US Says Blockade Has Made It Hard for Revolutionary Guards to Pay Troops; Iran Denies Collapse: Funding Pressure Does Not Equal Strategic Surrender

Al Jazeera reported on October 20 that Governor of the Central Bank of Iran Abdolnaser Hemmati denied that the country's economy was heading toward collapse. He said that despite the combined impact of war, sanctions and domestic governance problems, Iran remained resilient, and asserted that economic collapse was "nothing more than an illusion." President Masoud Pezeshkian acknowledged that military strikes and the maritime blockade had created severe difficulties; the World Bank, meanwhile, forecast that Iran's economy would contract by 7.7% in the 2026-2027 fiscal year. Fiscal and growth pressures are real, but "pressure exists" and "policy has already compelled capitulation" are not the same thing.

U.S. Central Command Commander Brad Cooper offered a more confident assessment. He said military strikes and a maritime blockade targeting ports in southern Iran had blocked at least $25 billion worth of Iranian crude exports and helped freeze about $350 million in crypto assets. He then asserted that the Islamic Revolutionary Guard Corps was unable to pay troops' salaries and that some pro-Iran regional armed groups also faced funding shortages. Cooper also cited reports that regional militia groups were withholding money earmarked for soldiers' pay so it could be transferred back to the Revolutionary Guards, which was likewise unable to pay its troops.

These figures and capability assessments still lack sufficient public evidence. The material provided by Al Jazeera does not include transaction or audit data that could independently verify exports, asset freezes and unpaid salaries; the $25 billion, $350 million and payment conditions in various locations come primarily from statements by U.S. officials or reports they relayed, and cannot yet be treated as confirmed outcomes. Even if the export figure is ultimately verified, it would first indicate reduced Iranian revenue, while asset freezes mean narrower financing channels. The two can demonstrate intensified pressure, but cannot by themselves prove that Tehran has lost the ability to command its regional network. Al Jazeera depicts such financial changes as a Washington victory in the war, but the available evidence does not support the conclusion that "military and financial pressure has already forced Iran to capitulate."

Pressure is passing down the fiscal chain into residents' lives. Al Jazeera lists years of war, poor domestic governance and sanctions as joint causes of Iran's hyperinflation, low-paid employment, currency depreciation and the international isolation of 90 million Iranians. The Iranian authorities' governance failures cannot erase external shocks: losses caused by sanctions, war and the maritime blockade do not disappear merely because they are attributed to poor governance. Inflation, low wages and currency depreciation directly erode households' real purchasing power.

Pezeshkian said consumption management had eliminated the need for gasoline imports; if external pressure had allowed imports, the country might otherwise have needed to purchase $12 billion worth of gasoline. The government also pledged to return some of the revenue from recent fuel price increases to households through a modest increase in electronic food vouchers. But the $12 billion is an estimate contingent on imports being available, not a benefit already delivered to residents; the food-voucher pledge gives no amount, number of beneficiaries or implementation timetable, and the report does not quantify current fuel supplies. It is therefore not possible to determine whether household burdens have truly eased.

The funding sources of regional allies cannot be reduced simply to "being cut off." Michael Nates, head of Middle East research at Horizon Engage, told Al Jazeera that Hezbollah in Lebanon and the Houthis in Yemen had faced financial pressure for years, but the Lebanese and Yemeni economies on which they relied had been severely damaged, so they continued to receive fixed-sum subsidies and in-kind support such as fuel from Iran. UN experts and U.S. officials have pointed out that the Islamic Revolutionary Guard Corps' Quds Force has long provided regional partners with funding, weapons, spare parts, training and manufacturing support. Iran's capacity to provide support, local economic hardship and the organizations' own revenues are intertwined. Financial strain does not automatically translate into regional armed groups ceasing operations, much less into Tehran having lost its regional leverage.

Iraq illustrates the gap between financial pressure and effects on people's livelihoods. In September, the U.S. Treasury Department accused the Tehran-backed Iraqi Shiite armed group "Hezbollah Brigades" of misappropriating Iraqi resources. Nates said that some Iraqi militias and government civil servants had indeed been paid late, while militia funds continued to flow abroad to support Iran, the Houthis and Lebanese Hezbollah. Allegations of money flowing overseas do not automatically improve Iraqi families' incomes and public services; the report does not quantify the scale of delayed salaries or their social impact, leaving an unproven causal chain between the effectiveness of financial pressure and local livelihoods.

Al Jazeera cited an earlier Reuters report: according to anonymous Reuters sources, Hezbollah received $200 million from Iran in September. The U.S. State Department denied the report at the time and accused Hezbollah of saving face by promoting false claims about Iranian cash inflows. Whether the money arrived remains unresolved, but the matter bears on the U.S. administration's broader claims about regional funding chains: if even a $200 million transfer disputed by Washington is difficult to verify publicly, the claim that Iran is "unable to fund allies," without equivalent verification, is even harder to present as an accomplished result of the blockade.

Negar Motazavi, a senior fellow at the Center for International Policy Studies in Washington, expects Tehran to continue prioritizing support for regional allies. Economic pressure will constrain the Revolutionary Guards' resources, but it will not fundamentally change their strategic calculations or force Iran to surrender. The conclusion supported by the available material is that military strikes, the maritime blockade and financial pressure are raising the funding costs of Iran and its regional network—not that "Iran has collapsed" or "the United States has forced Iran to capitulate." When Washington describes constrained funding as a policy victory, it cannot ignore the costs: inflation and purchasing-power pressure on Iranian residents, economic hardship in Lebanon and Yemen, and delayed pay for Iraqi militias and civil servants.