THE WAR IN THE MIDDLE EAST: LOSSES FOR THE UNITED STATES, GAINS FOR IRAN

It is common for each side to claim victory following a negotiated peace deal, and the Iranian regime and Trump administration are no exception. Following months of kinetic and economic warfare, the US and Iran signed a Memorandum of Understanding on 17 June which formally concludes the conflict and establishes a framework for negotiations towards a final settlement over the following 60 days. To ensure their domestic legitimacy after a costly war, the Trump administration and Iranian regime have both emphasised their achievements and tried to downplay their concessions. This rhetorical war to ‘win’ the peace can obscure the real outcomes, and so it is helpful to frame our analysis of the conflict’s results around two comparisons. Doing so demonstrates an Iranian victory.

The first useful comparison is with the pre-war situation, which indicates the likely scenario had Israel and America not decided to initiate the conflict on 28 February 2026. If we compare the Memorandum of Understanding with the agreement that seemed likely at the end of February, it is possible to see which side improved their negotiating position as a result of the war. This comparison extends beyond the terms of the recent deal to encompass the broader consequences of the war: military attrition, political stability, diplomatic relations, and economic conditions. These wider consequences, as well as the terms of the Memorandum, shape the positions from which both sides will negotiate a final deal and manage their relationship thereafter. In this sense, reopening the Strait of Hormuz and ending the American blockade are not results of the war but merely analogous to ending hostilities and returning to the status quo ante.

A second helpful comparison is between war aims and achieved outcomes. Because America and Israel decided to begin the war, and therefore chose to incur its costs, their success can be measured by the extent to which they achieved their objectives. Namely, America reportedly demanded the following as preconditions for negotiations at the end of January: a permanent end to Iran’s uranium enrichment, new curbs on the ballistic missile programme, and a halt to all support for regional proxies. Given that America’s military buildup was a direct response to the Iranian regime’s violent repression of protests in January, and the military operation began with the assassination of much of Iran’s senior leadership including the Supreme Leader, it is clear some form of regime change constituted a fourth objective. In this framework, because Iran did not initiate the conflict its threshold for success is lower and mostly involves preventing America and Israel from realising their war aims. This difference results from the fact that there is more expectation for the Israeli and American governments to explain the purpose of the war to their populations, and therefore the ‘successes’ needed are greater than for the Iranian regime. This is not to suggest that these aims were unrealistic: America and Israel assessed them to be achievable, which is precisely why they chose to initiate a costly conflict in pursuit of them. Any failure to achieve them is therefore a genuine strategic failure, not merely the inevitable result of overreach.

Military:

For Iran, the purpose of its own military is primarily to ensure deterrence; for Netanyahu and Trump, military force has been a key tool for reshaping the regional order and influencing Iran’s decisions. This has been particularly clear since the 7 October 2023 Hamas attacks against Israel, which ultimately resulted in the first major attacks against Iran since the 1980s. In April 2024, Israel bombed an Iranian consulate in Syria, killing multiple senior Iranian military officials, and Iran and Israel then traded strikes that were simultaneously aimed at deterrence and de-escalation. Then, during the Twelve-Day War in June 2025, Israel launched a surprise attack targeting Iranian military and nuclear facilities. Iran's poor performance, signified by its failure to mount sufficient retaliation against Israel and its abrupt agreement to end hostilities once the US joined the strikes, eroded Tehran's deterrence. This emboldened Trump and Netanyahu to seek greater concessions through military force in 2026; by 28 February Iran was utterly unable to deter either of its primary adversaries.

As a result of the war, however, Iran appears to have achieved deterrence against America as well as a commitment to end military coercion. This was not achieved because its military became stronger, but because Tehran demonstrated a willingness and capability to impose intolerable economic costs on America and the world by closing the Strait of Hormuz. American military planners had underestimated this scenario, believing that the economic costs to Iran would make them unlikely to attempt it, but Iran’s strategy proved so effective that it will dominate any future American considerations of conflict with Iran. To a lesser extent, the attacks on Arab Gulf states may also have influenced Trump’s sudden loss of appetite for war with Iran which contributed to his acceptance of the ceasefire. While Israel has not been directly deterred, Iran may consider the ending of America’s support for Israeli action to be a sufficient substitute for direct deterrence. This deterrence has been buttressed by commitments in the Memorandum of Understanding, including Article 2 that commits Iran and America not to interfere in each other’s internal affairs while respecting sovereignty and territorial integrity; Article 4 which commits the US to remove its forces from the proximity of Iran within 30 days of the final deal; and Article 9 which commits the US to not deploy any additional forces in the region during negotiations. Thus, the gunboat diplomacy which characterised America’s approach to negotiations in February appears to have ended, thereby consolidating Iran's military position. 

This deterrence means that Trump’s statements focused on the destruction of Iran’s military appear to be celebrating an empty victory, since he has already decided and promised not to attack again regardless. In one post on Truth Social on 19 June, he stated that Iran no longer has ‘an air force, a navy… or practically anything else.’ Iran's military has certainly been degraded, but the destruction of its air force and navy has little bearing on the nature of its strategic competition with Israel. As is evident from pre-war negotiations, Iran's ballistic missiles represent its most significant capability from an American and Israeli perspective, as they enable Tehran to strike Israel directly. While Iran’s ballistic missile arsenal has certainly been degraded, a New York Times article from 12 May cites US intelligence estimates that Iran still had operational access to 30 of its 33 missile sites on the Strait of Hormuz and around 70% of its pre-war missile launcher and missile stockpile. Perhaps even more importantly, US intelligence assessments reported by CNN on 21 May suggest that Iran has been rebuilding its military much faster than America expected, suggesting that any degradation may only be temporary. Therefore, Iran’s military may be weaker in absolute terms compared to February, but it has largely maintained its threat to Israel and achieved deterrence against the US. Moreover, the negotiated deal and Iran’s readiness to continue fighting if necessary demonstrate that Israel and America failed to achieve Trump’s demand for Iran's ‘unconditional surrender,’ made on 6 March on Truth Social.

At the same time, Israel and America’s own militaries have also been depleted. The Center for Strategic and International Studies assessed on 21 April that the US expended at least 45% of its precision strike missiles and around half of its Patriot and THAAD air-defence missiles before the 8 April ceasefire. After this date, some low-intensity fighting continued but the war primarily shifted to an economic contest: America maintained its naval blockade of Iranian exports while Iran closed the Strait of Hormuz to disrupt Gulf energy markets and pressure the global economy. Israel suffered similar missile depletion, and a Royal United Services Institute commentary in March identified a critical shortage of its Arrow interceptors. America’s half-empty stockpiles are particularly damaging because they limit the country’s ability to fulfill commitments in other regions, such as helping to defend Ukraine and potentially Taiwan, as well as for any future Middle East war. While Iran and Israel are essentially locked in a zero-sum game, where mutual degradation maintains their bilateral strategic balance, America’s missile expenditure is an absolute loss with global consequences. This absolute loss is compounded by a reputational loss, as rivals like Russia and China saw that America’s military was unable to achieve Iran’s ‘unconditional surrender’ as Trump had promised.

America and Israel were largely unable to achieve their two specific war aims related to Iran’s military capabilities. The first of these was the end of Iran’s ballistic missile programme. As noted, ballistic missiles are Iran’s primary threat against Israel and Tehran’s refusal to negotiate over this issue caused frustration before the war began. Following the third round of talks, which took place in Geneva during the week before the first strikes, Marco Rubio told the press that Iran was refusing to talk about ballistic missiles and “that’s a big problem.” After several months of fighting, Iran has not only retained the majority of its missiles and launchers according to intelligence reports, but the US has agreed to exclude ballistic missiles from future talks. Moreover, Trump has effectively endorsed Iran’s right to retain ballistic missiles, telling reporters at the G7 summit in France that “if other countries have them, it’s a little bit unfair for them not to have some.” Israel is, of course, furious about this concession but unable to change it. Compared to February, Iran managed to achieve a consensus that ballistic missiles are not on the negotiating table; compared to the war aim of ending the ballistic missile programme, Iran protected its stockpile and production and even gained the American president’s support for this.

Finally, America and Israel's other military war aim from February, which appears to be the only aim that survived the war, was to end Iran’s nuclear programme. This has been articulated in different ways, from the reported precondition to end uranium enrichment to Trump’s repeated focus on Iran never having a nuclear weapon. The achievements on this issue will become clearer if America and Iran reach a final deal, but so far there is a lack of notable progress. In Article 8 of the Memorandum of Understanding Iran ‘reaffirms’ its commitment not to procure or develop nuclear weapons, referencing previous such pledges including in the 2015 Joint Comprehensive Plan of Action (JCPOA) agreed with Obama. The issue of the existing stockpile of enriched uranium will be resolved in the forthcoming negotiations, with a minimum mechanism of downblending on site to be part of the final deal. Besides this, other nuclear-related issues are also deferred to a final deal and Article 9 commits Iran to maintain the status quo on its nuclear programme until then.

Compared to the deal which seemed possible in February, Iran appears to have maintained its position as a result of the war. On 27 February, the eve of the strikes, Oman’s foreign minister, who was mediating the US-Iran talks, told CBS News that Iran had agreed not to stockpile enriched uranium and to allow the International Atomic Energy Agency (IAEA) full access to verify this. Iran never officially confirmed this and strikes began within hours, but if it is true then Iran’s concession in the Memorandum of Understanding to downblend nuclear material on site is similar to what was on the table in February. Either way, the current agreement certainly does not guarantee the war aim of preventing Iran from ever having a nuclear weapon or from enriching uranium in the future, both of which would further require the destruction of Iran’s nuclear facilities and potentially even regime change. Speculation about further such Iranian concessions in a final nuclear deal would be premature: beyond the downblending mechanism agreed in the Memorandum, there is currently no evidence on which to base such analysis. What can be said is that the current framework offers Iran significantly more room than the maximalist American preconditions of January suggested.

Moreover, the structural asymmetry of the Memorandum creates a serious trap for Washington. America's concessions, including the withdrawal of forces from the proximity of Iran and particularly the economic and sanctions relief discussed later, are concrete, immediate, and easily verifiable. Iran's extracted commitments, by contrast, are largely deferred and loosely defined. By setting a low, concrete threshold for compliance, such as the minimum downblending mechanism, Iran can formally satisfy the letter of the text while preserving its broader strategic position. Conversely, should a frustrated Washington try to renege on the deal or return to hostilities to pursue its original war aims, it would find itself in an even deeper strategic quagmire, having already surrendered its primary tools of economic coercion, undermined alliance consensus, and demonstrated the vulnerability of global energy markets to Iranian retaliation. A return to war would likely entail even greater expectation to achieve results.

Political Stability:

The domestic political situations in America, Iran, and Israel have shifted considerably since the period immediately before the war. In each case, the shift is against the interests of those who initiated the conflict: Trump and Netanyahu.

Iran began 2026 in a position of acute internal fragility. Mass protests had escalated from economic grievances to widespread calls for regime change, and the security apparatus violently suppressed them with mass killings. Estimates of the number of civilians killed vary from 6,488 to over 36,500 people from 8-9 January, and the huge range reflects the concurrent internet blackout which prevented independent verification of figures. These events left regime legitimacy at its lowest point in decades, both internally and externally. Iran also faced a prospective succession crisis as Supreme Leader Ayatollah Ali Khamenei was 86, had held power since 1989, and his departure was expected to trigger competition among the clerics, Revolutionary Guard Corps, and civic government for influence over the Islamic Republic's future direction. Regime change was accordingly one of Israel and America's key initial war aims. The assassination of the Supreme Leader, attacks on senior leadership, and public calls by both Trump and Netanyahu for popular uprising are difficult to explain unless replacing or gaining influence over the Iranian regime was at least one objective of the operation. At the outset of the war, the regime seemed on the verge of collapse.

Trump, by contrast, began the year in a position of considerable strength. The first year of his second term had produced the strikes against Iran's nuclear facilities, which went unretaliated; the rewriting of the global trade order through tariffs and favourable deals such as with the EU; and the successful operation to remove Nicolás Maduro from Venezuela. Trump appeared to believe that American economic and military power could impose outcomes in any theatre, with foreign leaders having little choice but to comply. Domestically, Trump's firm control of the Republican party ensured there was minimal opposition to his actions from Congress. Netanyahu's position was similarly assertive. Having recovered from the embarrassment of 7 October, he had inflicted crushing military defeats on Hamas and Hezbollah even if, as Hamas's political survival demonstrates, military destruction could not always be converted into political victory. In February, few believed anyone could curtail Netanyahu’s ambitions to remake the regional order through force.

Several months of conflict have substantially reversed these positions. The Iranian regime has not only survived but consolidated. Protests seem a distant prospect, Mojtaba Khamenei succeeded his father without public displays of dissent, and the regime has demonstrated the capacity to replace scores of assassinated officials without destabilising consequences. The provision of an existential external enemy prompted Iran's internal factions to unite, while accelerating the consolidation of power within the Revolutionary Guard Corps and the broader security apparatus. America's commitments in the Memorandum of Understanding to Iran's sovereignty, territorial integrity, and non-interference in its internal affairs further entrench the regime's position. The initial war aim of regime change, or at least a change in the regime’s behaviour, remains entirely unfulfilled. 

Trump has encountered the hard limits of American power and faces significant domestic costs. The Strait of Hormuz had carried approximately 20% of global oil and LNG transit; its closure, combined with attacks on Gulf energy infrastructure, caused energy prices to skyrocket. Gasoline prices in the US peaked at $4.55 per gallon, well above the 2025 average of $3.10. As a result, annual inflation in May 2026 reached 4.2%, more than double the Federal Reserve's medium-term target. Trump's approval ratings fell to record lows according to Silver Bulletin, with disapproval exceeding 58% compared to around 55% in February, suggesting significant losses in November's midterm elections are likely. Congressional frustration is also mounting and both chambers have passed a war powers resolution instructing Trump to end the military campaign, the first time both have agreed on such a measure since the law was introduced in 1973. The Memorandum of Understanding has been met with caution by Republicans, who are largely withholding outright criticism pending a final deal, but the agreement's unpopularity has visibly strained the administration's relationship with parts of the American Right. Trump has even suggested that if the deal fails he will blame Vice President J.D. Vance, to whom he delegated negotiations, in a move that would effectively end Vance's prospects as the Republican frontrunner for 2028. Cumulatively, these consequences represent a significantly weaker domestic position than the one Trump held in February.

Netanyahu's position has deteriorated in parallel. He faces louder criticism of his foreign policy within Israel which, alongside domestic challenges, has produced a serious threat to Likud's electoral dominance. Naftali Bennett's bloc is now the slight favourite in October's parliamentary elections; Bennett has called the war a "historic failure" and can now credibly claim the mantle of the security candidate. Netanyahu is caught between the risk of criticising Trump's deal outright and the domestic pressure to distance himself from its terms, leaving him looking less like an autonomous strategic actor than a constrained and diminished one.

International Relations:

Decreasing domestic support due to the war is also reflected in the international scene for Israel and America, while Iran has essentially maintained its position. At the beginning of 2026, Trump was at odds with Europe over his threats against Greenland and, to an extent, his breach of international law in the kidnapping of Maduro from Venezuela. However, the American president believed he had the initiative and Europe was committed to maintaining a healthy relationship regardless of his actions. Whether the Iran war changed this, or merely provided Europe with an opportunity to retaliate, Trump's international position became noticeably weaker when no European allies answered his calls for assistance. Spain even closed its airspace to American planes involved in the operation against Iran, while Italy denied them the use of an airbase. This was perhaps the first time that America's allies have been able to clearly demonstrate to Trump the costs of failing to consult or respect them. It might not be a coincidence that Trump was noticeably less confrontational at the June G7 summit in France. Similarly, Trump neglected to warn the Arab Gulf states about the operation and America was then unable to sufficiently protect their civilian infrastructure against Iran’s drones and missiles. This has not ruptured relations, but there is less confidence in America as the Gulf’s sole security guarantor and a series of defence deals with Ukraine for protection against attack drones illustrates this emerging hedging.

Perhaps most significantly, the relationship between Israel and America, and between Trump and Netanyahu personally, has deteriorated as a result of the war. The Memorandum of Understanding ends America’s implicit commitment to support Israel in offensive military operations against Iran, and also imposes obligations on Israel to end its campaign against Hezbollah. Combined with the other unpopular aspects of the deal, it is unsurprising that a survey conducted by the Hebrew University of Jerusalem between 17 and 20 June found 92% of Israelis believe that Iran won the war. This popular perception reflects the strategic assessments of politicians and analysts within Israel. Netanyahu’s reluctance to end the campaign against Hezbollah, and frustration with America’s efforts to negotiate without him, led Trump to call him ‘f-ing crazy’ and declare that everyone hates Netanyahu and Israel according to a report in Axios. The emerging divide between this Republican administration and Israel is notable because much of the Democratic Party had already soured on Israel due to the widespread accusations of war crimes in Gaza since 2023. Bipartisan support for Israel may therefore have turned into bipartisan frustration over just a few years, leaving Netanyahu more isolated.

One of Israel and America's demands in negotiations before the war was that Iran cease support for its proxy forces, yet following the war this has disappeared from negotiations altogether. The obligation for the Israeli military to end its campaign against Hezbollah in southern Lebanon stabilises one of Israel’s primary adversaries, with great strategic significance. Between 2024 and 2026, Hezbollah had been significantly degraded as a military force by Israeli operations and the new Lebanese government, formed in February 2025 under Prime Minister Nawaf Salam, had made the militia’s disarmament a priority. Alongside international diplomatic support, notably from the US, France, and Saudi Arabia, the Lebanese military had expanded its territorial control south of the Litani River and completed Hezbollah’s disarmament there alongside a UN peacekeeping force. On 8 January 2026, the Lebanese army announced it was ready to move on to Phase Two of the five-phase plan, which involved disarming Hezbollah north of the Litani River up to the Awali River. Hezbollah’s survival as a military force was in peril, with the militia under pressure from Israel, the international community, and the Lebanese government while key allies like Hamas, Iran, and the Assad regime in Syria were lost or weakened.

However, when the Iran war spread to Lebanon, Hezbollah’s military power and aggression intensified while the Lebanese military was forced to suspend its disarmament operations. Progress on the disarmament plan has halted, and the fact that Iran has connected the cessation of hostilities against Hezbollah to the broader peace process may end the momentum altogether. As of now, Israel's decision to pursue its objectives through military means, ultimately unsuccessfully, appears to have derailed the most promising pathway to Hezbollah’s disarmament. Moreover, while the international community had reached a consensus at the beginning of 2026 that Hezbollah’s weapons were the primary problem in Lebanon, Israel’s occupation of southern Lebanon and intransigence over ceasefire efforts have now relieved some of that pressure on the militia.

Iran, meanwhile, has largely maintained its own status in the region. Arab Gulf states still appear to favour pragmatic cooperation with Tehran, as demonstrated by reported attempts by Oman to negotiate shared control over the Strait of Hormuz and by Qatar to allow access to the $6 billion in frozen Iranian assets held there. Moreover, the Trump administration insists that the $300bn investment plan for Iran committed to in Article 6 of the Memorandum of Understanding will be provided by regional partners, and Reuters reports that companies based in Gulf Arab states, as well as other regions, have already committed financing. Arab Gulf states have so far not confirmed their commitment, likely due to the political awkwardness of rebuilding the country that attacked them, but nor have they denied it, suggesting that pragmatic economic engagement with Tehran remains a live option. Hezbollah's survival thus preserves Iran's regional strategy as it existed in February while also denying Israel and America one of their core pre-war objectives. Finally, it is notable that the zero-sum nature of Iran’s relationship with Israel means that Israel’s losses - particularly the weakening support from the US - are Iran’s gains.

Economy:

The most remarkable changes to Iran’s position compared with February are related to their economy. The protests, which returned Trump’s attention to Iran amidst the Greenland and Venezuela disputes and Ukraine-Russia negotiations, were sparked by the sharp depreciation of the Iranian rial to a record low against the US dollar. Rising inflation and widespread shortages, caused by international sanctions and government mismanagement, had brought the economy and regime towards the brink of collapse. And yet despite this, Iran chose to wage an economic war in which closing the Strait of Hormuz necessarily suspended Iran's own oil exports and eventually some oil production. After regime change and military capitulation failed, Trump's theory of victory shifted to economic collapse: the US blockade of the Persian Gulf endured for over two months after the ceasefire on 8 April, during which military operations largely ceased and repeated threats to resume strikes went unfulfilled, suggesting economic pressure was the only remaining coercive tool.

And yet, Iran emerges from the war with dramatically better economic prospects than at its outset. Immediately upon signing the Memorandum of Understanding, America began allowing Iran to export crude oil by providing sanctions waivers covering oil exports and related services. Such sanctions have been imposed on Iran for decades, but they have been particularly intense since Trump pulled out of the JCPOA in favour of a ‘maximum pressure’ campaign in 2018. Moreover, the US commits not to apply any new sanctions against Iran while negotiations are ongoing, and Article 7 of the deal promises the end of all sanctions against Iran arising from the US, United Nations Security Council, and IAEA Board of Governors resolutions following the conclusion of a final agreement. Thus, the same sanctions which had brought the Iranian regime to the brink of collapse in January are being lifted in order to end the war. Economic pressure on Iran is further eased by Article 11, which entails the release of frozen Iranian assets as progress towards a final deal is made. Potentially the most significant achievement for Iran's economic outlook can be found in Article 6, where the US and its partners commit to ensuring at least $300 billion for Iran’s reconstruction and economic development. If this commitment materialises, regardless of its sources, the sum would more than cover the economic damages caused by the war and provide the investment needed to stimulate the Iranian economy. Thus, Iran’s success in the war resulted in the easing and, possibly, the abandonment of all tools of economic coercion that had been applied by America and international organisations.

Economic benefits for America or Israel are much harder to discern. The Trump administration has been insistent that none of the $300 billion fund will come from American taxpayers, and that some of it will be used to buy American agricultural produce. However, even if this is true, a new market for American farmers is hardly an economic windfall or major achievement in the context of the war’s costs. In contrast, the rampant inflation tied to increased hydrocarbon prices negatively affected American businesses and consumers and the psychological effects will likely endure even as prices gradually reduce. More generally, the global economic slowdown caused by the war damages America's reputation for economic stewardship. For Israel, economic consequences are generally secondary to strategic and security ones. In this regard, it is not the 1.4% downgrade to Israel’s forecasted growth for the year that concerns the government; it is the strengthening of the Iranian economy which will doubtless present strategic and security threats to Israel in the coming years.

Conclusion:

On the eve of the American and Israeli strikes against Iran, the Islamic Republic was unable to deter its primary adversaries; was internally fragmented and delegitimised; was increasingly internationally isolated; and was facing economic collapse. Upon the signing of the Memorandum of Understanding, it has achieved deterrence against America with an expectation that Washington will also restrain Israel; a transfer of power alongside the consolidation of domestic and international legitimacy; the maintenance of its regional relationships while Israel is increasingly isolated; and now faces an economic revival based on investment and the end of economic coercion. As such, Iran undeniably emerges from the conflict stronger than it entered and this alone demonstrates that the decision to initiate hostilities was a strategic mistake for America and Israel. 

Iran's absolute losses were substantial, including civilian suffering and loss of life, infrastructure destruction, the death of its Supreme Leader, and temporary economic devastation. Civilian casualties are irrecoverable, but the regime's willingness to accept them was already demonstrated by its response to the January protests, suggesting they do not represent a meaningful strategic cost to Tehran. In terms of the regime, the other absolute losses are the wrong way to measure success for two reasons. One is that the peace deal promises to pay for rebuilding the infrastructure, recognise the sovereignty of the renewed regime and with it the legitimacy of the new Supreme Leader, and relieve all economic pressure; any such losses are only temporary. The second reason is that Iran’s strategic competition with Israel is relative, not absolute, meaning that Iran has emerged from the war as a stronger regional actor.

The strategic mistake of Trump and Netanyahu is compounded by the fact that three of their four stated war goals have been abandoned: regime change, an end to Iran's support for its proxies, and the cessation of its ballistic missile programme are absent from the Memorandum of Understanding and associated talks, while the nuclear question remains subject to final deal negotiations. Although progress in nuclear talks seems possible, it is difficult to see how a final deal will be meaningfully different from the one Obama agreed in 2015. This, of course, raises significant doubts about whether the military, political, international, and economic costs for Israel and America outlined above are justified by an Iranian commitment that was possible in 2015 and, according to Oman’s foreign minister, on 27 February 2026. The war did not end with ‘unconditional surrender’ but it was America and Israel, rather than Iran, that came closer to it.

Billi-Villi is an analytical media outlet that explains the mechanics of decision-making, the motivations of politicians, hidden interests, and the consequences that are already shaping the situation in the world and in Ukraine today.