Iran In 'Critical Situation' After Punishing Year At Home And Abroad

Iran is weaker and more vulnerable than it has been in years after suffering a series of major blows.

During a punishing 2024, Tehran saw its regional influence diminished, its military deterrence against archfoes Israel and the United States weakened, and its economy languish.

Experts say the Islamic republic has tough decisions to make in the year ahead as U.S. President-elect Donald Trump takes office and the nuclear deal between Tehran and world powers expires.

"I suspect 2025 year will be a year of hardship and difficult choices for Tehran as the regime faces off against the bullish incoming Trump administration and tries to hunker down to contain the impact of Trump's hard-line approach," said Sanam Vakil, director of the Middle East and North Africa Program at the London-based think tank Chatham House.

On The Back Foot

The fall of longtime Syrian President Bashar al-Assad, an ally, in December was a major blow to Iran's regional ambitions.

Under Assad, Syria was a member of Iran's "axis of resistance," its loose network of regional proxies and partners, and allowed Tehran to supply its allies.

That included Hezbollah, the political party and armed group in Lebanon, which has also been Iran's most important partner for decades.

Once a force to be reckoned with, Hezbollah is now a shell of its former self. Israel's aerial bombardment and ground invasion last year severely degraded the group's military capabilities and decimated its senior leadership.

Bullet holes deface a mural depicting the toppled Syrian {resident Bashar al-Assad on the outskirts of Damascus.

Meanwhile, Israel's war in the Gaza Strip against U.S.- and EU-designated Palestinian terrorist group Hamas -- another ally of Tehran -- has left Iran with little clout in the Palestinian enclave.

Domestically, things are not looking any better. The national currency has lost over 60 percent of its value against the U.S. dollar in the past year, while the authorities shelved a controversial law to increase enforcement of the hijab, or Islamic head scarf, out of fear of public revolt.

Hamidreza Azizi, a fellow at the German Institute for International and Security Affairs, said Iran's clerical establishment is in a "critical situation."

"This may be the most challenging phase in [the Islamic republic's] history since the 1980-88 war with Iraq -- or perhaps even more severe," he argued.

Azizi added that even the establishment's core support base was now "questioning the validity" of the country's domestic and foreign policies.

Making matters worse is that 2025 could be a make-or-break year for Iran's nuclear program, with the practically defunct 2015 nuclear deal set to expire in October and the West growing impatient with the lack of progress on efforts to revive the deal.

French President Emmanuel Macron this week warned that Tehran's nuclear program was approaching "the point of no return" in comments that Iran later called "deceitful."

'Shock Therapy'

Iran is facing the consequences of years of poor investments both domestically and internationally, which have brought it to a critical "juncture," according to Alex Vatanka, director of the Iran Program at the Middle East Institute in Washington.

"Iran needs shock therapy…. It needs a shaking to its core to be able to maybe rescue this regime," Vatanka said.

Trump's return to the White House could have major consequences for the Islamic republic.

Analysts say Tehran needs to make major policy changes and tough decisions, such as engaging the Trump administration, to prevent further decline.

During Trump's first term in office from 2017-2021, his administration pursued a campaign of "maximum pressure" on Iran that included imposing crippling sanctions against Tehran.

"There appears to be a growing consensus among political circles in Tehran that, given the complexities on both domestic and external fronts, reaching an agreement is the most pragmatic course of action," said Azizi.

While the "world should welcome" such an agreement, it may not be enough to save the clerical establishment, Vatanka said.

"There is nothing Trump or anybody else can do for the hard problem that the regime in Iran faces, which is that it has lost its own people," he said, referring to growing public discontent in the country in recent years.