Behind financial restrictions, technology embargoes and trade controls, Iran has developed supply networks whose scale exposes a fundamental contradiction of the global economy: a state can be excluded from certain markets without being fully isolated from the production chains that sustain them.

For several decades, Iran has operated under one of the world's most complex systems of economic restrictions. American sanctions, European restrictions, controls on sensitive technologies and financial surveillance mechanisms have progressively narrowed its access to international markets. The objective pursued by Washington and its partners has been to limit the resources available to Iran's military programmes, complicate the development of ballistic missiles and drones, and increase the cost of activities considered threatening to regional and international security.

This architecture rests on a central assumption: when a state loses access to the dominant financial, commercial and technological networks, its ability to acquire the equipment necessary to pursue its strategic ambitions should diminish.

The assumption is not without foundation. Sanctions can deprive industries of essential components, delay programmes, increase production costs and reduce fiscal flexibility. But their effectiveness depends on a condition rarely met in a globalised economy: the ability to control not only direct commercial relationships, but also the intermediaries, industrial transformations and transactions separating a manufacturer from the ultimate user.

An investigation published by Reuters on 29 October 2026, conducted with the analytical firm 240 Analytics, sheds particularly important light on this difficulty. It describes a network of more than 5,000 administrative entities associated with Iran's Ministry of Defence, some of which appear in banking documents, commercial registers and import declarations.

An examination of approximately 19,000 trade records reveals international procurement channels through which industrial, chemical, mechanical and technological goods were reportedly acquired despite existing restrictions. A single entity, identified as MOD 346428, is reported to have imported approximately $2.3 billion worth of merchandise between January 2025 and June 2026.

These findings require careful interpretation. They originate from a documentary investigation whose underlying data have not been made fully public. A recorded import does not automatically prove delivery to a military installation, just as the presence of a dual-use component does not establish its incorporation into a weapon.

Yet the significance of the investigation extends beyond the destination of individual shipments. It reveals the possibility of organising large-scale commercial activity through an institutionally fragmented structure that is difficult to reconstruct from outside.

The problem posed by Iran is therefore no longer simply one of sanctions evasion. It concerns the ability of a state to maintain economic continuity within an international system designed to restrict its access.

A Military Apparatus Behind Thousands of Designations

In its simplest form, an embargo establishes a distinction between authorities prohibiting certain transactions and companies required to refrain from conducting them. Sanctioned organisations are identified, their assets may be frozen, financial institutions must screen counterparties, and exporters are expected to verify the destination of their products.

This framework becomes considerably less effective when transactions pass through thousands of administrative structures, commercial intermediaries and settlement mechanisms that do not correspond to conventional banking relationships.

The network described by Reuters is distinguished precisely by this fragmentation.

Designations beginning with MOD, followed by numerical identifiers, appear across different categories of commercial and financial documents. They appear to identify administrative units or procurement centres associated with Iran's defence establishment, although their precise legal status cannot be established uniformly from the published information alone.

It would therefore be inaccurate to regard these 5,000 designations automatically as independent shell companies or as entities individually listed under international sanctions regimes. Their importance lies elsewhere: in the multiplication of administrative entry points through which goods can be ordered, recorded or transported.

This structure creates a fundamental challenge for compliance mechanisms.

A company may verify the identity of its immediate customer, screen applicable sanctions lists and obtain documentation concerning the declared destination of equipment. It does not necessarily possess the means to reconstruct every relationship among the organisations subsequently involved in the transaction.

Administrative fragmentation does not eliminate traces. It disperses them.

Identifying the ultimate beneficiary then requires connecting information that is not always compatible: national registries, customs documents, banking identifiers, shipping contracts, declarations of origin and ownership relationships. The difficulty arises not only from secrecy, but from the distribution of information across multiple jurisdictions and regulatory systems.

This is where sanctions regimes encounter their first structural limitation.

They operate primarily through identifiable entities and controllable transactions. The networks they seek to constrain can instead multiply intermediaries and redirect operations towards the least transparent segments of international commerce.

Global Trade Does Not Have a Single Border

Sanctions are often understood through a distinction between economies participating in a restrictive regime and those continuing to maintain relations with the targeted state.

In practice, that separation is far less clear.

Industrial equipment may be designed in one country, manufactured in another, distributed from a third and incorporated into a system assembled in a fourth. Components may be resold, stored, reconditioned or integrated into other products before reaching their final destination.

Industrial globalisation was built precisely upon this separation between the locations of design, production, financing, distribution and use.

What constitutes an economic advantage during periods of stability becomes a surveillance challenge when certain transactions are prohibited.

The Reuters investigation identifies merchandise whose declared origins include China, Russia and several European countries. It refers to aviation equipment, heavy vehicles, chemicals and industrial components.

These indications do not establish that manufacturers based in those countries directly supplied Iran's Ministry of Defence, or that they necessarily knew the final destination of the goods.

Customs origin, country of shipment and the manufacturer's nationality are three different pieces of information. Confusing them would risk attributing responsibility without sufficient evidence.

Nevertheless, the diversity of the reported goods and routes demonstrates why monitoring military procurement can no longer be limited to prohibiting direct exports to a particular territory.

Controls must follow products circulating within an economic system whose primary function remains to facilitate trade.

There is a contradiction here that sanctions authorities cannot entirely resolve: the more internationalised value chains become, the harder it is to connect merchandise to a single commercial relationship.

The effectiveness of controls consequently depends on the quality of available information, cooperation among administrations, the traceability of ultimate beneficiaries and the ability of companies to detect irregularities.

These capabilities remain profoundly uneven across countries, industries and intermediaries.

Dual-Use Technologies and the Permanent Ambiguity of Industry

The issue becomes particularly sensitive when it concerns dual-use technologies.

Many forms of equipment essential to modern industry can also contribute to the production of military systems. Precision machine tools, certain electronic components, composite materials, navigation equipment, sensors and various chemical substances have legitimate civilian applications while also possessing strategic significance.

This duality is not marginal. It is one of the defining characteristics of contemporary industry.

Military drones and civilian aircraft may share certain categories of components. Materials used in commercial aviation may possess properties relevant to missile manufacturing. Industrial control systems required by civilian factories may also be employed in facilities producing defence equipment.

Export-control regimes attempt to address this challenge by classifying sensitive goods according to their technical characteristics, performance and destinations.

But no classification system can eliminate uncertainty regarding their ultimate use.

A product authorised for one transaction may subsequently change ownership. Equipment initially intended for civilian activity may be reassigned. Components that appear relatively insignificant individually can acquire strategic importance when assembled into a more complex system.

The challenge is therefore not simply to determine whether a product appears on a restricted-goods list. It also involves understanding the industrial environment in which that product will eventually be used.

This distinction is essential when interpreting the investigation into Iranian procurement.

The presence of chemicals, aviation equipment or mechanical components in the examined records does not, by itself, establish their actual contribution to ballistic missile programmes or drone manufacturing. Some categories of merchandise may nevertheless possess sufficient military relevance to warrant further investigation.

American authorities have previously documented procurement networks involving composite materials, navigation components and other equipment potentially supporting Iranian military programmes.

The underlying problem is therefore not new. What changes with the Reuters investigation is the administrative and commercial scale at which such procurement appears capable of being organised.

The economics of sanctions thus confront an industrial reality that resists simple distinctions: the boundary between civilian production and military capability does not always correspond to a boundary between separate markets.

It may run through the same factories, technologies and distribution networks.

Parallel Finance as an Infrastructure of Resilience

One of the most important dimensions of the investigation concerns financial mechanisms.

International sanctions do not merely seek to prevent the export of particular goods. They also aim to restrict the ability of targeted organisations to make payments, receive financing and access the banking services required for international commerce.

Restrictions on access to certain financial institutions, prohibitions on transactions involving designated persons and the monitoring of foreign-currency flows are essential instruments of this strategy.

Their effectiveness nevertheless depends on an assumption: international commercial transactions must, at some stage, pass through institutions or jurisdictions capable of identifying and blocking them.

Parallel financial networks seek precisely to reduce that dependence.

In June 2024, the US Treasury had already described a network of structures used by Iran's Ministry of Defence and the Islamic Revolutionary Guard Corps to transfer or mobilise commercial revenues through intermediary companies. American authorities identified mechanisms through which proceeds, including oil revenues, could be redirected towards military activities.

The general principle underlying such arrangements is the separation of a commercial transaction from its apparent financial settlement.

Goods may be purchased by one organisation while payment is offset through other financial relationships. Receivables and liabilities can be reconciled among intermediaries without every operation generating an identifiable international bank transfer between the ultimate buyer and the original supplier.

The Reuters investigation reports that a very high proportion of the shipments examined did not involve a declared cross-border foreign-currency transfer in the available records.

This observation does not demonstrate that the goods were obtained without payment or that no financial settlement occurred. Rather, it suggests that the available commercial information does not necessarily reveal the economic channels through which payment was arranged.

The distinction is decisive.

Banking controls can block a transaction when they identify a prohibited counterparty. They become considerably less effective when the relationship between the ultimate purchaser, the economic debtor and the apparent payer is fragmented.

The sanction remains legally valid, but its implementation depends on visibility that the financial architecture no longer guarantees.

Iran is not the only example of this development. Restrictions imposed on Russia have also encouraged efforts to establish alternative settlement channels, different invoicing currencies and banking relationships less exposed to Western jurisdictions.

It would nevertheless be excessive to conclude that a fully autonomous parallel financial system has emerged.

Offsetting networks continue to face exchange-rate risks, trade imbalances, liquidity requirements, transaction costs and distrust among counterparties. Their development does not eliminate dependence on the international economy; it changes the routes through which that dependence operates.

The real question is therefore not whether Iran can dispense with the global financial system, but how far it can reorganise its access to that system without consistently using its most closely monitored channels.

Sanctions Can Fail to Block Without Ceasing to Constrain

The discovery of an extensive procurement network might encourage an attractive conclusion: sanctions no longer work.

Such an interpretation would be inadequate.

The existence of imported goods despite restrictions does not, by itself, measure the effectiveness of an embargo. Establishing that effectiveness would require comparing actual procurement volumes with industrial requirements, identifying equipment that could not be obtained and measuring the additional costs imposed on the organisations concerned.

A network capable of delivering components may operate at substantially higher costs than a conventional supply chain.

Intermediaries must be compensated. Delivery times may increase. Legal risks become greater. The number of available suppliers may decline, while substitute equipment may perform less effectively.

An industry can therefore continue producing while experiencing a substantial deterioration in efficiency.

It is also necessary to distinguish among the objectives pursued by sanctions.

If the objective is to halt all imports into a state, continuing trade flows represent a failure relative to that ambition. If the objective is to slow a military programme, increase its cost or reduce its capabilities, the existence of residual procurement does not establish that restrictions are ineffective.

Sanctions are rarely switches that can simply be turned on or off. They operate more like cumulative constraints whose effects depend on their duration, intensity and the targeted economy's capacity to adapt.

This distinction helps explain why heavily sanctioned states can retain certain strategic capabilities while suffering considerable economic losses.

It also clarifies an apparent paradox: a sanctions regime may be powerful enough to transform an economy's organisation without being sufficiently comprehensive to prevent every acquisition it seeks to prohibit.

In Iran's case, the multiplication of intermediaries and administrative structures can therefore be interpreted in two complementary ways.

It demonstrates a capacity for institutional adaptation, but also reveals the efforts required to maintain procurement that would probably be simpler, cheaper and faster without restrictions.

Resilience is not the absence of damage.

Economic Pressure Creates Its Own Institutions

Sanctions are generally examined through their immediate effects: declining exports, financial restrictions, import difficulties, inflation or reduced investment.

Their institutional consequences deserve comparable attention.

When a state remains subject to restrictions over a prolonged period, the organisations responsible for maintaining trade do not necessarily confine themselves to temporary improvisation. They may progressively develop expertise, commercial relationships, administrative structures and financing mechanisms adapted to the restrictive environment.

An initially external constraint ultimately changes the internal organisation of the economy.

Functions previously performed by ordinary importers may be transferred to specialised structures. Financing arrangements become more complex. Relationships among administrations, state-owned enterprises, private actors and military organisations may deepen.

The sanctioned economy consequently develops a form of specialisation in managing restricted access to international markets.

This evolution has ambiguous consequences.

It can strengthen the ability of certain institutions to maintain activities considered strategically important. But it can also increase opacity, encourage privileged intermediary positions, concentrate commercial opportunities among actors with preferential access and distance parts of the economy from ordinary competitive mechanisms.

Evasion then becomes more than a technical response. It can evolve into a durable mode of economic organisation.

Iran provides a particularly revealing example because of the duration of the restrictions it faces and the central role of security institutions in certain strategic sectors.

The multiplication of entities identified by Reuters must be understood within this longer historical perspective.

They are not necessarily thousands of companies created simultaneously in response to a new round of sanctions. The published data do not permit a complete reconstruction of their institutional histories.

Their appearance in commercial channels nevertheless suggests that a considerable administrative infrastructure can be mobilised to organise defence-related procurement.

An embargo therefore does not merely reduce trade. It may also contribute indirectly to the emergence of institutions designed to absorb its effects.

The Russian Comparison: Adaptation on a Different Scale

Russia differs substantially from Iran. Its economic weight, energy resources, industrial inheritance and initial integration into global markets provide it with distinctive capacities for adaptation.

Nevertheless, the sanctions imposed following the full-scale invasion of Ukraine in 2022 have revealed several comparable mechanisms.

Western authorities progressively tightened restrictions on electronic components, machine tools, industrial equipment and technologies capable of supporting Russian military production.

At the same time, trade through third countries and difficulties in verifying ultimate users became increasingly important in export-control policy.

This development forced governments to move beyond an approach based exclusively on direct commercial relationships.

It was no longer sufficient to prohibit certain sales to Russia. Authorities also needed to monitor re-exports, changes in trading routes, intermediaries and companies potentially facilitating the indirect acquisition of sensitive products.

The Russian experience demonstrates that sanctions become more complicated when the countries imposing them do not control every territory through which goods pass.

It also shows that domestic industrial capabilities, existing inventories, technological substitution and relationships with external partners strongly influence outcomes.

Iran and Russia should therefore not be treated as identical cases.

Comparing them instead reveals a common transformation: sanctions policy is progressively extending from the control of direct transactions towards the surveillance of the economic networks that make those transactions possible.

This expansion considerably increases the need for intelligence, international cooperation and data processing.

It also multiplies tensions with third countries, whose companies may become exposed to extraterritorial restrictions or secondary-sanctions risks.

North Korea and the Limits of Isolation

North Korea represents another important case, although its economy and external relationships differ profoundly.

Subject to numerous international restrictions, it has developed procurement and financing mechanisms that have repeatedly attracted the attention of sanctions-monitoring bodies.

Intermediary networks, concealed commercial activities and difficulties in maritime enforcement illustrate the limitations of an international system lacking a single authority capable of monitoring all trade.

The comparison nevertheless has an important limitation.

Sanctions against North Korea have long rested on a series of United Nations Security Council resolutions, whereas restrictions targeting Iran combine American, European and multilateral instruments with different legal foundations and scopes.

The obligations imposed on states and the enforcement mechanisms available are therefore not uniform.

Yet all three experiences reveal a common difficulty: economic coercion must operate in a world where states retain divergent interests, administrative capacities are unequal and companies do not possess identical information about their trading partners.

A sanction can be legally precise without being universally enforceable.

Its effectiveness depends not only on how it is formulated, but also on the cooperation of actors who do not necessarily share the political objectives of those imposing it.

The Power of the Dollar and Its Operational Limits

The dollar's centrality in international trade and the role of American financial institutions constitute major sources of economic power for Washington.

Access to US financial markets, dollar-clearing services and institutions exposed to American regulation represents a considerable advantage for international companies.

The threat of losing that access can exert a deterrent effect far beyond US territory.

This is one of the foundations of American financial sanctions.

But that power does not mean Washington possesses complete visibility over every commercial settlement.

Transactions conducted outside banking channels directly exposed to the United States, offsetting arrangements among intermediaries and the use of jurisdictions where cooperation is limited complicate surveillance.

The development of these practices does not necessarily mean the dollar is losing its dominant role.

A currency can retain its centrality in reserves, financial markets and international invoicing while being used less frequently in certain transactions for political or regulatory reasons.

The distinction is essential.

The mechanisms described in the Iranian case do not demonstrate the collapse of the dollar-centred monetary order. They show that actors facing restrictions may seek to reduce their exposure to that order's most sensitive control points.

Financial power remains considerable, but it is not absolute.

The more restrictions are employed, the stronger the incentive for targeted actors to find ways of preserving transactions without systematically relying on dominant infrastructures.

Such adaptation does not guarantee that alternatives will succeed. It nevertheless contributes to changing commercial and financial behaviour.

Third Countries at the Centre of a New Geography of Control

One of the most important consequences of this evolution concerns countries that neither impose the sanctions nor constitute their direct targets.

Within a fragmented global economy, these states may become locations for transit, industrial transformation, financing or re-export.

Their involvement does not necessarily mean they politically support the activities of the sanctioned state.

A company may participate in a supply chain without knowing all its ramifications. A jurisdiction may possess limited enforcement capabilities. Goods may circulate through legitimate commercial transactions before being resold to users who were not identified when the original transaction took place.

There are also cases in which intermediaries knowingly participate in prohibited operations.

These situations must be distinguished.

The challenge for sanctions authorities is to identify deliberate misconduct without transforming every indirect commercial relationship into a presumption of complicity.

This requirement becomes particularly important when restrictions concern common industrial goods or widely distributed components.

Companies may be compelled to strengthen compliance procedures, examine ultimate beneficiaries more closely and terminate certain commercial relationships when the risks become excessive.

The costs of enforcement then spread beyond sanctioned states.

They affect manufacturers, transport companies, banks, insurers and distributors required to manage growing legal uncertainty.

Economic coercion consequently influences the broader organisation of global trade, including transactions that are not themselves prohibited.

Surveillance Enters a New Phase

The Reuters investigation also highlights the growing importance of data analysis in sanctions enforcement.

Reconstructing a network of several thousand administrative designations from commercial and financial documents requires methods extending beyond the individual examination of transactions.

Identifiers must be connected, relationships among entities recognised, trade declarations compared and inconsistencies across documents investigated.

Network analysis, probabilistic record matching and anomaly detection can help identify structures that would remain difficult to observe separately.

Artificial intelligence can also facilitate the processing of large volumes of heterogeneous documents, particularly when they involve multiple languages, different administrative conventions or varying designations.

But these tools do not eliminate problems of data quality.

A match between two names does not prove that their ultimate beneficiaries are identical. A commercial anomaly does not establish an offence. A statistical relationship among several entities does not automatically demonstrate operational coordination.

The risk would be to replace insufficient information with an appearance of algorithmic certainty.

Effective sanctions surveillance therefore requires a combination of technical capabilities, human intelligence, industrial expertise and legal procedures.

It also depends on cooperation among customs authorities, financial institutions, export-control agencies and judicial bodies.

The future of economic enforcement will probably depend less on the continuous expansion of prohibited-entity lists than on the ability to understand relationships among those entities, their intermediaries and the goods they seek to acquire.

This evolution is already visible in American and European control mechanisms.

It is likely to intensify as supply chains become more complex and strategic technologies spread across a growing number of industrial sectors.

A New Economy of Coercion

The use of sanctions as an instrument of foreign policy forms part of a broader transformation in international power relations.

For a long time, the capacity to exert economic pressure rested primarily on controlling resources, markets or financial flows.

These instruments remain decisive. But their effectiveness increasingly depends on the structure of the networks in which they operate.

Controlling a market does not necessarily mean controlling every product originating from it. Restricting access to a financial infrastructure does not guarantee that a transaction cannot be settled through other means. Prohibiting the direct export of a technology does not always prevent its circulation after several commercial operations.

Economic power can therefore no longer be measured solely by the ability to close access.

It also depends on the capacity to monitor alternative routes, influence intermediaries and maintain sufficiently broad international cooperation to reduce opportunities for substitution.

This transformation produces a permanent competition between control mechanisms and adaptive capabilities.

States imposing sanctions strengthen surveillance, extend certain restrictions to intermediaries and seek to improve the traceability of sensitive technologies.

Targeted actors reorganise procurement, diversify commercial relationships and develop financial mechanisms intended to reduce their exposure.

Each adaptation may trigger a new restriction, which in turn creates fresh incentives to alter commercial channels.

The outcome is not necessarily the disappearance of trade.

It may instead be its displacement into architectures that are more complex, more expensive and less transparent.

This phenomenon constitutes one of the fundamental contradictions of contemporary economic coercion: mechanisms designed to control particular activities may contribute to pushing them towards segments of the international system where monitoring becomes more difficult.

That does not make sanctions useless. It requires their effectiveness to be measured through actual outcomes rather than the mere existence of prohibitions.

What the Iranian Network Really Reveals

The network described by Reuters does not establish that Iran has neutralised all Western sanctions. Nor does it demonstrate that Iranian military programmes enjoy unrestricted access to every technology they require.

The available data do not permit a precise measurement of imports prevented, additional costs incurred or industrial capabilities lost because of the restrictions.

They nevertheless reveal an essential fact: access to industrial resources can be organised through administrative and commercial structures considerably more extensive than the entities directly identified under sanctions regimes.

The Iranian case thus exposes a profound asymmetry.

Sanctions authorities seek to establish legal boundaries around transactions, technologies and organisations. Economic networks, meanwhile, operate through successive relationships that do not necessarily correspond to those boundaries.

The challenge is not simply to identify a prohibited company. It is to reconstruct an entire chain of responsibility and beneficial ownership within a global system designed to facilitate the movement of goods.

This asymmetry becomes particularly significant when the products concerned are manufactured at scale, have multiple applications and cross several jurisdictions.

It explains why regulatory power, however considerable, does not automatically translate into complete control over material flows.

Iran is not an exception standing outside globalisation. Its procurement system instead reveals some of globalisation's fundamental characteristics: the dispersion of economic functions, the multiplication of intermediaries and the difficulty of connecting each product to its ultimate user.

The global economy was organised to make trade faster, more specialised and more extensive. Sanctions seek to reintroduce selective boundaries into that architecture.

Yet those boundaries are never as clear as the legal texts defining them.

The discovery of a network of several thousand entities associated with Iran's defence establishment therefore marks neither the end of sanctions nor proof of their futility. It requires recognition that their effectiveness can no longer be assessed solely through the prohibitions enacted and the organisations placed on restrictive lists.

It must be evaluated at the level of the industrial, financial and commercial systems that actually determine access to resources.

That is where the balance of power is gradually shifting.

In a world where technologies circulate through fragmented value chains, the ability to prohibit remains an expression of power. But the ability to understand, trace and control the networks that circumvent those prohibitions is becoming equally decisive.

Sanctions can close doors. They do not erase the routes connecting economies.

And it is increasingly along those routes, often invisible from official borders, that the confrontation between economic power and strategic resilience is taking place.