The Fall of Iran’s Gray Zone Tactics

By Dzmitry @Adobe Stock

Farzin Zandi of War on The Rocks reports that Iran’s gray zone strategy is weakening due to economic issues, sanctions, and regional losses. The country must choose between continuing its resistance approach or focusing on economic growth. Zandi writes:

“Today, you can get in a car in Tehran and get out in the Dahia, Beirut.” Five years and two months after Gen. Qasem Soleimani made this statement, the Islamic Republic of Iran is in retreat. Iran’s air and ground lines of supply to Lebanon now go through Sunni-dominated Syria, where the Assad regime recently crumbled. Even if Iran could more easily get to Lebanon, Hizballah is the weakest it has been in over a generation, having been relentlessly battered by Israel. In the words of one high-ranking commander in Iran’s Revolutionary Guard Corps: “We lost, we badly lost.”

Iran’s ability to deter and wage war in recent decades was largely through gray zone methods. […]

Iran’s gray zone strategy refers to a strategic approach that operates between conventional warfare and peacetime competition. Characterized by ambiguity, deniability, and reliance on proxies, Iran uses organizations like Hizballah in Lebanon, the Houthis in Yemen, and militias in Iraq and Syria to project influence and challenge adversaries — such as confronting the United States as the dominant external power in the Middle East, along with its regional allies, Israel and Saudi Arabia. Through asymmetric tactics — including political, economic, social, intelligence, and military support for various non-state actors — Iran pursues its geopolitical objectives while avoiding full-scale conflict. This strategy enables Tehran to expand its regional influence, counterbalance its rivals, and maintain plausible deniability in the face of international criticism or retaliation. The United States has sought to counter this strategy through various means, focusing particularly on “push back” and “roll back” approaches. […]

It is evident that the severe economic sanctions, particularly following U.S. withdrawal from the nuclear deal, have significantly impacted Iran’s economy. U.S.-led sanctions have significantly reduced Iran’s oil revenue, which has traditionally been a primary source of funding for its proxies. from 2016 to 2024, Iran’s crude oil exports decreased by approximately 615,784 barrels per day, reflecting the impact of external pressures on the country’s oil sector. Alongside this major factor, numerous internal issues have also contributed to the Iranian economy’s growing fragility. Corruption within the ideologically driven political system and the mismanagement of resources are key obstacles to Iranian economic growth. Between 2003 and 2023, Iran’s average score on the Corruption Perceptions Index was 26.14, ranked 149 out of 180 countries in 2023, as reported by Transparency International.

Also, Iran’s Trade Freedom scores, as assessed by the Heritage Foundation’s Index of Economic Freedom, were consistently low from 2017 to 2022, reflecting significant barriers to international trade. In 2022, Iran’s overall economic freedom score was 42.4, ranking 170th out of 177 countries. This low score has critical domestic drivers: Some factions close to the core power of the political system are in favor of Iran’s economic isolation and seek to impose high tariffs, non-tariff barriers, and restrictive trade policies that impede trade freedom. As a result, from 2012 to 2022, foreign direct investment in Iran averaged only $2.4 billion annually, with a paltry $1.5 billion recorded in 2022. […]

The dire economic situation has increased domestic dissatisfaction, reducing support for the Islamic Republic’s regional approach and posing a challenge to the political system on one hand. On the other hand, it has hindered Iran’s ability to strengthen its geopolitical reach in the region, due to a lack of economic power and the loss of human resources and experts, many of whom have left the system or immigrated abroad in search of a better life. Heavy sanctions, increasing financial constraints, and serious economic inefficiencies have limited Iran’s financial resources, leaving the government struggling to maintain supply lines and operational support for militias in Lebanon, Syria, Iraq, and Yemen. Additionally, heightened sensitivities, such as the recent scrutiny over the search of an Iranian plane and diplomat at a Beirut airport, have compounded logistical challenges in supplying arms and funds to these groups, significantly undermining the effectiveness of Iran’s efforts.

As a result of these challenges, Iran has been unable to sustain internal support or align diverse factions under a shared strategic vision. This lack of unity has eroded consistency and long-term resilience, leaving the country vulnerable to intensifying domestic and external pressures. It is time for the Islamic Republic to make a decision: remain on the path of resistance or turn to the path of development. The first route briefly opened a direct pathway from Tehran to Beirut—a connection that has since been lost. Perhaps following the second route will elevate Tehran to a position of prominence, like a shining city on a hill.

Read more here.