Iran runs dry as Islamic Republic funds ideology and foreign proxies

Iran’s water crisis is not only about scarcity or drought. It is also about where the Islamic Republic chooses to spend the country’s money, and what it leaves unfunded at home. In a system where political and ideological objectives consistently outweigh environmental sustainability and public welfare, even severe and widely recognized crises fail to trigger meaningful correction. In this sense, Iran’s water crisis is not a failure of resources, it is a consequence of deliberate choices. The impact of decades of misguided water engineering and policy decisions is already visible across Iran’s water systems. Major lakes and wetlands such as Urmia Lake have shrunk. Groundwater has been depleted across more than half of the country’s plains, land subsidence is accelerating, and per capita water availability has fallen to near or below 1,000 cubic meters.

At the same time, access to reliable drinking water has become increasingly uncertain. Water quality is declining because of inadequate wastewater treatment and aging infrastructure, while policy still emphasizes large-scale agricultural self-sufficiency despite mounting environmental constraints. It would be easy to assume that these failures could stem partially from financial limitations. But this is not a story of absolute constraint. Even under sanctions, Iran has continued to generate substantial revenues, particularly from oil exports, over the past decade. The water crisis is not necessarily due to a lack of resources, but how those resources are allocated. Based on Iran’s FY1404 (2025-2026) public budget, significant funding is still directed toward religious and ideological institutions, amounting to roughly $750 to $860 million annually, depending on exchange rates.

At the same time, Iran’s regional activities, including support for groups such as Hezbollah, Hamas, Palestinian Islamic Jihad, the Houthis, and allied militias, are widely estimated, based on publicly reported figures, to cost an additional $1.1 to $1.5 billion each year. These estimates reflect direct financial transfers and likely understate total support, which also includes substantial non-cash assistance such as weapons, equipment, and logistical backing.In total, nearly $1.8 to $2.4 billion per year is allocated to priorities that do little to address Iran’s most urgent domestic challenges. Even redirecting a portion of these resources toward water management and infrastructure could support large-scale, practical solutions. Over a five-year period, such a shift would mobilize roughly $10 billion, enough to move beyond short-term fixes and begin addressing some of the structural drivers of Iran’s water crisis. (Ed note: The two economic tables with explanation that follow is something to read.) (Read More)