Iran

What does the map enable, and what does it threaten?

Geography is Iran's great asset. It is a large, mountainous country that is hard to invade and occupy, with a population of about 93 million¹, and it commands the northern shore of the Strait of Hormuz, the chokepoint for Gulf oil. The war has shown what that position is worth: Iran's Revolutionary Guard declared the strait closed, US Central Command insists traffic continues, and oil has topped $100 a barrel¹⁰. The same position is also its curse. It sits among rivals and unstable neighbours, its coast faces the Gulf states and US bases, and its oil can be blockaded at sea. A powerful position, but an exposed one.

Is the population growing, skilled and staying?

Iran's population is large and still relatively young, with a median age of about 35². It has a long tradition of education, but the economy has not been able to use it. Before the war, only 40.7% of people aged 15 and over were economically active, and unemployment rose to 7.8% in late 2025⁴. Since then, war has shrunk the economy by an estimated 7.6% and pushed inflation towards 79%³, which will drive up joblessness and emigration. There is no reliable wartime labour data, hence low confidence. A capable people whose talents are being wasted by their government's choices.

What habits does the society reward?

Iranian society has deep habits of learning, trade and family enterprise, and a large educated middle class. But the institutions that shape public behaviour have been bent by four decades of revolutionary rule, sanctions and a large informal economy. Public corruption is perceived as severe: Iran scored 23 on Transparency International's 2025 index, unchanged, ranking 153rd of 182¹¹. Trust between citizens and the state has broken down, as the mass protests of early 2026 showed¹². Comparable data on social trust and work norms is scarce, hence low confidence. This score is about institutions and social habits, not about any group.

Who rules, how are they chosen, and are they competent?

Judged by deeds, Iran's leadership has led the country into catastrophe. Its nuclear standoff with the West ended in war: the United States and Israel struck on 28 February 2026, saying they aimed to ensure Tehran never obtains a nuclear weapon, and Iran vowed retaliation⁷. Supreme Leader Ali Khamenei was killed; his son and successor, Mojtaba, was wounded and has not appeared in public since taking power⁸. A memorandum to end the war signed on 17 June collapsed over control of shipping in Hormuz and expired in August⁹. The economy is expected to shrink 7.6% this year, with inflation of 78.6%³. A regime that has survived, but has not governed.

Is there rule of law, low corruption and predictability?

The state's grip is strong, but its order rests on force rather than law. Public corruption is perceived as severe, with a score of 23 and a rank of 153rd on Transparency International's 2025 index¹¹. When protests over the currency's slide reached all 31 provinces in January 2026, the state met them with force. The supreme leader admitted that thousands had died; Reuters reported that authorities had verified at least 5,000 deaths, including about 500 security personnel¹². The state still controls its territory despite eight months of war¹⁰, which is why this is a 2 and not a 1.

Where are the fault lines, and how stable are they?

Iran's society is deeply divided between the regime and much of its population. Protests that began over the economy grew into nationwide unrest in early 2026, and thousands were killed in their suppression; the authorities' own count includes about 500 security personnel¹². The war may have rallied some Iranians around the flag against foreign attack, but the regime's legitimacy has been badly weakened by economic collapse and by a supreme leader who cannot be seen⁸. Reliable polling is impossible under current conditions, hence low confidence. The state has held together through force; the consent beneath it is thin.

Why does the world need this country?

The world cannot ignore Iran, because it can disrupt the flow of Gulf oil. Its declaration that the Strait of Hormuz is closed, even contested by US forces, has helped drive oil above $100 a barrel¹⁰. Russia and China have moved to back Tehran, turning a regional war into a test of great-power rivalry¹⁰. Its nuclear programme remains the central issue in any settlement⁷. Its economy, however, is small and shrinking: the IMF estimates GDP at about US$312bn in 2026³. Relevant as a spoiler and a chokepoint, not as an economic partner.

What does it need, want and fear?

Need: an end to the war on terms that lift the US naval pressure and let it sell oil, and an economy that stops shrinking; the IMF expects output to fall 7.6% this year³. Want: recognition of its control over shipping in the Strait of Hormuz, which it made a condition of any lasting ceasefire^9,10; the survival of the Islamic Republic and its new leadership⁸; and the right to its nuclear programme. Fear: renewed large-scale US and Israeli strikes, which Washington is weighing¹⁰; regime collapse from within after the mass protests of early 2026¹²; and isolation if Russian and Chinese support proves thin.

Who are its patrons, rivals and hedges?

Iran is at war with the world's strongest military and its most capable regional ally. The war began on 28 February 2026 when the United States and Israel struck⁷; a June memorandum briefly paused it, then collapsed over the Strait of Hormuz⁹. Iran's patrons are Russia and China, which have stepped up their backing, but neither has intervened militarily¹⁰. Its attacks on shipping in the Strait of Hormuz⁹ put it at odds with every state that depends on the Gulf trade. A state with few friends, depending on two great powers whose support is political rather than military.

Can it deter, or does it depend on others?

Iran's armed forces have shown both their limits and their staying power. They could not protect the country's leadership or nuclear sites from US and Israeli strikes^7,8. But after eight months of war they still contest the Strait of Hormuz and can strike shipping in and around the strait^9,10. Pre-war military spending was about 2.09% of GDP in 2025⁵, though Iran's budgets are opaque. Missiles, drones, naval swarms and allied militias give it the power to impose costs, not to win. Data on losses is unreliable, hence low confidence.

Rising, stagnant or declining, and how fast?

Judged by results, Iran is in steep decline. The IMF estimates that the economy shrank 0.9% in 2025 and will contract 7.6% in 2026, with inflation rising from 50.6% to 78.6%³. The dollar value of GDP has fallen from about US$417bn in 2024 to an estimated US$312bn³. The war is in an uneasy lull, with diplomacy stalled and plans for new strikes circulating¹⁰. The country's leader is unseen⁸ and thousands died in the suppression of protests months before the war began¹². Nothing in the record yet points to recovery.