Both Israel and Iran have claimed victory in their recent round of fighting, but what do the facts on the ground say? For 12 days in June 2025, Israel and Iran engaged in tit-for-tat exchanges with air strikes and missile attacks. The climax of this war came when the United States decided to enter the war on the side of Israel. President Donald Trump authorized a US strike on Iran's nuclear facilities with B-2 bombers, dramatically escalating the conflict. This was not the first time Tehran and Jerusalem exchanged blows. In April and October 2024, Iran fired missiles at Israel (prompting Israeli retribution). These attacks resulted in minimal Israeli casualties, though. There was considerable concern that this war would disrupt the flow of oil and affect global oil prices. Fortunately, the war and the economic shocks associated with it were not as detrimental as initially thought. That said, the Israel-Iran War of June 2025 had broader implications for not only the participants but the region more generally.
Of course, both Tehran and Jerusalem have claimed victory over the other. We have to look past the peacocking and acknowledge the geopolitical and geoeconomic realities on the ground. Neither Jerusalem nor Tehran has emerged victorious from this war. Neither side has sufficient means to deal a decisive death blow against the other. The Israelis and the Iranians have both failed to achieve their strategic objectives in this war. Israel and even the United States have proven unable to permanently handicap Iran's nuclear program. Iran, for its part, cannot inflict a high enough military cost on the Israelis to deter their aggression. Indeed, the recent war resulted in minimal IDF casualties and Israeli air supremacy over Iranian airspace. Jerusalem still views Iran as an existential threat that needs to be dealt with once and for all. While there is a return to normalcy for the time being, this is far from the end of the confrontation between Israel and Iran. I feel it necessary to discuss the different tools that the Israelis and Iranians have at their disposal and the limitations that both countries face. On paper, though, it appears that Jerusalem currently has the stronger hand of the two.
What can Israel do?
All it takes is one look at a map to see that Israel is the smaller of the two powers, geographically and demographically. Regardless, there are several key advantages that the Israelis have over Iran. These are not all advantages directly related to military strength. First, the Israeli economy is bigger and more integrated with global markets than that of Iran. Israel's world-famous tech sector dwarfs anything Iran can muster. The Israeli economy is more diversified than the sanctioned and oil-dependent Iranian economy. Of course, the Israeli economy has its weaknesses. The period following October 7th, 2023, has been a period of economic decline in Israel. The start of the current round of hostilities between Israel and Hamas wrought havoc on Israel's economy. In 2023, the Israeli economy grew by 2%. In 2024, Israel's economy grew by 1%. What is more interesting is that emigration from Israel has increased. Approximately 83,000 Israelis emigrated from Israel in 2024, and only 33,000 migrated to Israel. The IDF has been experiencing manpower shortages as well. War with Iran and its proxies has put a squeeze on Israel's economy.
What can Iran do?
Iran, until recently, could act against Israel via its proxies in the Middle East. However, the operational capabilities of these proxy groups have been greatly degraded over the past year. Iranian-supported Shia militant group, Hezbollah, even opted to stay out of the Israel-Iran War. Make no mistake, if hostilities commence again between Tehran and Jerusalem, the conflict will not take the shape of a conventional shooting war between Israeli and Iranian troops. Iran and Israel's conflict will mostly be limited to air and missile strikes against one another. The shadow war between the two is likely to continue as well. In the absence of direct military confrontation between Jerusalem and Tehran, the latter will still conduct operations against soft Jewish/Israeli targets around the world. In fact, Tehran has done this before. Iranian nationals were arrested in connection with a bomb plot targeting Israeli diplomats in Thailand back in 2012. After October 7th, 2023, Mossad and Brazilian police uncovered Hezbollah plots against Jewish individuals and sites in Brazil. Israel, for its part, will more than likely act against Iranian proxy groups and individuals connected to the Iranian security apparatus. Like Iran, Israel has a long history of this type of activity.
The war's real winners
Other players in the region have gained from the recent fighting between Iran and Israel. I am mainly referring to the Arab monarchies in the GCC. Other than the underwhelming Iranian missile attack on Al-Udeid Air Base in Qatar, the Gulf monarchies have come out of the recent conflict unscathed. The GCC monarchies have the most to gain from this. These countries are taking the opportunity to position themselves as major players in the realm of regional diplomacy. Oman had hosted talks between the United States and Iran prior to the outbreak of the war. Oman and Qatar, in particular, have played mediator roles for decades. Muscat and Doha are the most Iran-friendly countries within the GCC. These countries have close ties with both Iran and the West. The war with Israel has also exhausted resources that Iran could use against the Gulf states, whether that be through direct Iranian strike capabilities or through proxies like the Houthis. The Arab petrostates of the Gulf are also able to portray themselves as stable and dependable oil suppliers compared to states like Iran, Russia, and Venezuela. Out of all of the players in the region, the GCC states were the big winners in this war.
Relations between the GCC and Iran will be important to watch in the coming months, especially the latter's relations with Saudi Arabia, Qatar, and Oman. It must be stated that it is in the best interests of the GCC monarchies for neither Tehran nor Jerusalem to achieve a clear-cut victory over the other if war breaks out once again. Israel's goal of regime change in Iran would pose a danger to the security of these monarchies. If the regime in Tehran were overthrown, there is no guarantee that whatever replaces it will be any more friendly to the GCC countries. Iran, another hegemonic threat, through its arming and funding of proxy forces, likewise threatens regional stability and the ambitions of countries like Saudi Arabia and the UAE. The increased political stature of the GCC countries is one result of the ongoing tension between Iran and Israel, but it remains to be seen if they can skillfully use this stature to defuse regional tensions.
Further reading:
1: Armies of Arabia by Zoltan Barany (PURCHASE HERE: https://amzn.to/4l4icFW)
2: Foreign Policy in Iran and Saudi Arabia: Economics and Diplomacy in the Middle East by Robert Mason (PURCHASE HERE: https://amzn.to/4l1t1Zj)
