The principal source of capital flight appears to be entities and individuals connected to state institutions and semi-state organizations, rather than ordinary Iranian households.By Dalga Khatinoglu, Middle East ForumNew data released by Iran’s Central Bank show that despite recording a trade surplus of nearly $27 billion in 2025, the country experienced a capital account deficit of roughly the same magnitude.In practical terms, Iran lost around $27 billion through capital flight last year alone—equivalent to approximately 8 percent of the country’s gross domestic product.The figure represents a 4.5-fold increase compared with 2020 and highlights a growing structural problem within the Iranian economy.Such capital outflow cannot realistically be attributed to ordinary citizens or private-sector traders.The scale points instead to actors with access to substantial financial resources and privileged channels for moving funds abroad.One oft-cited destination for Iranian citizens’ capital is the Turkish real estate market. However, official Turkish statistics suggest that purchases by Iranian citizens are insufficient to explain the dramatic rise in capital flight.According to Turkey’s Statistical Center, Iranians purchased 1,878 residential properties in the country last year, a decline of 15 percent from 2024 levels and only one-fifth of the peak recorded in 2020.These figures indicate that individual property purchases abroad are not the primary driver behind the accelerating capital outflows witnessed since 2020.The structure of Iran’s economy offers a more plausible explanation. Mohammad Saleh Olia, head of Iran’s National Productivity Organization, recently stated that genuine private-sector firms account for only about 14.5 percent of the country’s economy.The government controls roughly 15 percent, while the overwhelming majority is dominated by semi-state institutions, including entities affiliated with the Islamic Revolutionary Guard Corps, organizations overseen by the Office of the Supreme Leader, and other politically connected conglomerates.The role of the genuine private sector in Iran’s foreign trade is limited.Access to foreign exchange and import licenses remains heavily influenced by state institutions and semi-state organizations that benefit from preferential economic arrangements.One of the most significant distortions stems from Iran’s multiple exchange-rate system. The Central Bank supplies foreign currency for selected imports at rates substantially below market levels.This creates strong incentives for politically connected importers and exporters to exploit exchange-rate differentials.Companies receiving subsidized foreign currency often have little incentive to repatriate export earnings and sell them back to the Central Bank at artificially low official rates.Instead, keeping foreign currency abroad or transferring it to overseas accounts can generate higher returns. Such incentives facilitate capital flight on a large scale.As a result, the principal source of capital flight appears to be entities and individuals connected to state institutions and semi-state organizations, rather than ordinary Iranian households.The phenomenon also cannot be explained solely by sanctions-related restrictions on oil exports.Last year, Hossein Samsami, a member of the Iranian parliament’s Economic Commission, disclosed that approximately $95 billion in “non-oil export revenues” had failed to return to the country between 2018 and 2024.According to his figures, the amount represented roughly 35 percent of Iran’s total non-oil exports during that period.Because non-oil exports are less directly affected by U.S. oil sanctions, the missing revenues further strengthen the argument that politically connected actors are playing a central role in capital outflows.Another trend is the acceleration of capital flight following the escalation of direct military tensions involving Iran, Israel, and the United States over the past year.Available data suggest that the share of non-oil export revenues failing to return to the country roughly doubled in 2025 compared with previous years.Growing geopolitical uncertainty appears to have intensified concerns among economic actors with close ties to the political establishment.Those concerns may be encouraging the transfer of assets abroad as a hedge against future instability.This interpretation was echoed by U.S. Treasury Secretary Scott Bessent shortly before Operation Epic Fury.Speaking before the Senate Banking Committee in February, Bessent stated that Iranian officials were “frantically” moving assets out of the country.He suggested that such behavior could signal diminishing confidence among insiders regarding the durability of the current political system.“The rats are leaving the ship,” he quipped, implying that individuals closest to the centers of power were among those leading the exodus of capital.Whether or not such assessments are accurate, Iran’s official statistics reveal a reality: capital flight has become one of the country’s most significant economic challenges.The persistence of preferential access to foreign exchange, the dominance of semi-state institutions, weak transparency, and mounting geopolitical risks continue to encourage the movement of wealth abroad rather than investment at home.The post Iran’s capital flight has surged 4.5-fold in five years appeared first on World Israel News.