Iran Unleashed
The Atlantic · LC · trust 45/100
The dominant power in the Middle East from now on will not be the U.S. or Israel but Iran.
Illustration by The Atlantic. Sources: Atta Kenare / AFP / Getty; maps4media / Getty. August 23, 2026, 7 AM ET Share Save For years, Iran confronted a balance of power in the Middle East that tilted against it. The region was dominated by a hostile American superpower, a nuclear-armed and militarily superior Israel, and significant local actors—Egypt, Saudi Arabia, the United Arab Emirates—that were strategically and economically aligned with the United States.
Today finds Iran in entirely new circumstances. It has gone head-to-head with the superpower and Israel, withstood a pounding from their most advanced weapons, and more than survived. As a result, Iran has, with American help, completely reconfigured the power structure of the Middle East and the Persian Gulf. The dominant power in the region going forward will be Iran, not the U.S. or Israel. Neighboring countries are already making their adjustments to this new reality. More distant powers will too. For years, the world has been dealing with an Iran constrained. It will now discover what Iran unleashed looks like.
Iran doesn’t need a deal with the United States. The common assumption that a weak and impoverished Iran would eventually have to make some accommodation to American power, open the Strait of Hormuz, and set about tending to its badly damaged economy has proved mistaken. The Islamic Republic has rarely appeared weaker or more vulnerable than it has over the past two years. Last February, President Trump renewed his “maximum pressure” campaign of international sanctions, which severely damaged Iran’s already-weak economy and cut billions of dollars in state revenues. Israel and the United States then launched the 12-day war that June to destroy Iranian nuclear facilities. The war significantly damaged Iran’s program and revealed just how vulnerable the country was to Israeli and American strikes. Then, in February, the United States and Israel launched the most recent war with the killing of the regime’s supreme leader and the great majority of its senior officials, followed by more than five weeks of unremitting attacks on Iranian military capabilities.
Yet through all of this, the regime has survived and made no concessions. On the contrary, Iran exposed America’s Achilles’ heel: the vulnerability of Iran’s neighbors. A major turning point came in mid-March, when Israel attacked Iran’s South Pars gas field, and Iran retaliated against Qatar’s Ras Laffan complex, the world’s largest liquefied-natural-gas facility. The attack showed that although Iran obviously could not defeat the United States in an air war, Iranian missiles and drones could inflict enough damage on the oil-and-gas infrastructure of the Gulf to plunge the world into a prolonged economic crisis. The Gulf States understood this immediately, and so did Trump. He halted attacks on Iranian energy targets, ordered a reluctant Israel to do the same, and soon brought the larger campaign to a stop without extracting a single Iranian concession. Ever since, and despite many threats, Trump has not once ordered another strike against Iranian energy infrastructure.
This alone was enough to alter the balance of leverage between Iran and the United States. From April through last month, Trump repeatedly threatened to launch another massive attack against Iran. Each time, Iran threatened retaliation, Gulf States warned of the consequences, and Trump backed off. By his third or fourth bluff, Tehran had reason to conclude that the United States was no longer prepared to follow Iran up the ladder of escalation. Trump made this clear when he noted in mid-June that continuing the war would lead to “economic catastrophe,” possibly even a “depression,” and that he did not want to become President Herbert Hoover. Ever since, Trump has been trying, with notable desperation, to end the conflict.
The memorandum of understanding that the U.S. and Iran adopted in June reflected this reality. Although phrased to save face for the United States as much as possible, the MOU was a clear Iranian victory. It declared that the Islamic Republic of Iran, and no other nation, would “make arrangements” for the “safe passage of commercial vessels” through the Strait of Hormuz. In dialogue with Oman, without intermediaries or other participants, Iran would determine the strait’s administration “in line with the applicable international law and the sovereign rights of coastal states.”
The MOU did not call for a return to the prewar status quo. Neither did it provide the United States any say over future administration of the strait. Rather, it designated Iran as the only actor other than the weak Oman, and it even allowed Iran to charge nations for safe passage after 60 days. The MOU thus codified the defeat that the United States had suffered back in March, when Trump apparently realized that he either could not or would not risk further attacks on energy facilities in the region.
In retrospect, Iran’s leaders do not seem to have believed that they needed the MOU. Supreme Leader Mojtaba Khamenei reportedly had to be persuaded by President Masoud Pezeshkian to sign it. Tehran’s relative indifference was understandable: The American concessions reflected such desperation to end the war that the Iranians could well have expected that the U.S. would eventually retreat, with or without a deal.
Iranian leaders certainly did not hesitate to blow up the cease-fire almost immediately when the U.S. Navy began shepherding tankers through the Omani side of the strait. Trump may or may not have understood the full extent of the concessions his negotiators had made regarding control of the strait, but from the Iranian point of view, the Omani route was an attempt to recapture what the U.S. had given away. For a while, the United States and Iran engaged in tit-for-tat strikes, culminating in intense American…
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