Iran May Be Running Out of Options

0:09On Monday, an Iranian state newscaster was in the middle of a broadcast when her coverage was interrupted.

0:20by a blast.

0:26It was just one in a series of dramatic moments over the past five days, as Israel has escalated its attacks on Iran. Our colleague Suna Engel Rasmussen has been covering the conflict. Suna, what do we know about Israel's objective here? Publicly, Israel and Israel's Prime Minister, Benjamin Netanyahu, have said that they want to cripple Iran's nuclear program. Moments ago, Israel launched Operation Rising Lion, a targeted military operation to roll back the Iranian threat to Israel's very survival. But if you talk to Iranians and if you see the nature of the war unfolding in Iran currently, I think there's definitely signs that regime change is on the table, at least.

1:15If you're targeting the state media of a country, that to me looks more like regime change than it does targeting a nuclear program.

1:27How perilous do things look for Iran right now? This is the most serious situation that the Islamic Republic has been in since the late 80s. I don't think there's any doubt about that. I think the question now is whether the Islamic Republic, the whole system that has been in power since 1979, survives this war.

1:52Welcome to The Journal, our show about money, business, and power. I'm Annie Minoff. It's Tuesday, June 17th.

2:05Coming up on the show, Iran's government is running out of options. Can it survive?

2:27For almost half a century, Iran has been an Islamic theocracy, ruled by a cadre of religious leaders. And for more than three decades, the man at the center of that power structure, has been the country's supreme leader, Ayatollah Ali Khamenei.

2:49He's almost like a pope-like figure. And I say that on purpose, like he's both unelected supreme leader, representative of God on earth, but he's also a religious figurehead for millions of Shia Muslims across Iran, but also across the Middle East. In his time at the helm, Khamenei has transformed Iran. He took power at a time when Iran was in ruins, it was a financial ruin, but it was also humiliated and devastated after this deadly war with Iraq, which lasted from 1980 to 1988. And it's one of the deadliest wars of the past century on a global scale. And I don't think we can overestimate how much of a historical trauma that is for the Iranians who remember it.

3:34So that's the context that Ali Khamenei took power in in 1989. And he pulled off something that was actually quite miraculous. Like, he basically turned Iran into a Middle Eastern superpower.

3:52Khamenei and his government picked up the pieces after the Iran-Iraq war and built Iran into a strong regional power with a formidable military. At its core is Iran's Revolutionary Guard. And as an elite part of the Iranian military, it was originally established to protect the new state from both internal and external threats. The Revolutionary Guard kept the peace at home. But it also played a key role in the region, building up militias that were friendly to Iran. Those included Hamas in Gaza and Hezbollah in Lebanon. One way of looking at this is that Iran had become an aggressor and a colonizer.

4:31This is the way that people in Israel, for example, have portrayed it and many other places in the Middle East as well. Another way of looking at this was that Iran was doing this as a type of forward defense. That's the expression they use in Iran, where you have these militias positioned around the region, including on the border with Israel, as a deterrent against an Israeli or an American attack. And that worked. For decades, that worked. It was assumed across the Middle East and in Washington that if Israel or the U.S. were to attack Iran directly, or if they were to go after one of its important allies, for example, Hezbollah, the militia in Lebanon, well, then this axis of resistance that Iran had built would come together and they would attack Israel.

5:16Another key prong of Khamenei's strategy was building up Iran's nuclear program. Iran says that its nuclear program is peaceful. And the UN's nuclear watchdog, the IAEA, has also consistently said that Iran doesn't have a nuclear weapons program. But the idea that Iran could one day possess nuclear weapons was key to sustaining its power in the region. All of this, cultivating regional allies and raising Iran's nuclear profile, helped Hominayi and his government maintain peace and stability for years. Iran has been a relatively safe place to live and raise your children and create a life, even if it was obviously under authoritarian rule.

5:58But I think this is an important thing to remember, that even Iranians who didn't like or even despised their own rulers would say that they have conflicted feelings about him. Khamenei's ability to keep Iran strong and safe has been key to his government's legitimacy. But that perception of strength has started to crack. Since the beginning of the war in Gaza, Israel has weakened two of Iran's key allies, Hamas and Hezbollah. Syrian rebels also toppled dictator Bashar al-Assad, who is also friendly to Iran. Iran's so-called forward defense was faltering. Israel started by taking out one Iranian ally after the other and basically got away with it.

6:41And in that sense, I think Iran's unspoken threat and sort of main deterrence against Israel turned out to be somewhat of a paper tiger. Iran was vulnerable. That only became clear in April of last year, when Iran and Israel exchanged fire for the first time. That was the first time there was a skirmish with missiles between Iran and Israel. And Israel managed to cause severe damage to Iranian anti-air defenses. and Iran, even though it sent hundreds of missiles and drones over Israel, didn't actually manage to land a punch that really mattered. That happened again later last year. The same sort of pattern repeated.

7:24Then came Israel's attack on Iran last week. And the paper tiger began to crumple. Over the past five days, Israel has killed top Iranian military leaders. It struck Iranian nuclear facilities, including a key enrichment facility at Natanz. Israel says it's destroyed a third of Iran's missile launchers, and its planes fly freely over Tehran. People are fleeing the city. And according to a human rights group that monitors Iran, more than 220 civilians have died. We've seen this time around Israel taking out some of the highest-ranking, the highest-ranking military commanders in the country. Iran could still launch dozens and dozens of missiles, but not really damage anything of sort of military significance in Israel.

8:15And I think that shows the balance between the two powers in this war. Iran is sort of running out of ways that it can strike back at Israel, at least at a large scale. And we haven't seen it being able to hit Israel the way that it's been hit in return. So what are Iran's options now? Khamenei has no good options. Those no good options are next.

8:56Suna says Khamenei has basically three options for how to move forward. He can fight, he can negotiate, or... Clandestinely go for a bomb. Yeah, those are the options.

9:11Each carries its own risks. Take option number one, fighting. He can choose to strike back at Israel. That's what he's been doing to some extent. That runs the risk of not hitting Israel hard enough or hitting Israel so hard that Israel expands its strikes against Iran. And that can have fatal consequences for the system for the Islamic Republic. He also has the option of basically surrendering. And in this case, that would mean probably striking a nuclear deal with the U.S. and global powers that severely curbs Iran's ability to enrich uranium and keeps it far away from a nuclear weapon. But that would risk alienating his hardline supporters in Iran.

9:56Not to mention, giving up a nuclear program he's worked for decades to build. And then there's perhaps the final option, which is not really a good option either, and that is dashing for a nuclear weapon. That would be highly controversial internationally, and it could probably also prompt Israel to continue to target Iran's nuclear facilities. But I think it is an option that's on the table. Wow. So that's the menu of not great options. What are they going to do? What is Khamenei going to do? We reported yesterday that Iran has been sending messages through Arab intermediaries that it wants to urgently de-escalate the situation and return to the negotiating table with the U.S.

10:42over a new nuclear agreement. Iran had been negotiating with the U.S. over its nuclear program prior to Israel's strikes last week. In fact, Iranian and U.S. negotiators had been planning to meet in Oman last Sunday. Now, Iran is pursuing the resumption of those talks with new urgency. The Journal reported yesterday that Iran reached out to Arab intermediaries to signal that it would be open to returning to the negotiating table. But it may be too late. Today, President Trump called for Iran's, quote, unconditional surrender on social media. He also said that the U.S. knows Khamenei's location.

11:20Quote, He is an easy target, but is safe there. We are not going to take him out, in parentheses, kill, at least not for now. Administration officials said President Trump is considering a range of options, including a potential U.S. strike against Iran.

11:39If Iran were to either give up or strongly curtail its nuclear program, what would that mean for the country and for this regime? Iran has transformed the Middle East over the past two decades. It has become a regional powerhouse. And that status has rested to a large extent on its nuclear program and the threat that it could weaponize its nuclear program. If that threat is gone and Iran's nuclear program is either completely removed or it's cut down to size to the extent where it's no longer really a threat and it's not a deterrent, that will change Iran's status in the Middle East. It will change Khamenei's ability to implicitly threaten his enemies, and it will also change Iran's security calculus at home.

12:28How would you kind of describe the moment we are in right now for this region, for the Middle East? There's no doubt that we are on the brink of a new era in the Middle East, and all the alliances and power dynamics that have been taken for granted over the past two and a half decades, basically since the Iraq war, have now been thrown up in the air. And how they land is going to have wide ranging ramifications in Israel, Iran, the entire region, and possibly most likely also beyond. And I think how that plays out, to a large extent, depends on how Supreme Leader Ali Khamenei fares in this current war.

13:19This episode has been updated. A previous version said that Iran had helped build up Shia militias, including Hamas. While Hamas is allied with Iran, it is a Sunni group.

13:35That's all for today, Tuesday, June 17th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Benoit Faucon, Anat Pellet, and Summer Saeed. Thanks for listening. See you tomorrow.