The European Union announced it is considering targeted and significant measures against Iran following the execution of Jamshid Sharmahd, a German citizen and US resident, who was hanged this week.
John Spencer, who spent 25 years as an infantry solider and officer in the US Army, and served as advisors to senior US army leaders, said Israel’s October 26 retaliation was both restrained yet powerful, and deliberately didn't reveal all of its capabilities.
“It was a very solid and impactful show of force that Israel can reach the Islamic regime in Iran, can penetrate all their air defenses to include the S-300 and can target and show restraint when it wants,” said Spencer.
Satellite images showed likely damage sustained to a base run by the Islamic Revolutionary Guard Corps (IRGC) that builds ballistic missiles and launches rockets as part of its own space program. Iran launched a military satellite in space from Shahroud Space Center in 2020.
Tehran has largely remained silent other than acknowledging Israeli attacks taking place in Fars, Ilam, Khuzestan and Tehran provinces, stressing that damages were limited.
Images from satellite firm Planet Labs also showed that in the four-hour attack overnight Saturday, a military base in Parchin near Tehran, where nuclear tests were allegedly conducted in the past, was damaged.
Parchin was marked by Iran as military, not nuclear. It was also one of the sites which had been banned from inspections by the UN’s nuclear team.
Spencer said Israel also damaged S300s which are used to protect vital targets, including Iran’s Supreme Leader Ayatollah Ali Khamanei.
“Israel can hit anything it wants in Iran that it chooses to,” said Spencer.
Israel military chief said on Tuesday that if Iran attacks, they will hit back with capabilities that we did not even use last time.
“If Iran makes the mistake of launching another missile barrage at Israel, we will once again know how to reach Iran, with capabilities that we did not even use this time, and strike very, very hard at both their capabilities and locations that we set aside for now," said Israeli Chief of the General Staff Herzi Halevi.
He said Israel also reserved capabilities that it chose not to demonstrate, but the question is why?
Why Israel held back capabilities
Spencer said while nothing is black and white, Israel’s power lies in its allies, namely the United States, that wanted to avoid a full-scale war.
Guarantees were made by the Americans in exchange, said Spencer, like the US recently issued new sanctions against Iran's oil sector, including the so-called oil ghost fleet, which carries oil products sanctioned by the US.
Israel also took neighboring Arab countries into its decision-making factor that urged the US and Israel to avoid Iranian oil and gas sites for fear of reprisal.
With the US elections on November 5, there were a lot of considerations to be made, he said.
Donald Trump’s former national security advisor Ambassador John Bolton posted to X on Tuesday that there was pressure from the Biden-Harris administration and the impending US elections that forced Israel to retaliate against Iran in what Bolton described as a limited way.
“The Tehran regime has gotten away with too much for too long. After November 5, Israel should strike Iran’s nuclear-weapons program,” Bolton wrote.
There are growing calls inside Israel’s government to do more with Iran. While deterrence was established, an Israeli government source told Iran International, that the weekend strikes did not go far enough to avenge a Hezbollah drone strike last week on the seaside residence of Prime Minister Netanyahu. Iran denied any involvement in that attack, but Israel pointed the finger at the Islamic Republic, which it views as Hezbollah’s boss.
Israel’s Channel 13 news, said the security cabinet discussed the topic for "long hours," reporting that the weekend's strikes were not intended to avenge the attack on the PM's home, launched by Iran's largest militia, Hezbollah, in Lebanon. It said, "another response is expected".
Even some people inside Iran, from the pro-Israel camp, posted to social media that they were disappointed in Israel’s targets were hoping for strikes on Iran’s political leadership.
Some Iranians had invested hope in Israel to help overthrow the Islamic Republic rule especially after Prime Minister Benjamin Netanyahu’s speech delivered to the Iranian people where he made a direct appeal to them.
“You deserve better,” said Netanyahu in a pre-recorded speech last month.
Brigadier General (res.) Amir Avivi told Iran International prior to Israel's counterstrike, that Israel will perform one of many strikes in the Islamic Republic.
Avivi, who is a close friend of Netanyahu and is consulted for his military expertise, said that Israel’s first strike in Iran is beginning and not a means to an end.
What will Iran do?
When asked if Iran would counterstrike, Spencer said if you take the Islamic Republic leadership at their word, then yes.
Pezeshkian sent a letter to the UN Secretary General, saying Iran “reserves its inherent right to legal and legitimate response to these criminal attacks at the appropriate time”.
Abbas Araghchi, Iran’s foreign minister, said on Tuesday that Iran will respond to Israel. "Responding to Israel’s attack is our right, but the Islamic Republic will decide on this response itself, and we won’t allow anyone to drag us into emotional reactions."
Araghchi also noted that Tehran knows which countries allowed Israel to use their airspace to attack Iran, but the US is the main culprit.
Speaking at the United Nations Monday, Iran’s UN envoy told the Security Council, that it reserved the right to strike back. Iran also accused the US of being complicit in Israel’s airstrikes and said it would bear the consequences.
The US envoy, issued a warning to Iran, saying that any further aggressive actions against Israel or US personnel in the region would result in severe consequences.
“Stop pouring gasoline on the fire of the regional conflict,” the American envoy said, addressing the Islamic Republic.
Urban warfare expert John Spencer stated that Israel’s recent action serves as a deterrent, signaling to Iran that Israel could respond even more forcefully if Iran chooses to retaliate, given that it refrained from targeting additional sites. He also noted Iran’s often unpredictable behavior, making it difficult to forecast the Islamic Republic’s response.
However, Spencer cautioned against underestimating Iran’s capabilities. He warned that with the unpredictability of war and Iran’s actions, any Iranian retaliation targeting Israeli civilians could quickly escalate the conflict.
Iran still has thousands of cruise and ballistic missiles, for example.
“Iran still has the capability to conduct long range strikes against Israel. If it ratcheted up targeting civilian areas it would be really problematic. Nobody wants to see that.”
This round of Israeli strikes, though effective in destroying military targets while showing restraint, achieved important goals for Israel but the next move Iran makes will determine what unfolds in the near future.
Qassem, who has served as Hezbollah’s deputy leader since 1991, was elected by the group’s Shura Council. At 71, Qassem is regarded as a foundational member of Hezbollah, with long-standing ties to Iran.
Unconfirmed reports indicate that Qassem was flown from Beirut to Tehran on October 5 aboard a plane belonging to Abbas Araghchi, the Iranian Foreign Minister, following the Israeli assassination of Hezbollah chief Hassan Nasrallah in Beirut. Iranian officials have not confirmed the reports, but if Qassem is based in Iran, Hezbollah’s leadership in Lebanon would then be managed remotely.
Israeli Defense Minister Yoav Gallant hinted at Qassem’s vulnerability, posting on X shortly after his appointment that “Temporary appointment. Not for long.” In Hebrew, he adds: “The countdown has begun.”
In its official Arabic account on X, the Israeli government said: "His tenure in this position may be the shortest in the history of this terrorist organization if he follows in the footsteps of his predecessors Hassan Nasrallah and Hashem Safieddine."
It added that "there is no solution in Lebanon except to dismantle this organization as a military force."
Iranian leaders publicly congratulated Qassem on his appointment. President Masoud Pezeshkian praised his “defense of Lebanon’s sovereignty and ideals of the resistance front,” while Iranian Parliament Speaker Mohammad Baqer Ghalibaf lauded Qassem’s role in supporting Hezbollah’s cause in Lebanon and the region.
Qassem appeared on camera on October 8 from an undisclosed location, days after Nasrallah’s death and amid reports that Hashem Safieddine, another potential Hezbollah leader, was targeted by Israel.
In his statement, Qassem referred to the Israel conflict as a “war about who cries first,” pledging Hezbollah’s continued resistance despite what he called “painful blows from Israel.”
Iranian ties and ideological alignment
Qassem’s ties to Iran have been central to his role in Hezbollah. An advocate of the Guardianship of the Jurist doctrine, he regards Iran as the backbone of Hezbollah’s resistance efforts in Lebanon.
He has emphasized that Hezbollah’s presence in the resistance movement depends on Iran’s strategic support amid international pressure.
Born in southern Lebanon’s Kfar Fila in 1953, Qassem has held various roles within Hezbollah and the broader resistance movement. He co-founded the Union of Muslim Students in Lebanon in the 1970s and later joined the Amal Movement, before shifting to Hezbollah after Iran’s 1979 Islamic Revolution. Qassem has also published more than 12 books on religious and political topics, including Hezbollah: The Story from Within, detailing Hezbollah’s ideological foundations.
He has also authored books on Iran's Supreme Leader Ali Khamenei and his predecessor Rouhollah Khomeini, who founded the Islamic Republic.
Education ties and sanctions
Qassem previously led Lebanon’s Islamic Religious Education Association and served as an advisor to Lebanon’s Al-Mustafa schools, which promote Shiite Islamic ideology and receive support from Iran’s Al-Mustafa International University. The US Treasury Department sanctioned Al-Mustafa International University in 2020, alleging its involvement in intelligence operations for the Islamic Revolutionary Guard Corps and recruitment for Iran’s Quds Force.
In 2018, the United States and its allies in the Terrorist Financing Targeting Center, including Saudi Arabia, Bahrain, and the UAE, sanctioned Qassem and froze his assets, accusing Hezbollah of destabilizing the region.
"The military budget has increased by almost 200 percent. We hope this meets our security needs and those of the country’s military,” President Masoud Pezeshkian's spokesperson Fatemeh Mohajerani said of the proposed budget on Tuesday.
The Iranian rial hovered near all-time lows around the time of the announcement. It had plumbed lower depths after archenemy Israel on Saturday launched its biggest ever attack on the Islamic Republic, prompting calls by officials to beef up defenses.
A new report from Iran’s Parliamentary Research Center reveals that at least 20 percent of the government’s oil revenue is lost in efforts to bypass US sanctions, confirming previous reports by Iran International on the scale of revenue losses in oil exports.
The Parliament Research Center’s report highlights that in the first four months of the current Iranian fiscal year, 23 percent of the government's planned 4-month budget went unrealized. Despite the government’s extensive, unscheduled borrowing from the National Development Fund (NDF), it is projected to still face a budget deficit of approximately 880 trillion rials (equivalent to $3 billion at this year's official exchange rate of 285,000 rials per dollar) by the end of the year.
Next year starting March 21, the proposed budget will reach $105 billion, calculated on 550,000 rials per one dollar. The deficit will be around 30%, bridged by a variety of ways, including borrowing from banks, issuing bonds and diverting oil revenues from the share of the sovereign national fund, as well as up to 40% higher taxes.
According to estimates from the Parliament Research Center, despite these measures the projected budget deficit for the upcoming year may reach approximately $5.8 billion.
Components of Next Year’s Budget Bill
In the 2025-2026 budget, 33 percent will rely on tax revenues, 18 percent on the sale of bonds and government assets, and 45 percent on oil and gas revenues as well as borrowing from the National Development Fund (NDF). Borrowing from the banks is not even mentioned in the draft bill as part of the deficit, but rather as revenue. This borrowing leads to printing money, since the banks are directly and indirectly state owned and have no money of their own to lend to the government.
The proposed 39 percent tax increase in next year’s budget bill comes at a time when the country is facing over 40 percent inflation, while the government plans to raise public employee salaries by only 20 percent, with similar increases set for labor wages.
On the other hand, the projected 85 percent increase in customs revenue will significantly raise the prices of imported goods, worsening the overall living conditions for the public.
The government also intends to increase bond issuance by 96 percent to cover 11.7 percent of the budget, or more than 10%, effectively borrowing further from the banking system, which will lead to higher liquidity and inflation.
Additionally, the government plans to obtain a substantial portion of the National Development Fund’s 48 percent share of oil export revenue in the form of loans. So far, the government has borrowed $100 billion from this fund—initially established as a nest egg for future generations—and is currently unable to repay this debt.
Oil Revenue Details
Budget revenue from domestic sales of oil and gas products in next year’s budget bill is projected to reach $16.5 billion, a 14 percent increase over this year. The government plans to raise gasoline prices next year, though the exact increase is not specified in the budget bill or in the report from the Parliament Research Center.
The last time the government imposed a significant gasoline price hike in 2019, widespread public protests erupted, followed by a severe crackdown by security and military forces, resulting in the deaths of 1,500 civilians.
The government also aims to export 16 billion cubic meters of gas next year, valued at $5.2 billion. The Parliament Research Center states that, due to a severe gas shortage, only 75 percent of this target is likely to be realized.
Additionally, for the coming year, the government forecasts total daily oil and gas condensate exports to reach 1.85 million barrels, which will be allocated among the government, the armed forces and their special projects, the National Development Fund, and the National Iranian Oil Company (NIOC).
Tanker tracking companies put the Iranian oil export volume in 9 months of 2024 at about 1.5 mb/d.
A notable figure in the distribution of oil export shares is that of the armed forces, which has quadrupled compared to the initial version of this year’s budget law. However, the report from the Parliament Research Center reveals that the government, without public announcement, has significantly increased the armed forces' share in the initial budget law of current year. Consequently, next year, the armed forces’ share of oil exports will increase by only 24 percent compared to this year.
A critical point in the Parliament Research Center's report is that the government has set the price of oil at $63 per barrel for next year's budget, but Research Center says it is unlikely to sell for more than $60. Given the current oil price of around $70 per barrel in international markets, it seems more than 20 percent of the government’s oil export revenue will be lost due to sanctions evasion and discounts to Chinese customers.
The report does not address the realization of oil revenues for the armed forces. However, Iran International recently reviewed three oil trading documents from "Thunder Sahara Company," affiliated with Iran's armed forces, showing that half of the export oil value managed by this shell company is lost in the process of circumventing sanctions.
The Parliament Research Center also states that the oil export shares allocated to the government, NDF, and NIOC amount to a total 1.25 mb/d. However, actual exports are likely to reach no more than 1.1 mb/d.
In a statement on Tuesday, the EU condemned in the strongest terms the execution of the German-Iranian national and expressed its full solidarity with Germany. Similar remarks were made by European Union Foreign Policy Chief Josep Borrell on his X account on Tuesday.
“The European Union reiterates its call on Iran to end the distressing practice of detaining foreign civilians and dual nationals with a view to making political gains,” read the statement by the EU.
Iran executed the 68-year-old dissident who was a software developer and California resident on Monday. He was abducted by Iranian agents during a visit to the United Arab Emirates in 2020 and forcibly taken to Iran. In February 2023, the Iranian judiciary sentenced him to death on charges of endangering national security.
On Tuesday, Germany recalled its ambassador to Iran and summoned the Iranian chargé d'affaires. Several German officials, including German Foreign Minister Annalena Baerbock and Chancellor Olaf Scholz, spoke out against the killing, a move that prompted Iran to react and defend the execution.
The ambassador left Iran on Wednesday morning, said a German foreign ministry spokesperson.
The spokesperson added that the execution of Sharmahd has put "extreme" strain on the relationship between Berlin and Tehran.
The Islamic Republic’s foreign ministry summoned German Ambassador Markus Potzel over what the ministry called Berlin’s meddling in Iran’s internal affairs.
Foreign Minister Abbas Araghchi responded to the announcement on X, saying, “How about 'an EU measure' to end the killing of more than 50k Palestinians in Gaza? How about 'an EU measure' to allow 1.5 million refugees in Lebanon to return to their homes? How about 'an EU measure' to support the families of those killed by Jamshid Sharmahd?”
“If not, Europe only stands for hypocrisy,” the foreign minister added.
Sharmahd was convicted of heading a pro-monarchist group named Tondar accused of a deadly bombing incident that occurred in 2008 at a religious center in Shiraz, killing 14 and injuring 215 more. The accusation, repeatedly denied by Sharmahd, was never substantiated by documented evidence. He was denied a fair trial and due process, as most other political prisoners, especially dual nationals.
“Iranian restrictions on consular access to our citizens, the denial of consular protection and fair trial are not acceptable and stand in direct violation of international law,” the EU noted in its statement.
The EU also slammed the high number of executions in Iran. "The European Union reaffirms its strong and unequivocal opposition to the use of death penalty at all times, in all places and in all circumstances, especially taking into account the alarming increase in executions recorded in Iran last year and this year."
Iran conducted the most executions of any country in the world after China last year, Amnesty said in a report in May, adding that nearly 75% of all executions worldwide in 2023 outside China were in Iran. The recent wave of executions brings the total number of hangings in Iran this year to more than 567, including 20 women, according to rights groups.
