Iran has created a complex network to evade sanctions and finance its military and political activities, with China as a major partner.

By The Economist

Summary

Despite the broadest sanctions America has imposed on any country, Iran has managed to increase its oil exports twelve-fold, using its earnings to finance the country’s military and political activities, including support for militias and its nuclear program. The sophisticated network of front companies and shadow financial channels that facilitates Iran’s evasion of sanctions is buoyed by China in a key role as both an architect and chief beneficiary of this system.

Iran’s oil sales are conducted through a complex web of entities, including state-owned firms, ministries, religious organizations, and the Islamic Revolutionary Guard Corps (IRGC), which also engages in off-book oil sales. The Quds Force, the foreign arm of the IRGC, has reportedly earned billions from these sales. The process involves finding buyers, often in China, through front companies, signing detailed contracts, and using a variety of currencies, including dollars and euros. The oil is shipped via a fleet of more than 100 front companies, many of which use deceptive tactics to avoid detection. This elaborate system allows Iran to amass a substantial amount of foreign currency, estimated to be over $50 billion as of July, which it uses to fund its activities.

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