Allies in name only? China’s money flows around Iran and Russia

“With this year’s low rainfall, surface and underground water resources have declined and the situation is not favorable,” Hossein Haghighi, head of Tehran Water and Wastewater Region 4, told the semi-official ISNA news agency. “If it does not rain, we expect even tougher conditions in autumn.”

Haghighi said authorities had adopted a “multi-layer” approach that included reducing water pressure in some areas, public awareness campaigns and promoting low-flow devices to curb household use.

New buildings are required to install storage tanks and pumps before connecting to the network, he said. Tariffs are structured to heavily subsidize low users, while “bad consumers” – the highest tier – pay sharply higher rates. “After three warnings, we cut water to heavy users for 12 hours,” Haghighi said.

'Day zero' warnings disputed

Haghighi’s remarks followed a stark warning from Mohsen Dehnavi, spokesman for Iran’s Expediency Council, who said the water crisis “has passed the warning stage and entered a critical phase.”

“Continuing this trend could bring some areas of the capital to day zero in the coming weeks – a day when drinking water is cut off in many neighborhoods and the daily life of millions is disrupted,” Dehnavi said in a post on the social media platform X.

He blamed “five years of drought, overuse of underground aquifers, rapid urban population growth, high per-capita consumption and structural weaknesses in water management” for pushing Tehran’s reservoirs towards dangerous depletion.

He called for “strict conservation policies, renovation of ageing networks, industrial consumption controls and the adoption of smart, real-time resource management systems.”

Isa Bozorgzadeh, spokesman for Iran’s water industry, rejected the “day zero” assessment, saying that with further reductions in demand the crisis could be “acceptably managed.”

“If Tehran reduces its consumption by another 12%, the capital will pass through this crisis without severe disruption,” he said. Bozorgzadeh added that July saw a 13% drop in use compared with last year, and consumption so far in August was down more than 14%.

Drought, heatwaves, and blackouts

The water crisis comes after months of extreme heat that has triggered rolling blackouts and the temporary shutdown of government offices in several provinces to conserve energy.

Iran’s meteorological organization says the country has faced a near-constant drought for more than two decades, with rainfall down sharply this year and snowpack levels at historic lows.

Environmental activists have long warned that Iran’s sprawling capital – home to nearly 10 million people – is acutely vulnerable to water shortages due to inefficient infrastructure, leaky pipes, and limited investment in modern conservation technologies.

Climatologist Nasser Karami told Iran International earlier in August that the water crisis in Iran transcends drought and is a product of government mismanagement, militarized agriculture and deliberate manipulation.

According to Haghighi, Tehran’s average household water use is more than twice the international standard.

“Changing consumption habits is no longer optional – it’s a necessity,” Haghighi said. “If every household reduces just 10% of its water use, the capital can avoid the most severe restrictions.”

Elias Hazrati, head of the government’s information council, said on Tuesday: “Today, the country is in a completely stable situation. There is no crisis, and no war is taking place or about to begin.”

“Of respondents, 89% rated their agreement with the government’s economic policies as ‘low’ or ‘very low.’ 72% expressed dissatisfaction or strong dissatisfaction with government policies,” according to the poll results published on Monday.

The poll also indicated that the economy is the top priority for 53% of respondents, while 36% prioritized foreign policy.

The poll consisted of three questions, conducted via the paper’s Telegram channel with an average of 2,130 respondents per question.

Iran is currently grappling with water shortages and widespread power outages amid high summer temperatures, while also dealing with recovery efforts following a 12-day war with Israel and its aftermath.

Sanctions, corruption and economic mismanagement have contributed to widespread economic hardship and market instability as Iran's currency the rial has lost over 90% of its value since US sanctions were reimposed in 2018.

Tehran faces another challenge from European countries Germany, France and the United Kingdom who may be poised to trigger United Nations sanctions per the so-called the snapback mechanism.

Snapback refers to a clause in UN Security Council Resolution 2231, which endorsed the a 2015 deal on Iran's disputed nuclear program dubbed the Joint Comprehensive Plan of Action (JCPOA).

Under Resolution 2231, any party to the accord can file a complaint accusing Iran of non-compliance. If no agreement is reached within 30 days to maintain sanctions relief, all previous UN sanctions would automatically “snap back,” including arms embargoes, cargo inspections and missile restrictions.

Iran’s Ministry of Intelligence issued secret guidance on Monday, warning ministries and major companies to prepare for the likely return of punishing United Nations sanctions, documents reviewed by Iran International show.

Iran’s state-run English-language newspaper Tehran Times reported on August 8 that Tehran and Washington may start Norway-mediated indirect talks in August, covering Iran’s nuclear program and compensation demands over its June war with Israel and the United States.

Washington has called Iran’s compensation demand “ridiculous,” urging Tehran to stop funding militias and its nuclear program.

The Intelligence Ministry said that the return of so-called snapback sanctions will include a ban on arms sales, freezing of assets and foreign currency accounts of companies abroad.

“Re-sanctioning of legal and natural persons active in industries such as oil, petrochemicals, banking, shipping, insurance and sensitive technologies will be activated,” the document said.

Potential fallout could roil markets and exacerbate unemployment and deepen popular discontent, the ministry added.

“Severe currency fluctuations, reduced purchasing power, increased unemployment, layoffs and heightened social discontent are to be expected,” the Intelligence Ministry said.

The snapback mechanism is part of UN Security Council Resolution 2231, which endorsed a 2015 deal over Iran's disputed nuclear program called the Joint Comprehensive Plan of Action (JCPOA).

Under Resolution 2231, any party to the accord can file a complaint accusing Iran of non-compliance. If no agreement is reached within 30 days to maintain sanctions relief, all previous UN sanctions would automatically “snap back,” including arms embargoes, cargo inspections and missile restrictions.

Iran’s Intelligence Ministry also pointed to potential alternative partners for the Islamic Republic to evade the sanctions.

“Identify alternative suppliers in countries like China, Russia, Iraq, etc., which will be less affected by sanctions,” the statement said.

The guidance also warned of renewed threats to national security including cyberattacks on critical infrastructure.

“Increased targeted cyberattacks on economic infrastructure, focusing on supply chains, automation, and financial management, as well as efforts by foreign intelligence services to infiltrate through third parties, contractors, or organizational applications, will be some of the threats,” the statement said.

France, the United Kingdom and Germany told Iran they would restore UN sanctions unless it reopened talks on its nuclear program immediately and produced concrete results by the end of August.

Iranian diplomates last met representatives of the three European countries in Istanbul on July 25.

Iran’s Foreign Ministry spokesman Esmail Baghaei described the meeting with Britain, France and Germany as a “test of realism” for the E3 powers, calling it a chance for them to correct past positions.

The network is run on behalf of the Organization of Defensive Innovation and Research (SPND), a Defense Ministry body established in 2010 which the United States calls a successor to Iran’s alleged pre-2004 nuclear weapons program.

Western governments have sanctioned SPND for years, citing its role in the potential proliferation of weapons of mass destruction.

The network purchases dual-use and military-grade equipment, including in the field of neutronics—a highly sensitive discipline vital to controlling chain reactions in nuclear reactors and, in a military context, producing or controlling neutrons for weapons design, a source familiar with its activities said.

“This network purchases dual-use and military-grade equipment, including neutronics and other sensitive components, on behalf of SPND,” the source said.

Such capabilities can be used for reactor safety, protection from radiation and can have military applications for producing nuclear weapons.

Isatis group and SPND links inside Iran

Inside Iran, the procurement effort is anchored by companies operating under the Isatis name. Corporate and academic records link two SPND personnel, Hadi Zakeri Khatir and Ebrahim Haji-Ebrahimi, to Isatis Danesh Tolid Tajhiz, one of the group’s entities.

Zakeri Khatir, a faculty member at a university linked to Iran's Islamic Revolutionary Guard Corps, serves as vice chairman of the board. Haji-Ebrahimi is listed as a technical engineer with a background in nuclear fusion studies.

100%

Isatis presents itself online as a holding company with multiple subsidiaries in steel, cement and industrial equipment.

However, Iran International found that some of these firms—such as Isatis Foolad Tajhiz and Isatis Siman Tajhiz—remain unregistered in official records, suggesting the size and activities of the firm are not readily transparent.

Isatis Holding did not respond to requests for comment by Iran International.

European hub in Vienna

The network’s overseas hub is Vienna, according to the informed source and company registration documents obtained by Iran International.

Austrian commercial records show that Mohammad-Amin Kharazmi, son of Isatis co-founder Saeed Kharazmi, manages Better Way GmbH, a company registered in 2018 at a residential address in Vienna’s Margareten district.

Mohammad-Amin Kharazmi told Iran International: “I categorically deny any commercial or other activities connected, directly or indirectly, to Iran’s nuclear program.” He said he never had any legal or actual role in those entities.

The same address is used by two other firms—Pioneer Bio Instrument GmbH, a registered medical equipment supplier, and Petrophoenixx Handels GmbH—both with Iranian nationals in management roles.

Neither company responded to requests for comment by Iran International.

Kharazmi said many Iranian firms provide foreign addresses just to exaggerate their profile.

Better Way lists no website or contact details. Its declared business is online retail, with reported assets of roughly €420,000 at the end of 2023. On its own website, Isatis Danesh Tolid Tajhiz names Better Way as a European partner.

Legal cover, strategic depth

Israeli strikes during a 12-day war in June targeted SPND sites and killed multiple nuclear scientists.

The United States has repeatedly sanctioned SPND and affiliated companies, citing their role in “dual-use research and development activities applicable to nuclear weapons and nuclear weapons delivery systems.”

SPND’s work has drawn repeated censure from the International Atomic Energy Agency, and US sanctions target more than 30 of its scientists and multiple front companies.

In 2024, Iran’s parliament passed a law granting SPND official recognition under Iranian law. The act placed the organization directly under the authority of the Supreme Leader, exempted its budget from parliamentary oversight, and allowed it to form academic and commercial entities with legal protection.

The vessel, identified as Phoenix and sailing under the flag of a third country --Cook Islands -- was intercepted in Iran’s exclusive waters near Jask, said Ahmadali Goudarzi, commander of the border guards.

He said the operation was carried out following aerial surveillance and electronic monitoring that indicated an alleged large-scale smuggling attempt.

Authorities said 17 foreign nationals on board were detained and transferred to Jask for legal proceedings.

The cargo’s value was estimated at 759 billion rials (about $840,000), according to state media.

Iran has stepped up maritime enforcement in recent months, especially in waters near the Strait of Hormuz and the Persian Gulf, where fuel smuggling remains a persistent issue due to price differences with neighboring countries.

In April, Iran’s Revolutionary Guard Corps (IRGC) Navy said it had seized a tanker carrying 100,000 liters of smuggled fuel and detained six people, according to Fars News Agency. That followed a separate operation in which two tankers allegedly transporting more than 3 million liters of diesel were intercepted and taken to the port of Bushehr.

The IRGC regularly announces such seizures as part of what it calls efforts to curb fuel trafficking in the region, a key route for global oil shipments. Iran has also seized tankers over maritime disputes or in response to international sanctions enforcement.