Abstract
Iranian foreign policy is facing a defining strategic dilemma: how to preserve the Islamic Republic’s regional position and establish a credible deterrent while avoiding a prolonged confrontation that could exhaust its military capabilities, deepen economic distress, and weaken its relationships with neighbouring states.
The conflict that began with US and Israeli attacks on Iran in February 2026 has exposed vulnerabilities in Tehran’s longstanding security model, which relied on regional partners, missile capabilities, asymmetric warfare, and geographical leverage. Iran has responded by attempting to extend the costs of confrontation across multiple theatres while using maritime insecurity and economic disruption as bargaining instruments. Yet the ability to impose costs on adversaries does not necessarily translate into political concessions.
This study argues that Iran faces a leverage-conversion gap: the difficulty of translating military resilience and economic disruption into durable diplomatic gains. It examines five interconnected challenges: the limits of deterrence through regional partners, the strategic risks of weaponising the Strait of Hormuz, the two-sided economics of attrition, the constraints of negotiating under pressure, and the tension between regime survival and regional influence.
The study concludes that Iran’s most sustainable path would involve converting coercive leverage into a negotiated security arrangement before prolonged confrontation erodes the very capabilities on which its influence depends.
Keywords: Iran, foreign policy, strategic deterrence, war of attrition, Strait of Hormuz, regional security, economic sanctions, Middle East.
1. Introduction: The Difference Between Survival and Strategic Success
For decades, Iran’s regional strategy rested on a combination of military deterrence, ideological positioning, missile capabilities, and relationships with armed and political movements beyond its borders. This approach allowed Tehran to project influence without relying exclusively on conventional military power. Its regional partnerships offered strategic depth, while its geographical position near the Persian Gulf provided an additional source of leverage.
The escalation of direct confrontation in 2026 has placed this model under exceptional pressure. The Chatham House assessment published following the US and Israeli attacks on 28 February 2026 described the conflict as a fundamental challenge to Iran’s security architecture and political survival. Subsequent analysis by the Carnegie Endowment for International Peace has examined Tehran’s shift towards more direct retaliation and its attempt to distribute the costs of the conflict across several theatres.
These developments raise a fundamental question: Can Iran restore its regional influence through escalation without becoming trapped in a conflict that undermines its long-term strategic position?
The question cannot be answered solely by measuring missile launches, battlefield losses, or the number of fronts involved. It requires distinguishing between three different outcomes: the survival of the Iranian political system, the preservation of its capacity to deter future attacks, and the restoration of political influence across the Middle East.
These objectives overlap, but they are not identical.
Iran could survive a prolonged confrontation while losing economic capacity, weakening its regional partnerships, and encouraging neighbouring states to coordinate more closely against it. Conversely, it could accept a limited settlement that falls short of its maximal demands but preserves sufficient military and diplomatic flexibility to rebuild its position.
The central argument of this study is that Iran’s strategic problem is no longer simply how to impose costs on its adversaries, but how to convert those costs into a favourable and sustainable political outcome.
2. From Forward Defence to the Problem of Direct Deterrence
Iran’s traditional security model was partly shaped by the Iran–Iraq War, which reinforced the importance of endurance, military self-reliance, and preventing enemies from concentrating all their pressure on Iranian territory.
Over time, Tehran developed a regional network that included Hezbollah in Lebanon, armed groups in Iraq, the Houthis in Yemen, and relationships with other actors across the region. These relationships differ in their ideological foundations, organisational structures, and degrees of dependence on Iranian support. They should therefore not be treated as a single, uniformly controlled military instrument.
The intended strategic effect was to create multiple points of pressure around Iran’s adversaries. In principle, an attack on Iran could generate consequences elsewhere, complicating the military planning of its opponents and raising the anticipated costs of escalation.
However, the 2026 conflict has exposed a weakness in this approach: the ability to threaten retaliation through regional partners is not the same as the ability to prevent direct attacks on Iran itself.
In its March 2026 analysis, Carnegie Endowment’s Michael Young interviewed Iran analyst Hamidreza Azizi about Iran’s changing war strategy. The analysis described a shift away from a model centred primarily on preventing attacks through strategic depth towards a more direct reliance on punishment, including missile and drone attacks.
The shift suggests that Tehran is attempting to establish deterrence through demonstrated willingness to retaliate rather than through the mere possibility of a wider regional response.
Yet direct retaliation carries a different set of risks. It exposes Iran’s own capabilities, increases the possibility of counterstrikes against its infrastructure, and makes escalation harder to contain once several parties become involved.
This creates a difficult trade-off. If Iran responds too cautiously, it risks encouraging its adversaries to believe that military pressure can be sustained at manageable cost. If it responds too aggressively, it may reinforce the argument among those adversaries that Iran must be subjected to further military pressure.
Neither restraint nor escalation automatically produces security. The strategic outcome depends on whether Iran can make its responses sufficiently credible to discourage future attacks without making further confrontation appear unavoidable.
3. Regional Partners: Strategic Assets or Independent Sources of Risk?
Iran’s regional relationships remain important, but their strategic value deserves closer examination.
The conventional description of these relationships as a hierarchy of proxies directed from Tehran can obscure the political realities within the countries where these groups operate. Research published by the Center for Strategic and International Studies has noted that Iran’s relationships range across a spectrum from close allies to more dependent partners, with varying degrees of autonomy over decision-making.
Hezbollah, for example, has its own domestic political calculations in Lebanon. Iraqi armed factions operate within a complex environment shaped by national institutions, competing political interests, and relations with neighbouring states. The Houthis have their own local objectives rooted in Yemen’s conflict.
Iranian support can increase these groups’ military capacity and strengthen their relationships with Tehran. It does not necessarily eliminate their independent interests.
This distinction matters more during a prolonged regional war than during a limited confrontation.
First, a regional partner may calculate that escalation serves its own political interests even when it imposes additional risks on Iran. Second, a partner may avoid a level of confrontation that Tehran considers strategically necessary. Third, attacks attributed to Iran-aligned groups may trigger retaliation against Iran or neighbouring states regardless of the exact degree of Iranian operational control.
Developments in October 2026 demonstrate how interconnected these theatres have become. Reuters reporting on 7 October described the renewed escalation between Saudi Arabia and Houthi forces amid the wider US–Iran conflict, highlighting the strategic importance of Yemen and the Bab al-Mandab Strait. Such developments show how conflicts that begin in one theatre can generate additional pressure across the region.
The result is a strategic paradox: the same network that gives Iran geographical depth can reduce its ability to control escalation.
This leads to an underappreciated question: Does Iran possess a regional network that it can activate, or a regional network whose actions it must continually manage?
The distinction is crucial. An effective strategy requires not only the capacity to generate pressure but also mechanisms for coordinating partners, limiting unintended escalation, and preserving the possibility of political settlements.
If Tehran’s relationships become primarily instruments of immediate retaliation, their long-term value may decline. Local partners could face mounting domestic costs, while neighbouring governments become less willing to accept arrangements that appear to expose their territories to attacks.
The policy implication is not that Iran can simply abandon its regional relationships. Rather, their strategic value depends increasingly on whether they can support political bargaining and regional stability as well as military deterrence.
4. The Strait of Hormuz: From Geographic Advantage to Strategic Liability
Iran’s geographical position is one of its most powerful sources of leverage. The Strait of Hormuz is particularly significant because it connects the Persian Gulf to international shipping routes and carries a substantial share of global oil and liquefied natural gas trade.
According to the International Energy Agency’s Strait of Hormuz factsheet, an average of approximately 20 million barrels of oil per day passed through the strait in 2025, equivalent to around one-quarter of global seaborne oil trade. Much of this energy supply is destined for Asian markets.
The strait therefore gives Tehran an instrument capable of producing consequences well beyond the immediate military theatre. Threats to maritime traffic can increase transport and insurance costs, unsettle energy markets, complicate military planning, and create pressure on governments that might otherwise support a prolonged confrontation.
However, this leverage comes with a serious limitation: its effects are difficult to confine to a single adversary.
A sustained disruption would affect Gulf producers, Asian importers, international shipping companies, and the wider global economy. It could also encourage affected governments to deepen cooperation on maritime security, develop alternative transport arrangements, and strengthen military coordination.
In other words, a measure intended to increase Iran’s bargaining power could ultimately strengthen the incentives for other states to reduce their exposure to Iranian pressure.
This is the Hormuz leverage trap. The more effectively a state demonstrates its ability to disrupt a critical international chokepoint, the stronger the incentive for other actors to develop ways to contain that vulnerability.
The problem is not simply whether Iran can disrupt shipping. It is whether the political and economic costs generated by that disruption can be converted into concessions before the affected parties prioritise neutralising the source of the disruption.
Developments in October 2026 illustrate this dilemma. Reuters reported on 11 October that Iran considered the US response to its proposal for restoring normal maritime passage insufficient. Iranian officials maintained that reopening the strait was conditional on meeting their demands, while Qatar and other parties continued mediation efforts.
The episode demonstrates that geographical leverage can bring an issue to the centre of diplomatic negotiations. It does not guarantee agreement on the terms.
A more sustainable Iranian strategy would therefore need to distinguish between three objectives:
- Using maritime leverage to demonstrate that Iran cannot be excluded from regional security arrangements.
- Preventing adversaries from interpreting restraint as an absence of deterrent capability.
- Preserving the economic and diplomatic incentives for neighbouring states to reach an accommodation with Tehran.
The first two objectives depend partly on Iran’s ability to threaten disruption. The third depends on its willingness and capacity to reduce disruption once negotiations become possible.
That tension is likely to remain central to Iranian foreign policy.
5. The Economics of Attrition: Why Endurance Is Not the Same as Advantage
Iran’s willingness to withstand economic and military pressure is an important factor in assessing the likely duration of the conflict. A war of attrition does not necessarily require one side to achieve conventional military superiority. It can instead aim to persuade the opposing side that the financial, political, and strategic costs of continuing the confrontation exceed the expected benefits.
Iran may calculate that it can sustain pressure longer than its adversaries can maintain a costly military campaign. Such a calculation is not inherently irrational: governments operate under different fiscal conditions, domestic political constraints, geographical circumstances, and levels of tolerance for economic disruption.
Nevertheless, attrition is not a one-sided contest.
The Washington Post reported on 9 October 2026 that US restrictions and the blockade of Iranian ports had significantly reduced Iranian oil exports and deprived Tehran of substantial revenue. The report also noted that Iran continued moving some oil through land routes and selling previously exported stocks, demonstrating that pressure had constrained its options without completely eliminating its ability to generate income.
These developments reveal two important features of economic coercion.
First, sanctions and blockades can impose significant costs without producing immediate political concessions. A government facing what it perceives as an existential threat may prioritise political survival and security over short-term economic relief.
Second, resilience should not be confused with the absence of damage. A state can continue functioning while its capacity to invest, maintain infrastructure, support regional partners, and respond to future emergencies progressively deteriorates.
For Iran, this distinction creates a time problem. Continuing the conflict may increase pressure on its adversaries, but it also consumes resources that would otherwise be available for reconstruction, economic recovery, and rebuilding military capabilities.
The longer the confrontation continues, the more important it becomes for Tehran to demonstrate that the costs it imposes on its opponents are producing tangible gains.
Without such gains, endurance risks becoming an argument for continuing a policy whose strategic returns are declining.
There is also a broader regional consequence. Iran’s neighbours have economic development objectives that depend on investment confidence, predictable trade, infrastructure protection, and stable access to international markets. Military pressure that repeatedly threatens these interests may encourage governments to regard Iran less as a potential negotiating partner and more as a continuing source of systemic risk.
The strategic question is therefore not simply whether Iran can outlast an adversary. It is whether surviving the confrontation leaves Iran in a better position than the one it might have achieved through a negotiated settlement.
6. The Leverage-Conversion Gap: The Missing Link in Iran’s Strategy
The preceding sections point to a broader analytical problem that deserves more attention in assessments of Iranian foreign policy: the difference between possessing coercive leverage and converting it into a durable political settlement.
This study calls that difference the leverage-conversion gap.
A state can possess military capabilities, disrupt trade, threaten infrastructure, and impose costs on its adversaries without securing the political outcomes it seeks. Coercive capacity matters, but its strategic value depends on how it changes the decisions of other actors.
Iran’s current position can be understood through four dimensions.
Military leverage. Missile and drone capabilities, geographical advantages, and the possibility of pressure across multiple fronts can complicate the planning of stronger adversaries. Their value, however, depends on whether they deter future attacks or simply trigger countermeasures.
Economic leverage. Disruption to maritime trade can impose costs on external actors, but it can also increase the costs borne by Iran, its neighbours, and its potential diplomatic partners. The longer disruption persists, the greater the incentive to contain it.
Diplomatic leverage. Iran’s strategic position and its ability to affect regional security make it difficult to exclude from negotiations. Yet diplomatic relevance does not guarantee that other states will accept its demands.
Political leverage. Iran’s regional relationships may provide access and influence, but that influence depends partly on the willingness of partners and neighbouring governments to sustain cooperation. Excessive escalation may weaken this willingness.
The distinction between these dimensions is important because gains in one do not automatically produce gains in another. Iran might improve its ability to disrupt maritime trade while losing diplomatic trust. It might demonstrate military resilience while experiencing economic deterioration. It might bring regional partners into a confrontation while weakening their freedom to participate in future political settlements.
The resulting strategic challenge is not necessarily to maximise pressure at every opportunity. It is to identify the level of pressure at which the adversary has sufficient incentive to negotiate but not such strong incentives to organise a broader campaign to neutralise Iran’s sources of leverage.
This is not a precise threshold that can be calculated in advance. It changes with military developments, political leadership, economic conditions, and the expectations of each government.
Nevertheless, it provides a useful framework for evaluating Iranian policy. The relevant measure of success is not the volume of retaliation or the duration of resistance, but the degree to which these instruments improve the terms on which Iran can secure its long-term interests.
Table 1. Iran’s Strategic Instruments: Intended Gains, Hidden Risks and Measures of Success
| Strategic instrument | Intended gain | Underestimated risk | Key measure of success |
|---|---|---|---|
| Regional armed partners | Strategic depth and distributed deterrence | Loss of control over escalation and partners’ independent interests | Ability to coordinate pressure and support a settlement |
| Strait of Hormuz | Economic and diplomatic bargaining leverage | Stronger international efforts to contain maritime disruption | Concessions achieved relative to economic and diplomatic costs |
| Missile and drone capabilities | Credible retaliation and deterrence | Counterstrikes and further military degradation | Reduced probability of future attacks |
| Economic endurance | Outlasting external pressure | Erosion of resources needed for recovery | Ability to sustain security while rebuilding economic capacity |
| Regional diplomacy | Recognition of Iran’s interests in a settlement | Negotiating deadlock and declining trust | Verifiable agreements that reduce the risk of renewed conflict |
Source: Author’s analytical framework, drawing on the research and reporting cited in this study. This is a qualitative assessment, not a statistical ranking.
The table illustrates a central point: the strategic value of Iran’s instruments depends not only on their capacity to impose costs, but also on whether they generate political outcomes that justify those costs.
Iran could, for example, demonstrate its capacity to disrupt maritime trade without obtaining meaningful concessions. It could display military resilience while weakening its economic foundations. It could mobilise regional partners while making neighbouring governments less willing to accommodate its security interests.
This is the leverage-conversion gap: the distance between demonstrating power and achieving a durable political result.
7. Diplomacy Under Pressure: The Problem of Sequencing
Diplomacy is often described as an alternative to military pressure. In reality, negotiations during a conflict are shaped by the relationship between military developments, political demands, and the order in which commitments are implemented.
Iran’s reported proposal to restore normal maritime passage illustrates this problem. Reuters reported on 11 October 2026 that Tehran considered the US response to its seven conditions insufficient. Reported areas of contention included the wider terms for ending hostilities, restrictions on Iranian ports, and financial issues. However, publicly available reporting should not be mistaken for a complete, independently verified account of every condition in the proposal.
The broader diplomatic difficulty is one of sequencing.
Iran wants tangible guarantees and concessions that reduce the immediate costs of confrontation. Its adversaries, by contrast, have incentives to seek changes in Iranian behaviour before relaxing the measures designed to exert pressure. Each side may fear that making the first concession will weaken its negotiating position or allow the other to regroup.
This creates a commitment problem. Even when both parties recognise the costs of continued conflict, they may disagree on the order in which obligations should be fulfilled and on how compliance should be verified.
A potentially more sustainable approach would separate negotiations into linked but distinct stages.
The first stage would focus on reducing immediate risks: protecting commercial shipping, establishing reliable crisis communications, and preventing attacks from triggering wider escalation.
The second would address reciprocal measures, including the implementation and verification of agreed restrictions, arrangements concerning maritime security, and clearly defined steps towards reducing economic pressure.
A third stage could address broader and more difficult issues, including nuclear-related concerns, regional security, sanctions relief, and the future role of regional armed partners.
Such a framework would not eliminate fundamental disagreements. Its purpose would be to reduce the number of questions that must be resolved simultaneously.
It would also allow both sides to demonstrate compliance incrementally rather than relying on a single comprehensive settlement that may be politically difficult to negotiate and implement.
Regional mediators could contribute by maintaining communication channels and helping to distinguish between immediate security measures and the more contentious questions that require sustained negotiations.
The central lesson is that successful diplomacy does not require either side to abandon all leverage before talks begin. It requires a process through which limited concessions produce credible reciprocal benefits, reducing the incentive to return to confrontation.
8. Three Strategic Scenarios for Iran
Iran’s future foreign policy will depend on whether its leadership prioritises immediate deterrence, a negotiated reduction of pressure, or continued confrontation in pursuit of more extensive concessions. Three scenarios merit consideration.
Scenario One: Managed De-escalation
In this scenario, Iran and its adversaries accept a limited arrangement that reduces immediate military risks and restores more predictable maritime activity. Broader disagreements remain unresolved, but the parties establish enough reciprocal commitments to prevent repeated escalation.
For Tehran, the principal benefit would be preserving strategic relevance while reducing the burden of conflict. Its principal challenge would be demonstrating to domestic constituencies that compromise produces meaningful gains rather than simply postponing another confrontation.
Scenario Two: Prolonged Strategic Stalemate
The parties continue to exchange threats and impose costs without reaching a durable settlement. Iran retains some capacity to disrupt its adversaries, while external military and economic pressure continues to constrain its recovery.
This scenario could appear tolerable to leaders who regard endurance as a means of strengthening deterrence. Over time, however, it would risk widening the gap between Iran’s capacity to resist pressure and its capacity to restore regional influence.
The result could be a state capable of surviving confrontation but increasingly constrained in its ability to shape the regional order.
Scenario Three: Regional Escalation
A renewed direct attack, a serious incident involving shipping, or a major escalation on another regional front could broaden the confrontation. Such a development might temporarily strengthen the position of actors who argue that additional pressure is necessary. It could also increase the risks of economic damage, retaliatory action, and further deterioration in regional relationships.
The danger is that military developments could begin to drive political decisions rather than serve clearly defined political objectives. Once several theatres become connected, containing escalation becomes more difficult.
These scenarios are analytical possibilities, not predictions. Their value lies in identifying the choices and risks facing Iran and the other parties.
9. Policy Implications: From Demonstrating Power to Preserving Strategic Options
If Iran’s long-term objective is to preserve its security and restore regional influence, several policy implications follow from the preceding analysis.
First, deterrence should be assessed by its political effect, not merely its military visibility. Retaliation that demonstrates capability but produces no lasting change in an adversary’s behaviour may carry diminishing returns. Iran would need to distinguish between actions that strengthen its bargaining position and those that mainly increase the probability of further confrontation.
Second, regional relationships require political management as well as military coordination. The value of partners depends partly on whether their activities can be reconciled with Iran’s wider strategic objectives and with the domestic constraints under which those partners operate. A network that creates pressure but cannot support a settlement may provide less durable influence than Tehran expects.
Third, maritime leverage must be weighed against its long-term costs. Iran’s geography guarantees continued relevance to Gulf security, but the repeated disruption of trade could encourage other states to coordinate more closely to reduce their exposure. Preserving the possibility of secure and predictable passage could serve Iran’s interests better than relying indefinitely on uncertainty.
Fourth, economic resilience should be linked to a credible political objective. Enduring sanctions and military pressure is not an end in itself. The strategic question is whether continued resistance improves Iran’s eventual negotiating position enough to justify the additional costs.
Finally, diplomacy should be treated as an instrument of strategic recovery rather than evidence of weakness. A phased agreement could allow Tehran to preserve some leverage while reducing the risks of a conflict that increasingly consumes the resources needed to rebuild its regional position.
These implications do not assume that Iran can unilaterally end the confrontation. Any durable settlement would depend on the choices of its adversaries, their willingness to offer credible commitments, and the implementation of reciprocal measures.
They do, however, suggest that Iran has reason to evaluate its military and diplomatic instruments according to a common objective: preserving the resources and relationships needed to remain influential after the current conflict.
10. Conclusion: The Limits of Strategic Endurance
Iranian foreign policy is entering a period in which the distinction between resisting pressure and restoring influence is becoming increasingly important.
Tehran retains several instruments that make it a consequential regional actor: missile and drone capabilities, geographical leverage, established relationships with regional partners, and the ability to affect vital maritime routes. These instruments complicate the calculations of its adversaries and make it difficult to resolve the conflict without addressing Iran’s security concerns.
Yet the existence of leverage does not guarantee a favourable settlement.
A strategy based on sustained pressure can impose real costs on stronger adversaries, but it can also weaken Iran’s economic foundations, expose the limits of its regional partnerships, and encourage neighbouring states to pursue security arrangements designed to contain Iranian influence. The longer such a strategy continues without producing measurable political gains, the more difficult it becomes to justify the costs of endurance.
The principal challenge facing Tehran is therefore not simply how to survive a prolonged confrontation. It is how to prevent survival from becoming its only achievable objective.
Iran’s long-term regional position will depend on whether it can transform coercive capacity into credible diplomatic outcomes, maintain the political value of its regional relationships, and reduce the likelihood that its instruments of deterrence will repeatedly trigger the very conflicts they are intended to prevent.
Strategic endurance may prevent defeat, but only the conversion of endurance into political gains can create the foundations of a durable regional position.
The ultimate test of Iranian foreign policy will not be how long the country can sustain confrontation, but whether it can emerge from that confrontation with greater security, sufficient economic capacity for recovery, and a regional environment in which influence can be exercised without the constant threat of another war.
References and Further Reading
- Carnegie Endowment for International Peace. “Iran Rewrites Its War Strategy.” 30 March 2026.
Read the analysis - Chatham House. “US and Israel Attack Iran, Killing Khamenei. Tehran Launches Counterstrikes: Early Analysis from Chatham House Experts.” Published 28 February 2026; updated 2 March 2026.
Read the analysis - International Energy Agency. “Strait of Hormuz.” Factsheet, updated February 2026.
Read the factsheet - Reuters. “Iran Says US Response to Its Proposal to Reopen Hormuz Was ‘Insufficient’.” 11 October 2026.
Read the report - The Washington Post. “After Pledging Swift Results, Trump Team Prepares for Long Economic War with Iran.” 9 October 2026.
Read the report - Center for Strategic and International Studies (CSIS). “Axis Rising: Iran’s Evolving Regional Strategy and Non-State Partnerships in the Middle East.” 11 October 2018.
Read the research - Council on Foreign Relations (CFR). “Iran’s Regional Armed Network.” Updated 15 April 2024.
Read the background analysis - Carnegie Endowment for International Peace. “Firepower Against Willpower.” 9 March 2026.
Read the analysis - Reuters. “The War’s Explosive New Front.” 7 October 2026.
Read the report
Editorial note: The article reflects reporting and analysis available as of 12 October 2026. Developments relating to negotiations, maritime access, sanctions, and military operations should be rechecked before publication. The “leverage-conversion gap” is an analytical framework developed for this study, rather than a quotation or established term attributed to a particular research institution.
