The attack carried out by Hamas against Israel on 7th October 2023, followed by the war in Gaza, marked a decisive turning point in the regional influence of the Islamic Republic of Iran in the Middle East. The question of the beginning of the end for the “Axis of Resistance” was raised due to the military defeats of Iran-backed non-state forces in the region. These military setbacks in Syria and Lebanon were accompanied by political weakening: the loss of Hezbollah’s influence in Lebanon, the emergence of a new regime in Syria, and the increasing autonomy of Iraqi political forces. These dynamics could accelerate in the context of the implementation of the “maximum pressure” strategy by the second Trump administration. Washington has now developed a strategy of rollback[1] of Iranian influence, replacing the containment[2] strategy used during the Biden administration (2021-2025). Tehran is now in a defensive regional posture: it must manage the repercussions of heightened tensions with Israel since January 2025 and with the United States.
After the attack on 7th October, Tehran sought a balance between its support for its non-state allies in Lebanon, Yemen, Iraq, and Syria, and its broader strategy of reducing the risk of direct military confrontation with Israel and the United States. To this end, Tehran intensified its diplomatic efforts, strengthening its ties with partners such as Russia and China, while also enhancing good neighbourly relations with its Arabian Peninsula neighbours.
Thus, the government of the “moderate” Masoud Pezechkian has reinforced its policy of good neighbourliness. In particular, it has accelerated rapprochement with Moscow. The signing of a “comprehensive strategic partnership agreement” on 17th January 2025, three days before the inauguration of the new President, marks the two powers’ intention to send a strategic message to the new administration. Indeed, the Iranian debate on the possibility of accelerating the militarisation of its nuclear programme, in turn, raises questions in Washington DC and Tel Aviv about the use of military options to curb Tehran’s nuclear progress. The caution of the resigning vice-president, responsible for strategic affairs and former foreign minister, Mohammad-Javad Zarif, who opposes any change to the Iranian nuclear doctrine, should be understood in this context. He stated: “I am 100% against the idea of changing the [Iranian] nuclear doctrine, and I believe this is not the policy of the country either. However, there exists a circle within the country that agrees with this idea, but the regime’s and the Leader’s view is different.”
In March 2025, even though the Houthis in Yemen decided to resume their military operations, prompting a military response from the British-American coalition, Tehran sought to dissociate itself from these military actions, emphasising local dynamics to avoid direct involvement in a regional war. Since the early 1980s, the Islamic Republic has relied on asymmetric tactics and regional militias to maintain pressure on Israel and the American presence in the region. One of the consequences of 7th October was a deterioration in economic conditions in Iran. This led to a tightening of American economic sanctions, runaway inflation, devaluation of the national currency, and increasing budgetary constraints. In response, the authorities of the Islamic Republic are striving to strengthen trade with non-Western partners and bypass sanctions on oil exports. In other words, the regime is prioritising internal resilience in the face of external pressures. This has the effect of accelerating the country’s impoverishment to sustain the ideological ambitions of the Islamic Republic, based on Khomeinist ideology.
The regime extensively exploits the fear of chaos to control the Iranian population. With the successive crises in Iraq, Syria, Lebanon, and Afghanistan, Iranians fear a collapse of the state. Maintaining a certain level of military tension in the region thus serves the interests of the regime, enabling it to justify internal repression. This is known as the Islamic Republic’s siege complex: Iranian leaders instrumentalise external pressure to legitimise domestic repression. The risk that this strategy of tension poses to Iran’s future is the acceleration of the country’s economic decline.
Thus, the Iranian currency—a key indicator of economic health—ended 2024 at a record level of 821,500 rials to the dollar, down 40% from its level at the start of the year. GDP per capita has dropped by 45% since 2012—when sanctions related to its nuclear programme intensified—reaching $4,465.60 per capita in 2023, according to the World Bank. Despite sanctions, Iran recorded notable revenues in 2023: between $35 and $50 billion from oil sales, and an additional $15 to $20 billion from petrochemical exports. In July, foreign currency reserves stood at $53 billion, €17 billion ($19 billion), and other smaller amounts. These figures reflect a relative economic resilience in the face of international isolation. In this bleak economic context, a return to a “maximum pressure” policy under the second Trump administration could lead to exacerbated internal tensions.
This ideological continuity at the expense of internal economic prosperity aims to preserve Tehran’s soft power as the leader of the “resistance” axis. While initially, the authorities of the Islamic Republic seemed to capitalise on the anti-Israeli dimension of its regional strategy, the Islamic Republic has not been able to restore a credible conventional military deterrence during the two direct military confrontations with Israel in April and October 2024. Iran’s military power has been weakened by Israeli strikes against its regional allies, particularly Hezbollah in Lebanon, Hamas in Gaza, the collapse of Assad’s regime in Syria, and the destruction of much of its air defenses. Former President Biden attributes the effects of Israel’s regional policy since October 7, 2023, which has led to the weakening or fragmentation of the pro-Iranian axis following the fall of Assad’s regime, the military defeats of Hamas in occupied Palestine, and especially Hezbollah in Lebanon.
Moreover, the sudden political system change in Syria raises concerns in Tehran about a potential domino effect. The collapse of Assad’s regime could encourage opposition groups in Iran, inspired by the idea of the possible end of even the most authoritarian political systems. Iran’s internal situation is already marked by economic challenges, social unrest with repeated strikes (teachers, nurses, etc.), and a population increasingly disillusioned with the (poor) governance of the political elite in power since 1979. The fall of Assad could act as a catalyst for renewed dissent, in the context of the regime’s diminishing regional influence.
Iran’s efforts to maintain its regional influence come at a high financial cost, exacerbating the deterioration of its already fragile economy due to international sanctions and internal mismanagement. In several countries where Tehran holds considerable influence, complex local dynamics are questioning its grip and complicating its expansion strategies. The erosion of Iranian influence does not necessarily mean the disappearance of the “axis of resistance.” Tehran continues to invest in asymmetric strategies and bilateral relations with local actors. However, the “axis of resistance” seems less coordinated and less effective than before due to the loss of the strategic corridor passing through Syrian territory since December 8, 2024. This situation could lead to several scenarios: a reorientation of Iranian strategies towards more targeted and discreet support; an attempt to strengthen existing alliances to counter losses; or an increase in tensions if the Islamic Republic believes there is a direct and imminent threat of military intervention targeting Iranian national territory.
The definition of a new Iranian policy by Washington will nevertheless need to reconcile contradictory objectives: increasing economic pressure without promoting a new military conflict in the region; reducing Iranian oil exports will also require China’s support; finally, Israel will need to be involved in the new agreement between Trump and the Islamic Republic. However, this cannot be built solely around the nuclear issue, as the Iranian question has become a poly-crisis in the context of the Ukraine and Gaza wars and Tehran’s accelerating hostage diplomacy.
Notes
[1] Editor’s note: The strategy of rollback, or political rollback, is a doctrine introduced by U.S. President Dwight Eisenhower and his Secretary of State, John Foster Dulles. This policy aims to roll back, erase, or push back communism, rather than simply containing its expansion. This strategy contrasts with the policy of containment, which seeks to limit the adversary’s influence without taking radical measures to overturn its gains. Recently, there has been an application of this doctrine to Iran, to curb its ideological expansion, particularly through the “axis of resistance.”
[2] Editor’s note: The policy of containment is a geopolitical strategy aimed at preventing the expansion of a power or ideology perceived as a threat, without necessarily seeking to overthrow it.
