Iran’s Axis of Resistance after the 12-day war: Adaptation, restructuring, and reconstitution

Since Israel’s 12-day war against Iran in June 2025, Tehran and its network of regional proxies and non-state allies, the so-called Axis of Resistance, have entered a phase of strategic dormancy — an outward calm concealing rearmament, financial adaptation, and ideological renewal. The axis has evolved into a decentralized network sustained by a gray-zone economy of oil smuggling, cryptocurrency, and reconstruction contracts, coupled with an ideology of endurance that equates economic survival with resistance. Despite public fatigue and economic strain, Iranian companies linked to the Islamic Revolutionary Guard Corps (IRGC) continue to finance Lebanese Hizballah, the Iraqi Popular Mobilization Forces (PMF), and the Yemeni Houthis through semi-licit markets, ensuring operational resilience. Structurally, the axis now operates as a loose confederation of semi-autonomous militias bound by a shared deterrence doctrine, making it more durable but less controllable for Tehran. Backed by Russian and Chinese cover and facing fragmented Western policy, Iran’s strategy blends endurance, ideology, and economic integration to outlast isolation. An effective counter-strategy by the United States must, therefore, move beyond punitive sanctions toward systemic disruption — targeting the networked financing, narrative legitimacy, and state capture mechanisms that underpin Tehran’s enduring regional power.

Strategic dormancy and indicators of reconstitution

Since Israel’s forceful, multi-front campaign that began in the wake of Hamas’ October 7, 2023, attack — and especially after its 12-day war against Iran in June 2025 — Tehran’s proxies entered a calibrated phase of strategic dormancy: a visible lull aimed at preserving and gradually restoring their capabilities. Multiple reports since late 2024 track parallel trends in rearmament, welfare mobilization, and economic and political integration.

In Lebanon, the government has shown tangible successes in confiscating Hizballah’s weapons and destroying their tunnels south of the Litani River; but that progress has yet to be repeated in the rest of the country. On the whole, Hizballah has been rearming, in violation of the terms of its November 2024 cease-fire agreement with Israel, replenishing stocks via Syrian corridors either directly from Iran or out of looted weapons arsenals inside Syria. Nor is it limiting its efforts to mere smuggling. Rather, the group has undertaken a strategy of “industrial recovery” across the Lebanese areas it continues to dominate, seeking to expand domestic weapons production and thus create a self-sufficient defense economy, dovetailing with IRGC narratives about “economic jihad.” US Special Envoy Tom Barrack and Israeli officials have openly cited evidence of this arms stockpiling along with renewed Hizballah tunnel projects as the main barriers to a durable cease-fire. Hizballah is nonetheless pressing ahead, while bolstering those activities under a reconstruction banner: namely, it has been doling out $400 million in post-war aid and $77 million in rent subsidies pushed through the organization’s Jihad al-Bina foundation and its microfinance entity, Qard al-Hassan, as a way to consolidate social control in Shi’a-majority areas. Iran’s characterization of these activities is revealing, with Iranian officials and analysts specifically using the phrase “strategic patience” to indicate the axis is reorganizing, not retreating. Other axis members have been pushing a similar narrative: last July, Houthi leader Abdul-Malik al-Houthi asserted Hizballah had “recovered its strength” and the Axis of Resistance as a whole was “more resilient than before.”

In Iraq, the goal has been to build up the power and capacity of Iran’s local proxy allies by opening up their access to host-state resources through incorporation. That approach goes back years, as illustrated by the March 2024 memorandum of understanding (MoU) that Muhandis General Company for Construction, Engineering, and Mechanical, Agricultural, and Industrial Contracting — a state-owned firm with broad sectoral responsibilities and ties to the Tehran-supported PMF militias — signed with the corporate giant China Machinery Engineering Corporation (CMEC). The nature of the penned agreement encompasses cooperation on various construction, energy, engineering, trade, and services projects. But most germane to the question of the future prospects of the Axis of Resistance, the MoU involving the PMF-linked Muhandis reflects proxy institutionalization under commercial cover. By October 2025, Iranian Supreme National Security Council Secretary Ali Larijani’s Baghdad visit amplified efforts to codify the PMF’s integration into state structures, thus seeking to transform military leverage into bureaucratic permanence. By coupling diplomacy with economic instruments in this way, Tehran is maturing the “state-within-a-state” proxy model that had long been exemplified by Lebanese Hizballah. Earlier this autumn, Iranian Defense Minister Amir Ashtiani justified the approach vis-à-vis neighboring Iraq by explaining that Tehran is “supporting the countries of the resistance with all [of Iran’s] might”; moreover, he claimed that the axis is strong both militarily and politically. The Iranian daily Ettelaat echoed the defense chief’s words, casting Iran as a “reliable, enduring partner” for “peace-seeking nations.”

On the other side of the Arabian Peninsula, Iran has continued to ship arms and components to the Yemeni Houthis, despite occasional disruption by the US and allied forces. Two months ago, Yemeni National Resistance Forces reportedly stopped a Houthi-bound shipment of phenol-formaldehyde — a material input for missile production. European intelligence sources have apparently observed the delivery of 2,000 tons of sodium perchlorate from China to the Iranian port of Bandar Abbas since the imposition of snap-back sanctions on Tehran, thus directly linking Chinese chemicals to Iran’s missile propellants also used by its proxies.

The net effect of all of these developments across the region is a coordinated rebuilding of the axis network, in which Iran and partners pivot from kinetic warfare to laying down an economic foundation — infrastructure, contracts, and trade cover — to quietly restore operational readiness.

It bears pointing out that Hamas and Palestinian Islamic Jihad (PIJ) are best understood as conditional or intermittent members of the axis rather than structural components of the Iran-Hizballah-PMF-Houthi core. Their relationship with Tehran has always been shaped by strategic convergence rather than doctrinal alignment. While both Hamas and PIJ share Iran’s hostility toward Israel, they remain Sunni movements with ideological roots in the Muslim Brotherhood, whose long-term political vision is not compatible with Iran’s revolutionary Shi’a project. Historically, PIJ has been the closer of the two to Tehran, while Hamas has maintained greater autonomy and broader ties across the Arab and Turkish spheres. This divergence has widened since the Gaza war: Hamas has been engaging more closely with Arab actors, Turkey, and even US-mediated diplomatic tracks, reinforcing the limits of its integration into Iran’s command architecture. For these reasons, the following analysis focuses on the Shi’a/Zaydi components of the axis, which constitute the durable, institutionalized, and Iranian-directed core.

Financing the dormant axis

The axis’s rebound depends on fiscal liquidity. Despite sanctions, its financing has diversified into three interlocking layers: oil-based shadow revenues, embedded reconstruction economies, and globalized sanctions evasion networks.

Oil smuggling

Between December 2024 and October 2025, a series of news investigations exposed an elaborate Iranian oil-smuggling network sustained by forged manifests, ghost fleets, and offshore insurance loopholes. The scheme involves a multi-billion-dollar system channeling oil through fake documentation and front companies in the Gulf and East Africa, with profits funneled to the IRGC and allied militias in Iraq, Syria, and Lebanon. In particular, Emirati companies and individuals have been found dealing in Iranian oil disguised as Iraqi exports — as have similar entities from Hong Kong. Malaysia is a major hub for this activity as well, especially for Iranian oil shipments to China. A March report revealed falsified Iraqi paperwork embedding Iranian exports within Baghdad’s bureaucracy, while an October “Reuters Investigates” exposé showed a New Zealand insurer covertly underwriting Iranian and Russian tankers.

According to a June 2025 “Advisory” report produced by the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN), more than $10 billion of laundered Iranian oil proceeds are routed annually through front companies to the IRGC Quds Force and proxies. Some of these efforts also involve non-traditional financial vehicles: hundreds of millions of dollars from oil smuggling has been pumped into various cryptocurrencies to support both Hizballah and the Houthis. The Houthis, in turn, have also illegally imposed fees on oil and fuel imports to and across Yemeni territory they control, using the profits — totaling more than $5 billion between 2022 and 2024, laundered via Iranian intermediaries — to fund weapons purchases. Thus, despite the battlefield setbacks Iran and the axis suffered since 2023, they have collectively managed to maintain a gray-zone economy capable of financing Tehran’s external clients.

Embedded reconstruction economies

The Axis of Resistance has also been monetizing war damage into political capital. In Lebanon, Hizballah has been trying to rebuild goodwill among disaffected Shi’a communities, channeling hundreds of millions of dollars of the militant group’s funds through its social services branches to turn bombed-out districts into new party strongholds. Notably, Hizballah’s Waad Project fund is reportedly spending $3 billion on reconstruction of suburbs and villages around Beirut; but while the plans appear civilian on paper, the rebuilt infrastructure will be dual use in practice, ultimately supporting the group’s political, military, and economic infrastructure. In Iraq, PMF-linked firms dominate state construction tenders despite US Treasury sanctions on Muhandis General Company and Baladna Investments, designed to undermine the Tehran-backed militias’ profit-making capabilities. Nor are such efforts left entirely to Iranian proxies. For example, Khatam al-Anbiya, the IRGC’s engineering arm, has used foreign assistance construction projects — particularly in Lebanon, Iraq, and Syria — as cover to insert personnel who can assist local proxies.

Decentralized and global finance

As direct state transfers from Iran and dealings in hard currencies have continued to face scrutiny, axis members have increasingly shifted their funding offshore. Like the Houthis, Hizballah uses crypto; but it also employs gold swaps, smuggling, and other illegal or semi-legal money-making operations across Africa and the Gulf. The group also reportedly invests in the Latin American narcotics trade and deals in West African diamonds. This sanctions-resistant ecosystem includes so-called shadow banking schemes involving multi-currency and crypto channels as well as front companies designed to launder money from petrochemical and oil sales.

In recent years, Iran has been deliberately equipping its proxies to self-finance via semi-licit markets; the resulting gray-zone economy ensures continuity under isolation. Regime-aligned Iranian economists defend this approach as strategic spending essential to ensuring the country’s dignity and security. But Western watchdogs increasingly recognize it as the lifeblood of a decentralized resistance economy.

The role of international great power backers

Part of Iran’s and the broader Axis of Resistance’s reconstitution strategy relies on backing from Iran’s closest great power partners, namely Russia and China. Russia has increasingly acted as Iran’s principal diplomatic shield, especially since the 12-day war, using its United Nations Security Council veto, public messaging, and alternative multilateral forums to blunt Western pressure on Tehran and its axis partners. Moscow has condemned Israeli strikes on Iran and reframed Iranian actions as defensive, while softening or blocking Security Council measures targeting Tehran or its proxies, including prior efforts to censure Iran for arms transfers to the Houthis. It has also validated Hizballah’s political role inside UN negotiations, last year pushing mandate language favored by the group. Beyond the UN, Russia and Iran have, over the past decade, deepened their strategic coordination through the Astana Process (trilateral talks regarding the situation in Syria, launched in 2017, involving Russia, Iran, and Turkey, and hosted by Kazakhstan), which resulted in normalizing Iranian-aligned militias as legitimate security actors in Syria prior to the fall of Bashar al-Assad.

The Russian-Iranian partnership has since become more systematic in terms of the two countries’ cooperation in support of Iran’s non-state proxies. Russian-origin weapons have appeared in the hands of Hizballah, including Kornet and Konkurs anti-tank missiles used against Israeli targets in 2024, indicating indirect but tangible battlefield reinforcement. Moscow has also reportedly explored the transfer of weapons and military equipment to the Houthis, underscoring a willingness to extend material support to Iranian partners well outside of Russia’s immediate neighborhood or traditional theaters of operation. Indeed, when it comes to the Red Sea arena, reporting that Russia agreed to transfer advanced anti-ship missiles to the Houthis and provided targeting data to support strikes on Western shipping highlights how this partnership now spans diplomatic, material, and operational domains, reinforcing Iran’s proxy network as part of a broader, coordinated deterrence architecture. That said, the Russian military’s own needs in its war in Ukraine, combined with associated sanctions, have imposed increasing constraints on Moscow’s ability to supply external actors with arms.

China has, thus, quietly become a critical enabler of Iran’s military recovery since the latter’s June war with Israel — although that relationship long predates the 2025 conflict. Beijing continues to supply Tehran with missile-propellant precursors, guidance and propulsion components, and dual-use electronics that feed directly into Iran’s ballistic-missile, drone, and air-defense production lines. In helping rebuild key elements of Iran’s degraded missile deterrent, China compensates for Russia’s current supply constraints, positioning Chinese industry as Tehran’s main behind-the-scenes defense partner. And crucially, this cooperation extends beyond hardware: Chinese scientific expertise along with intelligence, surveillance, and reconnaissance (ISR)-related support strengthen Iran’s capacity to regenerate long-range strike systems and sustain its proxy networks, allowing Tehran to build back its forward deterrence without overt foreign deployments. Collectively, these inputs form a discreet but strategically meaningful pipeline that is accelerating Iran’s post-war military reconstitution and complicating US, Israeli, and Gulf efforts to degrade Iranian regional capabilities.

Ideological recalibration

Iran’s ideological project has evolved alongside its shifting economic survival strategy, reconceptualizing “resistance” into a doctrine of endurance rather than confrontation. At home, this means redefining jihad as economic productivity and moral steadfastness; abroad, it binds the axis with a shared ethic of self-reliance that sanctifies resilience as victory.

Official Iranian media outlets now portray restraint as triumph, while diplomacy and negotiation are recast as forms of jihad, blending pragmatism with divine mission. Tasnim’s September 2025 feature, “Resistance Economy as Strategic Defense,” pointedly describes production and community welfare as acts of holy struggle — effectively turning welfare programs and service institutions into instruments of influence.

This recalibration begins at the top. In his 2024 Nowruz (Persian New Year) address, Khamenei tied national salvation to “production surges through popular participation.” Clerical networks reinforce this creed: Friday sermons praise “faith, unity, and a resistance economy,” with “jihadi management” — a vague, long-used term by the Islamic Republic’s establishment referring to an Islamic, crisis-driven governance model emphasizing sacrifice and action — as the remedy for the country’s current woes. News outlets emphasize “resistance economy” campaigns to fight unemployment and codify participation in this so-called resistance economy as an existential duty. This dictated narrative transforms hardship into proof of divine purpose, preserving regime legitimacy under sanctions.

Externally, Tehran exports this moral economy to its allies. Hizballah’s chief, Naim Qassem, regularly fuses faith with economic populism in his public remarks. In the same vein, Hizballah’s self-reliance “jihad” and mosque-centered welfare are presented as victories of faith over adversity. Across the Axis of Resistance, welfare and reconstruction now function as both ideology and material supportive infrastructure — embedding survival within sanctified economic systems.

Domestically, Tehran’s ideological fusion of survival with sanctity sustains revolutionary faith through economic jihad; regionally, it gives the axis a shared moral grammar that legitimizes endurance. Resistance has become an institutionalized architecture — melding economic redistribution, social provision, religious legitimation, and militia governance — turning mere preservation into the ultimate expression of revolutionary success.

Cost, constraints, and public debate

Inside Iran, there is nevertheless visible fatigue about paying for the axis while inflation and unemployment figures mount, with reform-minded economists arguing that strategic depth through proxies is a fiscal drain. Even edited critiques in semi-official media reveal an eroding public patience with the government’s proxy policy.

Public sentiment surveys summarized by the US-based reporting platform Middle East Research and Information Project (MERIP) show declining enthusiasm for axis financing, especially in urban centers. Clerics and IRGC outlets still tend to frame external spending as “offerings for resistance,” but that rhetoric competes with kitchen-table economics, which is starting to arouse resistance to more outlays for an axis network that, in any case, had already significantly deteriorated prior to Iran’s 12-day war with Israel. Even reform-minded platforms like Khabar Online and Asr Iran, which generally limit themselves to mild, indirect criticisms of government policy, express unease about the fiscal drain of supporting the resistance front. Despite continued regime crackdowns, sustained public questioning of the government’s strategic regional policies has returned for the first time since the 2010s. The tension between this sense of revolutionary obligation versus socio-economic survival is stark and presents the most serious long-term constraint on Iran’s ability to finance the axis.

Such bottom-up pressure notwithstanding, the IRGC has persisted with the policy of financially propping up the axis — though it is acting through less direct means now. Utilizing its aforementioned construction arm, Khatam al-Anbiya, the IRGC has pushed to monopolize reconstruction contracts abroad, thus creating domestic patronage links with beneficiaries and stakeholders inside Iran while exporting influence. With the help of quasi-public firms like Khatam al-Anbiya and its subsidiaries to launder legitimacy, the regime is able to create some jobs at home while sending the profits abroad to fund foreign axis member budgets. In other words, necessary austerity has not forced a retreat; rather, the costs of maintaining Iran’s regional non-state proxy network are internalized via state monopolies instead of relying on transparent taxation.

Structure and evolution of the axis

The June 2025 Iran-Israel war exposed the Axis of Resistance’s fragility as well as its flexibility. What began as a tight hub-and-spoke model centered around the IRGC now behaves as a flatter “resistance network” bound by shared doctrine more than centralized command. That flattening started prior to the 12-day war — in the wake of the October 2023 Hamas attack, when Israel dramatically stepped up its targeting of Iranian proxies across the region. However, the subsequent 12-day war became the decisive turning point, which unmistakably demonstrated to Tehran that unless the axis was fundamentally reconfigured, Iran could face another devastating Israeli attack against its own territory and strategic assets. That realization pushed Tehran to accelerate the shift toward a more flexible, horizontally organized resistance network designed not just to preserve the axis but to better protect Iran from future large-scale Israeli escalation.

Hizballah, the PMF, and the Houthis increasingly coordinate among each other and with other militant organizations, sharing intelligence and resources with less direct IRGC mediation, coming to resemble a confederation of semi-autonomous members under a shared deterrence umbrella. This distributed resilience, as opposed to a hierarchical structure, may be a key to the axis’s survival, according to multiple experts on non-state militias and terrorist groups. A recent United Nations Panel report underscored this trend, documenting unprecedented military collaboration between the Houthis, Hizballah, Hamas, and even Somali al-Shabaab cells — transforming Yemen from a local battlefield into a regional logistics and training hub. According to the report, al-Shabaab fighters were trained at Houthi-controlled camps in improvised explosive device (IED) and drone manufacture, while Houthi engineers were simultaneously dispatched to Jilib, Somalia, to instruct al-Shabaab units in drone modification and weapons maintenance. The UN Panel report additionally confirms that roughly 400 Somali fighters traveled to Yemen for military and ideological training, and that al-Shabaab operational cells now function inside Hadramout to purchase arms from Houthi-linked dealers. Hizballah operatives and Iranian missile specialists, meanwhile, continue to advise the Houthis, and Houthi fighters were among those killed alongside Hizballah units in Israel’s September 2024 pager strikes in Lebanon — evidence of an operational linkage that extends well beyond rhetorical or political solidarity.

Iranian discourse itself also reflects this shift. Outlets such as Tasnim and Tehran Times routinely stress the axis as a network of nations, not a top-down chain of command. Statements by Iranian strategists and diplomats, including Foreign Minister Abbas Araghchi, additionally emphasize regional deterrence and shared governance among the axis members, suggesting a rhetorical pivot from directing to aligning Iran’s non-state partners.

Recent studies by the Israeli Institute for National Security Studies and the US-based The Century Foundation find mutually reinforcing local nodes dispersed across the axis network, including Hizballah’s reconstruction industries, the PMF’s integration into Iraqi institutions, Houthi doctrinal adaptation, plus intraregional trade links between axis members as well as with other entities. This localization of resistance mirrors Iran’s domestic blueprint of embedding security and welfare in the economy; exported outward, it sustains influence even when Tehran’s material inputs dip.

Finally, at the strategic level, deterrence has become more performative to compensate for revealed shortfalls in capabilities as a result of the 12-day war and earlier forceful Israeli strikes against the axis. Post-war narratives thus recast tactical losses as proof of Iran’s and the axis’s endurance, turning survival into political strength — weakened tactically but strengthened strategically. The intended message to adversaries and partners alike is that regime collapse in Tehran is neither imminent nor can it be easily engineered.

Regional responses and counter-moves

Regional and international actors have not remained passive; their counter-moves increasingly reflect acknowledgment that Iran’s network is still active and trying to regroup.

In Lebanon, President Joseph Aoun’s July 2025 call for Hizballah’s disarmament under UN Resolution 1701 represents institutional pushback supported by Western and Gulf partners. Simultaneously, US Treasury sanctions targeting al-Qard al-Hassan struck at Hizballah’s financial infrastructure, freezing assets and undermining its domestic banking legitimacy.

On November 6, 2025, the US sanctioned three individuals accused of transferring millions from Iran to Hizballah to fund its operations and reconstruction efforts, calling the move part of efforts to disarm the group. Deputy Treasury Secretary John Hurley said Lebanon can only achieve stability if Hizballah is disarmed and Iran’s influence ends. A day later, France backed Lebanon’s efforts to disarm Hizballah. Foreign ministry spokesperson Pascal Canfauro said disarming Hizballah is the mission of the Lebanese Armed Forces, while emphasizing that France fully supports them in this endeavor.

Washington has also conveyed its direct opposition to any Iran-aligned militias — which now hold a parliamentary majority following the recent elections — participating in Iraq’s next government and urged Iraqi leaders to avoid ministries controlled by Iran-aligned armed groups.

When it comes to Yemen, regional actors have been responding to the Houthis with a mix of de‑escalatory diplomacy vis-à-vis the civil war itself and selective security measures around the Red Sea, but they have largely avoided direct participation in US-led military efforts against Houthi maritime attacks. Most Gulf and Arab states seek only to prevent a wider regional war, keep their own infrastructure out of the line of fire, and compartmentalize the Red Sea crisis from their Yemen diplomatic tracks.

The uneven effectiveness of such international measures across the Middle East has allowed Tehran’s financing architecture to exploit global regulatory gaps beyond any single actor’s jurisdiction. Recent American statements underscore this reassessment: Washington reportedly issued a “final warning” to Baghdad regarding the PMF, signaling that future cooperation hinges on curbing militia influence and sanction-evasion networks. Ambassador Barrack’s public remarks on November 2 describing Lebanon as a “failed state” dominated by Hizballah, in addition to his assertion that US engagement will henceforth be limited, similarly illustrated Washington’s frustration with the axis’s endurance.

Policy recommendations

Washington should recalibrate its Iran strategy to address a network that now thrives less on direct command than on diffusion. The Axis of Resistance operates through semi-autonomous affiliates financed by a gray-zone economy spanning oil, reconstruction, and digital finance. Confronting this structure requires simultaneous financial, informational, and regional approaches rather than a purely military or sanctions-based response.

1. Target the funding architecture, not just individuals. The United States should expand maritime and financial intelligence cooperation with Gulf, East African, and Indo-Pacific partners to expose and freeze layered front companies, insurance facilitators, and crypto pipelines. The US Treasury Department and FinCEN should integrate maritime data analytics and artificial intelligence-driven tracking to identify disguised Iranian and proxy shipments in real time. This technology is still imperfect, can generate false linkages, or overfit patterns; so it will require care, controlled expansion, and strong human-in-the-loop oversight.

2. Reinforce local states as sovereign alternatives. Another key tool must be conditioning support for the Lebanese Armed Forces and Iraqi state institutions on these governments’ demonstrated progress in reducing the autonomy of local non-state militias as well as successfully denying “resistance welfare” to Iran’s proxies. In Yemen, the US and its partners should back a UN- or World Bank-run reconstruction mechanism that rebuilds essential infrastructure under strict auditing, channels humanitarian aid through internationally supervised corridors to prevent Houthi diversion, and ties economic support in government-held areas to basic governance benchmarks. Washington should fund and diplomatically support this structure while ensuring sanctions compliance so that aid reaches civilians without reinforcing the Houthis’ war economy.

3. Elevate the information front. To counter Tehran’s ideological narrative of “economic jihad,” the US government should step up public diplomacy that reframes sanctions relief, trade, and governance reform as genuine paths to prosperity. Priority audiences for such messaging should be urban Iranians fatigued by their leadership’s external adventurism. This effort could be buttressed by resuming or expanding funding to US-government-backed informational networks broadcasting to the region, such as Radio Farda, Voice of America, and the Middle East Broadcasting Networks. However, to be successful, any funding resumption to these media channels must be accompanied by a serious reform mandate, including strengthening editorial integrity, modernizing governance, encouraging inclusion of diverse perspectives and experts, and insulating them from both US partisan swings and Iranian exiled-community factionalism.

4. Pursue targeted deterrence and quiet containment. The US and its Arab and European partners should coordinate more tightly on sanctions enforcement and maritime interdiction while maintaining discreet de-escalation channels to prevent sliding into a major, open-ended war. In the Red Sea, where the US Navy and EU powers operate separate maritime security missions, this means dividing high-end (such as force protection or air-defense) and lower-end (including commercial shipping protection or convoy security) tasks between them, respectively. The two should share intelligence but use it for differentiated engagement thresholds — the US can retain the ability to strike imminent Houthi threats, while the EU, whose mandate is defensive, prioritizes shielding shipping lanes. And finally, both sides should align their respective rules of engagement to avoid contradictory signaling and ensure that select strikes or interdictions serve a unified deterrent message rather than fragmented national ones.

5. Institutionalize proxy monitoring. Establish a joint US-European “proxy threat observatory” that cooperates with North Atlantic Treaty Organization (NATO) structures to map evolving Iran-backed militia capabilities, their mixed, multi-channel revenue systems (which blur the line between licit, semi-licit, and illicit financing), as well as these proxy groups’ ideological alignments.

In essence, US policy should move from punitive cycles to systemic disruption, shrinking the space in which Tehran’s regional non-state proxy network trades economic adaptation for strategic endurance. 

Conclusion

Iran’s Axis of Resistance has not collapsed; it is adapting — militarily, financially, ideologically, and organizationally. What looks like quiet is a shift from battlefield visibility to institutional entrenchment, laying the groundwork for potential reconstitution. The gray-zone economy and embedded reconstruction underpin a networked deterrence architecture that spreads risk, sustains capacity, and complicates coercion. Moscow provides diplomatic cover; Beijing adds economic/technological ballast and targeted military inputs. Together, they insulate Tehran from isolation and weave it into a wider anti-Western framework.

This adaptability confirms a hard strategic truth: short of full-scale invasion and regime change in Iran, limited coercive measures are unlikely to uproot Tehran’s destabilizing influence across the Middle East. Such an invasion remains politically and militarily untenable. So absent that option, Washington and its allies need to craft new approaches — calibrated, sustainable, often indirect, and with strategic patience — that combine containment with selective engagement. The challenge is to reshape the present regional order, which Tehran has learned to exploit and sustain, and to do so without resorting to further, destabilizing war.

Dr. Reza Parchizadeh is a political theorist and international affairs analyst specializing in Middle Eastern politics, regional security, and great-power competition. His work analyzes the strategic behavior of states and non-state actors across the Middle East and Eurasia and their implications for the liberal world order.

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