Spies and slogans: Iran’s infiltration debate turns against radicals

None of Tehran’s counterparts, including Russia, has agreed to settle transactions in national currencies, leaving Iran isolated despite years of lobbying.

At the Shanghai Cooperation Organization (SCO) summit on September 1, President Masoud Pezeshkian repeated the call.

A day earlier in Tianjin, China, he unveiled a new initiative under the title “SCO Special Accounts and Settlements,”describing it as a three-pronged plan to “reduce the effects of illegal sanctions on SCO members.”

What’s the proposal?

According to Pezeshkian, the initiative has three components:

• Expanding the use of national currencies and reducing dependence on the dollar.
• Establishing shared digital infrastructure and adopting central bank digital currencies (CBDCs) for faster, more secure payments.
• Creating a multilateral currency-swap fund to support sanctioned members or those facing liquidity crises.

Pezeshkian argued that the plan could boost the “economic resilience” of SCO countries and turn the bloc into “a successful model for building a multipolar, fair financial order resistant to external pressure.”

Is it realistic?

The hurdles are steep.

SCO members’ national currencies lack international credibility and many are volatile. The Iranian rial has lost 99 percent of its value in the past two decades, while the Russian ruble has sharply fluctuated since the Ukraine war.

Over the past five years, all SCO currencies—except Tajikistan’s—have depreciated.

Trade imbalances add to the problem.

Chinese customs data show China’s exports to India, Pakistan, and Uzbekistan are seven times larger than its imports from them. With Tajikistan, the imbalance reaches tenfold.

China, with a $150 billion annual trade surplus with those countries, is unlikely to accept settlement in their weak currencies—and even if it did, they would be of little use in trade with third parties.

Energy trade underscores the limits further.

Of China’s $512 billion in total trade with SCO members last year, $90 billion was fossil fuel imports. About 80 percent of global energy transactions—especially oil—are conducted in US dollars. Even the euro and pound play only marginal roles.

Beyond energy, the dominance of the dollar and euro in global commerce is overwhelming: the dollar accounts for more than 65 percent of trade transactions, the euro about 20 percent.

China’s yuan makes up just 3–4 percent, mostly in neighboring countries.

The core problem

Above all, Iran remains on FATF’s blacklist, which restricts transactions regardless of currency. Whether in dollars, euros, yuan, or local money, doing business with Iran carries legal and financial risks.

For these reasons, Tehran’s latest de-dollarization push is less a practical plan than an aspirational talking point.

Currency weakness, trade imbalances, dollar dominance in energy, and Iran’s isolation from the global financial system make the proposal unworkable.

Adding to the difficulty, Washington has taken a firm line against such initiatives, warning the BRICS bloc over de-dollarization efforts and threatening more sanctions and tariffs if they advance.

“These devices should be used on thieves and fraudsters, not for a teacher who simply demanded her union rights,” says one teacher and union activist.

She recounts how, in the silence of the night, the short beep of her device awakens her five-year-old daughter—a constant reminder that miles away, someone is watching. Barred from stepping more than a kilometer from her home, she must wear the virtual shackle at all times.

She is one of dozens of teachers, artists, students, writers, members of religious minorities and labor activists who, after months or years in prison, now serve the remainder of their sentences under electronic surveillance.

Their names have been withheld due to the likelihood of official retaliation for telling their stories.

The devices are fastened to the leg and tracked around the clock by Iran’s Prisons Organization. In theory, they modernize punishments and reduce prison costs. In practice, they are applied not only to financial, drug or theft offenders but increasingly to civil and political activists.

Bruised—and paying for it

“I am having to pay just to have a shackle strapped to my leg,” one activist remarks.

For many, the devices are humiliating, painful, and financially crushing. Lawyers describe them as tools of harassment, combining physical restriction with constant control.

The locally manufactured monitors are poorly designed: heavy, sharp-edged and often causing wounds or inflammation.

To add insult to injury, users must pay for their shackle: an upfront fee of about $25 and roughly $9 a month thereafter—sums that weigh heavily on activists who are out of work or barred from working.

Restricted lives

“From the hairdresser to the grocery store, people call me a hero and say: ‘Respect for your courage.’ But I’m glad my mother isn’t alive to see me wearing this shackle,” says a female teacher."

The devices typically restrict movement to a 1,000-meter radius around the home, though the exact distance is determined by a judge. The impact is immediate: disrupted jobs, missed family events, lost opportunities and even obstacles to medical care.

Protest singer Vafa Ahmadpour, known online as Vafadar, announced that he lost the chance to travel to the US as an honorary judge at an arts festival because of his ankle monitor.

Some wearers try to hide the device under socks or trousers to avoid stares. Others leave it visible and say most reactions are sympathetic.

Arbitrary power

Some lawyers say monitors allow prisoners to return to a normal life, but others stress the selective and arbitrary way monitors are used against protesters.

“In other countries, these devices are used for actual financial or violent crimes; but in Iran, they’ve become tools for controlling and humiliating protesters and civil defenders and union activists,” says another.

He notes that law enforcement agencies wield wide discretion in deciding who qualifies and under what conditions—leaving activists especially vulnerable.

The stigma of ankle monitoring often blocks people from resuming their jobs. Some have even been forced to move homes so their workplace remains within the permitted radius.

“After my release, the school principal said I needed an official letter from the judge to return to teaching,” a teacher explains. “The judge confirmed I wasn’t legally banned from working, but the school still refused to take me back. I suspect the Intelligence Ministry put pressure on them.”

An invisible prison

Another teacher describes the constant anxiety: “Even going for a jog in the park makes me anxious. Once, I stepped outside the boundary. At 6:30 in the morning, they called and threatened to send me back to prison.”

It’s a recurring theme in conversations with those wearing monitors.

“I went out to buy a book I loved. At the intersection, the device beeped—I remembered I wasn’t allowed to cross. I looked at the book with longing and turned back,” says one author.

“The painful part is that only you can see this invisible boundary. Everyone else can cross it—except you.”

“In Shiraz Adelabad Prison, my cellmates were murderers and dangerous criminals. For me, the ankle monitor was a choice between bad and worse,” says a teacher from Shiraz.

For many, the device remains preferable to the harsh conditions of Iran’s prisons—but only barely.

“This is the least we pay for demanding our rights,” one teacher says.

“The ankle monitor has limited my physical movement, but it hasn’t stopped me from thinking and writing,” says another author. “I still write—and that’s something the government can never take away from me.”

“To fulfill the people’s will, let the armed forces stick to their core duties—nothing else. The economy isn’t their job. Propaganda, domestic politics or foreign policy aren’t either,” Rouhani said in a video message posted on his official website on Wednesday.

Rouhani argued that if the Islamic Republic expected its people's support against American and Israeli foes, it must deliver on its promises and avoid corruption.

“An intelligence agency involved in business or trade isn’t intelligence,” Rouhani said.

Reform attempts

The state dominates the economy through oil, banking, and strategic industries, while the IRGC plays a major role in commerce, limiting private sector freedom.

Calls for reform gained the fore during the presidency of Mohammad Khatami from 1997 to 2005, but the momentum waned and gave way to the rise of hardline governments such as that of Mahmoud Ahmadinejad.

Rouhani, his successor, adopted a more pragmatic stance and championed a 2015 nuclear deal which earned him the ire of hardliners and has been shut out of high-profile politics since.

A protege of Akbar Hashemi Rafsanjani, a founding father of the Islamic Revolution, Rouhani was a longtime head of Iran's powerful Supreme National Security Council before his presidency.

Despite his fall from favor, Rouhani is among the few figures considered a potential successor of 86-year-old Supreme Leader Ali Khamenei, though his chances have likely ebbed in recent years amid opposition by conservatives.

Popular will

Rouhani also suggested Iran's courts were beholden to entrenched interests, undermining society.

“People want an independent judiciary," he added. "To strengthen domestic governance, this is the path.”

In Iran, the judiciary is closely aligned with theocratic principles, often prioritizing state ideology and well-connected figures over impartiality.

Courts enforce strict Islamic laws, regulate social behavior, mandate the Islamic veil and police public expression.

Rouhani said solidarity between Tehran and its people he says was won in a brief war this summer could be deepened if authorities pursued a measured foreign policy.

“If we do all this and avoid unnecessary foreign policy conflicts or enmities, we’ll have a strong, unified nation standing behind its leadership,” he added.

Since the June 24 ceasefire between Iran and Israel following 12 days of conflict, Tehran has increasingly embraced nationalist symbols, including imagery and figures from the pre-Islamic era, both in public and during state broadcasts.

The clash over Babak Zanjani, whom Iranian media outlets say Tehran has recruited back into business as new sanctions loom, appears to indicate policy divisions among key institutions as the country reels from a damaging war in June.

Judiciary spokesman Asghar Jahangir on Wednesday rejected a statement last month by the central bank's governor saying Zanjani had only repaid about $15 million of a total $1.9 billion in oil revenue he was convicted of embezzling.

“At a time when the country needs calm, the judiciary cautioned central bank governor Mohammadreza Farzin to avoid comments that could disturb public opinion,” Jahangir added. The matter “rests solely with the courts," he said.

Zanjani's original 2016 conviction on fraud and money laundering charges earned him a death sentence, which was commuted to a 20-year prison term last year by Iran's Supreme Leader Ali Khamenei. He was released in April.

A wily evader of Western sanctions on Iran, Zanjani was widely reviled by many Iranians struggling in straitened economic circumstances but prized by officialdom for his craft in securing oil exports, the main source of state revenue.

“The defendant served his sentence without a single day’s leave until the introduction of his assets, which were even greater in value than the debt,” Jahangir said. “Claims that these assets were not returned have no valid legal basis.”

From air fresheners to oil billions

Babak Zanjani, born in 1951, was the prime defendant in one of Iran’s biggest corruption cases. He once said that during his military service he was the driver of the central bank governor and used the connection to trade hard currency—an account the bank has denied.

What is clear is that he developed ties with the Revolutionary Guards’ Khatam al-Anbia engineering arm through Ahmad Vahid Dastjerdi, then head of the IRGC cooperative foundation.

Before that, Zanjani had worked in small businesses, from producing air fresheners on Kish Island to selling sheep hides abroad. His fortunes changed in 2007 when he began supplying parts for IRGC projects.

In 2010, Zanjani became a crucial oil broker under Oil Minister Rostam Ghasemi. He acquired Malaysia’s First Islamic Investment Bank to channel oil revenues and built a network of exchanges in the United Arab Emirates and Tajikistan.

A 2012 decree signed by three ministers and the central bank governor allowed 14.5 percent of oil revenues to flow into his bank—a key focus of his eventual indictment.

In the last year and a half of Mahmoud Ahmadinejad’s presidency, Zanjani not only took delivery of crude shipments offshore but also received that 14.5 percent of oil sales directly, leaving him with a large debt to the oil ministry.

At the same time, his Sorinet holding bought domestic carrier Qeshm Air, extending his empire into aviation.

Fall and rise

Only months before his downfall, Zanjani called himself an “economic Basij member,” a reference to a domestic enforcement militia loyal to the Islamic authorities.

In 2013, after disputes with then-President Hassan Rouhani's government, he was arrested. In March 2016 judiciary spokesman Gholamhossein Mohseni Eje’i announced that Zanjani and two associates had been convicted as so-called corruptors on earth and sentenced to death.

The Supreme Court upheld the ruling but allowed clemency if he returned the funds.

“As the assets were returned and the debt was settled, the Supreme Leader granted clemency, reducing his sentence to 20 years,” his lawyer said in April 2024. He was released in December 2024.

Reports this year suggested Zanjani had resumed business activities, including launching an airline called Dot-One with 32 aircraft, as well as ventures in ride-hailing, shipping and rail imports.

In May, an $800 million contract between the transport ministry and a company linked to him marked his apparent full rehabilitation, sparking controversy.

The first decisive break came with the 2019 assassination of General Qassem Soleimani, the commander who embodied Iran’s regional network of armed allies and whose elimination was once considered beyond the realm of possibility.

For years, Soleimani symbolized Iran’s ability to project influence across the Middle East. Western policymakers and Israeli officials acknowledged his central role in destabilizing the region, but the notion of his actually being killed was long dismissed as outlandish.

Memoirs and statements from American and Israeli officials confirm he was repeatedly in their crosshairs until January 2020, when President Donald Trump ordered a drone strike on his convoy in Baghdad.

The attack, initially conceived as a joint mission with Israel before it withdrew at the last moment, shattered the regime’s myth of its own invincibility.

Arms broken

Soleimani’s death not only removed Iran’s most visible strategist but also disrupted the command structure of its allied armed groups—damage that remains unrepaired.

If Soleimani’s killing marked the first taboo broken, the next was direct military action on Iranian soil.

For decades, the idea of such strikes lingered at the margins of debate. It was occasionally invoked as a deterrent but rarely treated as feasible.

That barrier has now fallen.

Israeli and American precision airstrikes and even temporary control of Iranian airspace have made operations inside Iran a lived reality.

The bombing of sites deep within the country shows that thresholds once thought inviolable have already been crossed.

Head in the sand

In today’s climate, where the targeting of senior officials has become normalized and attacks on Iranian territory draw limited diplomatic shock, Tehran continues to pursue demands increasingly out of step with global realities.

The Islamic Republic’s insistence on uranium enrichment and nuclear advances, after years of secrecy and deception, has lost its leverage.

None of the old deterrents carry weight: not threats to close strategic straits, not promises of “harsh revenge,” not missile parades or military drills.

What once projected strength now reads as ritual.

By denying the scale of these shifts and clinging to exhausted strategies, Iran’s leaders only accelerate the erosion of their position.

What was once taboo—strikes on leaders, attacks on Iranian territory—is now well-trod precedent, and Tehran’s refusal to confront these realities may only hasten its own undoing.