By Ahmad Al-Remeh
Summary
Iran’s military budget has long been shrouded in opacity. While the country’s national budget is publicly presented each year before the Iranian Parliament, the military’s financial footprint hides deeper layers that even seasoned military and economic analysts struggle to uncover or quantify.
To truly understand Iran’s defense spending, one must consider more than just the formal budgets allocated to the Iranian Armed Forces, the Islamic Revolutionary Guard Corps (IRGC), and the Basij paramilitary force. Additional expenditures must also be factored in—such as those directed to internal security forces, police units, military-affiliated institutions, and various educational, religious, and research organizations tied to Iran’s armed forces.
Introduction
Each year, the International Institute for Strategic Studies (IISS) in London publishes a comprehensive assessment of global military capabilities and defense expenditures in a single volume titled The Military Balance.
In its latest report, the institute highlights significant changes in Iran’s 2018–2019 draft budget, particularly in terms of growing defense expenditures and a shifting strategy in the allocation of military funding. The report emphasizes that Iran’s public budget offers only a limited snapshot of the country’s military spending, as many institutions—particularly the armed forces—draw on private revenue streams not accounted for in the official state budget.
To expand its financial autonomy, the IRGC has aggressively pursued the creation of nationwide private enterprises to secure independent funding. Bolstered by growing political clout, the IRGC has secured a dominant share of state contracts in construction, energy, transportation, and infrastructure, often without competition.
Understanding the Scale of Iran’s Military Budget
To calculate Iran’s actual military expenditures, it is not enough to tally the budgets of the conventional military, IRGC, and Basij forces. One must also include the budgets of police forces, internal security agencies, and the institutions employing military personnel, as well as universities, research centers, and religious-political organizations tied to defense and strategic studies.
The lack of transparency is deliberate. The process of calculating and reporting Iran’s military budget is highly complex and subject to opaque internal negotiations among the regime’s power factions. These internal actors often influence budgetary allocations to serve their own political or ideological agendas.
Despite these challenges, the IISS has outlined five major findings after conducting extensive investigations:
- Official military and defense spending in Iran exceeds the amounts typically demanded by conservative MPs.
- Leading IRGC-affiliated media outlets and high-ranking military officials—including Major General Mohammad Bagheri, Chief of Staff for the Armed Forces, and former parliamentary national security chair Alaeddin Boroujerdi—have repeatedly called for allocating 5% of the national budget to defense.
- In 2016, the Iranian Parliament approved this request, and the military budget that year reached 921 trillion rials—approximately $19.6 billion.
- In the 2018 budget, the government projected total national expenditures of 12,000 trillion rials (approx. $260 billion), with 7.5% (approx. $19.5 billion) earmarked for military spending.
- The sharp depreciation of the Iranian rial between April and October 2018 reduced the real value of defense spending from $21.4 billion to $19.6 billion. However, the government maintained its nominal figures, signaling that its fiscal priorities had shifted, especially in light of internal unrest, notably the nationwide protests that forced a dramatic reassessment of domestic security strategy.
Even with currency devaluation, Iran’s 2018 defense spending marked a real 53% increase over the five-year average. The 2018–2019 budget also showed that the budget for police and internal security had risen by 83%, making it the largest single increase among military-related expenditures.
Strikingly, Iran allocated 16% of its 2018 defense budget to police and security forces—surpassing the 12.1% allocated to the conventional army. This massive increase reflects the regime’s concerns over growing public dissent and protest movements, especially those between December 28, 2017, and January 7, 2018.
Notably, 33% of Iran’s 2018 military budget—303 trillion rials (approx. $6.4 billion)—was allocated to the IRGC, which played a central role in quelling domestic protests.
Khatam al-Anbiya Central Headquarters: Role and Budget
The 2018–2019 budget also included funding for the Khatam al-Anbiya Central Headquarters (not to be confused with the Khatam al-Anbiya Construction Base). Under the command of Brigadier General Gholam-Ali Rashid, this headquarters has assumed a strategic coordinating role within Iran’s military structure.
Originally established during the Iran–Iraq War to synchronize operations between the army and the IRGC, Khatam al-Anbiya regained prominence in 2016. It was then announced that, in any future conflict, this command center—not the Armed Forces General Staff—would oversee all military planning and operational coordination.
Brigadier General Hossein Hassani Sa’di, the army’s former ground forces commander, was named deputy to Gholam-Ali Rashid at the helm of Khatam al-Anbiya, further indicating the center’s rising influence.
According to pro-regime media, the Central Headquarters is also responsible for “strategic coordination in the Middle East.” Gholam-Ali Rashid himself has deep ties to the late General Qassem Soleimani, former commander of the Quds Force—a unit tasked with overseeing Iran’s foreign military operations in Syria, Iraq, and Yemen, often in coordination with Hezbollah.
The 2017 defense budget presented to Parliament listed the Quds Force’s allocation at 10 trillion rials (approx. $213 million)—the same amount designated for Iran’s missile program.
However, in the 2018 budget, no figures were disclosed for either the Quds Force or missile development—suggesting the existence of alternative funding channels outside the official state budget. These channels likely fall under the direct purview of Supreme Leader Ali Khamenei and senior IRGC commanders, indicating prioritized and discreet financial flows for sensitive military programs.
What Can Be Inferred from Iran’s Military Spending?
This preliminary investigation reveals a marked shift in how Iran funds and prioritizes its defense programs. With an estimated $19.5 billion in military expenditure, the government has significantly increased its investment in security.
Moreover, 16% of the military budget went to police and internal security staggering 83% rise over previous years—while the army received just 12.1%. This suggests a regime increasingly concerned with domestic instability, anticipating continued protests and dissent in the coming months.
Meanwhile, the IRGC—long Iran’s most powerful security organ—received 33% of the total defense budget, or $6.4 billion, further affirming its dual role in both suppressing internal unrest and executing Tehran’s regional strategy of asymmetric warfare and proxy expansionism.
In light of these findings, one must ask: Where is Iran’s military budget truly going, and why?
Despite these statistics, ambiguity remains. The clearest indication lies in the absence of publicized budgets for the Quds Force and missile program in 2018. Their omission points to classified extrabudgetary funding mechanisms that highlight how Tehran’s military ambitions—both domestic and foreign—continue to operate in the shadows of official accounting.
