Strategic Leverage and Regional Realignment: Iran, Israel, and the New Balance of Power in the Middle East

The article examines Israel’s evolving security challenges amid a volatile Middle East. It analyzes the…

Abstract

The article examines Israel’s evolving security challenges amid a volatile Middle East. It analyzes the strategic consequences of the war with Iran, the diplomatic arrangements following the reopening of the Strait of Hormuz, and the unresolved dilemma in Lebanon. It argues that Iran’s maritime leverage, asymmetric capabilities, and emerging leadership have reshaped deterrence and regional stability, while the material and economic costs of modern warfare increasingly constrain strategic decision-making.

Introduction

Since its establishment, Israel has operated in a volatile Middle East shaped by the enduring condition of international anarchy and its far-reaching implications for national security. In international relations, anarchy denotes the absence of a central authority capable of enforcing rules or guaranteeing states’ security, not disorder. Consequently, states must assume primary responsibility for their own survival, relying on deterrence, strategic partnerships, military capability, and the prudent management of power to safeguard their interests.[1] Israel’s security doctrine and regional strategy have evolved within this structural reality, adapting to shifting balances of power, emerging threats, and evolving patterns of regional alignment.

The central question raised by the war is this: What strategic consequences did “Epic Fury” have for Israel and the evolving geopolitical landscape of the Middle East? Equally important, how have the diplomatic arrangements forged in its aftermath shaped the region’s emerging order? History suggests that battlefield success does not necessarily translate into favorable strategic and political outcomes. A persistent gap often separates tactical and operational achievements from the settlements negotiated once the guns fall silent.

Furthermore, the long-term consequences of war may diverge sharply from its immediate military results, as postwar diplomacy often exerts a greater influence on the regional balance of power than the conflict itself. Indeed, wars fought without a coherent strategy—one that clearly defines political objectives and the conditions for ending hostilities—risk allowing the subsequent diplomatic process to redefine the very agenda that prompted the conflict in the first place.

The Hormuz Issue and the Revolutionary Negotiations Mechanism

The cease-fire announced by the Trump administration and the reopening of the Strait of Hormuz advance longstanding U.S. priorities: preserving regional stability, safeguarding global energy flows, and avoiding a broader war in the Middle East. Yet the contours of the emerging diplomatic arrangement are likely to fall well short of Israel’s expectations. From Jerusalem’s perspective, the agreement risks turning substantial military gains into only limited strategic returns.

Despite months of confrontation, the core pillars of Iranian power—its nuclear infrastructure, ballistic missile capabilities, and network of regional proxies—remain largely intact. As a result, the emerging settlement appears more likely to freeze the conflict than to resolve it, managing the symptoms of regional instability while leaving its underlying drivers largely untouched.

U.S. officials have long argued that economic sanctions on Iran have been costly and have altered its strategic calculus, thereby contributing to Tehran’s decision to reengage in negotiations. In practice, however, Iran has blocked the Strait of Hormuz and developed a sophisticated network of sanctions-evasion mechanisms, relying on front companies, intermediary firms, and a fleet of ghost oil ships to sustain trade and preserve critical revenue streams. According to U.S. Treasury officials, these networks have enabled Tehran to mitigate the impact of economic pressure and maintain access to global markets despite extensive financial restrictions.[2]

At the time of writing, the Islamic Republic has reshaped the strategic landscape to its advantage. Rather than emerging weakened, Tehran appears to have gained a new deterrent capability by elevating the Strait of Hormuz to a central pillar of its coercive strategy. In doing so, it has strengthened its capacity to deter adversaries, influence regional dynamics, and raise the economic and geopolitical costs of future confrontation.

The war underscored the Islamic Republic’s enduring reliance on the Strait of Hormuz as its foremost strategic asset. Although Tehran proved unable to fend off a militarily superior adversary or to shield its leadership and territory from attack, it nonetheless demonstrated its capacity to raise the economic and geopolitical costs for regional states and global markets alike. The Strait therefore remains Iran’s ultimate deterrent instrument—a means of turning geographic advantage into strategic leverage and offsetting conventional military shortcomings, even when its defenses fall short.

A growing number of observers have questioned why the risks associated with the Strait of Hormuz were not more fully factored into campaign planning. For decades, Iranian military strategists have emphasized maritime warfare as a cornerstone of the country’s deterrence doctrine, often drawing on lessons from the Iran-Iraq War and highlighting Iran’s ability to disrupt traffic through the Strait of Hormuz during periods of crisis. Yet Western policymakers appear to have largely brushed aside these warnings, dismissing them as rhetorical signaling rather than treating them as a credible component of Iran’s coercive strategy.

Since the 1980s, Iran has developed a Strait defense doctrine centered on asymmetric capabilities to confront conventionally superior adversaries by exploiting their vulnerabilities. Rather than matching its rivals ship-for-ship, Tehran has assembled a portfolio of coercive tools—including drones, fast-attack craft, anti-ship systems, and the threat of naval mines—that could shut down or severely disrupt maritime traffic through the Strait. In doing so, Iran has built the capacity to raise the economic and geopolitical costs for its adversaries without crossing the threshold into full-scale conventional warfare.

Unlike many policymakers in Washington, who often regard negotiations as a mechanism for conflict resolution, Iran’s revolutionary elite tends to see them as a war toolkit. This worldview enables the advancement of strategic objectives, the exploitation of an adversary’s perceived vulnerabilities, and the securing of gains that may prove difficult to achieve through military means alone.

The revolutionary regime recognized vulnerabilities stemming from the Washington administration’s sensitivity to the broader geopolitical consequences of economic warfare and from the limited support it received from major European allies. Against this backdrop, Tehran turned to the Strait of Hormuz as its primary source of strategic leverage. Iranian leaders also noted President Trump’s determination to end the conflict at almost any cost. At the same time, they saw through the gap between his confrontational rhetoric and his continued efforts to broker a negotiated consensus.

Consequently, sustained pressure on the Gulf Arab states through calibrated military actions underscored the region’s vulnerability to disruption and fueled growing anxiety among U.S. partners. Those signals carried over to Washington, where domestic political considerations and concerns about the costs of a broader regional confrontation initially held back some policymakers from stepping up U.S. involvement.

Equally significant, in May 2026, Iran established the Persian Gulf Strait Authority (PGSA), a new institutional mechanism to formalize its role in overseeing transit through the Strait of Hormuz. As part of this initiative, Tehran asserted authority over a substantially expanded maritime zone, pressing claims that extend into waters traditionally regarded as within Omani and Emirati jurisdiction. The move forms part of a broader Iranian strategy of creating facts on the ground—or, in this case, at sea—to strengthen its bargaining position, push back against competing maritime claims, and help reshape the legal and strategic framework governing one of the world’s most consequential maritime chokepoints.[3]

If Iran were to impose transit fees in the Strait of Hormuz, the repercussions would extend well beyond disruptions to global commerce. The challenge is compounded by reports that the PGSA is closely tied to the Islamic Revolutionary Guard Corps, which remains under sanctions imposed by Washington, the European Union, and several other major economies. Commercial shipping companies, insurers, and financial institutions could therefore find themselves caught up in an increasingly complex sanctions environment, thereby increasing the legal and financial risks of transiting one of the world’s most strategically vital waterways.[4]

 The Lebanon Dilemma at a Crossroads for Israel’s National Security

The Lebanon dispute underscores the broader divergence among U.S., Iranian, and Israeli priorities. Tehran has sought to use negotiations to secure an Israeli withdrawal while limiting Israel’s operational freedom in response to Hezbollah’s repeated violations. For Israel, however, such an outcome would mark a fundamental shift in the regional and geopolitical architecture. Jerusalem is unlikely to accept an arrangement that restricts the IDF’s ability to respond to attacks on its northern civilians while leaving Hezbollah’s military aggression unaddressed. In the Israeli strategic worldview, any framework that weakens deterrence without addressing the underlying threat would be seen not as a stabilizing compromise but as an invitation to future confrontation.

From Israel’s perspective, Lebanon’s future should be determined through direct engagement between Jerusalem and Beirut, without external actors imposing the terms of any settlement. Both states share an interest in strengthening Lebanese sovereignty, rolling back the influence of non-state armed groups, and working toward the long-term objective of restoring the Lebanese state’s monopoly on the legitimate use of force.

One of the first major tests of Israel’s postwar strategy will unfold in Lebanon, where two diplomatic tracks are advancing simultaneously but not necessarily toward the same strategic end. The first is the U.S.-Iran understanding reached during the Bürgenstock (Switzerland) negotiations, led by Vice President J.D. Vance and facilitated by Pakistan and Qatar. The second is the U.S.-brokered framework agreement between Israel and Lebanon, concluded in Washington under Secretary of State Marco Rubio’s leadership.

Although both initiatives aim to reduce regional tensions, they are grounded in different strategic assumptions and could ultimately pull policy in opposing directions. How these parallel diplomatic tracks evolve—and whether they prove complementary or contradictory—will shape not only Lebanon’s future but also Israel’s freedom of action and the broader regional balance of power.

The Economics of Modern Warfare

The war also underscored how strategic choices are increasingly shaped—and constrained—by economic realities. Above all, it laid bare the enormous material demands of modern warfare and the limits of the United States’ ability to sustain a protracted conflict. Washington brought overwhelming force to bear against Iran during Operation “Epic Fury”, but only by drawing down critical stockpiles and diverting resources from other strategic priorities. In the process, the conflict underscored that military superiority ultimately rests not only on operational prowess but also on industrial capacity, resilient supply chains, and logistical infrastructure that sustain military power over time.

Dana Stroul argues that Washington burned through an extraordinary volume of munitions during its campaign against targets inside Iran. Citing defense analyst Mackenzie Eaglen, who observed that U.S. forces fired more than 1,000 Tomahawk cruise missiles in just a few weeks—far exceeding the roughly 90 to 100 missiles produced annually—Stroul notes that missile defense demands were equally intense. According to the Center for Strategic and International Studies, between February 28 and April 8 alone, the United States used at least 190 THAAD interceptors and 1,060 Patriot interceptors to fend off Iranian missile attacks.[5]

From Washington’s perspective, economic considerations were central to the administration’s strategic calculus. Taken together, the mounting costs of a protracted conflict, growing strains on U.S. military stockpiles, and broader economic vulnerabilities tipped the balance in favor of rapid de-escalation. In practice, that meant conceding to several Iranian demands, fueling concerns in Jerusalem that Israel’s security interests were being traded off against Washington’s determination to prevent the conflict from spiraling further and to contain its economic and strategic costs.

Stephen M. Walt, one of the foremost proponents of neorealist theory, has characterized the foreign policy pursued by the Trump administration as that of a “predatory hegemon.” He asserts that the Trump administration has recast the United States as a predatory hegemon—a dominant power that leverages its privileged position to extract concessions, deference, and material advantages from both allies and adversaries, rather than building up durable partnerships or working through institutions.[6]

Walt’s depicts Washington’s foreign policy as increasingly treating international politics as a zero-sum contest in which every negotiation must end in America’s favor. In Walt’s view, this approach reflects neither a coherent response to an emerging multipolar order nor a sustainable grand strategy. Under such a strategy, the value of an agreement lies not in the stability or mutual gains it generates but in the asymmetric advantages it confers on the hegemon.

Existing agreements, in Walt’s account, are readily cast aside once they cease to generate asymmetric advantages, while allies and adversaries alike are expected to concede more than they gain. The underlying logic is inherently transactional: every bilateral relationship is viewed as an opportunity to secure additional leverage and extract further concessions, regardless of the costs to strategic trust, institutional credibility, or long-term influence.[7]

Whether Walt’s characterization accurately reflects the current trajectory of U.S. foreign policy or not, Israel must remain prepared for a range of contingencies in the Middle East. In doing so, it should remain firmly anchored in its national interests while safeguarding the national resilience that underpins its long-term security and strategic position.

Post-revolutionary Leadership Transition

The war may also usher in an intergenerational transition within the Islamic Republic. As Suzanne Maloney has observed, Iran’s post-revolutionary leadership has evolved across three distinct generations. The conflict has accelerated the rise of a new cohort of leaders whose political outlook is shaped less by the revolutionary experience than by the imperative to steer the regime through an increasingly turbulent regional environment. Their aim is not to abolish the Islamic Republic but to shore it up and adapt it to new strategic realities, laying the groundwork for what might be described as a Third Islamic Republic—one that builds on its revolutionary legitimacy while adjusting to the strategic demands of a rapidly changing Middle East.[8]

The first Islamic Republic, under Ayatollah Ruhollah Khomeini, emerged from a revolutionary experiment to institutionalize clerical rule and export its ideology. Under Ali Khamenei, the second republic built on that foundation by strengthening the supreme leader’s authority and expanding the security apparatus, the regime’s central pillar. The post–Iran-Iraq War reconstruction period further accelerated the rise of the Islamic Revolutionary Guard Corps, extending its influence across the military, political, and economic spheres.

Maloney noted that by paving the way for Mojtaba Khamenei’s ascent, the regime appears to be laying the groundwork for what could be a third phase of the Islamic Republic—one in which political authority is increasingly concentrated in the hands of the Islamic Revolutionary Guard Corps and the broader security establishment. Under such an arrangement, the security apparatus would no longer merely stand behind the regime but would increasingly serve as the principal arbiter of decision-making, shaping domestic politics, steering economic policy, overseeing social governance, and advancing the country’s foreign policy. In doing so, it would further entrench the militarization of the Iranian state.[9]

As Narges Bajoghli and Vali Nasr have observed, expectations that large-scale military strikes and economic devastation would trigger the Islamic Republic’s collapse proved misplaced. Instead, Iran emerged from the conflict with its core military capabilities intact, its industrial base largely functional, and its political order intact. If the war had a transformative effect, it was not regime change but rather regime evolution.[10]

According to their analysis, the conflict hastened the rise of a new generation of leaders—drawn largely from the Islamic Revolutionary Guard Corps—whose technocratic expertise, nationalist outlook, and security orientation are increasingly shaping the direction of the Iranian state. Unlike the revolutionary leadership, this emerging cohort places greater emphasis on pragmatic statecraft, strategic competition, and the navigation of an increasingly contested regional environment. Rather than falling back on revolutionary dogma, its leaders are more inclined to build on existing institutions, adapt to shifting geopolitical realities, and carry forward a more security-centered vision of governance.

Concluding Remarks

Israel faces a regional security environment defined less by episodic crises than by a sustained shift in the balance of power. Tehran’s ability to turn the Strait of Hormuz into a source of strategic leverage—and to institutionalize that leverage through the Persian Gulf Strait Authority—has expanded its deterrent toolkit and strengthened its capacity to shape regional dynamics. At the same time, the resilience of Iran’s network of partners and proxies continues to challenge the assumptions underpinning Israel’s security doctrine, underscoring the need for a strategy that integrates military power with diplomatic engagement and economic statecraft.

The Lebanon dilemma further underscores the risks inherent in diplomatic arrangements that neither address the underlying drivers of conflict nor provide credible enforcement mechanisms. Israel’s shift from strategic restraint to proactive enforcement reflects a growing recognition that durable security depends not only on deterrence but also on the sustained capacity to uphold it.

The economic realities of modern warfare—including pressure on U.S. defense-industrial capacity and the increasingly transactional nature of American foreign policy—also underscore the need to preserve Israel’s national resilience and strategic autonomy. At the same time, the emergence of a new generation of Iranian leaders signals a more security-driven Islamic Republic, likely to compete by combining military power, coercive diplomacy, and institutional adaptation. Meeting this challenge will require Israel to strengthen its military and civilian capabilities, supported by diplomatic agility, economic resilience, and sustained regional partnerships to protect its interests and help shape a more stable regional order.

[1]. Regarding the term anarchy, Kenneth N. Waltz, “The Origins of War in Neorealist Theory,” The Journal of Interdisciplinary History, Vol. 18, No. 4, The Origin and Prevention of Major Wars (Spring, 1988), pp. 615-628.

[2] . Wall Street Journal, June 20, 2026, https://www.wsj.com/world/the-u-s-is-ramping-up-economic-warfare-its-enemies-arent-blinking-fdd49238?mod=world_lead_pos1

[3]. ABC News, Sat. 9 May https://www.abc.net.au/news/2026-05-10/iran-strait-of-hormuz-authority-for-ships-to-cross/106652970?utm_source=chatgpt.com

[4]. Nate Swanson, “Iran Won the War but May Lose the Peace: Tehran Is Poised to Overplay Its Hand,” Foreign Affairs Magazine, June 18, 2026. https://www.foreignaffairs.com/iran/iran-won-war-may-lose-peace.

[5]. Dana Stroul, ‘The Middle East Power Paradox: How the Iran War Will Transform America’s Military Role,” Foreign Affairs, June 16, 2026. https://www.foreignaffairs.com/iran/middle-east-power-paradox-dana-stroul

[6]. Stephen M. Walt. “The Predatory Hegemon: How Trump Wields American Power,” Foreign Affairs, Vol. 105, No. 2, March/April 2026. https://www.foreignaffairs.com/united-states/predatory-hegemon-walt

[7]. Walt. “The Predatory Hegemon.”

[8] . Suzanne Maloney, “The Third Islamic Republic: A War’s Unintended Consequences—for Iran, the Middle East, and the Global Order,” Foreign Affairs, April 1, 2026. https://www.foreignaffairs.com/iran/third-islamic-republic-middle-east-suzanne-maloney.

[9]. Maloney, “The Third Islamic Republic.

[10]. Narges Bajoghli and Vali Nasr, “Iran’s New Grand Strategy: How a Remade Islamic Republic Will Reshape the Middle East,” Foreign Affairs Magazine, June 3, 2026. https://www.foreignaffairs.com/iran/irans-new-grand-strategy

[1]. Regarding the term anarchy, Kenneth N. Waltz, “The Origins of War in Neorealist Theory,” The Journal of Interdisciplinary History, Vol. 18, No. 4, The Origin and Prevention of Major Wars (Spring, 1988), pp. 615-628.