So Daniel sent us this one, and I want to read it out because he framed it really well. He wrote: "Let's talk about Iran's political sphere of influence beyond the Axis of Resistance, which gathers together the military actors supporting the movement." That's it. Deceptively simple. But what he's pointing at is this whole shadow architecture that nobody talks about because everyone's fixated on missiles and drones. The financial networks, the religious institutions, the diplomatic maneuvering through BRICS and the Shanghai Cooperation Organization. The stuff that keeps Iran relevant even when its military proxies are getting hammered.
Herman Poppleberry here, and yeah, this is a topic I've been wanting to dig into for a while. Because here's the thing most coverage gets wrong: people treat Iran's influence as synonymous with the Axis of Resistance. Hezbollah, the Houthis, the various Iraqi militias. And those are real, they matter. But if you only look at the military layer, you're missing maybe two thirds of how Tehran actually projects power. The non-military architecture is older, more resilient, and in some ways more dangerous because it doesn't give you a target to bomb.
And this has become especially relevant in the aftermath of what happened in June last year. The twelve-day war fundamentally changed Iran's calculus.
It did. The Israeli strikes in June 2025 were a genuine shock to the Iranian strategic establishment. Not just because of the physical damage, which was significant, but because of what it demonstrated conceptually. The forward defense model, the idea that you maintain a ring of proxies who absorb and deflect external pressure before it reaches the Iranian mainland, that model failed. Hezbollah had been degraded. The Houthis were under sustained military pressure. And Iran itself took direct hits that it couldn't meaningfully retaliate against without risking escalation it wasn't prepared for. So the lesson Tehran drew from that experience was: we cannot rely on military deterrence alone.
Which is when you pivot to what they're now calling strategic multipolarity. And I want to make sure we explain what that actually means in practice, because it sounds like a think-tank phrase but there's real substance underneath it.
Strategic multipolarity, in the Iranian framing, means embedding yourself so deeply in alternative international structures that Western pressure loses its leverage. You become too interconnected to isolate. And the first major concrete move in that direction was the trilateral strategic pact signed in early 2026 between Iran, Russia, and China. This is not a loose statement of friendship. It includes specific deliverables. Russia commits forty-eight Su-35 fighter jets. There are joint naval exercises in the Persian Gulf involving Chinese assets. And critically, the economic integration component aims to create what the pact explicitly calls a sanction-proof financial corridor, integrating Iranian banks with the Russian SPFS system and the Chinese CIPS system to route around SWIFT entirely.
So the goal is to make the dollar-denominated financial system irrelevant to Iran's core transactions.
That's the ambition. Whether they fully achieve it is a separate question, and we should come back to that. But the direction is clear. And this connects to the BRICS dimension, which is where Iran has been doing some genuinely sophisticated diplomatic work. By 2026, Iran has proposed a BRICS-based clearinghouse specifically for energy payments, designed to facilitate oil sales to India and Brazil without triggering US secondary sanctions. The de-dollarization agenda gives Iran a useful coalition. Countries like India and Brazil have their own reasons for wanting alternative payment infrastructure, reasons that have nothing to do with supporting Tehran's foreign policy. Iran is essentially free-riding on a much broader geopolitical trend.
Which is actually quite clever. You don't need to convince India to love the Iranian government. You just need to convince India that it would be convenient to have a payment system that doesn't require US permission.
And that's a much easier sell. The Shanghai Cooperation Organization membership works similarly. The SCO gives Iran access to regional security frameworks that explicitly exclude the United States, focused on what they label counter-terrorism and border security in Central Asia. Now, the definition of counter-terrorism in that context is doing a lot of work, it often means suppressing domestic unrest. But structurally, it gives Iran a seat at tables where it can shape security norms in its neighborhood without American presence in the room.
There's actually a historical parallel worth flagging here. The Soviet Union used a similar playbook during the Cold War, embedding itself in postcolonial liberation movements not primarily through military aid but through institutional relationships, trade deals, and multilateral bodies that excluded the West. The Nonaligned Movement was nominally neutral but in practice gave Moscow access to diplomatic coalitions it couldn't have built through direct alliance. Iran is doing something structurally similar, just with the SCO and BRICS as the vehicles instead of the NAM.
That's a fair comparison, and it highlights something important about the timeline. Soviet institutional influence in the developing world took decades to build and, critically, decades to unwind after the USSR collapsed. The relationships Iran is cultivating now through the SCO and through its religious education networks are going to have a shelf life that extends well beyond whatever happens with the nuclear program or the next round of sanctions. You're planting seeds that grow slowly but are very hard to uproot.
Okay, let's get into the financial architecture, because this is where it gets genuinely intricate. By the way, Claude Sonnet 4.6 is generating our script today, which feels appropriate for an episode about shadow networks. Anyway. The hawala systems, the gold trade, the crypto mining. Walk me through how these actually function as a coordinated evasion apparatus.
So there are three primary channels, and they're not entirely separate, they overlap and reinforce each other. The first is hawala, which is an informal value transfer system operating primarily through Iraq and Pakistan. Hawala works through a network of brokers, hawaladars, who settle transactions through trust and ledger-keeping rather than physical cash movement. You give money to a broker in Baghdad, he calls a counterpart in Tehran, and the counterpart pays out the equivalent there. No wire transfer, no correspondent bank, nothing that shows up in SWIFT records. Iran has built an extensive hawala infrastructure particularly through Iraqi trading networks, where the volume of legitimate cross-border commerce provides cover for the financial flows that matter.
How old is this system, though? Because I want to make sure people understand this isn't something Iran invented to evade sanctions. This predates the modern banking system by centuries.
By a long way. Hawala, or systems functionally identical to it, were operating across the Islamic world and South Asia from at least the eighth century. Merchants on the Silk Road were using it to avoid carrying gold across bandit-infested terrain. The British colonial administration in India was still complaining about it in the nineteenth century because it made it nearly impossible to track capital flows. The reason Iran finds it so useful is precisely because it's not a technology or an institution you can shut down. It's a practice embedded in trading cultures and family networks. OFAC can sanction a bank's SWIFT access. It cannot sanction the trust relationship between two hawaladars who have been doing business together for twenty years.
And the US Treasury has been tracking this. In March 2026, the Office of Foreign Assets Control identified over two hundred Iranian front companies operating in just three Gulf states. Two hundred. In three countries.
And that's just what they identified. The front company layer in the UAE is particularly sophisticated. The IRGC's Quds Force has established what amounts to a parallel banking system through UAE-registered entities that process an estimated one to two billion dollars monthly in transactions that are invisible to Western sanctions enforcement. The UAE has been under pressure to crack down, and there have been some enforcement actions, but the scale of legitimate trade through Dubai makes it extraordinarily difficult to distinguish the clean from the dirty.
The second channel is gold.
Gold is fascinating because it's old technology that turns out to be extremely sanctions-resistant. In February 2026, Iranian authorities actually seized a cargo ship carrying three point two tons of gold bullion worth around two hundred million dollars, which inadvertently revealed a Turkey-Iran-Afghanistan smuggling route that moves an estimated fifteen to twenty tons of gold monthly. Monthly. The route works because gold is dense, high-value, and relatively easy to move in small quantities. You can carry millions of dollars in a suitcase. Turkey is the critical node because it has legitimate gold markets, significant Iranian diaspora business networks, and historically complicated enforcement of sanctions that technically apply to its trading partners.
And gold converts to hard currency anywhere in the world without touching a bank.
Which is the entire point. If you're Iran and you need to pay for something in a country that won't accept Iranian bank transfers, you move gold there, sell it locally, and pay in local currency. It's slower and more expensive than wire transfers but it's essentially unsanctionable in practice. The Afghanistan dimension is interesting because the railway connection between Iran and Afghanistan, completed in late 2025, now moves four hundred million dollars annually in goods. Iran controls the customs infrastructure on its side of that border, which means it controls the documentation, and controlling documentation means you can describe a shipment as whatever you need it to be.
So the railway is simultaneously a legitimate infrastructure project and a customs laundering mechanism.
That's a precise way to put it. And it generates something Iran needs badly, which is transit fee revenue and customs revenue that arrives in forms that are harder to sanction than oil exports. Iran has leveraged its geography aggressively here. It sits between Central Asia and the Persian Gulf, which means landlocked countries like Afghanistan and parts of Central Asia need Iranian territory to access global markets. Tehran has been deliberate about making itself indispensable to those trade corridors, because dependency is leverage.
How does that compare to, say, how China has used the Belt and Road Initiative? Because there's a structural similarity there, using infrastructure investment to create geographic dependencies.
The comparison is instructive but the scale is completely different. China is spending hundreds of billions of dollars building ports, roads, and railways across three continents. Iran is working with what it has, which is its geographic position. It can't build a port in Sri Lanka. What it can do is be the only viable transit route for an Afghan trader who needs to get goods to the Gulf. China buys dependency through investment. Iran creates dependency through geography and then works hard not to let alternatives emerge. The Zangezur corridor opposition we'll get to later is a perfect example of that, Iran expending diplomatic capital specifically to prevent an alternative route from opening that would reduce its indispensability.
The third channel is cryptocurrency, and I want to spend a minute here because the mechanism is slightly different from what people assume.
Right, and this is where a lot of analysis gets it wrong. People assume Iran is primarily using crypto for dark web transactions or direct payments to proxy groups. Some of that happens, but the bigger story is cryptocurrency mining as a hard currency generation mechanism. Iran has significant electricity subsidies, which make energy cheap, and cheap energy makes mining profitable. The Iranian government has actually licensed mining operations, though the licensing regime is chaotic and enforcement is inconsistent. What mining does for Iran is convert subsidized domestic electricity into Bitcoin or Ethereum, which can then be sold on exchanges in jurisdictions that don't enforce US sanctions, converting the proceeds into dollars or other hard currencies that can be used internationally. The sudden drops in Afghan and Iranian mining difficulty that analysts watch are often indicators of sanctions pressure forcing operational changes, either because exchanges are cracking down or because hardware supply chains are being disrupted.
So you can use cryptocurrency mining data as a kind of canary for sanctions effectiveness.
It's one of the more underused analytical signals, yes. And it connects to the broader point about how sanctions have actually shaped Iran's network rather than simply degrading it. The common assumption is that sanctions have isolated Iran. What they've actually done is force Tehran to develop a diversified, resilient evasion infrastructure that in some ways is harder to disrupt than a conventional financial system would be. You can sanction a bank. It's much harder to sanction a hawala network that exists in relationships between individuals, or a gold smuggling route that uses dozens of small operators, or mining rigs distributed across thousands of locations.
There's a dark irony there. The sanctions forced the innovation that makes the sanctions less effective.
And that's a genuine policy problem, not just an analytical observation. There's actually a term in economics for this kind of dynamic, it's called the Streisand effect applied to financial systems. The more aggressively you try to suppress a behavior, the more sophisticated the workarounds become, and the workarounds often end up being more resilient than the original system would have been. Iran's financial evasion apparatus in 2026 is more sophisticated and more distributed than it was in 2006, and a significant part of the reason is four decades of sanctions pressure that killed off the easy options and left only the hard-to-kill ones.
Now, let's move to the second major pillar, which is where I think Iran's long-term investment is actually more consequential than the financial networks. The diplomatic and soft power infrastructure.
The hearts and minds operation.
Which operates at a completely different tempo than financial networks. You can disrupt a hawala system with enough enforcement pressure. Dismantling an institution that's been training clerics for thirty years and embedding them in communities across fifteen countries is a different order of problem entirely. Al-Mustafa International University in Qom is the centerpiece of this. It operates thirty cultural centers across fifteen countries, and it trains twelve thousand foreign students annually in religious studies. But the curriculum is not purely theological. The political messaging is embedded throughout, framing Iranian revolutionary ideology as the authentic expression of Islamic resistance to Western imperialism.
And where is this having the most impact geographically?
Africa is the growth story. By 2026, Al-Mustafa has significantly expanded in Nigeria, Ghana, and South Africa. The approach in Africa is interesting because it's not just training Shia clerics, it's training anyone who's receptive to the anti-colonial, anti-Western framing, regardless of their precise theological position. You're essentially creating a cohort of religious and community leaders across the continent who have a favorable view of Iran and who frame Iran's conflicts with the West through a lens of postcolonial resistance. That's not a military capability, but over a decade or two it shapes public opinion in ways that affect how African governments vote in international bodies and whether African populations support or oppose Western-led sanctions coalitions.
And the returns are already visible at the UN level. African bloc voting on Iran-related resolutions has shifted noticeably over the past decade in ways that correlate with the expansion of Al-Mustafa's presence in those countries. You can't draw a straight causal line, but the correlation is there and it's not accidental.
Compare that to Latin America, where the influence mechanism is completely different.
This is one of the most underappreciated distinctions in Iranian foreign policy analysis. In Africa, the influence is rooted in religious education and social services. In Latin America, it's almost entirely political and media-based. Shiism is not a significant religious presence in Latin America. So Iran isn't trying to win converts. It's trying to win ideological allies, and the vehicle for that is HispanTV, Iran's Spanish-language media outlet. The ADL published a report in February 2026 documenting a significant surge in what they call anti-imperialist narratives on HispanTV, explicitly framing Iran as a moral alternative to the United States, targeting audiences in Venezuela, Nicaragua, and Cuba. The content isn't religious. It's political. It positions Iran as a fellow victim of American hegemony, which resonates in political cultures where that narrative already has traction.
It's a sophisticated segmentation strategy. Different message, different medium, different audience, same underlying objective.
And it's cheap compared to the cost of maintaining proxy militias. Running a television channel and funding a few cultural centers is orders of magnitude less expensive than arming and training Hezbollah. The return on investment in terms of diplomatic influence per dollar spent is actually quite high. Now, the medical tourism angle is less discussed but worth understanding. Iranian hospitals treat an estimated two hundred thousand patients annually from Iraq, Afghanistan, and Syria. That sounds like a humanitarian service, and it partly is. But it also creates dependency relationships. If you're an Iraqi family that relies on Iranian medical infrastructure for serious conditions, that's a relationship that shapes political attitudes. And if you're an Iraqi politician whose constituents depend on Iranian hospitals, that's a constituency pressure that affects your voting behavior.
It's institutional capture through service provision rather than through coercion.
Which is the key contrast with how Saudi Arabia approaches influence. Saudi influence in the Sunni world historically operates through direct financial transfers, aid payments, mosque construction funding, scholarships. It's visible, it's transactional, and it creates a particular kind of dependency. Iran's model is different. It embeds itself in existing institutional structures, it becomes part of the infrastructure of daily life in ways that are harder to disentangle. You can stop a Saudi aid payment. It's much harder to close an Iranian-affiliated hospital that serves a hundred thousand patients a year.
Let's talk about the Zangezur corridor, because this is a case study in how Iran uses diplomatic leverage in a situation where it's not immediately obvious what Iran's interest even is.
The Zangezur corridor is one of the more counterintuitive elements of Iranian regional strategy. The proposal is for a transit route through Armenian territory connecting Azerbaijan to Turkey and to the broader Turkic world. Azerbaijan and Turkey want it. Russia has been ambivalent. And Iran is firmly opposed, to the point of being willing to strain its relationship with Russia over the issue. The reason is geographic and existential. If Zangezur opens as a Turkish-Azerbaijani controlled corridor, it physically separates Iran from Russia and from Europe via the Caucasus route. Iran loses its position as an indispensable transit node. Tehran has positioned itself as the defender of Armenian territorial integrity, which is an unusual role for a country that doesn't share Armenia's religion or culture, but the strategic logic is clear. Iran needs to maintain a land connection to Russia and to the north, and it's willing to expend diplomatic capital to protect that.
And this creates a genuine tension with Russia, which is nominally Iran's partner in the trilateral pact but has its own interests in Azerbaijani relations.
Which gets at the question of whether this trilateral pact is a genuine alliance or whether Iran is essentially becoming a junior partner to Beijing. Because the power asymmetries are enormous. China's GDP is roughly twenty times Iran's. Russia's military capacity, even degraded by the Ukraine conflict, vastly exceeds Iran's. The economic integration component of the trilateral pact, the integration with SPFS and CIPS, is real, but it also means Iran's financial system becomes increasingly dependent on Chinese and Russian infrastructure. That's a different kind of dependency than SWIFT, but it's still dependency.
Is Iran trading Western sanctions for Eastern vassalage?
That's the uncomfortable question that Iranian strategic thinkers are clearly grappling with. The optimistic reading from Tehran's perspective is that being embedded in a Russia-China bloc gives you a diplomatic shield you didn't have before. Russia is now effectively vetoing UN Security Council sanctions that previously had broader consensus. That's a real, tangible benefit. The pessimistic reading is that you've traded one form of external constraint for another, and the new constraint comes from partners who have their own interests in Iran's oil, in Iranian territory as a transit corridor, in Iranian markets, and who have significantly more leverage over you than you have over them.
And the leverage asymmetry cuts in some uncomfortable ways. China's twenty-five year cooperation agreement with Iran, signed back in 2021, gives Beijing preferential access to Iranian oil at discounted rates in exchange for investment. From Tehran's perspective that's a lifeline. From Beijing's perspective it's a very favorable energy deal with a junior partner who has no other buyers. The structure of the relationship is not between equals.
Which is why some Iranian analysts have started using the phrase "managed dependency" to describe the China relationship, as opposed to the unmanaged dependency they had on Western financial systems before sanctions. The argument is that at least with China you're getting something concrete in return and you have some agency in the negotiation. Whether that framing holds up over time as the integration deepens is genuinely uncertain.
The space program angle is one I want to make sure we cover, because it's an interesting example of how technical cooperation becomes diplomatic leverage.
Iran's satellite technology exports to Venezuela, Bolivia, and Nicaragua are a good case study in this. The technology transfers are not militarily significant in a direct sense, but they create what you might call technological dependency relationships. When a country's satellite communication infrastructure involves Iranian technology and Iranian technical expertise, that country has a practical reason to maintain good relations with Iran, to avoid sanctioning Iranian entities, to vote favorably in international bodies where Iran's status is at stake. It's the same logic as the medical tourism infrastructure but in the technology domain. You're creating switching costs for the relationship.
Alright. Let's talk about what this means practically. If you're an analyst, a policymaker, a business person operating in this region, what do you actually do with this understanding?
The first concrete signal to track is gold prices in Istanbul and Dubai. I want to be specific about this because it's actionable in a way that a lot of geopolitical analysis isn't. Gold smuggling is Iran's primary mechanism for converting domestic value into internationally usable hard currency outside the banking system. When Iranian financial pressure increases, the volume of gold moving through Turkish and UAE markets tends to increase. When you see unusual movements in Istanbul gold spot prices or unusual activity in Dubai's gold souk, that's often an early indicator of changes in Iranian financial operations. The seizure in February 2026, the three point two ton shipment worth two hundred million dollars, was significant partly because of what it revealed about the scale of a route that had been operating quietly for years.
And the cryptocurrency mining signal.
Monitor mining difficulty in Afghanistan and Iran. Cryptocurrency mining difficulty is a public metric, it's visible on-chain, and sudden drops in difficulty in these regions often indicate that mining operations are being disrupted, either by sanctions enforcement against exchanges or by hardware supply chain pressure. It's not a perfect signal, there are confounding factors like electricity supply disruptions, but as one data point in a broader picture it's underused.
What about on the soft power side? Is there an equivalent early warning signal for when Iranian institutional influence is gaining or losing ground in a particular country?
The clearest leading indicator is scholarship and student flow data. When Al-Mustafa's enrollment from a particular country spikes, that's a signal of expanding influence operations in that region, usually preceding visible political effects by five to ten years. The lag is long, which is why it gets ignored in policy cycles that run on two or four year timelines. But if you're doing long-range strategic assessment, tracking where the students are coming from and what happens to them after they graduate is genuinely useful. Several of the Iraqi politicians who have been most vocal in opposing US military presence in Iraq over the past decade received their religious education in Qom.
For the policy dimension, what's the implication of Iran having built this resilient, distributed influence architecture?
The core implication is that sanctions policy as currently practiced is addressing the symptom rather than the mechanism. When you sanction an Iranian bank, Iran routes around it through hawala. When you disrupt a hawala network, it reconstitutes through different operators. When you pressure UAE front companies, the operations shift to other jurisdictions. The network is designed to be resilient to exactly the kind of targeted enforcement that Western sanctions regimes are built around. The more effective approach would need to target the enabling infrastructure at the country level, which means serious pressure on Turkey for the gold route, serious pressure on the UAE for the front company ecosystem, and that creates diplomatic costs that Western governments have historically been reluctant to pay.
Because Turkey is a NATO member and the UAE is a security partner.
Which is precisely the leverage Iran is exploiting. Tehran has correctly identified that the West's alliance relationships create blind spots in sanctions enforcement, and it has built its financial architecture around those blind spots. That's not an accident, it's a deliberate strategic choice.
The soft power dimension is even harder to counter because there's no obvious enforcement mechanism.
You can't sanction a university in Qom for training students from Nigeria. The students are there voluntarily. The institution is legitimate by any formal legal definition. And the influence it generates takes decades to manifest in measurable ways. The only real countermeasure is competing for the same audiences with a more attractive offer, which means sustained investment in education, media, and institutional relationships in Africa and Latin America, at a scale and consistency that Western governments have historically not sustained. Saudi Arabia has tried to compete in the religious education space with mixed results. The United States has not had a coherent soft power strategy in these regions for years.
So the open question going forward is really about two things. One, how does this financial architecture adapt as cryptocurrency regulation tightens globally? And two, what does deeper integration with Russia's alternative financial systems actually mean for Iran's strategic autonomy?
On the crypto question: the regulatory environment is tightening in ways that will create friction, but the fundamental dynamic won't change. As long as there are jurisdictions that don't enforce US sanctions and as long as cryptocurrency exchanges operate in those jurisdictions, Iran will have a channel. The adaptation will be ongoing. The cat and mouse dynamic between Iranian financial engineers and OFAC is genuinely sophisticated on both sides, and I don't think either side is close to a decisive advantage.
And the Russia integration question is where I think the most interesting strategic uncertainty lives.
The next phase of Iran's influence strategy almost certainly involves deeper integration with Russia's alternative financial infrastructure. Russia has its own incentives to build a sanctions-resistant economic bloc, its own experience developing SPFS as a SWIFT alternative, its own relationships with countries that want alternatives to dollar-denominated trade. If Iran and Russia genuinely integrate their financial systems, and if China's CIPS becomes a real alternative clearing mechanism for a significant portion of global trade, you start to see the outlines of something that looks less like sanctions evasion and more like a parallel global financial architecture. That's a much harder problem than tracking individual front companies in Dubai.
And it's a problem that's being built in plain sight while most Western policy attention is focused on missile transfers.
Which is exactly what Daniel's prompt was pointing at. The military stuff gets the headlines because it's dramatic and visible. The financial architecture, the religious institutions, the satellite technology deals, the railway customs infrastructure, these are slower moving and less telegenic. But they're more durable. You can degrade Hezbollah's missile stocks in a military campaign. You cannot bomb the Al-Mustafa University's alumni network out of existence.
That might be the sharpest summary of why this matters. Alright, let's bring it home. What's the through-line here?
Iran has spent the period since June 2025 doing something strategically coherent: recognizing that its forward defense model was exposed and pivoting toward a model that embeds Iranian influence in economic dependencies, institutional relationships, and alternative diplomatic structures that are harder to target and harder to reverse. The trilateral pact with Russia and China provides a diplomatic shield and financial integration. The BRICS and SCO memberships provide multilateral legitimacy and coalition-building opportunities. The hawala networks, gold routes, and cryptocurrency operations provide hard currency outside Western financial surveillance. And the religious and media institutions provide long-run ideological influence that shapes the political environment in which all of this operates. None of these individually is decisive. Together, they represent a strategy for surviving and remaining relevant despite military setbacks and economic pressure.
And the uncomfortable conclusion for Western policymakers is that this strategy is working well enough that Iran's regional influence has not collapsed despite everything that's happened.
It's adapted. Which may be more concerning than if it had simply been degraded.
Thanks as always to our producer Hilbert Flumingtop for keeping this whole operation running. And a genuine thank you to Modal for providing the GPU credits that power the show. This has been My Weird Prompts. If you're enjoying the episodes, a quick review on your podcast app genuinely helps us reach new listeners. We'll be back with whatever Daniel sends us next.
Until then.
