Flanked by generals on both sides, President Hassan Rouhani watched as Iranian soldiers carrying huge portraits of fallen “martyrs” paraded in Tehran, war planes swooped overhead and military trucks rumbled past hauling massive missiles. Yet Army Day, an annual show of military strength and resilience in the face of years of sanctions and arms embargoes, has rarely been marked with the theocratic regime under such intense pressure. 

One year after President Donald Trump unilaterally withdrew the US from the 2015 nuclear accord Tehran signed with world powers, the stakes are again being raised in a dispute some fear could trigger the Middle East’s next conflict.

Those concerns intensified this week with the deployment of a US aircraft carrier strike group to the region, and the unscheduled visit of Mike Pompeo, US secretary of state, to neighbouring Iraq. Mr Pompeo warned that the regime in Tehran was “escalating their activity”, without providing any detail. Within hours, Mr Rouhani said Iran would no longer comply with some of its commitments to the nuclear deal, while insisting that the Islamic republic would continue diplomatic efforts but “with a new language and logic”.

“Iran and the US are not heading towards a war,” says one regime insider in Tehran, “but we may witness some clashes that would then lead to negotiations rather than a full-scale war.”

Iranian protesters hold a portrait of the commander of the Iranian Revolutionary Guard's Quds Force, Gen. Qassem Suleimani, during a demonstration in the capital Tehran on December 11, 2017, to denounce US President Donald Trump's declaration of Jerusalem as Israel's capital. (Photo by ATTA KENARE / AFP) (Photo credit should read ATTA KENARE/AFP/Getty Images)
Iranians hold a portrait of the influential commander of the Iranian Revolutionary Guard's Quds Force, General Qassem Suleimani © AFP

Any such clashes are most likely to involve regional proxies. The military parade, on April 19, came just days after the US president designated the Islamic Revolutionary Guard Corps a terrorist organisation, escalating his pushback against the Islamic republic. Through its overseas wing, the Quds Force, the IRGC is at the frontline of Tehran’s support for militias and proxies across the Middle East, from Syria and Iraq to Yemen. 

And it is this factor — Iran’s muscular regional power — that infuriates the Trump administration and its Middle Eastern allies and goes to the core of their accusations against Tehran: that it is meddling in Arab affairs and stoking instability across the region. The US still has hundreds of troops in Syria and an estimated 5,000 in Iraq. Analysts warn that an asymmetric conflict, with American soldiers targeted by Iran-allied militias, is a simmering threat.

The crucial question now is whether Mr Trump’s efforts to strangle Iran economically will force Tehran to retreat or embolden hardliners opposed to Mr Rouhani, one of the architects of the nuclear deal. The hardliners believe the US president’s actions vindicate their stance that the regional role is more important than ever. At stake is the balance of power in a region where the Persian and mainly Shia country’s main Sunni Arab rivals, Saudi Arabia and the United Arab Emirates, are pursuing more aggressive policies. 

Mohammad Javad Zarif, Iran’s foreign minister, said last week that he did not think a military confrontation would occur. But he added that the Trump administration is “putting things in place for accidents to happen”.

A handout picture released by the media office of the Iraqi Presidency on May 8, 2019 shows President Braham Saleh (R) during his meeting with US Secretary of State Mike Pompeo in the capital Baghdad. - Iraq has promised to guarantee the safety of US interests from Iran, Pompeo said upon his arrival in Iraq on a surprise visit on May 7, accusing Tehran of planning
US secretary of state Mike Pompeo meets Iraqi President Barham Salih during an unscheduled visit to Baghdad on May 7 © AFP

At the parade ground in Tehran last month, it was not only military hardware on display, but also a show of defiance. Mr Rouhani insisted Iran’s goal was regional stability. He delivered a speech laced with attacks on the US and its allies. And he mocked American leaders as “delusional”, praised the IRGC’s achievements and called on regional nations to co-operate to “clean the region from intruders”.

“The collaboration of the popular forces [militias] of the region with the Armed Forces of the Islamic Republic of Iran is at its best situation ever,” he told the crowd.

Such bravado cannot, however, mask the economic impact the US’s punitive measures are having on Iran, with the IMF forecasting that gross domestic product will shrink by 6 per cent this year. But Mr Trump lacks global support for his tough stance, with Europe, Russia and China continuing to back the nuclear deal. And there is scepticism that economic pressure alone will force Iran into concessions on issues it regards as central to its national security — from its regional presence to an expanded ballistic missile programme.

“We never thought a grand bargain was achievable,” a European diplomat says. “Asking them to abandon these policies effectively means asking them to give up on the regime and they’re not prepared to do that . . . If the shah was in power, he wouldn’t [agree to] all these things [either].”

Mr Pompeo recently said the US administration’s squeeze on Tehran is “aimed at cutting off the funding for terrorists and it’s working”. But a senior Arab official from a country that cheered Mr Trump’s decision to withdraw from the nuclear deal says there now needs to be a “political parallel” beside the US pressure to engage on the three key issues: the nuclear deal, the regional role and ballistic missiles.

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“I understand the need to push forward, keep maximum sanctions for a certain period, but beyond that . . . you have to give the other party a way out,” the official says.

Tehran’s calculation will take into account the evidence that even as the Trump administration and its allies seek to isolate the Islamic republic and pushback against its influence, its reach appears stronger than ever. Iran is now at “peak” influence in the region, with proxies and allies deeply entrenched in Syria, Iraq, Lebanon and Yemen, says the European diplomat. “This is probably the high point of Iranian reach.”

Emile Hokayem, senior fellow for Middle East security at the International Institute for Strategic Studies, says under the current US strategy there “is no realistic scenario in the foreseeable future where Iran relies less on or downgrades its allies and partners”.

“The US maximalist strategy is inflicting some serious pain, but it is [not] changing the behaviour of its adversaries,” he says. “Iran’s network of regional partners is an inherent part of Tehran’s security apparatus. It allows Iran to project soft power in the region but also to exert coercion and the threat of coercion in ways that can be quite subtle, all this at low cost and some disingenuous deniability.”

(FILES) In this file photo made available on April 09, 2019 by the Iranian presidential office, Iranian President Hassan Rouhani (2nd L) listens to head of Iran's nuclear technology organisation Ali Akbar Salehi (R) during the "nuclear technology day" in Tehran. - Iran will no longer respect limits it agreed on its enriched uranium and heavy water stocks under a 2015 nuclear deal with major powers, officials said on May 8, 2019. Iran's Supreme National Security Council said the measure was necessary to "secure its rights and bring back balance" after Washington's abandonment of the agreement exactly one year ago on May 8, 2018. (Photo by HO / Iranian Presidency / AFP) / === RESTRICTED TO EDITORIAL USE - MANDATORY CREDIT "AFP PHOTO / HO / IRANIAN PRESIDENCY" - NO MARKETING NO ADVERTISING CAMPAIGNS - DISTRIBUTED AS A SERVICE TO CLIENTS ===HO/AFP/Getty Images
Iranian President Hassan Rouhani, right, listens to Ali Akbar Salehi, head of Iran's nuclear technology organisation, at a 'nuclear technology day' in Tehran © AFP

The US and Arab states have fretted over Iran’s regional ambitions ever since the 1979 Islamic revolution — it is not unusual to hear officials refer to Ayatollah Ruhollah Khomeini’s desire to “export” the revolution three decades after his death. But from an Iranian perspective, it was the decision by western and Arab states to back Saddam Hussein during the 1980-88 Iran-Iraq war that still shapes the regime’s thinking.

“Our defence is our defence,” says Hossein Sheikholeslam, a former senior diplomat. “We’re not going to discuss it with anybody because when the country was under pressure by Saddam — the missiles the west sold them [Iraq] . . . we demanded they stop and they did nothing.”

US soldiers patrol near an Iraqi army base on the outskirts of Mosul, on November 23, 2016. Forces battling the Islamic State group in northern Iraq cut off the jihadists' last supply line from Mosul to Syria, trapping them in the city for a bloody last stand. / AFP / THOMAS COEX (Photo credit should read THOMAS COEX/AFP/Getty Images)
The US still has troops in Syria and Iraq. Analysts warn that an asymmetric conflict, with American soldiers targeted by Iran-allied militias, is a simmering threat © AFP

Huge, sombre murals of soldiers killed in the Iran-Iraq conflict that cost at least half a million lives are emblazoned on the sides of office and residential blocks across Tehran — a reminder of Iranians’ sacrifices. National security is one area where regime hardliners and reformers have tended to agree, including on the need for Iran to project its influence through allies and proxies.

Tehran’s official line on Syria is that it is supporting the legitimate government, working to end the conflict and fighting Isis. Its forces and foreign militias such as the Lebanese Shia group Hizbollah have helped the regime of Bashar al-Assad brutally quell the eight-year rebellion. But analysts say Syria, a Sunni majority country led by an Alawite minority, is crucial to Iran’s regional ambitions as its military presence in the war-torn nation provides it a potential “landbridge” from Tehran to the Mediterranean. Israel has launched scores of strikes against Iranian and Hizbollah targets in Syria in recent years, including what it says are military facilities.

On Iraq, there is a consensus that the Islamic republic has genuine security concerns, including preventing the Isis threat spilling across its borders, as well as important economic ties — trade between the two countries is worth $12bn a year. But the west harbours deep concerns about Tehran’s influence over powerful Shia militias, some of which the US designates as terrorist.

The US and its allies inadvertently did Iran a huge favour by toppling Saddam in 2003, and paving the way for politicians from Iraq’s Shia majority, many of them with ties to Iran, to take power. A US army review of the Iraq war published in January said an “emboldened and expansionist Iran appears to be the only victor” of the 2003 invasion.

The battle against Isis deepened Iran’s influence as the Quds Force went to the aid of Iraq’s security forces as the jihadis advanced on Baghdad in 2014. Many of the Iraqi militias that joined a paramilitary force, known as the Popular Mobilisation Units, had been armed and trained by Iran.

Today, the PMU boasts more than 100,000 fighters and its political wing, Fatah, is integral to Baghdad’s coalition government after securing the second most seats in parliamentary elections last year. As a result, some analysts liken the PMU to Hizbollah or the Revolutionary Guards because of its ties to Iran. 

Mr Sheikholeslam does not shy away from Iran’s link to the militias. “We used to train them; when you teach somebody you have good leverage,” he says. “The Hashd al-Shaabi] [PMUs] was created to fight the enemies of Iraq and I hope there doesn’t come a time that the US is defined as an enemy of Iraq.”

In Yemen, the move by Saudi Arabia and the UAE to lead a coalition to fight Iran-aligned Houthi rebels created another opening for Tehran, analysts say. The Houthis, members of the Zaidi Shia sect, turned to Iran for support, extending its influence.

Riyadh and Washington accuse Tehran of supplying arms to the Houthis, including missiles fired at Saudi cities as a civil conflict has morphed into another proxy war. Iran denies the allegations and analysts say that its role in Yemen is more opportunistic than strategic. 

“If you think that we are sending missiles to Yemen, it’s not right, but if you think that this expertise that exists in Yemen came from Iran, you’re right,” says Mr Sheikholeslam. “We didn’t have much of a role in Yemen, but the Saudis made these mistakes [and] the Yemenis demanded us [for support], they came here to be trained.”

FILE - In this Feb. 1, 1979 file photo, Ayatollah Ruhollah Khomeini, center, waves to followers as he appears on the balcony of his headquarters in Tehran, Iran. Forty years ago, Iran's ruling shah left his nation for the last time and an Islamic Revolution overthrew the vestiges of his caretaker government. The effects of the 1979 revolution, including the takeover of the U.S. Embassy in Tehran and ensuing hostage crisis, reverberate through decades of tense relations between Iran and America. (AP Photo/Campion, File)
Ayatollah Ruhollah Khomeini during the Iranian revolution in 1979. Officials refer to the ayatollah's desire to 'export' the revolution three decades after his death © AP

Still the regime’s careful attempt to paint a picture of unity in defiance of US pressure was undermined by Mr Zarif’s shock resignation as foreign minister in February, which hinted at policy tensions. The catalyst for the veteran diplomat’s fit of frustration was his sidelining during Mr Assad’s first visit to Iran since the Syrian civil war erupted in 2011.

While Mr Zarif was apparently unaware of the visit, the Syrian president enjoyed a warm embrace with Ayatollah Ali Khamenei, Iran’s supreme leader who ultimately determines foreign policy, and sat alongside Major General Qassem Soleimani, commander of the Quds Force. 

In an interview with an Iranian newspaper around the same time, Mr Zarif pointed to deeper concerns, implying that Tehran was missing an opportunity by not using its regional influence as leverage at the negotiating table. “Any achievements we had [during the past 40 years] in foreign policy were the result of negotiations,” he said.

Mr Zarif withdrew his resignation, but the incident was a reminder that real power is unlikely to shift from Mr Khamenei and his military leaders, chief among them Maj Gen Soleimani.

For years, the charismatic general operated largely in the shadows, but as Iran’s role has expanded in Iraq and Syria, so too has his public profile. Often pictured with fighters in Iraq and Syria, Maj Gen Soleimani is considered central to Iran’s regional activities — despised by US and Arab officials, but also respected as a foe, while celebrated as a national hero by many Iranians.

An Iranian woman walks past murals of Iranian soldiers marching during the Iran-Iraq war (1980-88), on May 8, 2015, on Palestine square in Tehran, after a demonstration to denounce the strikes by the Saudi led coalition against the Shiite rebellion in Yemen, where Iran is accused of meddling by Riyadh. AFP PHOTO / BEHROUZ MEHRI (Photo credit should read BEHROUZ MEHRI/AFP/Getty Images)
A Tehran mural depicting Iranian soldiers in the 1980-88 war against Iraq © AFP

“The cards are in the hands of the guards and they don’t listen to Rouhani,” says an Iranian linked to regime hardliners. 

Even if there were more pragmatic voices within the regime who would consider negotiating security issues with the west, Iranians believe such a scenario would be difficult as long as Mr Trump is in office.

Ali Shakouri-Rad, a reformist politician, says there are differences of opinion within the regime over foreign policy, with reformers wanting to prioritise domestic issues while “our opponents prioritise regional issues”. But he adds that any critical debate has been muted by US actions. “One of the biggest mistakes the US is making is thinking the sanctions can make the regime surrender to concessions . . . the US is passing the ball to the hardliners,” he says. 

The result is that it is US administration hawks and Iranian hardliners who are dictating the discourse with threats and counter threats.

“The more the enemy threatens us, the higher will be the costs for them,” Maj Gen Soleimani told a military gathering last week. “The enemy wants to drag us to the negotiating table through economic pressure. Such negotiations mean mere surrender but our people . . . will not go under such humiliation.”

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