Four decades ago, Iran's fledgling revolutionary government set about building what has become one of the most extensive patronage networks in modern geopolitics. Amid the war with Saddam Hussein's Iraq, which killed around 1mn people on both sides. The Khomeini-led revolutionary government at the time quickly realised that the US and Western powers would do all they could to remove the government, one way or another, so it decided to play the offensive, rather than see war return to the homeland.

From Hezbollah's strongholds in southern Lebanon to Houthi positions overlooking the Red Sea, Tehran's fingerprints mark a constellation of militias, parties and armed movements that extend Iranian influence across the Middle East without requiring a single formal alliance.

The architecture is impressive in its scope. Money, weapons and training flow through channels designed to survive sanctions, economic crises and the occasional assassination of key operatives. What Western governments condemn as state-sponsored terrorism, Iran frames as righteous resistance to Israeli aggression and American hegemony.

Axis of Resistance

The difference is more than semantic: it reflects fundamentally opposed views of regional order and legitimacy. Yet whatever one calls it, the "Axis of Resistance" has become an entrenched feature of Middle Eastern security, giving Tehran reach and influence far beyond what its battered economy or modest military might otherwise afford.

Hezbollah: Firstly, Lebanon provides the template. Hezbollah emerged in the early 1980s from the chaos of civil war and Israeli invasion, forged with the fledgling Revolutionary Guard assistance into a formidable militant organisation. It has since evolved into something more complex: a hybrid actor embedded in Lebanon's political system yet maintaining an independent arsenal, command structure and social-welfare apparatus that rivals the state itself.

The model proved exportable. In Palestine and Israel, ideological and sectarian differences have not prevented Tehran from bankrolling Hamas's Izz ad-Din al-Qassam Brigades and Palestinian Islamic Jihad. In Iraq, a constellation of Shia militias—from the Badr Organisation in the 1980s through groups that bloodied American forces after 2003—now operate under the umbrella of the Popular Mobilisation Forces, serving as both partners and insurance against unfriendly governments.

Al-Quds: The Al-Quds Force, the external operations arm of the Islamic Revolutionary Guard Corps (IRGC), emerged from the Iran-Iraq War as the principal conduit for this support. During the 1980s and 1990s, Tehran concentrated on Lebanon and Palestinian factions, using Syria as a friendly corridor for arms shipments, cash deliveries and training. The American invasions of Afghanistan and Iraq, followed by the Arab uprisings, opened fresh theatres. Iran deepened its Iraqi militia network and deployed Lebanese and Iraqi fighters to Syria to shore up Bashar al-Assad's regime after 2011.

The price tag remains opaque, but available evidence suggests staggering sums, and probably a leading cause of Iran’s economic collapse. It is likely also the reason accountants in Tehran pulled the plug on support for now-exiled dictator Basher al-Assad.

Hamas: Adapted to a Sunni Islamist movement operating in a predominantly Sunni society, Hamas represents a variation on the same proxy logicd. Founded in 1987 during the first intifada, Hamas was initially rooted in the Muslim Brotherhood tradition and was never a natural ideological ally of Shia Iran. Yet strategic necessity proved stronger than theology. From the early 1990s, Tehran began cultivating Hamas as a means of projecting power directly against Israel, funding and training its military wing, the Izz ad-Din al-Qassam Brigades, while tolerating political differences.

The relationship has waxed and waned. Hamas’s refusal to back Bashar al-Assad during the Syrian civil war led to a temporary rupture after 2011, but shared hostility to Israel and reliance on external funding drew the two sides back together.

By the late 2010s, Iranian support again included cash transfers, weapons designs, rocket technology and training, much of it channelled via the Islamic Revolutionary Guard Corps and its external arm.

While Hamas remains operationally autonomous and locally embedded in Gaza, its ability to sustain prolonged conflict has been materially enhanced by Iranian backing, making it a central pillar—if an imperfect one—of Tehran’s regional deterrence strategy.

Houthis: The most recent and arguably most geopolitically disruptive example of Iran’s proxy playbook are the Houthis. Originating in the far north of Yemen as a Zaydi revivalist movement in the 1990s, the group—formally known as Ansar Allah—was initially a local insurgency fighting the Yemeni state. Iran’s involvement was limited at first, but escalated sharply after the Houthis seized Sanaa in 2014, turning a civil war into a regional confrontation.

Unlike Hezbollah, the Houthis are not a creation of Tehran, yet Iranian support has transformed their capabilities. Weapons transfers, drone and missile technology, training and intelligence assistance—largely attributed to the IRGC Quds Force—have enabled the Houthis to strike deep into Saudi Arabia and, more recently, disrupt Red Sea shipping lanes. This has given Iran a low-cost means of pressuring Gulf rivals and global trade routes without direct confrontation. As with other proxies, the Houthis retain their own agenda, but their growing reach illustrates how Iranian support can elevate a peripheral insurgency into a strategic actor with global economic consequences.

Well-funded

Western and Israeli assessments indicate that in flush years, Tehran has transferred hundreds of millions of dollars annually to core partners. American officials have estimated that Hezbollah alone has received over $700m a year at times, underwriting everything from fighter salaries to an ever-expanding rocket arsenal. Palestinian groups, including Hamas and Palestinian Islamic Jihad, have reportedly received more than $100m annually, though sanctions and political rifts have caused flows to fluctuate. Between 2012 and 2020, Washington assessed that Iran spent over $16bn supporting Assad and allied militias through cash, credit and military assistance.

Much of this largesse initially flows through official state structures, even when doing so violates international sanctions. The IRGC and Quds Force draw on oil revenues, budget allocations and a web of parastatal institutions. Semi-official religious foundations, or bonyads, ostensibly provide welfare for martyrs' families but have been blacklisted by America for allegedly funnelling funds to Hezbollah and Palestinian groups. Iranian banks, exchange houses and charities have similarly appeared on sanctions lists for managing accounts tied to the network's financial machinery.

As sanctions have tightened, particularly on oil and banking since 2010, Iran has refined its methods. The resulting apparatus relies on front companies, intermediaries and transactions involving cash, gold and barter deals that largely evade conventional oversight. American indictments describe sprawling networks of shell firms used to sell sanctioned oil, forge export documents and spoof ship-tracking data, laundering proceeds through offshore entities and foreign banks. Iranian airlines such as Mahan Air and Qeshm Air have been sanctioned for ferrying personnel, weapons and funds on flights masquerading as civilian operations. Informal hawala (Havaleh in Persian) systems and money-changing shops across the Persian Gulf and Levant and Europe provide another layer, moving cash without leaving banking trails.

Yet cash represents only part of the equation. Iran's most valuable exports are often weapons, expertise and organisational know-how. Iran is now the biggest producer of Kalashnikov’s worldwide, according to sources who spoke with IntelliNews. This alone, has enabled the entire system to remain off the books and behind the mesh of Western and global scrutiny.

From guerillas to hybrid forces

Quds Force officers and Hezbollah trainers have transformed ragtag guerrilla bands into hybrid forces possessing rockets, drones, media operations and increasingly sophisticated cyber-capabilities (see what happened in Iraq for example). Tehran supplies everything from anti-tank missiles to training in locally manufacturing rockets and drones.

In Yemen, Western and Arab governments accuse Iran of transferring missile and drone technology to the Shi’ite Houthis, enabling strikes on Saudi Arabia, Israel and Red Sea shipping, though Tehran denies commanding operations. Training sites across Iran, Lebanon, Syria and Iraq host cadres for instruction in urban warfare, intelligence tradecraft and propaganda.

For Tehran, this network offers remarkable value. Hamstrung without purchasing advanced fighter jets or building conventional naval power, cultivating proxies has provided a relatively cheap way to project influence and deter adversaries both inside the country and across the region as protestors in Iran’s Hamedan reported this week among protests saying several of the security forces shooting at them were Iraqis “speaking Arabic”.

Hezbollah's missile stockpile functions as Iran's primary deterrent against Israeli or American strikes on its homeland, raising the potential cost of any attack by threatening wider conflagration. In Iraq, allied militias give Tehran leverage over cabinet formation, security appointments and the future of foreign troops, they also forced out the Americans through IEDs. In Gaza and Yemen, partners can disrupt shipping, threaten energy infrastructure and complicate US and Israeli plans for the region.

Sustaining this architecture has grown more difficult as Iran's economy has buckled under sanctions, mismanagement and inflation, forcing occasional funding cuts and delays. Hezbollah and other groups have tightened budgets and sought additional local revenue through business interests, taxation and smuggling. Yet decades of investment mean many organisations now possess independent income streams and entrenched political roles, making them more resilient, and most importantly more autonomous from Tehran's direct control.

The result is a network that increasingly resembles a partnership of convenience rather than simple client relationships. However, if the powers in Tehran were attacked in the latest programme against the country by the US and Israel it could see unforeseen consequences.