The stock apps include a web browser, email client, and more. Sure, the apps are what make the phone, but to say you can’t do anything on a stock iPhone is a lie. And for those inclined enough, there’s AltStore for sideloading.
You do need an Apple account and constant connection to Apple servers to be able to sign development and AltStore apps - I assume for a govt that wants to block the store, blocking auth or signing servers is just one more line on a memo.
But of course you're right - you can use the web fine, provided the modern web apps you're using aren't crippled by Apple's slow API adoption in Safari, which is of course to drive you to the better experiences that are waiting for you in the hypothetically accessible App Store.