What’s Next for Iran, Israel, and the U.S.
A Conversation with Hadi Kahalzadeh, Gary Samore, and Naghmeh Sohrabi
Organized and edited by Ramyar D. Rossoukh, Associate Director for Research
June 27, 2025
On June 23, 2025, President Donald Trump announced a ceasefire between Iran and Israel after twelve days of airstrikes and counterstrikes that left more than six hundred people dead in Iran, twenty-eight dead in Israel, and thousands injured on both sides. Just two days earlier, the United States had bombed three Iranian nuclear sites in Isfahan, Natanz, and Fordow. Iran responded by launching missiles at a U.S. base in Qatar, echoing its reaction to the 2020 killing of General Qasim Soleimani.
For years, U.S. policymakers debated striking Iran’s nuclear sites but stopped short of crossing that red line. A direct war between Israel and Iran was long seen as the most dangerous escalation of their enduring hostilities. Now, that line has been crossed. With the fighting paused, this Crown Conversation brings together three Crown experts—Hadi Kahalzadeh, junior research fellow, Gary Samore, Crown Family Director and Professor of the Practice of Politics, and Naghmeh Sohrabi, Director for Research and the Charles (Corky) Goodman Professor of Middle East History—to assess the consequences of the Iran–Israel–U.S. war, particularly for Iran’s domestic politics, economic future, and the prospects for diplomacy.
In the weeks before the U.S. and Israel launched strikes on Iran, diplomatic talks on Iran’s nuclear program seemed to be advancing. How has the war changed the prospects and objectives of nuclear diplomacy with Iran?
Gary Samore: Actually, U.S.-Iran negotiations had come to a dead end over the issue of enrichment before the Israeli attack. In May, the Trump administration proposed allowing Iran to continue producing low-enriched uranium for nuclear reactor fuel, pending the completion of a regional enrichment center outside Iran. Supreme Leader Khamenei publicly and categorically rejected the U.S. proposal on the grounds that it would deny Iran’s right to enrichment. Some speculate that Trump’s willingness to approve the Israeli attack was partly due to frustration with the lack of progress in the negotiations and a belief that the Israeli attack would make Iran more susceptible to U.S. demands.
Whether or not that’s true, I think Trump will propose resuming nuclear negotiations with Iran because military strikes alone are insufficient to prevent Iran from acquiring nuclear weapons. For example, a new nuclear deal could require Iran to cooperate with the International Atomic Energy Agency (IAEA) to account for its stockpile of enriched uranium and any remaining centrifuges that survived the bombing. The U.S. could also seek a commitment from Iran not to build new enrichment facilities now that Fordow and Natanz are out of action.
Iran remaining in the NPT, which makes it subject to inspections by the International Atomic Energy Agency, will be one of the key preconditions for a nuclear deal. It would be very imprudent for Iran to withdraw from the NPT as the U.S. and Israel would likely see it as a declaration of intent to acquire nuclear weapons, potentially triggering renewed conflict. It would be wiser for Iran to remain in the NPT and, if it decides to pursue nuclear weapons, violate the treaty in secret. The danger, of course, is that Iran could be caught (as it has in the past), triggering further conflict.
Because of its military success, the U.S. may feel emboldened to make extreme demands, such as eliminating Iran’s medium-range ballistic missile program or ending military support for Hezbollah. Whether Iran would agree to such demands remains unclear, but the conflict could resume if the nuclear talks fail again. If the U.S. or Israel detects Iranian efforts to rebuild or pursue nuclear weapons capabilities, they are likely to resort to military force again. However, “mowing the grass” is a risky and ineffective strategy. A better approach would be to negotiate an agreement with Iran that lifts sanctions in exchange for verified limits on Iran’s nuclear program. Whether such an agreement is still possible after the war is probably the most important question now.
Even before this war, Iran’s economy was under immense pressure from sanctions and mismanagement. How has the war affected Iran’s already strained economy, and how might that shape the broader political situation we’ve been discussing?
Hadi Kahalzadeh: It’s still too early to fully assess the economic impact of Israeli airstrikes on Iran, especially given the uncertainty of the ceasefire and whether it will lead to a new deal with the U.S. to lift economic sanctions. What is clear, however, is that the strikes have damaged thousands of military and civilian sites and further weakened Iran’s already fragile economy, compounding long-standing vulnerabilities in infrastructure, energy, and public welfare.
Israeli airstrikes extended beyond nuclear sites, military targets, and energy infrastructure. They also targeted hospitals, prisons, universities, and numerous private properties. Reconstruction could cost billions of dollars, straining Iran’s already limited fiscal resources.
Even before these attacks, Iran faced substantial economic and energy challenges. Since 2020, Iran has seen modest economic growth, averaging about 4 percent. The war is likely to reverse that trend and intensify rising prices and economic stagnation. Just a 2 percent decrease in growth could result in a $10 billion drop in GDP.
My recent estimates show that the country needed over $500 billion in investments to address critical shortfalls, particularly in the energy, transportation, and industrial sectors, all already strained by U.S. sanctions. Iran already faced a 20 percent deficit in electricity, natural gas, and fuel supplies—shortages now deepened by airstrikes on natural gas plants, oil depots, and refineries.
Additionally, Iran has temporarily halted oil exports from Kharg Island, which accounts for 90 percent of its oil exports, and suspended gas and petrochemical production at the South Pars gas field. This has caused billions of dollars in lost revenue and intensified the country’s energy deficit crisis.
In recent years, Iran has run a high public budget deficit, ranging between 18 and 25 percent. The war has exacerbated this deficit, forcing the state to raise taxes on the private sector and print money, especially to increase defense spending, which further limits welfare programs. Inflation could exceed 40 percent this year. The combination of high inflation and reduced welfare spending is likely to drive poverty even higher. Already, 80 percent of Iranians face food insecurity, failing to meet the minimum daily calorie requirement of 2,100. Additionally, more than 60 percent of Iranians live in poverty or are vulnerable to poverty. A prolonged war would only exacerbate this humanitarian crisis, pushing the country toward a potential national catastrophe.
Regional actors like China, Russia, and the Gulf states have largely stayed on the sidelines so far. Do you see that changing and, if so, how?
Samore: No. Beyond rhetorical criticism of the U.S. and Israel, neither Russia nor China is prepared to help Iran defend itself. Putin won’t jeopardize Trump’s favor on Ukraine by helping Iran. China’s main concern is keeping the oil flowing, so they are happy that the war has been contained. What remains to be seen is whether Russia and China will sell Iran conventional weapons to rebuild its military, especially air defense systems.
The Gulf countries are also relieved that Iran didn’t disrupt oil shipping in the Strait of Hormuz or attack them directly (beyond the token attack on the U.S. airbase in Qatar). Qatar and Oman, in particular, are likely to play active roles in mediating a deal between Iran and the U.S. that avoids renewed conflict.
Turning to the Iranian political scene, how have these past twelve days changed the domestic calculations of the Islamic Republic of Iran?
Naghmeh Sohrabi: As my colleagues have noted, it’s too soon to be able to take stock of the long-term effects of these twelve days of war. With this in mind I will mention two domestic issues that I’m keeping my eyes on.
First, this war has brought into relief the limits of the Islamic Republic of Iran’s opposition in the diaspora. During the Women, Life, Freedom movement in 2022, Reza Pahlavi, the son of Iran’s deposed Shah, anointed himself as the only viable opposition figure to the Islamic Republic. He gave speeches in European Houses of Parliament, appeared on Persian and English-language media, and it seemed his popularity was increasing even inside Iran, something that had eluded him until then. As Israel began to bomb Iran, Pahlavi took to traditional and social media and declared that this was the end of the Islamic Republic. He invited people to take to the streets and overthrow the government. He urged members of the military to leave their posts and help topple the regime. None of that happened. In fact, his words had the opposite effect. In a moment when Iranians rallied around the flag, even as many remained against the Islamic Republic, his support for first Israeli and then American bombings was seen as a betrayal of Iran and its people.
During those twelve days, rumors swirled that the end goal of the Israeli strikes was the dissolution of Iran as a sovereign country. Many expressed fear that the end goal was also “Syriafication”: a country brought to its knees through civil war and the arming of ethnic minorities by outside groups. By supporting the bombing of Iran—including calling the U.S. strikes on the three Iranian nuclear sites Iran’s “Berlin Wall moment”—he has, for now at least, destroyed his own claims to be the Iranian people’s best alternative to the Islamic Republic.
Second, the war’s most immediate domestic effect is an increase in internal repression. This is the most direct consequence of the unprecedented security breach that, in the first days of the war, allowed Israel to kill some of Iran’s highest-ranking military commanders, including members of the Qods Force, target scientists, and stockpile drones inside the country. During the twelve days of war, the Islamic Republic executed three men imprisoned on espionage charges for allegedly spying for Israel. On the first day of the ceasefire, it executed three more. Since then, the regime has cast a wide dragnet to capture the fifth column and collaborators. Caught in this net are ethnic minorities such as the Kurds and Afghans. Iran is not immune to the anti-immigrant sentiments on the rise globally. Among the population, rumors abound that Afghan refugees provided intelligence or helped with the drone stockpiles inside Iran.
By June 25, just one day after the ceasefire took hold, Iran had arrested over 800 people on security charges, including already persecuted members of the Bahai faith. There is justified concern that the government may use suspicions of enemy infiltration to carry out even more brutal crackdowns on protests of any kind. The long (and even short-term) effects of this war on strengthening the repressive aspects of the Islamic Republic are immense.
After the Iran–Iraq War (1980–88), Iran entered a reconstruction era, with many seeing President Rafsanjani’s policies as laying the foundation for the reform movement. What might reconstruction look like after this war? Do you see a link between Iran’s economic choices and the possibility of political change?
Kahalzadeh: It is difficult to predict which direction the Islamic Republic will take. If the ceasefire holds and Iran manages to avoid the “Iraqization” of the 1990s, this war could serve as an opportunity for the country to better assess its strengths and weaknesses.
As Naghmeh mentioned, a common fear was of “Syriafication.” In my view, there is also a likely scenario that Israel aims to push Iran into a situation similar to Iraq after the 1991 Gulf War: a failed state under sanctions, with broken infrastructure, failing basic services, widespread repression, and civil war, ultimately leading to collapse and disintegration. Alternatively, Israel may prefer to see Iran resemble North Korea: a nuclear-armed, isolated, and failed state under permanent sanctions. In both cases, Israel’s bottom line appears to be maintaining crippling sanctions, even if that means a nuclear-armed Iran. If Israel fails to achieve this unstated objective and Iran reaches a deal with the U.S., the economic impact could be significant.
For example, one option is a nuclear consortium in the Persian Gulf that recognizes Iran’s right to uranium enrichment but relocates the enrichment process outside the country in exchange for lifting U.S. secondary sanctions (penalties imposed on non-U.S. persons or companies that do business with Iran). Another option is to link nuclear talks to a non-aggression pact with Israel, in exchange for lifting both U.S. primary and secondary sanctions. Either path could add between $600 billion and $1 trillion to Iran’s GDP by 2040.
However, such economic gains are not achievable without a meaningful shift in both Iran’s foreign and domestic policies, including repairing the state-society relationship to restore legitimacy with its citizens.
Israeli airstrikes have provoked a “rally around the flag” effect in Iran, strengthening national unity and social cohesion—though perhaps only temporarily. At the same time, the war has revealed how Iran’s strategic isolation in the region, combined with its revolutionary, hardline foreign policy, can become an existential threat not only to the Islamic Republic, but to the country itself.
Although I’m not optimistic, the Islamic Republic could seize this opportunity to broaden its support base by opening up the political environment and easing social restrictions. Unlike Rafsanjani’s approach after the Iran-Iraq War, a second reconstruction era would require a strategic shift to rebuild public trust, reduce internal dissent, and address the challenges of sanctions and regional isolation. Otherwise, Iran risks following a path reminiscent of Iraq after the first Gulf War: a fragile state marked by severe economic stagnation, social unrest, and political instability that could threaten the nation’s sovereignty and long-term viability.
Speaking of the Iran-Iraq War, your recent reflections have highlighted how the current Iran-Israel war resonated with many people’s memories of the Iran-Iraq War. Are there any other parallels between the two you want to highlight?
Sohrabi: There are many, but I will highlight just one. As many readers know, the New York Times recently reported that the current war has triggered the succession process for Iran’s next Supreme Leader—whose absence these past two weeks has been the source of much speculation and anxiety.
According to the Iranian constitution, the Supreme Leader is chosen by the Assembly of Experts, an eighty-eight-member clerical body elected by direct vote. The current Assembly was elected in 2024 and will serve an eight-year term. It consists primarily of clerics who ran on the Principlist list, and almost half are serving for the first time.
Interestingly, the Assembly of Experts has only fulfilled its role as the elector of the Supreme Leader once before, shortly after the end of the eight-year war between Iran and Iraq. Or perhaps more accurately, one and a half times. In 1985, the Assembly appointed Ayatollah Hussein Ali Montazeri as Deputy Supreme Leader. He and Ayatollah Ruhollah Khomeini had been comrades in the lead up to the 1979 Iranian Revolution but by the mid-1980s, they found themselves in disagreement over the direction of the Islamic Republic of Iran.
In the summer of 1988, shortly before the end of the Iran-Iraq War, the Islamic Republic conducted mass executions of political prisoners across multiple cities. In response, Montazeri wrote an open letter protesting the killings and eventually resigned (some say was pushed out) as Deputy Supreme Leader in March 1989.
On June 4, 1989, just one day after Khomeini’s death, the Assembly of Experts convened to pick the next Supreme Leader. Initially a vote was held on whether the next leader should be a committee (of three or five clerics) or a single person. Ali Khamenei voted for a committee, but the motion did not pass. And the rest, I guess, is history.
Perhaps this is a parallel without a deeper meaning, but I find it noteworthy that the most consequential event for the future of the Islamic Republic—picking the next Supreme Leader has happened, and it seems will happen again, in the aftermath of the only two direct wars fought by the Islamic Republic of Iran in its forty-six-year history.
For more Crown Center publications on topics covered in this Crown Conversation, see: “Beyond Israel: The Challenges Ahead for Iran,” “Iran’s Eastward Turn to Russia and China,” “Iran After Trump: Can Biden Revive the Nuclear Deal and Does Iran Even Want to?”
The opinions and findings expressed in this Conversation belong to the authors exclusively and do not reflect those of the Crown Center or Brandeis University.