FP - Argument
Everyone Lost the War With Iran
Months of fighting revealed that multiple countries can impose costs, but none can impose order.
With the announcement of a framework deal to end the war in Iran, the conventional wisdom taking hold is that the United States and Israel lost.
From this perspective, the tactical and operational successes that the U.S. and Israeli militaries achieved masked a deeper strategic defeat, with neither securing the political objectives cited to justify the war in the first place. The Iranian regime survived and emerged more hard-line, and it discovered a new, powerful negotiating chip in closing the Strait of Hormuz. The United States once again became embroiled in a costly Middle East conflict that damaged its credibility with partners, weakened deterrence with adversaries, and reduced readiness in the Indo-Pacific. Meanwhile, Israel’s efforts to advance normalization with Saudi Arabia and other Arab Gulf states appear to have been further set back, and Israel has failed to eliminate the Iranian threat in the postwar regional order.
But focusing on U.S. and Israeli losses misses the fact that almost everyone involved lost. Ultimately, the war has left every major actor further from their preferred strategic end state. The war did not produce a clear victor or a more stable regional order. Instead, it accelerated fragmentation, deepened insecurity, and imposed costs on every key regional and global power involved, including Iran, the Arab Gulf states, Russia, and China. The war demonstrated that no state will be able to navigate the new era of global disorder unscathed.
Iran may have avoided regime collapse, but it did so in a way that narrowed its future options. Survival came at the cost of a weakened standing with allies, a more unstable deterrence environment, economic devastation, and fewer pathways to national recovery. Neither China nor Russia was willing to shield Iran from U.S. and Israeli attacks, demonstrating that these relationships are transactional, not true alliances. After the war, Iran will need to rely more heavily on its partners, but from a position of greater weakness and reduced leverage.
The economic costs for Iran could prove existential. The war accelerated the collapse of the rial, fueled inflation, and damaged key industrial infrastructure, including steel plants, shipyards, and power infrastructure. If current estimates of more than 1 million job losses during the conflict prove accurate, the conflict may become one of the most economically destabilizing episodes in the Islamic Republic’s history. As the Iranian regime emerges from war, it will be forced to choose between prioritizing the rebuilding of its military capabilities and addressing the deep economic crises its people face.
The Iranian regime is not more secure, either. The war appears to have consolidated power among Iran’s military-security elite, strengthening regime control in the short term. But systems dominated by security institutions often become less capable of managing public discontent, economic reform, and political adaptation over time. Thus, Iran may emerge from the war more securitized, but also more fragile.
The war also realized some of Arab Gulf states’ greatest fears. Gulf leaders opposed a major war with Iran precisely because they understood they would be unable to control escalation dynamics while still bearing many of the consequences. Iran’s closure of the Strait of Hormuz revealed geography to be a fundamental vulnerability at the center of Gulf economic models. Gulf states have spent decades attempting to reposition themselves as global hubs for finance, logistics, tourism, and technology—and more recently, as a central node for global AI infrastructure. However, the war shattered their image as an oasis of stability in a troubled region and revealed their continued vulnerability to Iranian attacks. While the war has reinforced the need for these countries to accelerate their diversification away from hydrocarbon revenues, it also challenges their visions for doing so.
What’s more, the conflict has deepened a trust deficit between the Gulf states and the United States. The war reinforced the limits of the U.S. security umbrella and heightened the Gulf’s frustration that Washington did not sufficiently prioritize its security concerns. Arab Gulf states have long understood that the United States can help deter and punish Iran, but the war underscored that Washington cannot shield their economies and infrastructure from the consequences of confrontation with Tehran. Now, they must divert resources away from their economic diversification agendas while also working to invest in their own defensive capabilities.
Russia’s position is more complicated than it initially appeared. Moscow benefited from a short-term boost in oil prices and limited sanctions relief. But the war also accelerated trends that undermine Russian influence in the Middle East. Russian air defenses in Iran proved ineffective in the face of U.S. and Israeli attacks. Meanwhile, Ukraine used the conflict to demonstrate its status at the forefront of modern warfare. Ukrainian President Volodymyr Zelensky signed partnerships with key Gulf states and Syria on drone defense, further constraining Russia’s strategic position in the Middle East. The war has also challenged Russia’s ability to balance its ties between Iran and Arab Gulf states. Russia’s support for Iran has infuriated Gulf Arab states, particularly its decision to veto an April 7 U.N. Security Council resolution aiming to reopen the Strait of Hormuz. The war also revealed the limits of Russia’s diplomatic leverage, as Moscow failed to play a significant role in shaping the outcome of the conflict. Therefore, Russia’s short-term economic gains mask the progressive shrinking of its strategic positioning in the region.
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China’s short-term gains similarly veil longer-term challenges. Beijing has benefited from appearing more stable and restrained than the United States during the conflict. The conflict also undermined U.S. readiness in the Indo-Pacific due to the scale of munitions it has burned through in Iran, bolstering China’s relative position. Yet China suffered important setbacks. The conflict has jeopardized billions of dollars of Chinese investments in Iran as part of its Belt and Road Initiative. It has also strained China’s relationships with Arab Gulf states. Beijing did not convince Iran to reopen the Strait of Hormuz and joined Russia in vetoing the U.N. Security Council resolution on the strait. This exposed the limits of Chinese leverage over Tehran and prompted fury among Arab Gulf leaders, who felt China was unwilling or unable to protect their economic interests, defend its own investments, or act to preserve broader regional economic stability.
More broadly, the war threatens China’s future economic interests. China has been one of the greatest beneficiaries of the relative predictability of the global economic system, even as it has sought to revise parts of that order. The war opened a dangerous Pandora’s box that threatens those interests. The weaponization of strategic choke points, attacks on critical civilian infrastructure, and normalization of economic coercion all create precedents that could ultimately harm China as much as, if not more than, its rivals.
The lesson of the war with Iran is that even the most powerful states are unable to convert military advantage into political control in the emerging geopolitical environment in the Middle East. The Iran war did not reorder the Middle East around a new balance of power. Instead, it exposed a region in which every actor can impose costs, but none can impose order.
This post is part of FP’s ongoing coverage. Read more here.
Will Todman is chief of staff of the Geopolitics and Foreign Policy Department and a senior fellow in the Middle East Program at the Center for Strategic and International Studies.
