"Nobody has ever given Iran a bigger opportunity to make a deal than I have". With these words of US President Donald Trump, the analysis of Andrew Peake's article in the Atlantic Council begins.
And he continues, quoting the words of the American head of state, that the Iranian regime's refusal to accept an agreement would lead to the US imposing "economic warfare and isolation on an unprecedented scale. This decision could mark a change in the administration's approach to one resembling the "maximum pressure" campaign against Iran during the first term of the US president.
Now, however, Trump's mandate is combined with the real threat that the US will resume direct attacks - actions that the US head of state has already shown that he is prepared to take in his second term.
Such an approach is likely to yield results, although it will take time. Iran is currently run by veterans of the Islamic Revolutionary Guard Corps (IRGC) who participated in the Iran-Iraq war. They could strike back before retreating. Their strategy relies on inflicting enough damage on the US in the short term to force it into an unprofitable deal. Moreover, their goal is to disrupt regional alliances to prevent better coordination against the Iranian regime. Ultimately, however, they will be forced to change course by the collapsing economic situation.
Why hasn't Iran broken yet?
Ever since the first "thaw" of the Islamic Republic under Mohammad Khatami, the reformist president from 1997 to 2005, the West has dreamed of a different Iran. An Iran that listens to rock music, an Iran whose development comes from the diaspora, and an Iran that peeks out from under the mandatory but casually worn hijabs. Such Iranians do exist, but in moments of particularly intense despair or hope, many of them are stoned by security forces in the streets, chanting first for change and then for the end of the regime. But this is not the only Iran.
The other side of Iran is also the guards at Evin prison, the seminarians in Qom, and the morality police patrolling the streets. Every nation has many faces, but its governments usually have fewer faces. Revolutionary regimes are usually resilient because they have a sense of public sentiment and know where their support lies.
Because Iranians themselves grew up on the streets, they often feel the people better than those who were born into power. Iran's new supreme leader, Mojtaba Khamenei, would certainly not dare to take to the streets, but the people of his father's generation who surround him are just that.
They are all tough men, hardened in their determination not to back down. Iran is often described as a regime driven by religious irrationality and obsessed with the idea of martyrdom - and to some extent it is.
For much of the ruling regime, the defining experience of life is not apocalyptic religious doctrines but the Iran-Iraq War of the 1980s - that almost forgotten conflict that lasted nearly a decade and was marked by horrific fighting, including "human wave" attacks and the use of poison gas.
Yet, much of the war was effectively a stalemate. By 1984, the front lines were practically bogged down in mud. Neither side could make any significant progress, but they continued to bomb, gas, and shell each other for years.
One of Iran's current lead negotiators, Mohammad Ghalibaf, was a 19-year-old commander in the Islamic Revolutionary Guard Corps (IRGC) during the Iran-Iraq War. Iranian President Massoud Pezeshkian served as a soldier and doctor in the IRGC during the same conflict. These are the people who are considered moderate reformists.
The new IRGC commander, Ahmad Vahidi, held a high command position in the organization during the war, although he was only in his early twenties at the time. The new secretary of Iran's Supreme National Security Council, Mohsen Rezaei, was the IRGC's commander-in-chief both during and after the war. He is the most significant figure among the regime’s new appointees, but they are all tough men, hardened in their determination not to back down.
Even before Operation Epic Fury, the IRGC had proven that it put the survival and power of the Iranian regime above the interests of the Iranian people. Many IRGC leaders seem to believe that former Syrian President Bashar al-Assad’s main mistake during the Syrian civil war was not to kill more people at the outset.
This was clearly evident in the protests in Iran in January of this year, when security forces killed as many protesters as possible in as short a time as possible, with some estimates putting the death toll at over ten thousand in just a few days.
Will the regime ever break?
The protest data is one of the best available indicators of the internal cohesion of the Iranian regime today. The number and scale of demonstrations the regime faces serve as an important barometer of its strength, but perhaps more important than scale are the location and composition of the participants.
The regime is well-prepared to defend itself against what could be defined as its class enemies - the upper middle class of northern Tehran, students across the country, the extended families of the Iranian diaspora in the United States, and the remnants of the former regime around the world. After all, he has been doing this for nearly half a century.
The fate of the brave young women wearing avant-garde headscarves does not always move the miner from Sistan and Baluchestan province, whose attitudes toward the Islamic Republic may be more favorable. That is why the protests in the province, rather than in the capital, pose a greater threat to the very existence of the regime.
Like the demonstrations of 2017-2018, the protests, driven by economic reasons, directly affect lower-middle and working-class Iranians. It is they who make up the personnel of the regime's security forces, who are more religious, and who should benefit from the existence of the Islamic Republic.
They are the people who join the "Basij" (Iran's internal security militia - ed.) and are serving their military service in the Islamic Revolutionary Guard Corps (IRGC), unlike the "Artesh" (Iran's conventional armed forces - ed.). When discontent begins to creep in among them, the risk of a split in the security forces increases significantly, which would be a serious warning signal for the regime.
Another important indicator of the regime's cohesion is the presence of hard currency assets in Iran - including dollars, euros, yen and gold. Iran uses hard currency to pay its proxies, finance imports and support its national currency - the rial.
Oil sales are Iran's main source of hard currency. The most effective sanctions against Iran target both energy exports in general and the banks that facilitate oil-related payments and transfers.
In 2013, coordinated international pressure on Iran's oil industry led to a decline in oil exports to an average of less than 1 million barrels per day (down from about 2.2 million barrels per day in 2011 - ed.). This pressure, exerted through international sanctions, helped achieve the Joint Comprehensive Plan of Action (JCPOA).
During the first term of US President Donald Trump, Iranian crude oil exports rose again to 1.85 million barrels per day, before falling to around 440,000 barrels per day.
Subsequently, Iran's foreign exchange reserves collapsed from a peak of $120-128 billion during the JCPOA to $15 billion in 2019, after Trump's "maximum pressure" sanctions were imposed.
During 2019-2020, when Trump's pressure was felt most strongly, the country's accessible foreign reserves fell even further, to $12.4 billion. If Trump had won a second term in office during this period, the Iranian regime would almost certainly have been forced to negotiate.
In the medium and long term, time is on the side of the United States, as Iran faces a shortage of funds and an inability to export its energy resources.
To date, it is unclear how much oil Iran exports. The country undoubtedly transports as much as possible overland, mostly through Iraq, but these are likely insignificant compared to its seaborne trade.
An additional challenge to reaching an agreement now concerns the Strait of Hormuz. If a deal to reopen it allows Iran to collect fees, it would likely require the lifting of many of the current and highly effective nuclear-related sanctions on the country’s financial sector in order for these payments to be processed.
Decoupling financial sanctions from Iran’s nuclear program could mean that key U.S. sanctions against the country would be lifted even without a concrete nuclear deal.
So instead of seeking a deal that involves collecting fees from Iran for passing ships, the U.S. should look for other ways to maintain oil supplies and stabilize global energy prices.
Staying the course
What is the situation for the Iranian regime in this context? The first optimistic scenario is that if three factors combine, the regime's grip on the country may begin to weaken. These factors are:
Iran's inability to export enough oil to maintain its foreign exchange reserves;
The emergence of cracks in the regime's internal unity, leading to the weakening of Iran's military power in the region;
Hyperinflation in Iran, which is generating massive and prolonged public discontent.
In the medium and long term, time is working in favor of the US and Trump, as Iran faces a shortage of funds and the inability to export its energy resources.
In the short term, however, when US gasoline consumption for cars is at its highest, and against the backdrop of discontent among American society ahead of the midterm elections this fall, Iran is trying to make the most of its self-ascribed advantage.
To achieve success in the medium and long term, the US must maintain its tough sanctions policy towards Iran and not are rejecting it as part of a larger deal. That would be more difficult than it was a decade ago during Trump’s first term and his “maximum pressure” agenda, and amid heightened military action.
Iran will resort to escalation before it allows itself to be strangled economically, and several Gulf states are already looking for ways to ensure their security in the face of an unpredictable Iranian state.
Saudi Arabia, for example, has signed a security agreement with Turkey and Pakistan, though the implications of that are not entirely clear, signaling a race to secure the region.
The continued threats from the Iranian leadership, such as the recent promise to move to “fully offensive” operations, contribute to this change, although in the context of the pressure campaign this probably means that the status quo is unsustainable for Tehran.
The signs of the regime's weakening are clear. What exactly will ultimately lead to its collapse remains unknown and impossible to predict. The United States has a poor record of predicting political processes in other countries - from the time of the USSR all the way to the war in Iraq.
In reality, the regime could fall tomorrow and the eventual future "shahinshah" could return and restore the monarchy. Or the regime could remain in power for another three decades, with our grandchildren still worrying about the nuclear program of the Islamic Republic of Iran.
The future is built with courage, but given the price being paid, it is difficult to wish young Iranians, regardless of their views or social status, to take to the streets again.