Why in news?

A recent media investigation has revealed that six Registered Unrecognised Political Parties (RUPPs), all based in Gujarat, received donations of around Rs 1,700 crore in 2023-24. This is more than the combined donations of five nationally recognised parties, excluding the BJP, which received Rs 1,480 crore in the same period.

The revelation has raised serious concerns about opaque political funding and the misuse of tax exemptions by non-serious parties.

What’s in Today’s Article?

• What Are Registered Political Parties?
• The Problem of "Letter Pad Parties"
• Why the Six Gujarat Parties Remain Active?
• Poor Compliance and Lack of Transparency
• Way Forward

What Are Registered Political Parties?

• Political parties are associations or bodies of individuals formed by citizens.
• Section 29A of the Representation of the People Act, 1951 (RP Act) lays down the requirements for registering a political party with the Election Commission (EC).
• After scrutiny of the documents submitted, the EC registers the party as RUPP.
• RUPPs enjoy three key benefits:
  • Tax exemption on donations received under Section 12 of the Income Tax Act, 2025.
  • A common symbol for contesting general elections to the Lok Sabha or State Assemblies.
  • Twenty "star campaigners" during election campaigns.
• In return, RUPPs must fulfil certain obligations:
  • Maintain details of individual donors contributing more than Rs 20,000 in a financial year and submit them to the EC annually.
  • Under Section 29C of the RP Act, failure to do so leads to loss of income tax exemption.
  • Accept donations above Rs 2,000 only through cheque or bank transfer, as required by the Income Tax Act, 2025.

The Problem of "Letter Pad Parties"

• As per the EC notification, India had more than 2,800 RUPPs as of July, but only around 750 contested the 2024 general elections.
• The rest have earned the moniker "letter pad parties", existing largely on paper.
• The core issue is the EC's limited power. The RP Act does not explicitly empower the EC to de-register a party that fails to contest elections, conduct inner-party elections or file required returns.
• In Indian National Congress vs Institute of Social Welfare & Ors (2002), the Supreme Court held that the EC cannot de-register a political party under the RP Act, except in exceptional circumstances:
  • Registration obtained by fraud.
  • The party ceasing to owe allegiance to the Constitution.
  • The party being declared unlawful by the government.
• The EC periodically publishes lists of de-listed RUPPs. The October 2025 notification contained over 800 such parties.

Why the Six Gujarat Parties Remain Active?

• The six parties named in the investigation are Aam Janmat Party, Bharatiya National Janata Dal, Garib Kalyan Party, New India United Party, Satyawadi Rakshak Party and Swatantrata Abhivyakti Party.
• All remain on the EC's active list as of October 2025 because they collectively fielded 15 candidates in the 2024 Lok Sabha elections.
• Contesting a token number of seats allows them to retain their registration and tax benefits.

Poor Compliance and Lack of Transparency

• The Association for Democratic Reforms (ADR) periodically publishes reports on RUPP compliance.
• Its July 2025 report, analysing annual reports for 2022-23, found that reports of only 26 per cent of RUPPs were available in the public domain.
• Poor compliance with statutory requirements, combined with weak transparency, allows these parties to function as opaque channels for tax evasion and money laundering.

Way Forward

• Empower the EC to de-register parties. The Law Commission, in its 255th report, recommended amendments to allow de-registration of a party that fails to contest elections for ten consecutive years.
  • The EC, in its 2016 memorandum on electoral reforms, also sought powers to de-register parties.
  • These reforms would enable action against non-serious parties that serve merely as a front for illegal financial transactions.
• Strengthen enforcement. Even if de-registration powers are granted, parties may contest a few seats simply to meet the statutory requirement while continuing to misuse tax exemptions.
  • In today's digital environment, the Income Tax Department and other enforcement agencies can easily monitor the transactions of such parties.
  • Strict action against wrongdoing would act as a deterrent.
• Introduce a vote threshold for tax exemptions. The EC had earlier suggested that tax exemptions be given only to parties that win seats in the Lok Sabha or State Assemblies.
  • Analysts consider this undemocratic and extreme, since many parties contest elections consistently without winning.
  • Instead, they propose a vote percentage threshold, similar to the 1 per cent vote threshold used for allotting common symbols to RUPPs.
  • Only parties crossing this threshold should be eligible for tax exemptions on donations.

Conclusion

The RUPP framework was designed to nurture political participation, but weak statutory provisions and poor compliance have turned it into a loophole for opaque funding.

Empowering the EC to de-register non-serious parties, strengthening enforcement and linking tax exemptions to a reasonable vote threshold would restore integrity to political funding without stifling genuine small parties.

Why in news?

India hosts the 18th BRICS Summit in New Delhi on September 12–13, 2026, as the grouping marks 20 years since its formalisation in 2006.

In this context, this article assesses what BRICS has achieved, the tensions within it, and how India can give it a practical developmental agenda instead of an anti-West posture.

What’s in Today’s Article?

• BRICS vs G7: The Numbers
• Evolution of BRICS
• India's Strategic Engagement
• Divergences: Anti-West Bloc or Economic Forum?
• Expansion and the Consensus Problem
• The Dollar Question
• Pakistan's Membership Bid

BRICS vs G7: The Numbers

• In 2000, Brazil, Russia, India and China together held roughly 23 per cent of global GDP (PPP), while the G7 held nearly 52 per cent.
• By 2024, the positions had reversed. The expanded 11-member BRICS accounted for about 36.8 per cent, while the G7's share fell below 29 per cent.
• Other key comparisons:
  • Population: BRICS ~3.7 billion (49.5 per cent of world); G7 ~771 million (10 per cent)
  • Nominal GDP: BRICS ~$28.5 trillion; G7 ~$46.6 trillion
  • Land area: BRICS ~39.7 million sq km; G7 ~21.7 million sq km
  • Oil production: BRICS ~43.6 per cent of global output
  • Natural gas: BRICS ~36 per cent of global production
  • Rare-earth reserves: BRICS ~72 per cent of global reserves
  • Agriculture: BRICS produces 42 per cent of world wheat, 52 per cent of rice, 46 per cent of soybeans
  • Growth: BRICS projected at 3.8 per cent in 2025 and 3.7 per cent in 2026, over three times the G7 average
• BRICS accounts for roughly a quarter of global trade.
  • Intra-BRICS merchandise trade reached $1.17 trillion in 2024, a 13-fold rise from $84 billion two decades ago.
  • The bloc holds $5.2 trillion in foreign reserves and produces 78.2 per cent of global mineral coal.
• However, per capita GDP tells a different story: the G7 averages around $53,000 while BRICS averages roughly $8,200.
• The bloc's weight comes from population and resource scale, not individual prosperity.

Evolution of BRICS

• BRIC (Brazil, Russia, India, China) began in 2006, following a Goldman Sachs projection identifying these economies as future growth engines.
• It evolved from a foreign ministers' dialogue into a leaders' forum. The first summit was held in Yekaterinburg, Russia, in 2009.
• South Africa joined in 2010.
• In 2024, Egypt, Ethiopia, Iran, Saudi Arabia and the UAE were added.
• Indonesia became the 11th member in January 2025.
• BRICS has grown from an economic grouping into a geopolitical entity presenting itself as the voice of the Global South.
• Yet its central grievance remains unchanged: global institutions have not kept pace with the shift in economic and political power.

India's Strategic Engagement

• India's participation reflects multi-alignment underpinned by strategic autonomy. New Delhi engages simultaneously with BRICS, the G20, the Quad and the SCO without alliance commitments.
• For India, multi-alignment is about creating room for manoeuvre, not choosing between power centres.
• India's institutional contribution is significant. At the 2012 New Delhi summit, India proposed a BRICS development bank, which became the New Development Bank (NDB).
  • By mid-2026, the NDB had approved about $44 billion across 141 projects.

Divergences: Anti-West Bloc or Economic Forum?

• The most fundamental tension is over purpose. China and Russia position BRICS as a counterweight to Western dominance and the dollar.
• Beijing has driven expansion to project leadership of the Global South. Moscow, excluded from SWIFT and under sanctions, sees BRICS as an economic lifeline.
• India and Brazil view BRICS as an economic and reform-oriented grouping. India does not share the enthusiasm for confronting the West.
• Two episodes illustrate this:
  • In 2023, Russia demanded payment for oil in yuan. India refused, insisting on dollars or rupees.
  • In February 2026, India signed a framework trade agreement with the US, reportedly agreeing to halt Russian oil purchases in exchange for reduced tariffs, prioritising national interest over bloc solidarity.

Expansion and the Consensus Problem

• Expansion has introduced sharp contradictions. At the BRICS Foreign Ministers' meeting in New Delhi in May 2026, members failed to agree on a joint declaration because of a direct confrontation between Iran and the UAE, who are on opposite sides of an active conflict.
• India, as host, issued a chair's statement noting "differing views" on West Asia. Since BRICS works on consensus, expansion has made agreement on geopolitical crises far harder.

The Dollar Question

• US President Donald Trump has threatened 100 per cent tariffs on BRICS nations if they create a new currency. This has largely shelved the idea of a single BRICS currency.
• Members have instead moved towards bilateral settlement in national currencies:
  • Russia and China settle over 90 per cent of trade in ruble and yuan.
  • Russia and India have moved about 90 per cent of direct payments to national currencies through Special Rupee Vostro Accounts authorised by the RBI.
  • India and the UAE have run a rupee-dirham system since July 2023.
  • India and Indonesia operationalised a rupee-rupiah framework in July 2026, with local-currency trade rising 163 per cent to $8.45 billion in the first two months of 2026.
• The BRICS Pay system, to be unveiled at the New Delhi summit, will link Russia's SPFS, China's CIPS, India's UPI and Brazil's Pix, allowing settlement without dollar correspondent banks.
• India favours interoperable central bank digital currencies over a supranational currency, reflecting its UPI experience.
• Yet the dollar still holds 57.13 per cent of global central bank reserves (Q1 2026), and no BRICS member is building rupee, yuan or rand reserves at scale.

Pakistan's Membership Bid

• Pakistan applied for membership in November 2023, but its bid remains contentious due to recurring balance-of-payments crises, IMF dependence, its record on terrorism, political instability and weak policy continuity.
• Its dependence on China could increase Beijing's influence, and it has limited capacity to contribute to the BRICS agenda.

Conclusion

The Iran-Israel-US conflict and the Russia-Ukraine war will test India's ability to secure a joint declaration. Visits by Xi Jinping and Vladimir Putin offer scope for high-level consultations.

Beyond geopolitics, the summit will focus on resilient supply chains, reform of global financial institutions, strengthening the NDB and expanding intra-BRICS trade.

Over the next decade, India can preserve the reform agenda while adding digital public infrastructure, climate finance, health cooperation, critical minerals, local-currency payments and inclusive connectivity.

Context:

• At the Southern Zonal Council meeting, held recently in Mamallapuram, Union Home Minister Amit Shah stressed the need for early resolution of water disputes in the southern region.
• He also spoke of linking major rivers from the Brahmaputra to the Godavari and the Cauvery, claiming this could ensure India faces no water shortage for 100 years.
• In this context, this article argues that while the intent appears well-meaning, resolving water issues is far harder than it sounds, and river-linking is not the solution.

The Pennaiyar Dispute: A Case of Delay

• The Centre's handling of Tamil Nadu's demand for a tribunal on the Pennaiyar river dispute shows how slow the process can be:
  • Tamil Nadu alleged that Karnataka violated the 1892 inter-State agreement.
  • In November 2019, it requested the Centre to constitute a tribunal and also moved the Supreme Court.
  • Since then, two negotiation committees have been formed and 11 meetings held, without result.
  • In February this year, the Supreme Court directed the Centre to form the tribunal within a month. The deadline was later extended by six months.
  • The tribunal is still not in place.
• Instead of constituting a new tribunal, the Centre asked the court whether the Pennaiyar dispute could be referred to the Mahadayi Water Dispute Tribunal.
• Critics call this illogical, as the two disputes have nothing in common. The Interstate River Water Disputes Act, 1956 also does not permit such a transfer.
• Similarly, the Centre has not yet replied to Tamil Nadu's March 2026 demand for a tribunal on the Mekedatu dam project proposed by Karnataka.

Why River-Linking Is Problematic?

• If routine disputes take years to resolve, the complications of inter-linking rivers would be far greater.
• Proponents, including Tamil Nadu, argue that river-linking would not disturb natural flows but only divert surplus water. Many experts are not convinced, for several reasons:
  • Once linking is allowed, beneficiary regions may demand water even during distress periods, eventually depriving original beneficiaries of their share.
  • There are serious concerns about adverse ecological consequences.
  • Kerala has strongly opposed the Pamba-Achankovil-Vaippar link, warning that it would harm the Vembanad wetland system, into which the Pamba and Achankovil rivers drain.
• The National Water Development Agency counters that it has accounted for improving river flows during lean periods.

India's Limited Experience with Inter-Basin Transfers

• In the last 130-odd years, India has seen only a handful of inter-basin transfer projects, mostly in south India.
• The successful examples include:
  • Mullaperiyar dam
  • Parambikulam-Aliyar project
  • Krishna Water Supply Project
  • Indira Gandhi Canal Project
• After 2014, the Union government formed a Special Committee for Interlinking of Rivers, which has held over two dozen meetings. Yet there has been little progress.
• In 2024, PM Modi laid the foundation stone for the Rs 44,000 crore Ken-Betwa Link Project. This has already led to agitations by tribal populations in Chhatarpur.

The Case for Demand-Side Management

• Many experts argue that governments at the Centre and in the States, along with civil society, should shift focus from supply-side interventions to demand-side management.
• The reasons are practical:
  • Land is increasingly scarce.
  • Public resistance to land acquisition is growing.
  • The era of mega irrigation projects is almost over.
• The priority must be conserving available water and using it judiciously. Specific measures suggested include:
  • A massive programme to sensitise and incentivise farmers on optimal water use.
  • Immediate curbs on indiscriminate groundwater extraction, which is encouraged by free electricity schemes for agriculture in many States and is leading to ecological disaster.
• Unless water conservation becomes a shared commitment of all stakeholders, disputes will remain the norm.

Conclusion

• River-linking promises a supply-side fix but ignores ecological risks, federal tensions and the Centre's own poor record in resolving existing disputes.
• With land scarce and mega projects facing resistance, India must prioritise conservation, efficient irrigation and groundwater regulation.
• Demand-side management, not grand engineering, offers the sustainable path to water security.

Why in the News?

• Indian banks mobilised over $127 billion through FCNR(B) deposits under a special RBI swap facility, but with the window now closed, attention has turned to who bears the foreign exchange risk on the principal and interest.

What’s in Today’s Article?

• About FCNR Deposits (Meaning, Special Swap Facility, Risk Management, RBI’s Cost-Benefit Position, Exposure Among Banks, Broader Assessment)

About FCNR(B) Deposits

• Foreign Currency Non-Resident (Bank) deposits, or FCNR(B) deposits, are term deposits that non-resident Indians can maintain with Indian banks in foreign currency rather than in rupees.
• The key feature is that both the principal and interest are denominated in foreign currency, typically US dollars.
• This protects the depositor from rupee depreciation, a significant attraction for NRIs who would otherwise see the value of their savings erode if the rupee weakened.
• These deposits are usually held for maturities of one to five years and are a long-standing instrument for attracting foreign currency into India's banking system.

The Special Swap Facility

• The RBI introduced a special swap facility in June 2026 to encourage NRIs to place money in FCNR(B) deposits.
• The context was pressure on the rupee from high oil prices and India's need to strengthen its foreign exchange reserves amid the West Asia conflict.
• Response - the scheme attracted far more than anticipated:
  • Initial target: around $50 billion
  • Actual mobilisation: more than $127 billion
• Given the scale of inflows, the RBI closed the window for fresh FCNR(B) deposits on August 31, 2026.
• For banks, the scheme provided a relatively cheap source of foreign currency funding. For the country, it added substantially to foreign exchange reserves at a time of external pressure.

How the Risk Is Split?

• Because these deposits typically carry three-to-five-year maturities, the question of who bears currency risk when principal and interest fall due becomes important.
• The answer is that the risk has been divided between the central bank and commercial banks.
• The RBI Covers the Principal
  • Under the swap arrangement, the RBI shields banks from foreign exchange risk on the principal amount. The central bank bears the cost of hedging this exposure.
  • Estimates place this hedging cost at up to 3% annually.
  • In simple terms, the RBI is protecting the dollar value of the principal against movements in the rupee-dollar exchange rate, absorbing the cost of that protection itself.
• Banks Handle the Interest
  • The swap facility does not cover the interest that banks must pay depositors in dollars.
  • This means banks have to arrange the dollars themselves for interest payments and manage that foreign exchange exposure independently.

The RBI's Cost-Benefit Position

• The RBI's position is not purely a cost. The foreign currency received through these deposits adds to India's reserves, which can then be invested.
• Recouping Reserves
  • By August 7, 2026, the RBI had recouped $31.2 billion of its foreign currency assets, equivalent to 55% of the amount mobilised at that point.
  • Part of this may be invested in US securities, which offer higher yields.
• Potential Returns
  • Estimates suggest the RBI could earn around 4.5% to 5% on the foreign exchange reserves generated through these deposits.
  • This could more than offset a hedging cost of up to 3%, assuming the foreign currency holdings are hedged for five years.
• The Scale of the Cost
  • Research assuming FCNR(B) mobilisation of $65-70 billion and a 3% annual hedging cost calculated:
    • Annual notional cost: about $2.1 billion
    • Cumulative cost over five years: about $10.5 billion
  • Against current reserves of around $700 billion, this works out to roughly 1.45% of the reserve stock over five years, a modest figure in relative terms.

Unhedged Exposure Among Banks

• Where the risk becomes more concerning is on the interest side.
• Who Is Hedging - pattern varies by type of bank:
  • Foreign banks are largely hedging this exposure.
  • Most state-run banks and several private-sector Indian lenders have left it unhedged.
• Why Banks Are Not Hedging?
  • The main reason cited is cost. Hedging the foreign exchange risk on interest payments for three-to-five-year deposits costs banks about 3% a year.
  • Since interest on these deposits is paid at maturity rather than periodically, some banks have chosen to avoid that cost upfront. Their plan is to buy dollars in the spot market when the payment actually falls due, rather than locking in protection in advance.
  • One banker at a mid-sized state-run lender indicated the bank expected to handle payments through spot purchases when required.

What Happens If the Rupee Weakens?

• The consequences of leaving this exposure unhedged can be illustrated simply.
• Consider a bank that must pay $1 million in interest:
  • If the dollar costs Rs. 95, the payment requires Rs. 9.5 crore.
  • If the rupee weakens and the dollar rises to Rs. 100 at maturity, the same payment requires Rs. 10 crore.
• A bank that has hedged would be protected against this movement. A lender that has left the exposure unhedged absorbs the higher rupee cost directly.

The Broader Assessment

• The FCNR(B) scheme achieved its immediate objective. It brought in substantially more foreign currency than targeted at a time when the rupee was under pressure and reserves needed strengthening.
• The RBI has taken on the exposure associated with the principal through its swap, and appears likely to cover that cost through returns on invested reserves.
• Banks continue to face currency risk on the interest payments, and a substantial share of that exposure remains unhedged by choice.
• This means a portion of the currency risk has been deferred rather than removed, surfacing only when the deposits mature.

Why in News?

• For the first time, the Ministry of Statistics and Programme Implementation (MoSPI) has released district-level estimates on the informal economy, drawing on the Annual Survey of Unincorporated Sector Enterprises (ASUSE), 2025.
• The data covers the unincorporated non-agricultural sector—broadly, establishments engaged in manufacturing, trade and other services.
• The district-level estimates provide a more granular picture of women’s participation, wages, enterprise ownership and the geographical concentration of informal economic activity, which can help improve evidence-based policymaking.

What’s in Today’s Article?

• Women’s Share in Informal Work
• The Pay Divide
• Women’s Enterprise Ownership
• Economic Activity Is Highly Concentrated
• Significance for Policy
• Conclusion

Women’s Share in Informal Work:

• The data reveals a striking geographical divide in women’s participation among informal workers.
  • Highest women’s participation: Nirmal, Telangana (78% of all its informal workers are women); Imphal East, Manipur (70%); Nizamabad, Telangana (70%); Jagtial, Telangana (69%); and Bishnupur, Manipur (66%).
  • Lowest women’s participation: Srinagar, J&K (11%); Hathras, Uttar Pradesh (11%); Banaskantha, Gujarat (11%); Marigaon, Assam (9%); and Rudraprayag, Uttarakhand (7%).
• All the top 10 districts for women’s share are located in eastern or northeastern 22 of the 25 districts with the highest female participation are from the region, with the remaining three in Jharkhand and Odisha.
• At the other end, Rudraprayag records just 7%. The all-India average is around 29%, while women constitute at least one-third of the informal workforce in 237 districts.
• Telangana’s presence among the leading districts also highlights the importance of state- and district-specific socio-economic factors.

The Pay Divide:

• High female participation does not necessarily translate into uniformly higher earnings.
• Among districts where women constitute at least half of the informal workforce, South West Khasi Hills, Meghalaya, is identified as the best-paying district.
• Here, annual emoluments per hired worker is around ₹1.71 lakh, compared with an all-India average of about ₹1.3 lakh.
• This underlines the need to examine both participation and the quality of employment, including remuneration, productivity and access to better economic opportunities.

Women’s Enterprise Ownership:

• The district-level data also reveals a strong relationship between women’s participation in the workforce and women’s ownership of enterprises.
• Districts with high female participation tend to have a high proportion of female-owned proprietary establishments.
• Nirmal, which tops the female workforce participation ranking, also has nearly 80% of proprietary establishments owned by women.
• This suggests that women’s economic participation in some regions is not confined to being workers; it also extends to entrepreneurship and ownership of informal enterprises.

Economic Activity Is Highly Concentrated:

• The distribution of informal economic activity is very different when measured by the absolute number of workers and establishments rather than women’s participation.
• North 24 Parganas, West Bengal has the largest number of informal workers—about 21.3 lakh—and around 16.6 lakh establishments.
• The top 10 districts by number of establishments account for around 11% of the total Gross Value Added (GVA) generated by the sector. The top 50 districts account for almost one-third of the sector’s GVA.
• Thus, while women’s participation is particularly high in several northeastern districts, the scale of informal economic activity is concentrated in a relatively smaller set of districts across India.

Significance for Policy:

• The findings highlight three interconnected policy concerns -
  • Women’s labour-force participation: High female representation in informal work needs to be converted into productive and remunerative employment.
  • Women-led entrepreneurship: High female ownership of proprietary enterprises can be leveraged through credit, skilling, digitalisation and market access.
  • Regional targeting: Large inter-district variations demonstrate the need for granular, locally tailored policies rather than one-size-fits-all interventions.
• Importance and challenges of the informal sector: It contributes significantly to employment, livelihoods and economic activity, while often operating outside the institutional protections available to formal workers.
• Why district-level data matters?
• The report covers 757 districts, although geographical coverage can vary because of administrative changes, including the creation of new districts and changes in district boundaries.
• District-level data can help identify districts requiring focused measures for women’s employment, skilling, entrepreneurship, credit access and social protection.

Conclusion:

• The first district-level estimates of the informal economy provide an important statistical foundation for understanding India’s gendered and geographically uneven informal economy.
• Better granular statistics can strengthen cooperative and competitive federalism, outcome-based governance and evidence-based policymaking, particularly for achieving women-led development and inclusive growth.

Context

• The global war on terror, launched by the United States after September 11, 2001, sought to eliminate terrorism and contain threats to American interests.
• However, its interventions in Afghanistan and Iraq produced unintended consequences that strengthened Iran.
• By removing hostile regimes, creating political vacuums, and intensifying sectarian conflicts, U.S. actions enabled Tehran to emerge as a powerful regional actor.
• Iran’s rise demonstrates how military intervention can generate outcomes contrary to its original objectives.

The Removal of Iran’s Strategic Rivals

• Before 2001, Iran faced strategic pressure from two hostile neighbours: the Taliban in Afghanistan and Saddam Hussein’s Iraq.
• The U.S. invasions of Afghanistan in 2001 and Iraq in 2003 removed these governments, eliminating Iran’s most dangerous regional adversaries.
• In Iraq, the overthrow of Saddam’s Sunni-dominated regime enabled the emergence of a Shia-led political order with strong connections to Tehran.
• Iran subsequently developed substantial influence over Iraqi political institutions, security organisations, and armed militias.
• Iraq gradually shifted from a hostile neighbour to a strategic partner, significantly improving Iran’s regional position.

Sectarianism and the Expansion of Proxy Warfare

• The Shia-Sunni Divide
  • The invasions of Afghanistan and Iraq destabilised existing political structures and intensified Shia-Sunni sectarian tensions.
  • The weakening of central authority encouraged religious identity-based mobilisation and armed conflict.
  • In Iraq, Sunni insurgent groups and Shia militias competed for influence, while regional powers supported opposing factions.
  • Iran strengthened Shia militias, whereas Saudi Arabia and other regional actors supported Sunni political and militant forces.
  • This proxy warfare increased Tehran’s influence and undermined the objective of isolating Iran.
• Iran’s Role in Counter-Terrorism
  • The emergence of ISIS paradoxically strengthened Iran’s regional position.
  • Tehran became a crucial military supporter of the Iraqi government, deploying advisers and coordinating Shia militias through the Quds Force of the Islamic Revolutionary Guard Corps.
  • Iran’s participation in the anti-ISIS campaign provided strategic legitimacy for its military presence in Iraq and Syria.
  • Although the United States and Iran briefly shared an interest in defeating ISIS, meaningful cooperation failed to emerge.
  • The U.S. designation of Iran as part of the Axis of Evil in 2002 reflected continuing hostility and prevented sustained dialogue.

The Axis of Resistance and Forward Defence

• Iran’s regional strategy developed around the Axis of Resistance, a network of political, military, and social organisations extending across Iran, Iraq, Syria, Lebanon, and Palestine.
• Its major members include Hezbollah, Hamas, the Houthis, and Shia militias in Iraq.
• These groups provide Iran with strategic depth and enable it to exert influence beyond its national borders.

The Islamic Revolutionary Guard Corps and Asymmetric Power

• Iran’s military strategy has focused heavily on the Islamic Revolutionary Guard Corps (IRGC), particularly its Quds Force.
• The IRGC controls important strategic assets and coordinates Iran’s regional partnerships.
• Unlike conventional military forces, the IRGC specialises in asymmetric warfare, using military advisers, intelligence, missile capabilities, and allied armed groups to project Iranian power.
• This strategy allows Iran to challenge the United States and Israel without matching their conventional military superiority.
• Proxy networks have therefore become a central pillar of Iranian defence policy.

Power Vacuums after 2011

• The U.S. withdrawal from Iraq and the Arab Spring in 2011 created political and security vacuums.
• Iran was well positioned to exploit these developments because it already possessed established networks of allies and military influence.
• In Iraq, Iranian-backed forces became important actors in the fight against ISIS.
• In Syria, Tehran intervened to defend Bashar al-Assad’s government, protecting its major state ally and preserving access to Hezbollah in Lebanon.
• The prolonged Forever Wars consumed American resources and attention, allowing Iran to consolidate its influence.
• Its ability to operate through local partners reduced the costs of direct intervention while increasing strategic reach.

The Transformation of Iran into a Regional Power

• The removal of hostile regimes, collapse of political institutions, and rise of sectarian conflicts enabled Tehran to expand its influence across West Asia.
• Iran’s regional power rests on strategic depth, proxy warfare, political alliances, military networks, and nationalism.
• The IRGC coordinates regional operations, while allied governments and armed groups provide buffers against external threats.
• This transformation illustrates the limitations of strategies based exclusively on military containment.
• By attempting to reshape West Asia through intervention, the United States unintentionally created conditions for Iran’s rise.

Conclusion

• Although the United States sought to eliminate terrorism and contain Iran, its interventions removed Iran’s strategic rivals, destabilised neighbouring countries, and enabled Tehran to expand its influence.
• Iran capitalised on these developments through the Axis of Resistance, the IRGC, and an extensive network of regional alliances.
• Iran’s present capacity to resist pressure from the United States and Israel reflects the cumulative advantages it gained during the past two decades.
• Its rise demonstrates that military interventions can generate unintended strategic consequences, particularly when they disrupt regional balances without establishing durable political stability.