Iran in crisis: the landscape after the Twelve-Day War

The so-called Twelve-Day War between Israel and Iran in June 2025 marked the culmination of a decades-long international crisis surrounding Iran. The conflict significantly weakened the Iranian state but failed to resolve the core issue: Tehran’s pursuit of its nuclear programme. Pressure on Iran has continued, including further rounds of economic sanctions.

Despite suffering severe losses during the war, Iran has managed to maintain internal stability while actively adapting to the new situation. However, the conflict has intensified a number of fundamental challenges and dilemmas facing the Islamic Republic. These include the collapse of its previous security and development strategy and mounting political, economic and social problems. The crisis has been accompanied by growing tensions within the political elite and society, which are likely to trigger serious internal upheavals.

In this situation, Iran’s foreign policy is likely to remain defensive, reactive and inconsistent, largely owing to tensions within the elite. The state’s weakness, its mistrust of the United States and the high expectations placed on it by Western actors (the US, the EU and the United Kingdom) reduce the chances that a diplomatic resolution to the dispute will be found. Iran’s weakened position, combined with the lack of prospects for a political settlement, increases the risk of further Israeli attacks, both aerial and hybrid, aimed at toppling the regime in Tehran and strategically marginalising the country.

The Twelve-Day War: a turning point in the Iran crisis

The current situation in the Islamic Republic of Iran is the result of the so-called Twelve-Day War. Between 13 and 24 June, Israel targeted Iran with airstrikes and sabotage and disinformation operations on an unprecedented scale. On 22 June, the United States also carried out a single wave of air and missile strikes. Iran responded by launching drone and missile attacks on targets in Israel and, in a single act of symbolic retaliation, on the US military base in Qatar.

Israel’s strategic objectives included destroying Iran’s nuclear programme, dismantling its defensive capabilities, paralysing its state institutions and, ultimately, toppling its regime. The US intervened militarily to support Israeli operations targeting Iran’s nuclear infrastructure, sending a clear signal that it was seizing the initiative in the conflict. This compelled both sides to halt their military operations (though in practice this meant only Israel).

The outcome of the war remains inconclusive. There is no doubt that Iran’s military capabilities were significantly degraded, its air defence systems crippled and its missile arsenal partially destroyed. Its ability to support regional proxies, including Hezbollah in Lebanon and the Houthis in Yemen, was significantly curtailed. Israeli strikes killed several of Iran’s most senior military and security commanders, over 400 military personnel (primarily specialist staff) and more than a dozen leading scientists and managers involved in its nuclear programme. A number of Iranian nuclear facilities sustained serious damage, including sites at Natanz, Arak and Fordow, and research centres in Isfahan and Tehran.

Israel also conducted a complex and sophisticated operation aimed at provoking social unrest and mobilising and organising the Iranian opposition as part of a broader strategy of undermining public trust in the state. Factors that worked in Israel’s favour included its relatively effective defence (substantially supported by the US) against Iranian air attacks, which official data indicate killed 33 people, including 32 civilians; more broadly, Israel received unequivocal support from the United States.

Israel scored an undeniable success in the war, but failed to achieve all of its strategic objectives. In particular, there is considerable uncertainty regarding the extent of the damage inflicted on Iran’s nuclear programme. According to some assessments, Iran could restore its capabilities in this area within two years. The fate of up to 440 kilograms of uranium enriched to 60% also remains unknown; in theory, this stockpile could be rapidly enriched to the 90% level required to produce weapons-grade nuclear material.

Although Iran’s air defence system was largely neutralised and a significant portion of its offensive arsenal was destroyed or depleted, the country still possesses missiles, drones and the means to conduct hybrid operations against Israel, US forces and their partners, primarily through its network of proxies. The regime did not collapse in the six months following the war. From Israel’s perspective, the success is therefore only partial; Washington forced both sides to end the hostilities, but the current situation is regarded as temporary.

Israeli attacks came to an end, but pressure on Tehran has not ceased. The United States has imposed additional sanctions on Iranian entities and those cooperating with Iran, including Chinese and Iraqi companies and banks, continuing a campaign it began in early 2025. In addition, it has been working actively, both through unilateral action and by pressuring the governments of Lebanon and Iraq, to dismantle the structures and support networks of pro-Iranian forces in the Middle East: Hezbollah and various Shia militias, respectively. In a notable development, last November the Iraqi government designated both Hezbollah and the Houthi movement as terrorist organisations. Israel has continued to carry out regular strikes against Hezbollah targets in Lebanon.

At the same time, the European Union has intensified its pressure on Iran regarding political dialogue. France, Germany and the United Kingdom, known as the E3, have demanded that Tehran restore the International Atomic Energy Agency’s (IAEA) full oversight of its nuclear infrastructure, hand over illegally enriched uranium and return to direct negotiations with the United States, which, in turn, insists on Iran’s complete abandonment of uranium enrichment as a precondition for any agreement.

As a result of Iran’s failure to clearly accept all these conditions, the E3 decided to trigger the automatic reinstatement of full-scale UN sanctions, which had been gradually lifted since 2015 under the nuclear agreement with the UN Security Council known as JCPOA.^[1] These sanctions re-entered into force on 28 September and led to a series of additional, targeted restrictions imposed on Iran by the EU and Western countries. The international political and economic pressure on Tehran has been reinforced by threats from Washington hinting at a possible return to military action. At the same time, the EU and the US have repeatedly expressed they are willing to seek a political resolution to the crisis and to achieve a full normalisation of relations – a commitment that US President Donald Trump reiterated in Israel’s Knesset on 13 October.

Iran: down but not out

The Twelve-Day War is the most serious challenge Iran has faced in recent decades and marks a turning point in the worsening crisis of the Iranian state and its policy. In the short term, the situation has been contained: the state and the regime have survived and Iran is now adapting to the new realities.

Even before the war had finished, the Iranian government initiated the process of adapting the state’s command and governance structures to the conditions of high-intensity conflict, including the disintegration of the decision-making chain and the physical isolation or elimination of key individuals. Spurred by the consequences of the war, Iran has developed a succession framework for its most senior positions both in the military (where top-level appointments depend on political decisions) and in the civilian leadership. The adopted arrangements reportedly apply both to central and local government officials and to the highest-ranking figures in the state. Iran’s Supreme Leader Ali Khamenei, who went into hiding during the conflict, is said to have designated a narrow group of potential successors and established a crisis-response procedure.

Iran has continued to debate and test various measures aimed at decentralising and increasing the flexibility of the state’s governance and military command structures, including by strengthening the authority of provincial governors. Furthermore, existing mechanisms for coordinating the activities of military and civilian state institutions have been revised, notably by establishing the Supreme National Defence Council headed by the president.

Even during the war, Iran tightened its internal security measures, conducting a large-scale wave of arrests that targeted individuals accused of collaborating with Israel or organising public protests. In total, at least 21,000 people were detained; some were incarcerated and a small number were executed.

Iran has also taken steps to restore its military capabilities and end its international isolation after it failed to secure any meaningful political, let alone military, support from its nominal allies in Moscow and Beijing. Since the end of the war, Iran’s president and other senior officials have paid repeated visits to Russia, China, Belarus and the countries in the region. As part of these diplomatic moves, Russia and China made an unsuccessful attempt to block the reinstatement of UN sanctions against Iran. These two countries have also pledged to rapidly expand their cooperation with Iran.

In the military sphere, Iran has primarily sought air defence systems (from Russia, Belarus and China) and combat aircraft, signing a contract for Russian Su-35 multirole fighter jets and receiving MiG-29 fighter jets.^[2] China has faced accusations of supplying Iran with materials and technologies for producing missiles. Iran is also keen to expand its economic ties, seeking avenues to sell its oil under tightened sanctions (China remains its main partner), to attract investments and obtain technology for its crisis-stricken energy sector and to secure gas supplies from Russia. In spite of official statements, the actual support provided by China and Russia appears to be limited.

Iranian policy continues to be marked by a rhetoric of deterrence and threats of retaliation in the event of further attacks. Iran has repeatedly pledged to accelerate the development of its missile programme while warning that it could block the Strait of Hormuz. It has also threatened to trigger a refugee crisis by pushing at least 2.5 million Afghan refugees and migrants residing in Iran^[3] towards Turkey and Europe, or to conduct operations through its proxies, for example by activating gangs based in Western and Northern Europe which are alleged to have links to Iran.

On the nuclear issue, Iran initially sought to maintain channels of political dialogue with the E3 and, informally, with the United States. The outbreak of war during nuclear negotiations with Washington provided grounds for questioning the very purpose of diplomatic dialogue. Iran formally froze the talks and ultimately, following the re-imposition of UN sanctions, suspended its commitments under the JCPOA. It has also repeatedly threatened to withdraw from the Non-Proliferation of Nuclear Weapons Treaty (NPT) and to expand its nuclear programme without any limitations. Nevertheless, contrary to its official statements, Iran has resumed dialogue with both the IAEA and the E3, agreeing to some of their demands, including providing conditional access to selected nuclear facilities. These steps did not prevent the sanctions from being re-imposed. On the one hand, Iran has continued to sharply criticise the EU and the US and questioned the purpose of holding talks with them. On the other, it has consistently signalled its willingness to reach an agreement with the US; one of its preconditions is that it should receive security guarantees, at least for the duration of any future negotiations.

The Iranian government scored a success, at least in the short term, by defusing public discontent. It used repression and arrests, but other factors also proved significant, including appeals to patriotic sentiment, a strong emphasis on national and secular themes rather than on traditional Islamic ones, and a relatively restrained response to signs of post-war social liberalisation. Notably, it has tolerated increasingly frequent cases of women violating hijab regulations – meaning the dress codes mandated by Sharia and Iranian law. Criticism of government policy and frustration over the social situation has been channelled by the so-called reformist camp within the ruling elite, which includes President Masoud Pezeshkian.

A systemic crisis

While the Iranian government may consider the domestic situation to be under control for now, this should not obscure the fact that the Twelve-Day War was both a symptom of the state’s profound crisis and also a factor that has significantly exacerbated this crisis. The strategic assumptions underpinning Iran’s policy, its core instruments, the adaptive capacity of its political system and its socio-economic viability have all been called into question. At the same time, all the negative trends affecting Iran are steadily worsening.

Over the past decades, Iran’s primary objectives in the realm of foreign and security policy have been to ensure its own security in the face of the threat from the United States and its regional partners (primarily Israel) and to establish itself as a regional power. Its main instruments in pursuing these goals have included two overriding factors. Firstly, developing its nuclear programme (with the ultimate aim of acquiring nuclear weapons and their delivery systems) both as a marker of its status and a deterrent. Secondly, cultivating a network of state and non-state regional allies. Iran’s most successful period came during the 2010s, when it established an effective network of partners and clients in countries such as Lebanon, Iraq and Yemen, partly as a result of the failure of US policies in Iraq and Afghanistan and the upheavals of the Arab Spring. Working in tandem with Russia, Iran secured control over Syria and checked its regional rivals such as Saudi Arabia and Turkey. This trend was halted in 2020, when US forces killed General Qasem Soleimani, widely seen as the architect and driving force behind Iran’s Middle Eastern strategy. It reversed decisively in 2023 and, for the past two years, Israel has been systematically dismantling Iran’s network of proxies in Palestine and Lebanon. In the autumn of 2024, Israel launched direct strikes on Iran, destroying vital assets such as its air defence systems. The Syrian regime of Bashar al-Assad collapsed later that year.

The Twelve-Day War has reinforced the trends working against Iran. The cessation of hostilities in June did not put an end to US efforts to roll back Iran’s influence in the Middle East. Washington has intensified its engagement in Lebanon, Iraq and the Gulf region, notably by strengthening its security guarantees for Qatar last September, following an Israeli strike on a Hamas office in Doha. Iran now faces the hypothetical prospect of a US military presence along its border with Armenia and in Afghanistan.^[4]

The defeat in the war has exacerbated Iran’s political crisis. Iranian policy rests on a strong ideological and institutional foundation – the unique model of the Islamic Republic – that ensures its continuity. Its traditional core consists of the Shia clerical establishment, while real power lies with the Islamic Revolutionary Guard Corps (IRGC), which dominates the security sector and also wields significant influence in the political and economic spheres. Ali Khamenei, who has been Supreme Leader since 1989, remains the linchpin of the system. The ruling elite has always shown little capacity or willingness to institute profound policy changes. Successive rounds of internal and external conflicts, sanctions and other crises have made reform extremely dangerous for the regime and virtually impossible to carry out. Nevertheless, the foundations of the system and its strategic direction are now under growing and increasingly radical pressure, both from society and from a segment of the elite (the so-called reformists) who want to push for a fundamental revision. At stake is not only the future of Iran’s nuclear programme and its relations with the West, but also the gradual liberalisation of the country’s social, economic and political life.

The ‘radical’ wing of the reformist camp is currently centred around former president Hassan Rouhani, while the moderate wing is represented by the government led by President Masoud Pezeshkian. The war has intensified these internal disputes, which have been unfolding against the backdrop of threats to state cohesion, external dangers and a deepening socio-economic crisis (see below). Tensions within the elite have been exacerbated by the scale of foreign infiltration, which enabled Israel to identify and eliminate senior state officials during the war. Most notably, it assassinated two consecutive heads of Khatam al-Anbia, a powerful, IRGC-managed holding operating in strategic sectors of the economy. In the short term, the conflicts within the ruling elite have resulted in half-measures and inconsistency in policymaking. The long-term effects may include the regime’s inability to reform itself and a deepening paralysis of the state. The inevitable, and likely turbulent, transition following the demise of Khamenei, who is 86, will not only intensify the struggle over his succession, including control over both the formal and informal instruments of power he developed during his rule, but will also force a profound overhaul of the system itself.

Iran faces a major structural problem in the form of an economic crisis. More broadly, its development model is nearing exhaustion and its economy lacks any positive financial or technological drivers. For decades, Iran’s economic growth has been constrained by a number of factors. Chief among them are sanctions, which have caused Iranian assets abroad to be frozen, cut off the country’s resource-based economy from export markets (currently, 90% of Iran’s oil exports are sold to China at discounted prices), blocked investment and restricted financial operations, which have an impact on private and independent businesses. Trade with Russia and China is now based on barter arrangements. While Iran has developed mechanisms to circumvent these restrictions, enabling its economy to survive, they are not a path to growth. Furthermore, they have strengthened the role of the IRGC, which has developed and now controls the mechanisms for managing the economy as the country grapples with international isolation.

Further challenges include sustaining enormous security-related expenditure (in particular the funding of an ambitious and costly regional policy that relies largely on support for proxy forces) and developing its nuclear programme. In this context, Iran lacks the financial resources and technological capacity to maintain, let alone expand, its critical infrastructure, including in the energy sector. Mounting difficulties stem from ageing oil and gas extraction and processing infrastructure, along with an inefficient power generation system. As a result, Iran has been forced to import gas, while energy shortages, including regular blackouts, have severely disrupted its economy, forcing the industry and public administration to halt operations and also affecting ordinary citizens.

In recent months, severe water shortages, including in Tehran itself, have become a major problem. These stem from below-average rainfall and also past missteps in the construction and expansion of water infrastructure (such as reservoirs and hydroelectric plants) and poor management practices. Any attempts at economic reform face a serious obstacle in the opaque governance structures and mechanisms that favour the IRGC and powerful religious foundations directly subordinate to the Supreme Leader. The pervasive corruption also poses a broader problem.

Iran’s development model has run its course and the country lacks any positive technological, financial or other growth drivers. The war has significantly worsened the situation, causing severe damage to infrastructure that is difficult to quantify and necessitating substantial investment in its reconstruction; and restoring the military capabilities is another priority. According to World Bank projections released last October, Iran’s economy is expected to contract by 1.7% in 2025 and by a further 2.8% in 2026.

Iran’s profound decline is reflected in a social crisis and the high potential for anti-regime protests – two risks that the war has undoubtedly exacerbated. Public frustration has been fuelled by steadily deteriorating living conditions, including inflation nearing 50% (as of October 2025), a sharp rise in the cost of living (the prices of basic goods soared at least by 50% over the past year and a fuel price hike was announced last December), widespread shortages and now the prospect of a further deterioration due to the war and sanctions. The economic crisis is increasingly associated with the country’s costly, and ultimately ineffective, foreign policy. Social, local and sectoral protests have become a permanent feature of Iran’s socio-political landscape.

The erosion of the social legitimacy of the existing political system poses a deeper problem. Public belief in the possibility of transforming the system is waning, as reflected in the declining trust in the reformist forces. The very purpose of participating in state-sanctioned elections – even if they have long been competitive within the ruling elite – is increasingly being called into question. Official, inflated turnout figures in the most recent presidential election stood at 38% and 49% in the first and second rounds of voting respectively, marking the lowest participation in the recent history of Iran. Iran faces a serious challenge stemming from the gradual erosion of its ideological legitimacy, driven by advancing secularisation^[5] and even outright anti-Islamic sentiments in the country.

Iran’s otherwise very strong pro-state and patriotic sentiment, which was demonstrated during the war, is now grounded in references to Iranian civilisation and Persian/Iranian nationalism, rather than to Islam. Demands for a liberalisation of the system, particularly expressions of opposition to the regime’s repressive practices and its restrictive morality laws, remain a consistent feature of Iran’s protest dynamics. A combination of political, social and cultural grievances, often compounded at the local level by ethnic minority issues, has formed the backdrop to recurrent waves of spontaneous mass protests over the past decades (such as those in 2009, 2019/2020 and 2022), which have been suppressed with constantly increasing brutality.

Fears over social stability – and in effect, the stability of the entire system – rose sharply during the Twelve-Day War. Israel launched a sophisticated campaign aimed at generating and fuelling unrest through disinformation operations, strikes against critical infrastructure and selected security structures, as well as support for exiled opposition groups, ranging from monarchist circles to radicals affiliated with the People’s Mojahedin Organization of Iran (MEK/MKO), alongside separatist Kurdish and Baluch organisations. The war, followed by a new wave of sanctions, has thus exacerbated existing problems and introduced an additional layer of external pressure. While the Iranian government managed to de-escalate social tensions in the months immediately following the de facto cessation of open hostilities, these efforts may prove insufficient in the longer term. Meanwhile, more substantial steps would risk undermining the systemic and ideological foundations of the Islamic Republic.

Outlook

Iran has limited options for overcoming the strategic impasse it has found itself in following the Twelve-Day War. With scarce resources and growing tensions within the ruling elite, the regime’s priority will be to stabilise the domestic situation through a mix of coercive measures and limited liberalising concessions and to rebuild its defensive capabilities, relying on its own resources and the modest external assistance from countries such as China, Russia and Belarus. This foreign support is likely to remain minimal: just enough to keep Iran afloat and to divert Washington’s attention. Regardless of its official rhetoric, Iran is unlikely to make any aggressive moves in the region, as any such action would be costly, highly risky and damaging to its relations with the neighbouring countries. Favourable scenarios for Iran would involve a potential shift in US policy, a strategic entanglement of the United States in another theatre of operations, or a serious weakening of Israel.

A successful political resolution to the Iranian nuclear issue appears highly improbable. For part of the ruling elite, the country’s nuclear programme – and this would presumably include the development of nuclear weapons and their delivery systems – is both essential to preserving national sovereignty (by legitimising the regime) and indispensable as a deterrent. The entire elite remains deeply distrustful of the United States as a negotiating partner. There is growing concern that Washington may resort to the use of force and that it is not able to fully control Israel. Confidence in the credibility and agency of the European Union is also low. The Iranian government is likely to engage in negotiations with the IAEA, the EU and other actors aimed at paving the way for decisive talks with the US. It may even be prepared to offer significant concessions, but these would probably be contested within Iran with Washington viewing them as insufficient. However, Israel remains the most serious challenge, as it is not, cannot be and does not wish to be part of any political process aimed at normalising relations with Iran. Based on its actions in recent years, it would almost certainly take active steps to undermine any agreements that might be reached.

Domestically, public discontent, driven by both social and political factors, and tensions within the elite are expected to rise and reach their peak no later than when Ali Khamenei is eventually succeeded. In the short term, large-scale, grassroots protests leading to the revolutionary overthrow of Iran’s political order appear unlikely, largely due to the organisational weakness of the anti-regime forces. Nevertheless, ongoing tensions, political and social challenges and intensified public pressure are accelerating the erosion of the system and may ultimately trigger a turbulent overhaul led by the reformist segment of the elite. This could involve a partial de-Islamisation of the regime, liberalisation and greater openness to the outside world, with a stronger emphasis on nationalist themes.

A radical, sudden collapse of the entire system appears more likely in the event of active external involvement – that is, an expansion of the actions undertaken by Israel during the Twelve-Day War aimed at causing state failure, such as eliminating key figures, targeting the institutions responsible for internal security, carrying out disinformation campaigns and providing support for exiled opposition groups and other actors. However, this scenario would offer little prospect for rapid stabilisation in Iran due to a number of factors, including the exiled opposition’s political alienation from Iranian society and its deep internal divisions, the expected rise in separatist tendencies among ethnic minorities and, finally, the regime’s decades of experience from regional conflicts and its ongoing preparations for operating under conditions of state collapse.

With Iran pushed into a highly defensive posture and with limited prospects for effectively resolving tensions in its relations with the United States and the European Union, the strategic initiative now lies with Israel. It is reasonable to assume that Israel views the current circumstances as a unique window of opportunity to eliminate Iran as a regional actor and it will seek a pretext – such as the need to neutralise the Iranian nuclear threat entirely or to respond to alleged Iranian violations of existing commitments – to either launch a direct attack or escalate its sabotage and hybrid operations. It could take these actions independently of the United States and in the face of opposition from other regional states, without any ambition to shape a stable new order in Iran should its regime collapse. In the event of another attack, Iran would likely retaliate with air strikes on Israeli territory, as seen during the Twelve-Day War, and with broader actions in the Middle East targeting Western interests, particularly those of the United States and the EU. These could include attempts to block maritime traffic in the Strait of Hormuz and efforts to destabilise other countries across the region.