Fourteen months on from the October 7th attacks and Israel’s war against axis of resistance groups in Gaza, Lebanon, Syria, Iraq, and Yemen, and Iran appears to be in a seemingly indissoluble bind of its own making. Tehran has seen two rounds of unprecedented direct military confrontation with Tel Aviv --the latter of which resulted in significant strikes on its military infrastructure. Its deterrent focused forward defense strategy looks broken-- degraded as it was by Israel’s formidable military capabilities. Hezbollah and Hamas have been under persistent Israeli attack with clear indication that the Israeli government has no intention of returning to the pre October 7th status quo toleration of Iran backed militarized groups on its borders. While a ceasefire in Lebanon was just reached with Hezbollah’s consent in November, the conflict in Gaza continues with no settlement in sight. Furthermore, the rapid downfall of Bashar Assad in Syria, Tehran’s longstanding regional ally, has eroded the power, connectivity and influence of Iran’s axis of resistance network, leaving Tehran looking even more vulnerable.
The November 5th resounding re-election of Donald Trump promises to return a maximum pressure policy of sanctions enforcement on Iran while empowering an Israeli first regional strategy. Relations with European partners remain frustrated by Tehran’s transfer of lethal aid to Russia, continued detention of dual and foreign nationals, interference abroad and its advancing nuclear programme. Despite having restored regional ties with its neighbours across the Middle East and having doubled down on relations with Moscow and Beijing in the pursuit of longer strategic partnerships, Tehran remains without naturally aligned allies and partners.
This bleak picture bleeds into the domestic domain. After years of sanctions and little or no economic growth, Iran’s financial outlook is tenuous at best. The country is experiencing a serious but undiscussed climate crisis. Iran’s political landscape is marked by intense factional competition, leading to policy paralysis and hindering effective governance. This internal discord complicates efforts to address pressing national issues. The elite are publicly weighing up the merits of weaponizing Iran’s nuclear program. Its political landscape in advance of the most consequential political transition in a generation that will come when Supreme Leader Ali Khamanei dies or decides to pass the baton of power to a new clerical leader is opaque and fractious. Moreover, social dynamics across Iranian society are detached from the stale ideology of the clerical elite and vulnerable to unrest at any moment over any of the aforementioned issues. Evidence of this is seen in the government’s continued preoccupation with enforcing women’s hijab through the passing of new legislation. A significant increase in executions and reports of human rights violations have drawn international criticism, adding pressure on the government to reform its judicial and law enforcement practices.
Taken together, it can certainly be argued that Iran is facing a number of interconnected challenges not seen since the 1980-88 period of the Iran-Iraq war. At that time, while the 1979 Iranian revolution had succeeded in overthrowing the Pahlavi monarchy, Tehran faced significant internal opposition to the hardline clerical monopoly of power at the same time it was isolated regionally. After eight years of hardship and collective suffering though, the Iranian elite survived this period of protracted pressure but did so only through compromise with the West. This experience alongside an assessment of Iran’s own opportunities and weaknesses could shed light on Tehran’s circuitous path ahead.
The aforementioned challenges have also coincided with the snap June election of the pragmatic moderate Masoud Pezeshkian. After declining public participation in elections and frustration stemming from the crackdown of 2022 "women, life, freedom" protests, the new president, who is an insider in the political system, has come into office on a platform of sanctions relief and incremental reform. Having succeeded Ebrahim Raisi, who died in a helicopter crash in May of 2023, and was thought to have been the hardline successor to the Supreme Leader, Pezeshkian has also tried to manage Iran’s factional domestic dynamics by aligning with the Supreme Leader and his office alongside consensus building with traditional conservatives such as Speaker of the Parliament and Presidential contender Mohammad Baqer Qalibaf. This strategy led to Pezeshkian’s cabinet being approved without opposition signifying a degree of unique elite unity.
Pezeshkian pledged to address Iran's economic challenges by seeking the lifting of international sanctions and implementing policies aimed at improving living standards. The nation faces severe economic difficulties, including high inflation, currency devaluation, and energy shortages. These issues have led to widespread public dissatisfaction and have strained the government's ability to maintain stability. The new president is committed to easing strict social regulations, particularly those affecting women's rights, including the enforcement of the mandatory hijab. He also expressed a desire to re-engage with Western nations to reach a new nuclear agreement and reduce regional tensions. Pezeshkian and his team expressed support for such outreach during the September 2024 United Nation General Assembly meetings in New York.
Following Donald Trump's re-election as U.S. President, the Iranian rial plummeted to an unprecedented low of 703,000 rials per U.S. dollar, reflecting deepening economic instability. Despite plans to boost oil output by 250,000 barrels per day, Iran remains vulnerable to potential U.S. sanctions that could curtail exports and further strain the economy. Iran is implementing rolling power blackouts due to natural gas shortages, exacerbated by underinvestment in infrastructure and the discontinuation of high-polluting fuel use to combat air pollution. The 2024–25 national budget reveals a high deficit, with increased military spending and reduced allocations to the National Development Fund. This fiscal strain is compounded by inflationary pressures and tax hikes.
This picture is clouded by President Trump’s resounding reelection including resultant Republican victories in the Senate and House of Representatives where Republican policymakers are united in pressuring and containing the Islamic Republic’s activities. President Trump’s early appointments ranging from Senator Marco Rubio as Secretary of State to Peter Hegseth as Secretary of Defense all indicate that a more stringent maximum pressure campaign is returning. The incoming administration intends to reapply stringent sanctions targeting Iran's oil industry and financial sectors, aiming to curtail Tehran's revenue streams and limit its nuclear and military advancements. Efforts will be made to diplomatically isolate Iran by encouraging allies and international partners to sever or reduce economic and political ties, thereby increasing pressure on the Iranian government. There is potential for increased cyber activities aimed at disrupting Iran's critical infrastructure and communication networks, further destabilizing its internal operations. These measures collectively aim to create a stronger security zone for Israel, but ultimately to compel Iran to negotiate a more comprehensive agreement addressing its advancing nuclear program, ballistic missile development, and regional activities. Important to note, as made clear by Brian Hook, former Iran envoy and head of Trump’s transition team, is that the administration’s Iran goal is a change of Iranian behavior not regime change. Revelations of Elon Musk’s meeting with Iran’s UN Ambassador also foreshadow similar objectives.
While the Trump team seem united in exerting pressure on Iran it is important to remember that the President returns to an evolved Middle East where regional states have embarked on de-escalation and reconciliation strategies. This has led to the resolution of the Gulf dispute with Qatar, rapprochement between the UAE and Saudi Arabia with Iran and Turkey and the preservation of the Abraham Accords normalization agreements with Israel. This pattern of reconciliation has prevailed despite the increase in tension and conflict across the region. There is also a new acute awareness of the connectivity of Middle East conflicts. Continued fragility in Lebanon, uncertainty in Syria amid the war in Gaza and lack of progress in Yemen bodes poorly for regional stability. Israel’s unwillingness to engage in a Palestinian political process suggests that conflict management if not resolution remains a region-wide priority.
Iran has already capitalized on this norm by partaking in widespread regional dialogue including the first Iran GCC summit since 2007 as well as Saudi Arabia sponsored Arab and Islamic summits in support of a ceasefire in Gaza and statehood for Palestine. Another example was seen in advance of Israel’s October strike on Iran, when Abbas Araghchi, Iran’s foreign minister, also toured Arab states ranging from Egypt, Jordan, Syria and Saudi Arabia to pressure its neighbours from providing any support. Iran-Saudi relations, while still tepid, are also moving ahead with technical, military and diplomatic exchanges. Iran’s participation in the BRICS (an informal grouping of emerging economies originally comprising Brazil, Russia, India, China and South Africa – which now has 5 additional members) is also seen as another untested avenue for increased economic and political cooperation.
In tandem, the geopolitical landscape, although not fully favorable for Iran, is one that Tehran seeks to leverage. Iran and Russia are preparing to sign a comprehensive strategic partnership treaty that will enhance their defense cooperation. This partnership reflects a mutual interest in countering Western influence and addressing shared security concerns in the Middle East and beyond. While the full details have not been disclosed and the deal has been twice postponed, key aspects are expected to include joint military activities, including training exercises and intelligence sharing, to bolster regional security. The agreement may involve joint development and production of military technologies, leveraging each nation's expertise to advance their defense industries. Most importantly, Iran is anticipated to acquire advanced Russian military equipment, such as S-400 air defense systems, to enhance its defense capabilities. It is worthwhile noting that President Trump’s intention to negotiate with Putin over Ukraine could impact Tehran, especially if, as part of a deal Trump would demand Putin’s support for maximum pressure. Here, too, Beijing, as Iran’s primary purchaser of Iranian oil, could also come under compliance pressure from Washington and suffer under the weight of incoming tariffs.
In the runup to President Trump’s inauguration aware of these intersecting pressures amid geopolitical and regional shifts, Tehran is no doubt trying to make the best of a weak hand that is heavy on challenges and light on opportunities. Drawing a card from past efforts of compromise referred to as ‘heroic flexibility,’ Iranian policymakers from across the system including longstanding advisors close to Iran’s Supreme Leader have showcased unity and openness to dialogue. The range and scope of what might be discussed remains unclear as does Tehran’s willingness to directly deal with Washington. This strategy by no means guarantees negotiations, let alone their success. It does, however, showcase the pragmatic impulses of survival that lie at the heart of the Iranian state and ultimately should be taken into consideration by those in Washington who believe that a deal with Tehran can be done.
Dr Sanam Vakil is the director of the Middle East and North Africa Programme at the London based think tank Chatham House. She is also the James Anderson Adjunct Professor at Johns Hopkins SAIS Europe.
