Northern Anxieties

Welcome back to the MBN Iran Briefing.

Today we travel from a national banking disaster to the Israel-friendly northern neighbor that increasingly worries Tehran to Latin America to see how the Islamic Republic brings free online courses – in Spanish – via its “Instituto Salam.” We’ll find out why a conference of 500 rabbis was suddenly canceled, how a leaked video has scandalized Iranians, and pop by an art gallery in Tehran.

Send tips, suggestions, or questions to me at ailves@mbn-news.com. If you were forwarded the newsletter, please subscribe. Read me in Arabic here.

TOP OF THE NEWS

Bad Bank, Big Trouble

The biggest tremor this week in Iran — no mean feat for one of the most earthquake-prone countries in the world that records hundreds of tremors a year — is the dissolution of Ayandeh Bank. 

After years of chronic mismanagement, opaque ownership and mounting losses at one of Iran’s largest private institutions, all its assets and depositors have been transferred to Bank Melli, Iran’s largest state-owned commercial bank. Parliament strongly backed the decision in a statement, calling it a “courageous and necessary step towards reforming the country’s banking system.”

Others weren’t as kind. The press homed in on the Ansari family’s potentially illegal missteps with forensic detail. One analysis, under the headline “Behind the scenes of Ayandeh Bank’s 550 trillion loss | How did the Ansari family empire squander people’s capital with shell companies?,” shows how seven brothers and one sister allegedly funnelled client money into family projects and tried to cover up their tracks. The dissolution, Rouydad24 added, “is a transfer of the crisis instead of a solution.”

The 550 trillion mentioned? That’s in tomans, or over $5 billion.

A bank failure is almost without precedent in Iran, and is a black eye for authorities. It could lead to a crisis of public confidence and trigger wider instability in the country’s financial system.. 

Oh, and Ayandeh (آینده) means “future” in Persian.

Baku Blues 

Some 140 miles from the Iranian border, some 500 rabbis were due to fly in next week for a gathering in the center of a Muslim-majority city, mingling with international guests, Israeli officials, and local dignitaries.

The conference in Baku, the capital of Azerbaijan, was suddenly cancelled on Monday over concerns about a possible Iranian-sponsored attack. In the words of an Israeli security expert quoted in an Israeli news site, “the very existence of a rabbinical conference arouses enormous anger in Iran; for the Iranian Revolutionary Guards, it is a tempting and symbolic target, especially in light of their failure in the war against Israel.” Iran has an ethnic Azeri proxy called the Husseiniyun it has used in the past to carry out such attacks.

What’s going on? There is a fair bit to unpack.

Start with the map. Iran’s seven immediate land neighbors are a hit parade (think Afghanistan, Iraq, and Pakistan). But Azerbaijan is always a top concern for Tehran.

Azeris are the largest ethnic group after Persians, coming in at somewhere between 16 and 35% of Iran’s population (all figures are estimates as Iran doesn’t ask about ethnicity in its census). Even the lower figure means more ethnic Azeris live in Iran than in the entire country of Azerbaijan with its population of a mere 10 million. The border between the countries artificially splits ethnic Azeris between an independent Azeri state to the north and a significant Azeri minority in Iran to the south, and Tehran and Baku have long eyed each other with suspicion for that reason alone.  

Then you have shifting dynamics in the Caucasus. Baku’s moving closer to Turkey, which makes Tehran uneasy. Baku’s recent push toward reconciliation with Armenia, following engagement by US President Donald Trump, opens the way for new regional transport routes backed by both Ankara and Washington. Iran fears these changes could cut it off from the Caucasus, cement Western and Turkish influence on its doorstep, and weaken its longstanding strategic position.

But the biggest trigger for Iran, pun not necessarily intended, is the news that Azerbaijan has emerged as a leading candidate to join the U.S.-backed international mission to stabilize Gaza, with proposed roles ranging from peacekeeping to reconstruction support. Its involvement is still being negotiated with Washington and other partners.

An Azeri role in Gaza “would strengthen Israel through its long-standing partnership and shared strategic interests with regard to Iran,” Joseph Epstein, an expert on Iran’s relations with the Caucasus and Central Asia and director of the Turan Research Center, told the Jerusalem Post.

Israel and Azerbaijan share a common threat in Iran and their cooperation goes back 30 years, Epstein added in a call with me Tuesday. Azerbaijan supplies most of Israel’s oil.“But the cooperation goes much farther,” he added. “Azerbaijan has long acted as Israel’s advocate in the Muslim world. Israel for its part has lobbied for Azerbaijani interests in Washington.”

Tehran is especially livid about the Gaza move. On Monday, state-affiliated Mehr News published an article entitled “The Republic of Azerbaijan and the Conundrum of Military Presence in Gaza,” concluding that Azerbaijan’s participation in Gaza “carries risks” for Iran, the Arab states, Israel, and Turkey. The article warns that Baku’s involvement could provoke negative reactions across the region and further escalate tensions.

Stay tuned. The Iran-Azerbaijan story isn’t going away. It’s only going to get more interesting.

NEWS BRIEFS

Vote for Khamenei? In an open letter from Tehran’s notorious Evin Prison published yesterday, well-known dissident Abolfazl Ghadyani publicly challenged Supreme Leader Ali Khamenei to face a nationwide referendum on the Iranian political system. The letter urges Khamenei to “find the courage to put your rule to the test of the people’s vote” and argues that true legitimacy in Iran can only come from an open democratic choice. Ghadyani wrote that Khamenei should step down and create a path for the Iranian people to establish a system they want. FYI, Ghadyani is in prison for violating Articles 500 and 514 of Iran’s Islamic Penal Code: “propaganda against the system” and “insulting the Supreme Leader,” respectively.

Triple trouble: Iran, China and Russia last Friday sent a joint letter to the International Atomic Energy Agency last Friday declaring that all special UN oversight of Iran’s nuclear program had ended. The letter is significant because it underscores an intent to create a diplomatic break with the Western powers and the IAEA, not just letting a technical deadline quietly pass.

The three took a swipe at the European trio of the United Kingdom, Germany and France, saying their move in August to reimpose sanctions on Iran “is inherently, legally, and procedurally flawed.” Clearly a new chapter in Iran’s engagement with international nuclear regulators has begun. It is another sign Tehran, Moscow and Beijing are aligned.

IRAN’S FAR ABROAD 

Bye Bye, La Paz

Another blow to Iran’s influence overseas came in Bolivia, as Kian Sharifi from RFE/RL points out. The election of new center-right President Rodrigo Paz last week ended two decades of dominance by the Movement for Socialism Party, which had forged close political, economic, and military ties with Iran. The change in leadership could reshape Bolivia’s lithium policy. With President Paz expected to favor market reforms and Western standards, Iran may find it harder to benefit from Bolivia’s lithium supply, especially as the new government moves closer to Western partners. 

Think the Iran-Latin America connection doesn’t matter much? Look closely. By one count, Iran has 80 cultural centers in Latin America, including the Instituto Salam, which will even teach you in Spanish how to be successful on Instagram. To be fair, Iran still has buddies in Cuba, Nicaragua, and Venezuela.

GEOIRANOMICS

WHAT NEXT FOR IRAN? GAMING IT OUT, PART II

In last week’s inaugural edition of the MBN Iran Briefing, I went through what the immediate future might look like following the blows dealt to Iran in the 12-day war and, most recently, being frozen out of the Gaza peace process.

This week I step back and look beyond. What could the next year look like for Iran and the rest of us impacted by its actions? I think there are four possible paths ahead for Iran between now and the end of 2026:

• Baseline: “managed fragility”. Iran stays outside of Gaza diplomacy but maintains nuisance-level pressure via proxies; still selling oil, but the pipeline is getting stickier with more middlemen, higher costs, and slower flows eating into its margins; home front is tense but contained.
• Squeeze-and-pivot. Sanctions bite harder than expected; Tehran trades limited nuclear transparency or regional restraint for narrow economic relief. Quietly, not as a grand bargain.
• Escalatory detour. A proxy miscalculation draws direct retaliation; Tehran absorbs damage, answers asymmetrically at sea, then seeks a ladder down. This is costly and leaves the régime looking weaker.
• Inside track (low probability). If Arab guarantors invite limited Iranian involvement in a Gaza reconstruction niche (health, de-mining, prisoner exchanges), Tehran can slow proxy operations to consolidate the optics of a win.

What to watch

• Watch the tankers, not the talk: Tehran’s rhetoric is cheap; its lifeline is oil. Real export volumes, not official statements or slogans, reveal how much financial leverage the regime truly retains. If exports fall, domestic stress will mount quickly. If they hold steady, expect Iran to project confidence.
• Signals from China: Beijing remains Tehran’s most important economic backstop. Chinese demand gives Iran a financial lifeline at a moment when Western pressure is tightening. Any sign of Beijing recalibrating its tolerance for risk has ripple effects across Iran’s oil revenues and budget planning.
• Watch Moscow’s shadow, not its slogans: Russia casts a long shadow over Iran’s energy fortunes. The two may speak of partnership, and on some levels it’s real, but crucially they compete in the same Asian markets, often selling to the same buyers. Moscow’s discounted crude pushes down prices and eats into Tehran’s margins. The real story isn’t in the speeches about “strategic cooperation” — it’s in the tankers.
• Proxy activity: Watch the weekly rate of claimed attacks (Lebanon, Iraq/Syria border, Red Sea), Israeli/coalition responses, and whether Tehran’s media amplifies or downplays these attacks.
• Domestic realities: Bread, fuel, water, and power complaints; municipal protest videos from provincial capitals; budget re-allocations toward subsidies ahead of winter.
• Micro-diplomacy: Tiny but telling signs, such as consular talks, prisoner swaps, FATF-adjacent steps, might precede bigger moves.

Oil: And on that China and Russia oil note, check out the latest: Iran has had to offer its crude at unusually steep discounts to Chinese buyers. The pressure comes from new international sanctions and growing competition from Russian suppliers. Reuters says it’s the sharpest drop in prices this year and has significantly reduced Iran’s export earnings.

IRANIAN FAIT DIVERS 

 Big Fat Tehran Wedding 

Everyone is talking about the leaked video from the lavish wedding of the daughter of a high-ranking official: former head of Iran’s Supreme National Security Council Ali Shamkhani, who is close to Supreme Leader Khamenei. In the video, guests, including the bride herself, are not wearing the hijab and celebrate in ways that are shocking by the Islamic Republic’s strict standards. The footage has ignited outrage and sparked heated debate, reminding everyone of the double standards enjoyed by the political elite while ordinary Iranians face strict enforcement of hijab laws and social restrictions.

The wedding, which is said to have cost the equivalent of tens of thousands of U.S. dollars, was held at one of the most luxurious venues in Iran. As Iranwire reminds us, “Under the laws of the Islamic Republic, given the type of wedding he hosted, Shamkhani had committed a crime punishable by up to 99 lashes.”

Two more points to note: Shamkhani is renowned for a particularly brutal crackdown on protests in 2019. Intriguingly, much speculation is about the timing of the leaked video – the wedding was either in 2022 or 2024, depending on the source – and that it is intentional. It coincides with a surge in hardline criticism of former President Hassan Rouhani and ex-Foreign Minister Mohammad Javad Zarif, who are under fire for their openness to the West and for controversial decisions during their time in office, such as the nuclear deal

Art after bombs

In case you were wondering, new gallery openings and group shows were still taking place in Tehran over the summer, weeks after the end of the 12-day war with Israel and the U.S. The “Expectant” exhibition at 8Cube gallery, showcasing 28 emerging Iranian artists under the direction of celebrated sculptor Bita Fayyazi, drew over 1,500 visitors on its opening night, according to The Art Newspaper, a UK-based publication. “After the 12-day war, we are still in a state of suspension and limbo,” Fayyazi said. “If we give in to it, we will regress and lose our spirit. We must move. We are in debt to art; we must continue.”