Iran Is Caught In A Ceasefire Trap
The longer they resist, the more Operation Economic Fury reduces regime leverage
By Monday morning, the Islamic Republic had fired a “limited number,” “barrage,” or “salvo” of “about 10 missiles” at Israeli airbases. First Ramat David was targeted, then Nevatim, and then Tel Nof on Monday morning. None of the missiles hit their target. Israeli air defenses intercepted most or all of them. Sirens sounded across Israel, but there were no confirmed hits, damage, or casualties.
Esmaeil Baghaei, spokesman for Iran’s Foreign Ministry, said the strikes “will further complicate an already ‘chaotic diplomatic process’ with the U.S.” He did not say that the process is ended. He is telling the truth about the chaos because that was the entire point of these strikes. Iran, and more specifically the Islamic Revolutionary Guard Corps (IRGC), has correctly assessed that Operation Economic Fury is a clear and present danger to the Islamic Republic. The ceasefire is a trap.
Iran did not break out of the ceasefire trap with this exchange. Tehran says they are still engaging in the ceasefire negotiations via Pakistan even after the limited Israeli response against Iran. Rather, the weekend flurry of missiles was very clearly aimed at altering the status quo of the ceasefire while constructing a narrative of Israeli malfeasance.
Let us recall the sequence of events. Israel warned Hezbollah, Iran’s proxy in Lebanon, against launching attacks on Israel. Iran warned Israel against attacking Beirut to punish Hezbollah, Iran’s proxy in Lebanon, in retaliation for any strikes on Israel by Hezbollah, their proxy in that country. Hezbollah, which again is Iran’s proxy in Lebanon, promptly ignored Israeli warnings so that Hezbollah’s sponsor, Iran, could strike Israel in retaliation for the IDF’s retaliation on Beirut.
The entire affair has been directed from Tehran, which would have the world blame Israel for the continued suffering of the Islamic Republic. That suffering, or “strategic erosion” as Hamidreza Azizi terms it, only happens inside the ceasefire trap.
The delay in finalizing the memorandum of understanding is increasingly interpreted as purposive rather than procedural and as a U.S. attempt to use the passage of time as a strategic instrument. The concern is that each week of ceasefire, with American military and economic pressure continuing unabated and Iranian restraint producing no reciprocal concessions, represents a net erosion of the position Tehran believes it secured during the forty days of active fighting.
Azizi reports that “the government finds itself caught between two simultaneous pressures. Engaging in diplomacy without tangible gains — no sanctions relief, no end to the blockade, no reciprocal restraint from Washington — makes the leadership appear to be negotiating from weakness.” As I keep telling readers, this is because the regime is actually negotiating from actual weakness. Azizi is validating my strategic assessment here.
To make peace with the Great Satan requires the regime to change. As this is impossible, the regime has chosen to strangle, slowly, inside the ceasefire trap as the colossal economic damage inflicted by Operation Epic Fury, the kinetic phase of the conflict, sets in.
Analyses of risk to Iran’s long-term economic future made in April set early June as the date for the regime to experience its first serious collapses. On Foreign Policy’s podcast this weekend, economist Adam Tooze said the damage of OP Economic Fury is being underreported in western media. He estimates that the US-Israeli campaign has done 100 times as much economic damage to Iran as the Islamic Republic has managed to inflict on both enemies.
According to DropSite, Iran has already lost roughly half the country’s gross domestic product. Millions of Iranians are out of work. The systematic targeting of steel, petrochemical, and industrial infrastructure underlying Iran’s missile arsenal has simultaneously put a dagger through vital organs of manufacturing. No wonder that “the human and economic toll of the war makes it equally difficult to justify continued sacrifice without a credible account of what it can actually produce”, as Azizi writes.
Hormuz is “the primary mechanism through which Tehran translated battlefield endurance into political leverage” during OP Epic Fury, Phase One.
Now, Phase Two under the ceasefire — Economic Fury — is “a process in which the operational significance of the Strait is steadily reduced until the point at which Iran agrees to formally reopen it yields little diplomatic or economic return”.
As the US Navy blockade continues indefinitely, and effective counter-blockade efforts continue to bring the ‘hostage’ ships that were trapped inside the Gulf out of it, Iran loses Hormuz leverage indefinitely.
As I wrote last week, the IRGC is especially concerned with Lebanon, where the IDF is still advancing against Hezbollah on the ground. Lebanon is the biggest military and political colony of the Islamic Republic. Losing leverage in Lebanon directly affects the IRGC, which largely exists to maintain proxies overseas. The ‘ceasefire’ is in fact a low-intensity strategic competition, but the regime is competing with a snare around its neck. Time is on the side of Donald Trump.
The regime is testing the limits of the ceasefire to create informational space for political outcomes. Put simply, they are betting on the unpopularity of Trump’s war at home, and the embrace of anti-Semitism by the American Democratic Party, to punish him through the political process. With five months to go before the elections, this likely means the heat death of Iran’s economic universe will happen first. It is a foolish bet.
It will not work because the Trump strategy does not rely on Israeli power. Instead, Trump relies on Arabs to continue what they are already doing, applying economic pressure in the form of long-term cooperative projects to circumvent Hormuz. The longer the accelerated construction continues, the more long-term economic leverage Iran loses in Hormuz.
Challenging the US Navy for supremacy in the Strait of Hormuz is another key goal and purpose of the IRGC. Another pillar of their existence is threatened by the extended state of ceasefire.
Iran simply faces a much more powerful macroeconomic alliance than the IRGC has, or can build in any reasonable amount of time. OP Economic Fury found its schwerpunkt, its decisive moment, in Beijing weeks ago. There will not be an emergency Belt and Road Initiative for Iran. Chairman Xi cannot afford it and the Islamic Republic has no credit line.
Before the war even began, I had told readers to expect a macroeconomic analysis of this conflict from me. ALL WARS ARE FUNDAMENTALLY MACROECONOMIC AFFAIRS. The most likely winner of any war is the side with the larger macroeconomic alliance, which is why anti-Israel organizing in the United States is so focused on relatively small Israeli defense support programs and ‘disinvestment’ from the Israeli ‘settler economy’.
OP Economic Fury demonstrates this iron law of polemology with smaller salvoes of missiles than Epic Fury. These are narrative-driven, even symbolic attacks with little or no military impact.
None of this analysis is original to me. I have also repeatedly identified Trump as kayfabe. This analysis of his behavior as a form of public spectacle, a la professional wrestling, is not my original insight, either. It is however an exquisite explanation of his willingness to play ‘the heel’ right now, begging Netanyahu to refrain from retaliation so that a lasting peace can be secured. As always, it is a mistake to take his words literally instead of seriously.
Actions matter more than words. Treasury Secretary Scott Bessent has announced that Iranian assets held in the West will be used to help Arab allies rebuild all the damage inflicted by Iran. The more Iran resists, the less money they receive for the eventual peace. Bessent’s specific words matter less than the administration’s willingness to arbitrage its own economic leverage in order to force the Islamic Republic to capitulate to the Great Satan. Every flurry of drones launched against their Arab neighbors will have a cost, now.
Time will tell whether this leveraged buyout of the Islamic Republic succeeds. Donald Trump could potentially ride out his entire second term in a state of furtive ceasefire punctuated by intermittent missile and drone barrages. It remains unclear just how much of the Iranian missile and drone programs has actually been restored, and at what cost.
The only certainty is that Iran keeps losing leverage all the time, while the economic risks to the regime grow exponentially over time. Strategic patience has high returns for Trump at relatively low risk.
Regime adaptation in response to these risks comes with trade-offs, including non-economic risks. In order to use bitcoin to circumvent the blockade, for example, the Islamic Republic had to turn the internet back on over the last two weeks. Students at twenty campuses immediately organized demonstrations.
The ceasefire trap is inescapable, now. The regime lacks military power to escape it, nor can it survive the humbling of submission. We are bound to see more of this fitful thrashing, the death-struggle of a snared animal.