While the axis has adapted to external shocks, its populations have suffered. The fall of the Assad regime illustrates that the most significant pressure on Iran and its allies comes from the public.
The effects of axis shape-shifting on the population
While Iran and its networks have historically showed resilience to economic, military and political setbacks, people living in the countries in which they operate have suffered. Sanctions and other external policy interventions damaged already struggling national economies and their ability to provide a basic standard of living for citizens, while the transnational changes adopted by axis members to overcome shocks to their ecosystem focused primarily on the survivability of axis elites. Poor governance led to massive protests across the countries where axis members sought public authority, including in Iran (in both 2009 and 2023), Syria (2011), Iraq (2019) and Lebanon (also 2019). As the fall of the Assad regime in 2024 shows, the biggest threat to the axis and its constituent groups is disillusionment among their own social base in each country, who suffered the greatest consequences from the financial flows and energy trading mechanisms detailed in the previous chapter.
For instance, illicit financial flows from Lebanon to Syria, in response to international sanctions, reportedly affected the Lebanese economy and the value of the Lebanese pound. In 2022, the Lebanese central bank reported that US dollar smuggling, primarily to Syria, was a major factor in devaluing its currency. This increased demand for US dollars in Lebanon caused the exchange rate to ‘skyrocket’. This severe devaluation of the Lebanese currency, alongside other factors, prompted a sharp rise in the cost of living in Lebanon, including a staggering 483 per cent year-on-year increase in food prices from January 2021 to January 2022.
The Iraqi public also bore the brunt of the axis’s coping economy. Domestic inflation rates soared as the PMF sent large quantities of US dollars to its allies across the region and the US imposed stricter restrictions on banks involved in this trade. As in Lebanon, the demand for US dollars drove up the exchange rate with the Iraqi dinar. This disparity in the rate reportedly led to a significant increase in the cost of many imported goods, including food and medicines, severely impacting the daily lives of Iraqis. An Iraqi merchant lamented: ‘Since Iraq imports most of its consumable goods, all the prices keep increasing while our salaries remain the same. We cannot do anything about it.’ Between 2020 and 2024, the price of goods and services in Iraq rose by 18 per cent, with meat prices soaring by 35.6 per cent and healthcare services increasing by 25.2 per cent.
Axis groups and other Iraqi political elites were performing the functions of the state, such as regulating and taxing businesses, in place of the central government in Baghdad.
The axis’s energy trading also impacted the public and their standard of living. In 2021, former Lebanese caretaker energy minister Raymond Ghajar noted that much of Lebanon’s subsidized fuel ended up in Syria, which was one of the key reasons for the termination of subsidies. In October 2020, a gallon of (subsidized) gasoline cost 25,200 Lebanese pounds. By May 2024, the price had surged to 1.66 million Lebanese pounds per gallon.
How axis groups build and maintain social power
Iran and axis members had to reclaim and sustain domestic authority not merely through coercion, but also by wielding ideological and economic forms of social power. They harnessed ideological tenets ranging from ethno-nationalism to anti-imperialism to quell dissent. Economically, they leveraged their influence over the state to bolster their own communities by serving as an alternative. In absence of functioning state, focus groups held in Lebanon and Iraq revealed that Iran-aligned groups performed functions usually carried out by the government to recover some legitimacy among their own support base. Preserving domestic power became as a crucial element of the axis’s ability to adapt to external shocks.
One example is Hezbollah’s use of an affiliated association, al-Qard al-Hassan, as an alternative banking system. Licensed by Lebanon’s interior ministry as a charitable organization rather than as a commercial bank, al-Qard al-Hassan enabled Hezbollah to provide interest-free microloans to Lebanon’s struggling population amid the collapse of the country’s formal banking sector. Operating outside the traditional Lebanese banking system, de facto banks like al-Qard al-Hassan became vital instruments for Hezbollah to consolidate its support. Despite US sanctions, which alleged these entities facilitated Hezbollah’s financial activities, focus groups conducted by the authors in Lebanon revealed that the primary use of this system was in helping to restore Hezbollah’s economic authority among Lebanon’s Shia community:
Another respondent agreed, saying:
A number of focus group respondents remained distrustful of lenders owing to the financial collapse, and felt that this kind of alternative system was too risky. But others argued al-Qard al-Hassan was a better option than either government-backed institutions or private banks. One respondent said:
Beyond the makeshift banking systems used by Hezbollah, discussions in the Beirut focus group also revealed that the removal of government subsidies on medications had made items less accessible to those most in need, but that Hezbollah had offered such provisions to its social base. Highlighting the disparities in service accessibility between communities, one respondent stated that: ‘If someone from Hezbollah or Amal needs to go to the hospital, they do not have to pay anything. Their movement will take care of all expenses.’ This sentiment resonated throughout Lebanon, as the country’s power-sharing political settlement led citizens to turn to their community’s political parties, rather than the government, whenever they needed something done.
More generally, most respondents confirmed that they went to political parties – including Hezbollah – rather than government institutions when faced with a problem requiring state input or regulation. When asked this question, one respondent said:
Similar sentiments were echoed by respondents from focus groups conducted in Anbar and Basra in Iraq, where various PMF-linked groups had sought to assert public authority. In the border town of al-Qaem in Anbar, where members of the Iran-led network had established control over the trade of cash, energy, and other goods across the border to Syria and the Levant, focus group discussions revealed that the public was adversely affected by these economic supply chains. Yet the public turned to the same groups and to other elites, rather than the formal government, for economic coping mechanisms or to resolve bureaucratic issues. Seeking economic opportunity, one respondent told the group: ‘Once a friend wanted to rent a store, he had to go to a political party in order to get approval because they control that border town.’
In this way, the axis groups and other Iraqi political elites were performing the functions of the state, such as regulating and taxing businesses, in place of the central government in Baghdad. Another respondent said: ‘In the centre, we might go to the state but in border towns, it is either political parties or tribes.’ Respondents living in such so-called peripheries still had their own centres of power, distinct from the central government.
Similar responses were given in the oil-rich province of Basra, in southern Iraq. One respondent stated: ‘In the government, you have to go and wait and get through bureaucracy, and maybe bribe some people, and sometimes we don’t get what we want. So, we have to go to stronger parties, such as political elite or tribal leaders.’ In southern Iraq, these tribal leaders are often linked to the PMF.
Holding axis groups to account
In conclusion, the networks linked to the axis of resistance, while controlling territory, also had to establish authority over the populations living in the areas under their control. These people suffered from both international interventions like sanctions and the economic practices of the network’s members. Axis groups endeavoured to manage internal pressures from their social bases, employing a blend of coercion, ideology and economic strategies to fill the void left by a weak formal government in their respective countries.
However, ordinary people demanded greater accountability, leading to protests and a decline in the axis’s legitimacy at times. For example, many Shia Iraqis had been protesting against Iranian influence since at least 2015, while Shia Lebanese echoed ‘All of them means all of them’ during the 2019 uprisings. Beyond protests, civil society consistently sought to hold Iran and its affiliated groups accountable for their governance. This call for better governance was also transnational, uniting populations in Iraq and Lebanon, where civil society shared a solidarity against Iran and axis groups, which then faced challenges to their legitimacy. Such grassroots pressure, if strategically harnessed, could serve as a crucial lever to compel better behaviour from axis groups in future, in contrast to the top-down measures employed by Western policymakers to date.
