The US and Israeli military operation launched on 28 February against Iran threatens to profoundly reshape security dynamics across the region. In response to the killing of Ayatollah Ali Khamenei on Saturday, Iran’s drones and missiles have pounded targets across the region, even as far as a UK base in Cyprus. Recent US Central Command reports describe several US jets having been mistakenly shot down by Kuwaiti air defence forces; meanwhile, Hezbollah and Israel are once again locked in a pattern of strike and counterstrike.

These dramatic events will also have profound implications for the shape of organized crime in the region, and for how Iran will use illicit markets. For decades, Iran has been a deeply criminalized state, harnessing illicit activity and organized crime in order to remain solvent and strategically capable in the face of crippling sanctions. Illicit markets have also enabled the regime to project its influence beyond its borders, funding and equipping its network of proxies throughout Middle East.This system is as sophisticated as it is pernicious. Over the years, Tehran has built a sanctions-evading oil trade based on ship-to-ship transfers, manipulated identification systems, re-flagging and falsified ship documentation, working through criminal maritime brokers in the Gulf, South East Asia and China. It is also deeply involved in drug economies: heroin trafficking routed through Hezbollah-linked networks; meth production in Iran and the trafficking of Afghan meth; and Captagon production and trafficking facilitated through Hezbollah’s logistics ecosystem in Syria and Lebanon. Its weapons smuggling operations are overseen by Quds Force Unit 190, a hybrid intelligence and criminal system.

These flows are sustained by illicit finance and laundering networks, including hawala systems, trade-based money laundering and cryptocurrency – through Gulf intermediaries. Together these function as a parallel treasury. Banks, gold traders and foreign exchange houses have also served as key enablers. Abroad, assassinations of political opponents are conducted by co-opted biker gangs, Eurasian organized crime figures and foreign nationals. Tehran also recruits transnational smuggling syndicates in the Gulf and Türkiye for coercive operations abroad, relying on loosely affiliated brokers in what law enforcement calls the Dubai Super Cartel ecosystem. These actors are not ideological proxies but contractors of statecraft, providing utility and deniability within a state-directed system of criminality.

Domestically, illicit markets have become part of the fabric of Iranian life. The shadow economy enables people to survive amid surging inflation and a shortage of basic goods, where formal jobs are few and far between. The main beneficiaries are invariably those with the right connections. Profits from foreign goods, imported at subsidized rates and sold at market prices, pool around those with access, licences, patronage and protection. These sprawling patronage networks are another means by which the regime can project authority, determining who is protected, who benefits and who is targeted when the state is minded to punish. It is no coincidence that the largest players in Iran’s illicit economy are members of the security apparatus, in particular the Islamic Revolutionary Guard Corps (IRGC).

Removing the head of this system will have consequences. Granted, succession planning was already underway to replace the elderly Khamenei. The regime has named an interim leadership body and still boasts a fearsome security apparatus that is more than capable of quelling further domestic dissent. Nevertheless, Iran’s religious autocratic model is today arguably more vulnerable than at any time since its founding in 1979. Any recalibration of the regime – or its eventual collapse – will have seismic impacts on organized crime in the country and across the region. Everything will depend on the political alignment of the new order, the political responses in the region and how the West responds in terms of lifting, maintaining or tightening its sanctions policies. In our view, these are the scenarios that stand to emerge from the current upheaval.

A continuation along present lines in the shape of a new Ayatollah or another regime-aligned figure determined to maintain and even deepen the current level of antipathy with the West is likely to entrench Iran’s reliance on illicit tools. In search of retribution, the regime may double down on its use of hitmen and seek to resurrect its networks of proxies, waging a crime-enabled terrorist campaign against the West, Israel and those the regime sees as complicit.

A rupture within inner circles, perhaps in the form of an IRGC-dominated coup, may lead to cartelization of the state, where various factions fight to dominate smuggling, foreign-exchange transfers, arbitrage and procurement. In this scenario, key assets will be contested, such as ports, border crossings, airports, fuel flows, access to currency and the protection rackets controlling commerce.

In an even more destabilizing outcome, the state may collapse and fragment. Iran’s size, demography and violent borderlands make it particularly vulnerable to a situation where the centre can no longer control the periphery and the periphery seeks autonomy through armed means. In such a contest, border crossings may be seized and held as prize assets; roads become toll routes; smuggling corridors would form the basis of political authority. The tools of criminal statecraft will have become franchised, as networks, once unified by a central project, break down into competing entrepreneurial militias with commercial portfolios. For Iranians, this would mean greater predation – including extortion and intimidation – where competitors are presented as foreign agents or corrupted. The ensuing violence will be commercial, not ideological.

In another scenario, a new leader may emerge who can lead a genuine reset of society and re-establish rapport with the West. This may lead to an easing of sanctions, which would reduce dependence on organized crime as a structural economic force. A rigorous defenestration programme could dismantle patronage networks and reintroduce transparency in governance.

But the risk of corrupt actors capitalizing on such a scenario is also high. A new government led by serious reformists intent on rebuilding bridges with the West may bring hope and goodwill, but dismantling a system of corruption that has been in place for decades would be a major challenge. Full or partial lifting of sanctions and qualified reintegration into the global economy may well enrich existing networks and lead to the creation of new spheres of illicit interest and schemes. One useful analogy is the fall of the Soviet Union in 1991, which saw former Soviet republics entering the globalized capitalist marketplace – and organized crime and corrupt actors taking full advantage.

In all these various scenarios, the people of Iran are likely to suffer the most, whether they stay and cope with political and economic turmoil or decide to flee.

Iran is often analyzed as a nuclear file, a proxy network, a sanctions dossier or a human rights crisis. It is all of those things. But, today, it has also become something else: a country fighting for survival and on the edge of a black market succession battle.

Whether the Islamic Republic survives or falls, the criminal networks that have helped it endure – its sanctions-evasion logistics, its proxy relationships to other regional groups that also have heavily embedded illicit economy networks, its patronage economies, its coercive protection markets – will not dissolve quietly. They will be contested, repurposed and exported. In the coming weeks and months, the real question may not be who wins the streets of Tehran: it may be who wins the ports, the crossings, the exchange houses and the corridors that connect Iran’s crisis to the wider world.