In 2025, the Iranian terror regime doubled its direct financial funding to Hezbollah to $2 billion, prioritizing the rapid expansion of its regional proxy terror armies over domestic investments, according to Israeli military assessments.
In recent days, a military official shed light on the financial activities of the Iranian military headquarters in Tehran, which was used as a base to finance proxy forces, and which was struck by the Israeli Air Force on April 2.
The Iranian government budget for the Persian year 1404, covering March 2025 to March 2026, stood at approximately $59 billion. From this total, the regime allocated about $16 billion directly to its defense budget, representing approximately 27% of the national budget.
The regime diverted these resources away from civilian infrastructure, education and healthcare toward the production of missiles and drones, and to Iran’s armed forces, including the Basij paramilitary, which murdered tens of thousands of civilians, and to its proxy forces abroad.
In addition to Hezbollah’s $2 billion budget, Tehran transferred hundreds of millions of dollars annually to Hamas and other Palestinian terror factions in Gaza and Judea and Samaria, and hundreds of millions of dollars in cash, weapons and goods to the Houthis in Yemen. Iraqi pro-Iran militias received tens of millions of dollars per year, according to the official.
Brig. Gen. (res.) Yossi Kuperwasser, director of the Jerusalem Institute for Strategy and Security, told JNS on Tuesday, “For the Islamic regime in Iran, supporting proxies is always a top priority, as can be seen from the increase in aid to Hezbollah precisely during a period of economic difficulties.”
Hezbollah’s active participation in the current multi-front war solidifies this financial and operational bond, Kuperwasser said. Hezbollah’s decision to fight for Iran while taking risks and sacrificing personnel, sharpens the Iranian regime’s commitment to stick to this policy, he argued. The regime views the survival and rearmament of its proxies as a fundamental requirement.
Therefore, it’s likely that even if the regime faces economic difficulties, it will continue to prioritize aid to Hezbollah and the rest of the proxies, Kuperwasser added. The physical realities of the post-war economic environment, however, will dictate the extent of the transfers. Iran may have no choice and will be forced to cut the volume of aid, he said.
Maintaining its regional axis
Professor Kobi Michael, a senior researcher at Tel Aviv University’s Institute for National Security Studies, outlined the potential trajectories of Iranian proxy funding based on the political and military conclusion of the current war. The regime’s ability to transfer currency will be heavily shaped by the conditions that end the conflict, he said.
Speaking before the Tuesday evening truce, Michael also assumed that if there were an agreement that included lifting sanctions, and assistance for Iran’s economic rehabilitation, the regime would find a way to continue transferring money to its proxies, even if in lesser amounts.
Conversely, Michael said, if the war ultimately ended with the “opening of the gates of hell,” according to U.S. President Donald Trump’s assertions, it is hard to see a situation where the beaten and battered Iranian regime would manage to significantly fund its proxies.
Iran could find other ways to maintain its regional axis, the professor cautioned, such as supplying weaponry, technology, intelligence, military training and maybe even unconventional weapons, chemical, biological, or dirty nuclear, to prepare for the great revenge.
Throughout the war, the IDF struck dual-use Islamic Revolutionary Guard Corps targets that helped create billions of dollars in revenue for the Iranian regime’s military-terrorist activities.
On April 3, the IDF announced the elimination of Mohammed Kahi, a senior commander in the IRGC’s Oil Headquarters, who served as head of commerce. The Oil Headquarters finances the IRGC military buildup through oil sale profits, estimated at billions of dollars annually, bypassing international sanctions, the IDF stated. On March 31, the head of the Oil Headquarters, Jamshid Eshaghi, was eliminated by the IAF.
