How supply chains fuel transnational conflict in the Middle East

Transnational conflict in the Middle East is fuelled by both ‘legal’ and ‘illegal’ trade. Mapping these cross-border dynamics can help understand and address violent conflict.

Explainer Published 18 November 2024 Updated 22 January 2025 6 minute READ

Hayder Al-Shakeri

Research Fellow, Middle East and North Africa Programme

Dr Renad Mansour

Senior Research Fellow, Middle East and North Africa Programme; Project Director, Iraq Initiative

Conflicts in the Middle East are increasingly ‘transnational’, spreading beyond national borders and becoming intertwined with regional and global trade.

Governments and formal institutions collaborate with informal traders and armed groups to operate both legal and illegal supply chains – moving people, capital and goods along routes across Iran, Iraq, Türkiye, and the Levant.

One grouping associated with these regional dynamics is the Axis of Resistance, which views its role as opposing Israeli and US ‘imperialism’ in the Middle East.

The Axis connects Iran, Hezbollah in Lebanon, the Popular Mobilisation Forces (PMF) in Iraq, the Assad regime in Syria, Hamas in Gaza, and the Houthis in Yemen. Another example is the Kurdistan Workers’ Party (PKK) which pursues its nationalist armed struggle against the Turkish state across Iraq, Syria and Türkiye.

Groups like the Axis of Resistance…are part of the decision-making structures of states…including Lebanon, Syria, Iraq, Iran, and Yemen. 

Groups like the Axis of Resistance blur the line between licit and illicit activity, and state and non-state actors, because they operate in and influence both formal and informal government institutions. They are part of the decision-making structures of multiple states in the region, including Lebanon, Syria, Iraq, Iran, and Yemen.

This article examines how these groups operate and gain power from cross-border trade using three case studies: the supposedly ‘legal’ tomatoes supply chain, the ‘illegal’ narcotics supply chain, and the dynamics around two key Iraqi conflict ‘hubs’ – the towns of al-Qaem and Rutba.

The article also explains how the use of military strikes and sanctions has failed to reduce conflict or illegal trade and has instead disproportionately harmed local populations.

Understanding these supply chains offers a crucial insight into the true power dynamics that connect the Middle East.

The ‘legal’ trade of tomatoes

Iraq is a hub in a regional trade network, with a high volume of goods moving across its borders to countries around the region. Agricultural products are a significant part of this commerce, with Iran being a primary exporter of crops to Iraq.

Iraq’s political elite, some of whom are linked to armed groups allied with Iran, assert significant control over this sector – securing transportation routes, managing transit hubs, allocating agricultural contracts, and orchestrating financial transactions.

At times, the import of crops serves as cover for smuggling – of banned agricultural products, narcotics and weapons, into Iraq and across the Levant.

This is made possible through their control of senior security and civil service positions within the government.

Their influence shapes decisions regarding imports, taxation and regulatory practices – giving them significant influence over the lives of ordinary people. In Basra, as in other areas of southern Iraq, actors linked to armed groups allied with Iran control many of these processes.

At times, the import of crops serves as cover for smuggling – of banned agricultural products, narcotics and weapons, into Iraq and across the Levant. Sometimes these smuggled goods are traded for US dollars, which then circulate back to Iran or are sent to Syria and Lebanon. The result is a transnational agricultural sector which has become closely tied to armed actors.

The below map illustrates how Iraqi armed groups are central to the supply chain of tomatoes in the region.

Map of Iraq border crossings. Created by Obsalytics.

The tomato supply chain has serious consequences for Iraqi society: farmers are dispossessed of their livelihoods as cheaper Iranian tomatoes flood the market.

Agricultural lands are devastated by armed factions seeking to wipe out competition, and populations are exposed to health risks, including food poisoning cases due to unregulated produce. (Across Iraq, between 40 to 60 tons of products unfit for consumption, including tomatoes, are destroyed every month).

The tomato trade also has links to drug smuggling: in 2023, Saudi authorities seized 2 million Captagon pills hidden inside a tomato shipment on its border with Jordan.

The agricultural supply chain involves networks across Iran and Iraq which often bypass government oversight.

Iraq’s government has intermittently imposed import bans on certain items, including tomatoes, hoping to mitigate the risks associated with the influx of low-quality Iranian agricultural products. The most recent ban commenced in October 2023. However, such measures have historically proven ineffective; similar restrictions in 2020 failed to prevent trucks filled with tomatoes continuing to enter Iraq.

The issue is that the agricultural supply chain involves networks across Iran and Iraq which often bypass government oversight. Isolated actions, such as product bans within specific countries, are ineffective in this context.

To be effective, policy must engage all influential elites, whether they operate within or outside government frameworks, and establish transparent governance mechanisms. In this way, the agricultural sector can become more accountable to populations across the region.

The ‘illegal’ trade of narcotics

Over recent years, the narcotics trade has seen a significant surge in Iran, Syria, Lebanon and Iraq, and further afield to countries like Jordan and Saudi Arabia. These narcotics include Captagon and crystal meth, among others.

Iraqi armed groups aligned with Iran have leveraged their influence over key border crossings, such as Al-Qaem with Syria and Al-Shalamjah with Iran, to facilitate trafficking.

These groups are integral to broader regional alliances, and exploit their position to facilitate the drugs trade and profit from it.

This expanding trade has not only bolstered the power and influence of these armed groups. It has also significantly disrupted local communities in Iraq, Lebanon, and Syria and in particular those living near border towns, diverting young people to narcotics usage and trafficking.

These communities, often vulnerable and marginalized, are coerced into illegal activities, facing extortion from dominant militias.

The former interior minister of Iraq noted that over 50 per cent of Iraq’s youth population is now involved with narcotics in some capacity.

The Captagon smuggling issue is escalating into a significant transnational problem, particularly affecting Gulf countries. In Saudi Arabia for example, seizures of Captagon have surged dramatically, more than doubling from just under 30,000 kilograms in 2020 to over 70,000 kilograms in 2021.

The below map illustrates how the supply chain of narcotics moves across borders.

Map of raq Border Crossings with Iran–Syria. Created by Obsalytics.

Conflict hubs – the case of Iraq’s al-Qaem and Rutba border crossings

Specific geographic hubs or ‘nodes’ influence the development of crop and narcotics trades. One such area is Sinjar in Iraq.

Another is the al-Qaem border crossing between Iraq and Syria, a part of the Iraqi border strengthened in the aftermath of ISIS’s defeat in 2017.

In the years since, the competition over different trading routes in al-Qaem has led to the emergence of new forms of instability and violence.

In Rutba, an Iraqi town close to the Jordanian border, policy responses to secure the border pushed armed groups and traders to shift their operations to al-Qaem.

As a result, Rutba now faces reduced economic opportunities and problems related to limited access to goods, services and healthcare, including crucial gynaecological health services for women.

One woman from the town told the authors in a focus group discussion that ‘due to the night curfew and the long distance between Rutba and Ramadi, pregnant women suffer the most’. The lack of access has led to women facing severe health issues, including deaths.

In turn, the increase in trade via al-Qaem has increased the number of armed groups present in the town, contributing to the militarization of the area.

These groups tax the flow of goods and police the area to prevent and punish dissent, creating negative consequences for farmers and agriculture in the city. Armed actors are stationed around 500 agricultural projects owned by local farmers.

Finally, these new dynamics have empowered those networks across Iraq and allowed them to gain a foothold in neighbouring Syria, increasing cross-border movement of weapons and narcotics.

The map below illustrates those dynamics.

Map of Al-Qaem and Rutba areas. Created by Obsalytics.

In the case of Rutba an

d al-Qaem, the decision to secure border crossings simply exported armed violence from one town to another, while introducing new forms of indirect violence to the population.

Policy implications

This analysis sheds light on a crucial issue: the same actors and networks who control seemingly harmless trade, such as crops or medicine, also control illegal and dangerous supply chains such as narcotics and weapons. Narcotics, agricultural produce and medicine all follow the same trade routes, facilitated by collusion between formal and informal actors.

Effective policy will… require an understanding of the transnational dynamics of conflict.

These actors rely on connectivity to local and national governments, via politically sanctioned corruption, to gain access to state funds and maintain their authority over these supply chains and conflict hubs.

These actors are further empowered by their transnational connectivity. 
However, international policymaking in the Middle East typically targets local or national dimensions of a conflict, without considering or effectively navigating the broader regional or transnational dynamics.

These policy responses, such as sanctions, military strikes, and secured borders, are often ineffective. Conflict actors use their networked transnational spaces to overcome the disruption to their operations. Instead, these strategies often harm the public more than the elites they intend to target.

These new dynamics have empowered those networks across Iraq and allowed them to gain a foothold in neighbouring Syria.

Effective policy will therefore require an understanding of the transnational dynamics of conflict and how armed groups, working with government bureaucrats and private traders, have captured legal and illegal trade across the Middle East.

Accountability can only be achieved by engaging actors within these transnational networks: for example, by facilitating cross-border agreements and information sharing on drug trafficking between countries.

Policies should also provide rehabilitation resources and economic opportunities in the form of alternative and sustainable livelihoods, to prevent more communities in Iraq, Lebanon and Syria from engaging with the narcotics trade.

Fundamentally, policymakers must move beyond false binaries like formal and informal, legal and illegal, and state and non-state – and ground their policy responses in the transnational dynamics shaping conflict in the region.


This article was produced by Chatham House for the Cross-Border Conflict Evidence, Policy and Trends (XCEPT) research project, funded by UK International Development. The views expressed do not necessarily reflect the UK government’s official policies.