Iran’s Balancing Act: Khamenei’s Strategic Thinking at a Critical Juncture

Iran’s Supreme Leader, Ali Khamenei, is in a precarious situation. Tensions between the US and Iran are at an all-time high. The US has for the past year pursued a “maximum pressure” campaign against Iran, applying sanctions to force Tehran to moderate its aggressive behavior and come to the table for a new nuclear deal. For both domestic and regional reasons, the Tehran regime needs to push back against Trump with strength and resolve. At the same time, Tehran must assuage European concerns over Iranian aggression in Syria, Yemen and beyond and keep key European nations on board with the nuclear deal. The Iranian regime is juggling these interests and one wrong move could be catastrophic. Khamenei will seek to balance escalation, restraint, and deterrence moving forward.

Escalation

Khamenei may seek to co-opt Iran’s regional proxies and partners to impose costs on the US for its pressure campaign. Saudi oil infrastructure came under attack twice in mid-May. The perpetrators of the first attack, which occurred off the Emirati coast, are unknown. The US has reportedly assessed that Iran likely encouraged its regional proxies and partners to conduct the attack, and the Iranian reaction bolsters that conclusion. The Iranian-backed al Houthi movement in Yemen then damaged Saudi oil facilities with drones in a second attack. Both strikes appear to be part of an Iranian strategy to disrupt global energy trade and create uncertainty in the oil market, as the United States tightens the screws on Iranian oil exports. Iran may also intend to demonstrate it can threaten US and partner regional interests and maintain plausible deniability. The regime may order or encourage similar low-level attacks against regional oil infrastructure in Saudi Arabia or the UAE in the future.

Restraint

The regime will likely restrain from conducting direct attacks against American forces or personnel in the short term, however. Khamenei explicitly *stated that he does not want war with the US during a meeting with top regime officials on May 14. He recognizes that overt attacks against Americans or partner forces could incite a conflict that he would lose.

Khamenei also needs to convince Europe to maintain and increase economic ties with Iran. US economic pressure has led to spiraling inflation and falling oil exports. In short, Iran needs its friends in Europe, notwithstanding the fact that EU nations have repeatedly failed over the past year to give Iran the economic benefits of remaining in the nuclear deal. Desperate to up the pressure, Tehran *reneged on some of its nuclear commitments on May 8 to pressure Europe, a strategy that was met with a sharp rebuke from Brussels. Nonetheless, Tehran threw down the gauntlet, giving the EU 60 days to establish a trade mechanism that will facilitate purchases of Iranian oil. Khamenei subsequently sent one of his closest advisors to France to negotiate.

Iran’s relative patience and continued diplomatic engagement with Europe underscores Khamenei’s desire to reap the JCPOA’s economic benefits, such as they are. At the same time, the Supreme Leader is well aware that a military escalation could pull Europe away at a critical moment for the Iranian economy.

Deterrence

The US and Iran are playing a dangerous game of brinkmanship and posturing accordingly. The regime deployed military assets around the Persian Gulf and *convened with its Iraqi proxies. The US in response dispatched strategic military assets, including a carrier strike group, to the theater. Iran could respond to perceived US aggression with a further military buildup. Both sides are contingency planning for a possible escalation. Either side could easily misinterpret the other’s moves as preparation for an attack. The risk for a miscalculation is real and dangerous.

Conclusion

American leaders will respond to potential Iranian threats best if they understand Tehran’s strategic calculus and competing interests. Khamenei will act based on domestic considerations, threat perception, and his notions of proportionality. While the United States must be prepared to defend American lives and hold Iran accountable for the actions of its proxies, the Trump administration will also be wise to remember that Iran has faltered every time in the face of a show of strength from the US. Calibrating just how much strength will cause Tehran to stand down, without giving the regime reason to believe its survival is at stake is job one for Trump’s national security team.