Abstract: The Middle East’s shifting strategic landscape has reshaped the balance of deterrence in the Persian Gulf, where Iran has combined maritime coercion with diplomatic ambiguity to convert military pressure into strategic leverage. Agreements such as the Bürgenstock memorandum have allowed Tehran to preserve room for maneuver while exploiting uncertainty over regional commitments and red lines. The result is an increasingly fragile deterrence environment in which perceptions, credibility, and ambiguity shape regional stability as much as military power.

History repeatedly shows that military outcomes and strategic gains often diverge, and that military success does not always translate into strategic advantage. States that win on the battlefield can still squander their long-term position, while adversaries that weather tactical setbacks can turn those setbacks into diplomatic, economic, and geopolitical leverage. This was true of Napoleon’s 1812 invasion of Russia, which culminated in a disastrous French retreat and the collapse of his continental dominance.

Germany’s invasion of the Soviet Union (Operation Barbarossa, 1941) likewise turned early battlefield success into a war of attrition that exhausted the Wehrmacht. More recently, the Soviet intervention in Afghanistan accelerated the erosion of Soviet power, while the U.S.-led invasion of Iraq in 2003 swiftly toppled Saddam Hussein but ultimately fueled prolonged instability and expanded Iran’s regional influence, undermining many of Washington’s strategic objectives.

Although Operation “Epic Fury” differed fundamentally from the conflicts discussed above, its aftermath reshaped the regional order—this time in Iran’s favor. By restoring a measure of deterrence and embedding it in the emerging postwar order, Tehran turned a battlefield setback into strategic leverage, converting military losses into a more favorable geopolitical position.

The Bürgenstock memorandum of understanding, signed by the United States and Iran in June 2026, exemplifies Tehran’s longstanding reliance on constructive ambiguity as a tool of statecraft. Rather than binding itself with detailed commitments, Iran has favored broad frameworks that accommodate competing interpretations and shifting political realities, preserving diplomatic flexibility and room for maneuver. Article 5 fits squarely within this approach: its deliberately open-ended language advances Tehran’s objectives while leaving Washington to grapple with the agreement’s practical implications.

The wording of Article 5 of the agreement, which stipulates that Iran would “make arrangements, using its best efforts, to ensure the safe passage of commercial vessels through the Strait of Hormuz … as a demonstration of goodwill and to facilitate negotiations toward a final agreement,” proved sufficiently elastic to accommodate competing interpretations. Tehran read the provision as a tacit acknowledgment of its authority over the Strait, whereas Washington viewed it as an Iranian commitment to preserve freedom of navigation.[1] In doing so, the agreement advanced Tehran’s strategic objectives while leaving the United States to grapple with the consequences of constructive ambiguity.

In fact, the memorandum of understanding ultimately settled little. Rather than clearing up the dispute over the Strait of Hormuz, it opened up conflicting interpretations: Washington believed the accord would keep oil exports flowing unhindered, while Tehran read it as effectively handing control of the waterway to Iran. Much of the violence that has since unfolded reflects Iran’s effort to reset its regional relationships, shore up its strategic position, and gain the upper hand over its rivals.[2]

Between Confrontation and Negotiation

Drawing on past events, one may assume that the June 2026 cease-fire negotiations underscored Iran’s ability to turn battlefield setbacks into diplomatic leverage, thereby reinforcing its regional influence through asymmetric statecraft, maritime coercion, and institutional adaptation. Meanwhile, Washington’s emphasis on de-escalation and economic stability increasingly aligned U.S. diplomacy with Iranian priorities, sidelining Israel’s security concerns.

Gause, F. Gregory III asserts that the cease-fire revealed the limits of the Trump administration’s regional strategy. Despite a string of setbacks, Tehran clawed its way back by tightening its grip on the Strait of Hormuz and intensifying coercion against its Gulf neighbors. The regime survived largely intact, with the Islamic Revolutionary Guard Corps consolidating its hold on the state. Its leadership remains committed to pushing back against Israel and stirring instability across vulnerable Arab states.[3]

Washington has struggled to grasp the profound strategic and cultural asymmetry that shapes its confrontation with the Islamic Republic. U.S. policymakers tend to frame strategy through economic performance, electoral considerations, and short-term policy outcomes. By contrast, Tehran’s leadership operates within an ideological framework, prioritizes regime survival, and exercises strategic patience. From the regime’s perspective, merely enduring a military confrontation with the world’s leading military power constitutes a strategic success, even after absorbing substantial losses.

Consequently, Tehran believes it can outlast successive U.S. administrations, wagering that Washington’s political resolve will erode before Tehran’s. Further military gains are unlikely to alter that assessment, particularly because Iran has adapted to sustained pressure and developed asymmetric capabilities that raise the costs of any prolonged campaign against it.

Tehran has recognized President Trump’s strong desire to reach a negotiated settlement and end the conflict at almost any cost. Moreover, a growing view within the Islamic Revolutionary Guard Corps holds that the more forcefully Trump escalates his rhetoric, the stronger his underlying determination to secure an agreement. Iranian decision-makers have sought to capitalize on this perception, incorporating it into their broader negotiating strategy.

The revolutionary regime has increasingly staked its strategy on economic warfare while stepping up pressure on countries hosting U.S. military bases. At the same time, the IRGC has intensified its coercive campaign, launching hundreds of missiles and drones at Kuwait, knocking out critical infrastructure and choking off oil exports through the Strait of Hormuz. The conflict has since spilled into the Eastern Mediterranean. According to The Wall Street Journal, a drone strike triggered an explosion at an Egyptian port, leaving two ships ablaze—including a U.S. gas-storage tanker—and creating a new threat to one of the region’s most important energy corridors.[4]

At the time of writing, Iran and Oman were wrapping up negotiations on a draft agreement to reopen the Strait of Hormuz. The two sides had agreed on the agreement’s core provisions, establishing separate inbound and outbound shipping lanes adjacent to Iran and Oman, respectively. They had circulated the draft among Washington, regional governments, and Iran’s senior leadership, whose final approval was still required before the agreement could move forward.[5]

Under the proposed arrangement, Iran would place inbound maritime traffic entering the Persian Gulf under Tehran’s oversight, while ostensibly withholding any authority to impose transit tolls or levy service fees. The ambiguity surrounding tolls and service fees leaves unresolved whether Tehran’s role would amount to mere operational oversight or evolve into a more consequential form of regulatory—and potentially economic—control over the Strait.

Recalibrating the Balance of Deterrence

The balance of deterrence is the prevailing equilibrium of mutual restraint between adversaries, determined not only by their relative military capabilities but also by their perceptions of each other’s resolve, credibility, and escalation thresholds. Unlike the balance of power, which emphasizes the distribution of material capabilities, the balance of deterrence reflects the extent to which each side believes the costs of escalation outweigh its expected gains.

Furthermore, deterrence is a strategic mechanism by which one actor seeks to influence another’s decision-making by convincing it that the costs, risks, or probability of failure associated with a contemplated action exceed its expected benefits. Deterrence operates by shaping perceptions rather than by employing force directly, relying on a combination of credible military capabilities, demonstrated political resolve, effective communication, and the adversary’s assessment of both capability and intent. Because deterrence is fundamentally psychological, its success depends less on the objective balance of power than on how decision-makers perceive it.

In Iran’s case, the balance of deterrence rests on a dynamic strategic interaction in which the IRGC seeks to preserve—and, where possible, shift—the equilibrium by maintaining the credibility of its deterrent posture. Its approach is designed to shape adversaries’ cost-benefit calculations through a combination of threatened punishment, pressure on more vulnerable neighboring states, denial of military or political objectives, and the prospect that confrontation could spiral into a broader, increasingly costly conflict.

Unlike the balance of power, which focuses primarily on the distribution of material capabilities, the balance of deterrence encompasses military capacity, political resolve, signaling, perceptions of credibility, and the willingness to bear the costs of conflict. The balance of deterrence is neither fixed nor determined solely by objective capabilities; it evolves as perceptions, technologies, alliances, and strategic circumstances shift.

Erik Lin-Greenberg argues that the Trump administration’s inconsistent signaling and strategic ambiguity risked fueling, rather than containing, confrontation with Iran. Equally consequential was Washington’s failure to articulate a clear assessment of the prevailing balance of deterrence. Without such clarity, both sides are more prone to misreading signals, increasing the risk that either could inadvertently cross escalation thresholds neither side intended to breach.[6]

The costs extend well beyond the immediate U.S.-Iran relationship. Deterrence rests not only on military capabilities but also on the credibility of political commitments. When Washington sends inconsistent signals about the prevailing balance of deterrence, Gulf partners begin to question the durability of U.S. security guarantees and hedge against a less reliable American commitment. The result is weakened alliance cohesion, greater strategic uncertainty, and new opportunities for Tehran to drive wedges between the United States and its regional partners.

The repercussions of the region’s recent conflicts have prompted Saudi Arabia, Turkey, and Pakistan to enter into a defense pact that deepens strategic and security cooperation among the three states. The agreement stipulates that an armed attack against any one party will be regarded as an attack against all three, establishing a framework for collective defense and strengthening their shared deterrent posture against external aggression.[7]

The joint defense accord underscores how regional actors are reshaping their security arrangements. The signatories increasingly view the region’s deteriorating security environment through a common lens, reflecting a broader effort to hedge against mounting strategic uncertainty. During the conflict, Tehran relied heavily on retaliatory strikes across the Persian Gulf, targeting economic and cultural sites, U.S. military installations, and diplomatic facilities. Iran also launched missile strikes against Turkey, a NATO ally that hosts a significant U.S. military presence.           

The pact appears to have been driven by mounting concerns about the evolving regional situation, particularly in the aftermath of the attacks during Operation Epic Fury, and by growing doubts about Washington’s willingness and ability to uphold its security commitments to regional partners. Against this backdrop, the agreement draws on the logic of NATO’s Article 5, establishing a collective-defense framework in which an attack on one signatory is treated as an attack on all.

Saudi Arabia also faces a renewed security challenge along its southern flank, as escalating tensions with the Houthis threaten to spill into the kingdom. The Iran-backed militia has intensified attacks on Saudi-backed forces and increased pressure on Red Sea maritime traffic, including Saudi-linked tankers. The threat has increasingly crossed the Yemeni border: a recent Houthi attack on a Saudi border town reportedly injured 11 people.[8] These developments have brought the Yemen front back into Riyadh’s strategic calculations, reinforcing concerns that Tehran’s regional partners can impose costs on Saudi Arabia on land and along critical maritime routes.

Recent reports that Egypt may also join the emerging defense framework suggest the arrangement could evolve beyond a trilateral pact into a broader regional security architecture. The newly signed defense pact is reminiscent of the regional alliance structures that emerged in the 1950s in response to the strategic pressures of the Cold War. At the time, regional states entered into collective-security arrangements to secure the backing and protection of a major power against perceived external threats. The most prominent of these regional alliances was the ‘Baghdad Pact.’

This dynamic points to a direct link between shifts in the regional security environment and policymakers’ perceptions of the prevailing deterrence balance, particularly among states exposed to Iranian attacks. The Islamic Revolutionary Guard Corps (IRGC) has repeatedly sought to exploit perceived gaps in U.S. resolve, especially when Washington appears uncertain about the regional deterrence equilibrium. Under such conditions, the IRGC tends to probe U.S. red lines, escalate coercive pressure, activate its network of regional proxies, and intensify maritime harassment—using calibrated escalation to test the limits of American restraint and shift the deterrence balance in Tehran’s favor.

The objective is not necessarily to trigger a direct military confrontation but to test U.S. patience, impose mounting costs, and gradually shift the regional balance in Tehran’s favor while staying below the threshold for a broader war. Over time, this strategy has reshaped the regional balance of deterrence by eroding Gulf states’ confidence in Washington’s willingness and ability to underwrite their security, prompting them to hedge against an increasingly uncertain regional order. The resulting crisis of confidence may outlast the fighting itself, weakening the credibility on which American deterrence in the Gulf has long rested.

Tehran reinforced this shift by translating its asymmetric capabilities into coercive leverage. By disrupting maritime traffic through the Strait of Hormuz and threatening critical energy infrastructure, Iran demonstrated its ability to impose costs far beyond the battlefield, turning its position at a vital global chokepoint into an instrument of economic statecraft and a central pillar of its regional deterrence strategy.

The IRGC’s combination of drones, fast-attack craft, and the threat of maritime disruption underscored a central feature of the emerging balance of deterrence: Iran did not need to match U.S. conventional military power to constrain Washington’s freedom of action.[9] It needed only to maintain a credible capacity to impose unacceptable costs on the United States and its regional partners, thereby narrowing their room for maneuver and shifting the escalation calculus in Tehran’s favor.

In the U.S.-Iran rivalry, stable deterrence depends on both sides maintaining a reasonably accurate understanding of each other’s capabilities, intentions, and escalation thresholds. When Washington loses sight of the prevailing balance of deterrence—or fails to communicate its assessment clearly—strategic stability gives way to uncertainty. Under such conditions, perceptions rather than objective military realities begin to shape decision-making, increasing the risk that both sides will misread signals and stumble into unintended escalation.[10]

Misjudging the balance of deterrence obscures the line between manageable competition and dangerous escalation. It invites adversaries to test the limits, escalate coercive pressure, and exploit perceived ambiguity over red lines and retaliatory thresholds. Effective deterrence, however, rests on aligning diplomatic signaling, military posture, economic statecraft, and alliance management. When policymakers lack a shared assessment of the deterrence balance, these instruments can pull in different directions, undermining strategic credibility and heightening the risk of miscalculation.

As Robert Jervis argues, in an international system without a central authority to enforce commitments, states must contend with persistent uncertainty about one another’s intentions—a condition that can give rise to the security dilemma. When governments question whether an ally will honor its security commitments, they may hedge against abandonment, pursue alternative partnerships, or build autonomous capabilities. Jervis’s “Stag Hunt” captures this dynamic: even when states stand to gain from cooperation, doubts about their partners’ credibility and reliability can erode mutual confidence and push them toward unilateral strategies that offer greater security but leave all sides worse off.[11]

In the Middle East’s increasingly volatile security environment, states stand to gain from collective action—through alliance commitments, mutual-defense arrangements, or coordinated sanctions. Yet governments may hesitate to make binding commitments unless they are confident that their partners will follow through when a crisis tests those commitments. The emerging defense pact among Saudi Arabia, Turkey, and Pakistan illustrates the strategic logic identified by Robert Jervis: cooperation may offer the greatest collective payoff, but uncertainty about partners’ credibility and reliability can prompt states to hedge against abandonment and preserve their freedom of action.[12]

Despite the announcement of a trilateral defense pact intended to deepen strategic and security cooperation among Saudi Arabia, Turkey, and Pakistan, the Houthi attack on Saudi Aramco’s refinery in Jazan appears to have fallen short of triggering the agreement’s collective-defense mechanism. The episode thus exposed a potential gap between the pact’s formal commitment to collective deterrence and its members’ willingness to translate that commitment into action.

Concluding Remarks

At the time of writing, Gulf states increasingly face the prospect that Iran’s control of the Strait of Hormuz could harden into a permanent feature of the regional order, leaving their oil and gas exports—and, by extension, global energy markets—vulnerable to sustained disruption. The war has made Iran more assertive and antagonistic, while leaving a region central to global energy security with few credible options to push back against Tehran’s growing leverage.

Israel is closely monitoring recent regional developments, with growing concern about their trajectory and the prospect of a broader shift in regional dynamics. Iran’s weaponization of the Strait of Hormuz has become a central pillar of the region’s evolving balance of deterrence. By exploiting its ability to threaten, disrupt, or condition access to one of the world’s most consequential maritime chokepoints, Tehran has turned battlefield setbacks into diplomatic leverage and a geopolitical advantage.

The aftermath of recent conflicts, compounded by the strategic ambiguity embedded in arrangements such as the Bürgenstock memorandum, has further tilted the regional security environment in Iran’s favor, leaving Gulf states more exposed to coercive pressure and making global energy markets increasingly vulnerable to disruption.

Iran’s assertive posture and its ability to impose costs without matching conventional military power have given it significant leverage, compelling its rivals to reconsider their strategies. The emergence of new regional defense pacts underscores growing uncertainty and eroding confidence in traditional security guarantees, particularly those from the United States.

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[1] . Wall Street Journal (hereinafter WSJ), June 17, 2026, https://www.wsj.com/world/middle-east/an-annotated-analysis-of-a-u-s-draft-of-the-iran-deal-6a9ec49f?mod=article_inline, retrieved August 8, 2026.

[2]. “See the New Fronts of the Iran War Erupting Across the Middle East: Violence broke out in fresh theaters throughout the region in July,” WSJ, July 29, 2026. https://www.wsj.com/world/middle-east/see-the-new-fronts-of-the-iran-war-erupting-across-the-middle-east-dda24313?mod=world_feat1_middle-east_pos4,  retrieved August 7, 2026.

[3]. F. Gregory Gause III, “The New Old Middle East Wars of Sound and Fury,” Foreign Affairs, Vol. 105, Number 5 (Sept. /Oct. 2026), pp. 69-83.

[4]. “Egypt Suffers First Drone Attack, Widening the Iran War,” WSJ, July 30, 2026,  https://www.wsj.com/world/middle-east/egypt-suffers-first-drone-attack-widening-the-iran-war-5ce2b49e?mod=world_feat1_middle-east_pos1, retrieved August 7, 2026.

[5] . “Negotiators Close in on Deal with Iran to Open Hormuz: Agreement would give Tehran a role overseeing traffic but wouldn’t allow tolls,” WSJ, Aug. 5, 2026, retrieved Aug. 6, 2026. https://www.wsj.com/world/middle-east/negotiators-close-in-on-deal-with-iran-to-open-hormuz-50c0f335?mod=world_lead_pos1

[6] . Erik Lin-Greenberg, “The Ambiguity Spiral in Iran: How Washington’s Lack of Clarity Leads to

Escalation,” Foreign Affairs, July 31, 2026, pp. 1-7.

[7]. “Saudi Arabia, Turkey and Pakistan Sign Defense Pact,” WSJ, August 7, 2026, https://www.wsj.com/world/middle-east/saudi-arabia-turkey-and-pakistan-sign-defense-pact-ba80d84d?mod=world_feat1_middle-east_pos2

[8]. Ibid, WSJ, August 7, 2026.

[9] . Narges Bajoghli, Vali Nasr, “Iran’s New Grand Strategy: How a Remade Islamic Republic Will Reshape the Middle East,” Foreign Affairs, July/August 2026 (Published on June 3, 2026), pp. 1- 21.

[10]. Lin-Greenberg, “The Ambiguity Spiral in Iran.”

[11]. Robert Jervis, “Cooperation Under the Security Dilemma,” World Politics, Vol. 30, No. 2 (Jan. 1978), pp 167-214.

[12] . Jervis, “Cooperation Under the Security Dilemma, pp. 213-214.