Iran and Israel took the Middle East region to the brink of war this month as Israel’s assumption that Iran would not respond to a strike on diplomatic premises in Damascus proved flawed. Both sides resisted their own hardliners’ demands to escalate, but even their more-limited responses have crossed a Rubicon.
Shadow War Turns Overt. On 1st April a suspected Israeli air strike hit a consulate building adjacent to the Iranian embassy compound in Damascus, Syria. At least seven people were killed, including Brigadier General Mohammad Reza Zahedi, a senior commander in the Quds Force, and seven other IRGC Quds Force officers, including Brigadier General Mohammad Hadi Haji-Rahimi. Zahedi and Haji-Rahimi are the highest-ranking Iranian military leaders to be assassinated since the USA killed Major General Qasem Suleimani with a drone strike inside Iraq in January 2020.
Iran launched an unprecedented direct attack on Israel in retaliation. Almost all 300 drones and missiles launched by Iran were successfully intercepted. The US, UK, France, Jordan, and other Arab states contributed to the defence of Israel, seeking to prevent Israeli retaliation from igniting a wider, outright war. Binyamin Netanyahu said his country was determined to defend itself, while US President Biden and others urged restraint to avoid regional escalation. Almost a week later Israel struck Iranian air-defence systems on an airbase near Isfahan, the city most closely associated with Iran’s nuclear programme. It also struck air defence systems protecting the Natanz nuclear complex.
Clearly wishing to avoid a further escalation, Israel did not claim the attack and Iran played it down. Satellite images appear to indicate that Iran quickly replaced destroyed air-defence radars (servicing its Russian-supplied S-300 batteries) with new systems to give the impression that it had avoided sustaining losses.
Broader Context. The Isfahan strikes seem to draw a line under this cycle of violence for now; however, the past month has witnessed highly significant change in the Middle Eastern security context. For the first time in its history, the Islamic Republic has attacked Israel directly and openly, having previously preferred to use its proxies to attack Israel directly, offering Iran the veil if deniability. By turns, Israel has now clearly signalled it is willing to target Iranian nuclear facilities and demonstrated an ability to hit Iran’s most valuable strategic sites without even entering its airspace.
This episode may also open a window onto a shift in Iran’s strategic decision-making. Supreme Leader Khamenei’s direct command to “punish” Israel led to rapid military action, bypassing the usual deliberative processes of the Supreme National Security Council (SNSC). The lack of challenge from President Ebrahim Raisi and other cabinet members to Khamenei’s directives, and the influence of senior IRGC members, may indicate a breakdown in Iran’s strategic decision-making hierarchy and underscore the rising influence of the IRGC.
North Korea. North Korea’s Minister of External Economic Relations Yun Jong Ho became the first official from Pyongyang to visit Iran in over five years this month. The trip is officially about economic ties, but the US State Department said it was “incredibly concerned” about possible missile and nuclear technology cooperation. There’s precedent; Tehran has borrowed Pyongyang’s missile designs for its own weapons and admitted to using North Korean missiles during its 1980-1988 war with Iraq. Today, North Korea has intercontinental ballistic missiles that Tehran cannot yet field. Given Iran’s preoccupation with its strategic position, searching for increased deterrence against both Israel and the United States, the fact that it would welcome a North Korean delegation right now is significant. The visit coincided with a trip to Russia by Iran’s national security advisor to Moscow.
Capital Punishment. Amnesty International reported that Iran executed 853 people last year, an eight-year high. More than half were for drug-related offences. Amnesty said that the regime has stepped up its use of the death penalty “to instil fear among the population” after the 2022 protests. It executed at least 95 people by 20th March this year. Amnesty suspects its figures may even be an undercount.
Rapper Death Sentence. On 24th April a court issued a death sentence to the imprisoned popular rapper Toumaj Salehi on speech-related charges. Saheli’s lawyer said that Branch 1 of Isfahan’s Revolutionary Court had sentenced his client to death on the charge of “corruption on earth.” In October 2022, authorities arrested Salehi, a musician and vocal critic of the government, during nationwide protests. A year later, Iran’s Supreme Court struck down a six-year prison sentence handed to Salehi and released him on bail, referring his case back to the court of first instance. Security forces rearrested him 12 days later.
Rial. The Iranian rial weakened against the US dollar at the height of the escalation crisis with Israel (dropping to 670,000 per dollar) but ended the month up at 600,500 IRR on the black market.
Truckers’ Strike. Truck owners throughout Iran have initiated a strike in response to decreased fares and fuel allocations. In regions including Sistan-Baluchistan, Kerman, Ilam, and Asaluyeh, truck operators have ceased operations, while in Tehran, they have halted their trucks along the Babaei Highway on the city’s northeast side, with trucks displaying signs voicing grievances over reduced or eliminated fuel quotas. Strike activity has disrupted the transportation network, halting businesses in numerous sectors. There are unverified reports that the government might either increase fuel prices or progressively cut national subsidies to manage shortages. The government spends billions annually on indirect energy subsidies, with petrol and diesel subsidies alone costing around $100 million daily.
Tech Sector. Unconfirmed reports are circulating on Persian social media that the shares of two leading Iranians startups, Digikala and Snapp, were sold to government-affiliated communication operators, Hamrah-e Aval and Irancell. Digikala is Iran’s biggest online retailer and Snapp is the country’s main ridesharing app. Likewise, half of the shares of Tapsi, another ridesharing app, were sold to Golrang Industrial Group, a government-backed holding entity. This has led to concerns among the Iranian Chamber of Commerce and others at the government’s rising influence in the commercial tech sector. Iranian startups face numerous obstacles including sustained high inflation, international sanctions, inability to access capital or transfer currency, depreciation of the rial and emigration of skilled personnel. Under these circumstances, companies like Digikala, Snapp, and Tapsi appear to have little alternative than to sell equity to government-owned firms.
Digikala was shut down by officials last summer when staff openly defied rules on compulsory hijabs. It was also accused of blasphemy earlier this year over designs of consumer items with words said to be disrespectful of Koranic figures. Hossein Shariatmadari, editor of official newspaper Kayhan and known to be close to the Supreme Leader, said at the time that the management of several digital companies, will “fortunately” be transferred to those “who serve the state.”
Medicine Crisis. The Health and Treatment Commission of Iran’s parliament released a report indicating that nearly 150 essential medicines are in short supply, with 65 of them critically scarce. The report criticized the failure to align the preferential exchange rate (42,000 rials) with the NIMA system rate, resulting in a significant debt of 840 trillion IRR owed to the Central Bank. The Central Bank has been accused of not cooperating in providing the necessary foreign currency and liquidity for the pharmaceutical industry. Despite ongoing challenges in securing foreign currency for importing medicine and raw materials, parliament rejected the proposal to refer government violations to the judiciary by a vote of 137 against, 67 in favour, and eight abstentions. Although international sanctions exempt humanitarian items like medicine, the regime blames sanctions for the medicine crisis. Meanwhile, smuggling and trading of pharmaceutical items remain profitable for regime-linked entities, exacerbating shortages in pharmacies and making it difficult for the public to access essential medicines.
Russian and Iranian defense ministers pledged to enhance military ties at a Shanghai Cooperation Organization (SCO) meeting in Kazakhstan, emphasizing increased cooperation and trust, particularly highlighted by their joint support in Syria and drone technology exchanges. A security memorandum was signed, focusing on unspecified security matters, further deepening their strategic partnership. Iran, having joined the BRICS bloc and the SCO, is aligning more closely with Russia and China, moving away from the US dollar in bilateral trade to counteract the impact of sanctions.
Iran and Israel have broken the taboo against directly attacking one another’s territory, rather than taking covert action or acting via proxies as they have historically done. The tit-for-tat strikes may have shown that Israel still has the upper hand; it struck the first and last blow, and its strike, though smaller, displayed greater military prowess than Iran’s massed attack. But more important than who “won” is the point that the tacit rules of the game in the Middle East are changing, with the shift from shadow proxy war to overt missile war bringing much greater dangers. For now, both sides seem content that they have found the red line, even briefly crossed it, and stepped back from it having sustained relatively little damage. This will not be the end of it, however, and we should anticipate continued attacks on Israel from Iran’s proxies – especially should, or indeed when, Israeli forces enter Rafah in Gaza.