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| Asa'ib Ahl alHaqq Fighters Marching in Baghdad |
Israel's attack on HAMAS, Lebanon's Hizballah and the Popular Mobilization Units (PMU) in Iraq has had a devastating impact of Iran's so-called "Axis of Resistance." Since HAMAS attacked Israel a year and a half ago, Iran's proxy militias have all, with the exception of the Houthis in Yemen, lost considerable military and political influence. What then is the future of these militias? Will they be able to continue to destabilize the Eastern MENA region? What does their status tell us about Iran's future ability to project power and influence in the Middle East?
A key variable in answering these questions which has yet to be given adequate attention is the degraded state of Iran's economy. Iran's losses after Israel's bombing have placed limits on the degree to which it can provide its proxy militias with weapons and funds. In 2018, Iran faced an annual inflation rate of 18%. It has since increased to 40%,seriously undermining the value of the Iranian rial. Iran suffers from crippling sanctions and a crumbling infrastructure. Extensive state corruption and mismanagement have only exacerbated these problems.
Iran is experiencing a severe water crisis. Already, some areas in its south west provinces have been forced to evacuate famers and other residents because water supplies have completing dried up. Much more analysis of this crisis is required because the MENA region is suffering from the adverse effects of climate change more than any other of the world's regions.
With the toppling of Syria's al-Asad regime in December 2024, Iran no longer can use the country as a conduit for arms and other goods across the so-called Shi'a Crescent, i.e., through Iraq, Syria and into Shi'a majority southern Lebanon. Competing with discounted oil prices which Russia provides China and India to offset the sanctions it has faced for invading Ukraine in 2022, has hampered Iran's ability to expand its oil sector and hence export more oil and natural gas.
Clearly, HAMAS has been organizationally and militarily degraded to the point where its actions are limited to sniper attacks by small groups of militants on Israeli soldiers in Gaza. Reports indicate that HAMAS' approval rating is at an all time low and that is hated by a significant sector of Gaza's Palestinian population. In short, it is difficult to see HAMAS ever returning to the position of political and military power it enjoyed before October 7, 2023.
Hizballah has likewise been seriously degraded militarily. Consequently, its political hold on the Lebanese government has also been weakened. Prior to HAMAS' attack on Israel, Hizballah's strength was evident in its control of half of Lebanon's cabinet ministries. In May, 2008, during militia clashes in Beirut resulting from Hizballah's demand for greater political representation in the Lebanese government, it became clear that competing militias and the Lebanese army troops were no match for its military power.
Most analyses of the status of Iran proxy militias following the 12 day Iran-Israel War in June 2025 fail to examine the economic consequences - the political economy - of Israel's devastating attack on Iran's nuclear facilities and infrastructure.
Iran's proxy militias are much more than military and political forces. To support their organizational needs and ability to resort to violence to enforce compliance by the populaces they control, they require a steady, predictable source of funds. Without such funds, these militias could not survive.
Even though Iran will be unable to provide its proxy militias with the type of weaponry and financial support that it has in the past, one of the legacies of Iran's regional influence is the spread of criminality. While the ties linking the militias to Tehran will diminish, their criminality will persist,
Hizballah is as much a crime syndicate, much like in Southern Italy, as it is a political and military organization. Its tentacles stretch into Europe and Latin America where it engages in drug and contraband smuggling, identity theft, and money laundering. Hezbollah's Networks in Latin America
Although Iran, its main patron has been diminished militarily, politically and economically, Hizballah can continue to pursue its criminal activities, even while it has lost considerable political power based on Israel's killing of its top leadership and destroying it as a military power. Lebanon's President Aoun Urges Hezbollah to Give Up Arms
Along with other government and military officials, Hizballah has consolidated its hold over the port of Beirut to control the import of illicit goods. Although it didn't cause the August 4, 2020 chemical blast which killed 200 Lebanese, wounded 7000 more and destroyed much of downtown Beirut, it bears much of the responsibility for the horrific explosion of nitrogen chemicals which had stored in a port warehouse for several years.
Because the Lebanese government is prohibited by Hizballah from inspecting parts of the port, and government officials are often bribed to look the other way and not report the arrival of contraband goods, the dangerous chemicals which exploded was never addressed, even though many officials knew it presented a serious danger. Following the blast, Hizballah intervened to prevent the Lebanese judiciary from investigating who bore responsibility for the tragedy.
In Iraq, the PMUs (al-Hashad al-Sha'bi) have developed a parallel economy, in effect creating a state within a state. In multiple areas of the country, government officials, not even the prime minister, can enter zones where the militias have stockpiled goods as they are being prepared for sale.
Even as Iran's proxy militias have reigned in their attacks on American troops in Iraq, as instructed by Iran, they continued to enjoy strong political support. Currently the Iraqi parliament is considering a law which would integrate the PMUs into the Iraqi army.
While Prime Minister Muhammad Shia' al-Sudani argues that this process will give the state greater control over the militias, this reason for presenting the bill is false.
The PMUs already occupy key positions in a number of key ministries, especially the Ministry of the Interior, and thus would only obtain added legitimacy if the law is passed.
For many militia leaders, the new bill contains an ominous article. If passed, it would require all militia leaders above the age of 60 to retire. Falih Fayyadh, who is head of the Shiite Coordination Framework and the PMUs, is 63 years old and, under the terms of the new law, he would lose his position. This legal stipulation would apply to many other PMU leaders whose age exceeds 60. Debate over PMU reform sharpens as the US threatens sanctions
Qa'is al-Khazali, head of the notorious Asa'ib Ahl al-Haqq (League of the Righteous People), is one of the main advocates of the proposed law. His organization hopes to gain more patronage if it is able to marginalize older, more established PMU leaders once the law passes.
Led by the former minister of agriculture, Khazali's forces recently stormed Iraq's Ministry of Agriculture as a new minister was being appointed. Asa'ib fighters engaged in a firefight with government security forces and killed a police officer and wounded 9 others as they attempted to prevent the former Minister of Agriculture being replaced with a new one. This type of "wild West" behavior demonstrates how violent Iraq could become if internal cleavages intensify between the 6 main PMU forces.Gunfight in Baghdad kills one as paramilitary group storms ministry
Meanwhile, the Trump administration has been vigorously lobbying against the proposed law to integrate the PMUs into Iraq's security forces. It argues that once this process is completed, it will be difficult to disentangle the militias from Iraq's armed forces.
The US State Department recently withdrew a sanctions exemption which has allowed Iran in the past to sell electricity to Iraq. Coming during Iraq's increasingly hot summers, it will cause a major disruption to Iraq's citizens and businesses. The Trump administration is also pressuring the al-Sudani government to reign in Iraqi banks especially established launder dollars transferred to Iran.
On another front, Iraq's Shi'a PMUs have been attacking oil installations in the Kurdish Regional Government (KRU) in lieu of targeting US troops at bases near Baghdad and in the KRG. The militias claim the KRG assisted Israel in its attacks on Iran. Because the KRG is closely aligned with the United States, these attacks are seen as sending a message that Iran's proxy militias can still harm American interests in Iraq.سقوط ثلاث مسيرات في أربيل وكركوك
To conclude, Israel's military attacks have severely degraded the "Axis of Resistance." However, there are still many ways in which Iran's proxy militias can undermine political stability in the Eastern MENA region, especially the Popular Mobilization Units in Iraq.
