The Pessimists Have Been Wrong About Iran

The imam is hidden, the proxies are shrinking, and there are no cards left

IDF sappers destroy a Hezbollah tunnel complex under the Lebanese village of Majdal Zoun. Iran is unable to intervene

Iran is still in crisis. The economy remains devastated. Millions are unemployed. Oil prices have collapsed below pre-war levels, creating a market glut, and nobody is lining up to buy their oil. Because who wants to trade with a lunatic pirate kingdom that attacks commercial shipping in the modern world?

Iran formally buried the Ayatollah Khamenei today. His son Mojtaba, putatively the new Supreme Leader of the Islamic Republic, did not attend the funeral processions. The regime says they were afraid for his life, but the absence has fed speculation that Mojtaba is not in fact alive at all. Is the hidden imam just a front? The question is more than academic, because the supreme leader is the source of authority in Iran’s constitutional system.

Mohammad Bagher Ghalibaf, the speaker of the majlis, has authority to negotiate (he says) because the velayat-e-faqih has supposedly blessed the proceedings. As I observed at the beginning of the week, this claim is increasingly contested inside Iranian regime politics.

As I also observed, Iran’s ability to close the Strait of Hormuz keeps deteriorating under the Memorandum of Understanding (MoU). The IRGC simply lacks the means to close the strait, whatever they announce otherwise.

As the next round of talks is set to begin in Qatar, the US Navy has two aircraft carrier battle groups keeping the Omani route through the strait open. The USS Boxer, an amphibious assault ship, has entered the theater this week carrying Marines. American military hard power leverage increases even as IRGC weakness is exposed.

Israel telegraphed plans to strike Iran this week, with Ghalibaf and the foreign minister on the reported target list. It is rare to see the IDF announce their intentions in advance like that. Israelis emphasize they are independent of Donald Trump here, and in fact the whole story smells like a pressure campaign on the regime.

Trump says they can have 60 days. Of course, his timelines are always flexible, but Benjamin Netanyahu’s patience is limited. By exquisite coincidence, a car overturned on Monday, killing Mohammad Akbarzadeh, the Political Deputy of the Office of the Supreme Leader’s Representative in the IRGC Navy. What a happy accident to remind the hardline resistance to the MoU that it is in fact the moderate outcome.

The American side keeps offering Iran economic relief — after cooperation. Iran cannot cooperate with the Great Satan. Tehran resists normalcy among nations. Trump has briefs on his hard power options, just like Netanyahu. He is giving Iran an opportunity to make a deal. The regime of the hidden imam keeps resisting that deal.

The Saudis too have offered normalization to Tehran this week. This is being cast by some as suspicious. Saudi Arabia has to live in the same neighborhood as Iran, shares the same sea as Iran, and has Arab neighbors with restive Shia populations. For a variety of understandable reasons, they would like to see a diplomatic outcome rather than a military one. Moreover, their economic pressure on Iran — measured in wellhead oil pressure — is proving decisive in the dispute.

Trump has been content to play the heel and let the Arabs put economic pressure on Iran. Tanker flows through the strait are still not back to prewar levels, but dozens of tankers are going through the strait every day, now, and Americans drive into the July 4th weekend with gasoline prices plummeting. Iran has lost their economic political leverage in the strait altogether, and they are not getting it back.

President Trump has all the leverage in the strait and it keeps growing. So far, J.D. Vance has not surrendered an inch, or a dollar, to the regime in advance of performance. Foreign Minister Abbas Aragchi can talk about an “inalienable right” to uranium enrichment all he wants, but the American side holds all the power to withhold frozen assets until IAEA inspectors are allowed to access nuclear sites in Iran.

Iran’s hard power capabilities are greatly diminished. A tentative deal is developing between Israel and Lebanon precisely because Iran cannot summon a hard power response to their implementation. It has become possible for the Lebanese Armed Forces to take control of Lebanon again and disarm Hezbollah because Iran’s missile and drone salvoes cannot overwhelm Israeli defenses, anymore.

Likewise, this week the Iraqi government arrested dozens of high-profile officials, lawmakers, and former government figures with alleged Iran ties. Senior officials in the Oil Ministry were arrested in the Green Zone. Iran has been documented blending or disguising its oil with Iraqi crude oil to circumvent the market discounts of US and international sanctions. IRGC proxies are being reduced while negotiations continue.

The ‘bull market’ in oil is gone. The strait is opening. The imam is hidden. The proxies are shrinking. Ghalibaf and Aragchi have a choice: be normal, or be over. So far, they have lost their diplomatic contest of will with the Americans — because the Americans have all the hard power, as well as the larger economic alliance.

For the regime, this is of course not the end. Resistance and defiance can never end. They want to drag out the inevitable forever. Trump and Netanyahu are not giving them forever. Trump, Vance, and the Arabs are offering Iran a normal place in the world if they just act normally. But they do not have forever.

I cannot say how this will end. I can only say that it is not what I was told would happen. I was repeatedly told that the war with Iran would never lead anywhere, least of all here. With every phase — the bombing, then the blockade, then the negotiations — there was anguish and despair about the outcome. The optimist case has yet to pan out, but the pessimists have been wrong, so far.