Worst outcome is Islamic Republic’s survival, ex-CIA official says

The delegation which held lengthy talks with the US team in Islamabad on Saturday includes not only Parliament Speaker Mohammad-Bagher Ghalibaf and his political allies but also Ali-Akbar Ahmadian, Secretary of the Defence Council, and more moderate technocrats such as Central Bank of Iran Governor Abdolnaser Hemmati.

However, the presence of Mahmoud Nabavian—a hardline parliamentarian known for his staunch opposition to negotiations with the West—has generated particular surprise.

Nabavian, a cleric affiliated with the ultra-conservative Paydari (Steadfastness) Party, has for years denounced figures like Mohammad-Javad Zarif and the relatively moderate government of Hassan Rouhani as “traitors” for pursuing the 2015 nuclear deal, formally known as the Joint Comprehensive Plan of Action.

His inclusion in the delegation appears to be interpreted as a calculated move by Ghalibaf. By bringing a vocal critic of negotiations into the process, he may be attempting to share responsibility for the outcome and pre-empt future criticism from hardline factions that wield significant influence within Iran’s political and military structures.

With figures like Nabavian involved, any eventual agreement—or failure to reach one— is less easily attributed to a single political camp.

According to political activist Hossein Shirzad, the delegation’s structure suggests a broader objective beyond traditional diplomacy. “The composition of the delegation … indicates that negotiations are aimed at presenting a ‘political business plan’ to Donald Trump’s representatives for Iran’s future,” he wrote on X. He added that “the discussions are likely about the quality of an agreement, not the agreement itself.”

Shirzad also claimed that “the issue has already been resolved behind the scenes. Ghalibaf wants to prove that he has the expertise and executive capability to manage Iran and control the remaining structure. He is seeking personal and factional guarantees.”

Mojtaba's green light

Despite the significance of the negotiations, Iran’s new supreme leader has not issued an explicit public endorsement.

However, in a written message marking the fortieth day after his father’s death, Mojtaba Khamenei referred to the “announcement of the decision to negotiate with the enemy” and called for public mobilization to influence the outcome, remarks that many interpret as implicit approval of the negotiation process.

He also referenced verses from Surah Al-Fath in the Quran, alluding to the Treaty of Hudaybiyyah—a peace agreement between Prophet Muhammad and his adversaries in Mecca. In Islamic tradition, this treaty is seen as a strategic move that reduced conflict and ultimately strengthened Muslims despite their weaker position at the time.

Such symbolic references carry strong weight among the Islamic Republic’s ideological base.

Ghalibaf and his rivals in the conservative camp

Divisions and rivalry within Iran's conservative camp remain pronounced. On one side stands Ghalibaf and his pragmatic allies—often described as technocratic conservatives—who advocate negotiation from a position of strength. They reject ultimatums but view diplomacy as a rational tool for managing tensions and reducing external pressure, with indirect talks seen as the most viable path under current conditions.

For Ghalibaf, success in these talks could significantly bolster his political standing after multiple failed bids for the presidency over the past two decades. A diplomatic breakthrough could help secure his position as a leading figure in Iran’s future political landscape.

On the other side are more radical conservatives, including Saeed Jalili and factions such as the Paydari Party, who have consistently opposed any engagement with the United States. These groups have framed past agreements as “surrender” and continue to adopt a hardline stance.

Jalili has remained notably silent in recent days, fueling speculation in political circles that under the new leadership he may have been replaced in his role at the Supreme National Security Council by Ali Bagheri-Kani, also present alongside the delegation.

Hardline opposition beyond political elites

Hardline opposition extends beyond political elites into public discourse. In street protests and on social media, critics have condemned any potential agreement as a sign of “humiliation” and “betrayal of the leader’s blood.”

In one widely circulated video, a speaker denounced Ghalibaf’s trip to Pakistan for talks with JD Vance, prompting crowds to chant “Hayhat Min al-Dhilla” (“Never accept humiliation”)—a phrase historically attributed to Imam Hussain on the Day of Ashura.

State media also reflects this tension. While negotiations are widely understood to require leadership approval, some broadcasters have continued to voice dissent.

For instance, a presenter on IRGC-affiliated Ofogh TV questioned the rationale for talks, asking: “If the Zionist regime has violated the ceasefire, based on which commitment should we remain silent and go negotiate? Three of Iran’s ten conditions for negotiation have been violated.”

Even so, other voices within state media have pointed to historical precedents, noting that several Shia Imams engaged in dialogue or cooperation with their adversaries, suggesting that negotiation, in itself, is not incompatible with ideological principles.

As US and Iranian envoys prepare to meet in Pakistan this weekend, the truce between the two sides appears less a step toward peace than a fragile intermission in a war whose central disputes remain unresolved.

There is little clarity about the terms of the ceasefire. Neither Washington nor Tehran refers to it as a formal agreement, and the absence of guarantees, enforcement mechanisms or an effective mediator underscores how fragile it may be.

President Donald Trump has declared victory, Tehran has described the outcome as a “historic achievement,” and Israeli Prime Minister Benjamin Netanyahu has offered only partial support for the arrangement.

The complexity of the war, including the involvement of Arab states across the Persian Gulf and multiple proxy actors, makes a comprehensive settlement difficult for now.

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There is little clarity about the terms of the ceasefire. Neither Washington nor Tehran refers to it as a formal agreement, and the absence of guarantees, enforcement mechanisms or an effective mediator underscores how fragile it may be.

President Donald Trump has declared victory, Tehran has described the outcome as a “historic achievement,” and Israeli Prime Minister Benjamin Netanyahu has offered only partial support for the arrangement.

The complexity of the war, including the involvement of Arab states across the Persian Gulf and multiple proxy actors, makes a comprehensive settlement difficult for now.

The view from Washington

The United States entered the war with multiple objectives: degrading Iran’s nuclear program, weakening the “Axis of Resistance,” and in some quarters even raising the possibility of regime change. At its core, however, the goal was to alter the regional balance of power by weakening Iran’s ability to threaten Israel and its neighbors.

According to American officials, roughly 13,000 targets were struck during the campaign, including missile infrastructure, naval facilities and parts of Iran’s air-defense network. Much of Iran’s military command structure was also disrupted following the killing of several senior figures.

From Washington’s perspective, these developments bought time by setting back Iran’s military capabilities and limiting its ability to rebuild quickly, even if sanctions were lifted.

However, key US objectives remain unresolved. Iran’s stockpile of highly enriched uranium has not been secured, and parts of the missile program retain operational capacity.

At the same time, Washington may have underestimated the leverage Tehran could exert through the Strait of Hormuz. Iran’s move to close the strait triggered a sharp global energy shock, prompting intense pressure on the Trump administration. These dynamics likely contributed to Washington’s decision to shift unresolved issues to negotiations.

In that sense, the United States neither fully won nor clearly lost. It altered the strategic equation but did not achieve all of its objectives on its own terms.

The view from Tehran

The internal condition of the Islamic Republic remains difficult to assess because of extensive internet restrictions. However, Tehran’s acceptance of the ceasefire suggests that the damage inflicted across military and infrastructure sectors was substantial.

The war also produced a dramatic transformation in Iran’s command structure following the killing of several senior figures, including Supreme Leader Ali Khamenei.

The collapse of much of Iran’s air-defense network exposed the political center of power to continued vulnerability, making the possibility of further strikes a persistent concern.

At the same time, Iran’s leadership faced a different strategic risk: internal instability. Disruptions to electricity and fuel infrastructure, combined with the fragile legitimacy of the new leadership, raised concerns about potential unrest in a society already marked by repeated protest movements.

Hardline figures publicly criticized the ceasefire on Wednesday night, accusing the government of retreating under pressure. Yet the leadership appears to have concluded that a temporary pause was necessary to stabilize the domestic situation.

Tehran also believes it has gained leverage through the closure of the Strait of Hormuz. Reports have emerged that Iran seeks transit fees of roughly $2 million per ship. If such a system were implemented across normal shipping volumes—a major assumption—it could theoretically generate tens of billions of dollars annually.

A fragile truce

Shortly after the announcement, parliamentary speaker Mohammad Bagher Ghalibaf—who now leads Iran’s negotiating team—said that three provisions of the ceasefire framework had already been violated: Israeli attacks on Lebanon, Iran’s enrichment rights, and the incursion of a hostile drone into Iranian airspace.

Complicating matters further is the structure of the mediation effort itself. Pakistan, as a non-Arab Muslim state with working relations with both Washington and Tehran, appears a logical intermediary.

But Islamabad’s influence appears limited. Netanyahu’s rejection of Prime Minister Shehbaz Sharif’s remark that the ceasefire included Lebanon was a telling moment.

The absence of GCC powers and Lebanon also represents a structural weakness of the negotiations, as these actors remain deeply embedded in the conflict.

However, the decisive issue in the coming talks is likely to be the nuclear question. The central contradiction between Washington’s demand for zero enrichment and Tehran’s insistence on maintaining enrichment rights appears difficult to bridge. The fate of Iran’s existing uranium stockpile remains equally uncertain.

The Lebanese front presents another potential flashpoint. For Tehran, any perceived abandonment of Hezbollah would signal the collapse of the Axis of Resistance. Recent rhetoric from Iranian officials about defending Lebanese Shiite communities indicates that this front retains the capacity to derail the ceasefire.

The ceasefire therefore represents neither the end of the conflict nor the beginning of a durable peace. It is more accurately a pause within an ongoing confrontation.

The war did not generate the decisive pressure necessary to impose a lasting settlement. Both sides now hope to translate battlefield outcomes into diplomatic leverage. But based on what is publicly known, the negotiations appear unlikely to deliver the decisive achievements either side seeks.

The truce that emerged after six weeks of war remains fragile, even as diplomatic signals from Washington, Tehran and Islamabad suggest the meeting is likely to go ahead.

Amid the uncertainties and the mistrust, it was perhaps unsurprising that Iran’s ambassador to China, Abdolreza Rahmani Fazli, publicly expressed hope that Beijing could act as a guarantor of the process. The suggestion followed reports that China maintained contact with both Washington and Tehran during the diplomatic push that helped produce the ceasefire.

Yet when asked directly about such a role, China’s foreign ministry avoided any commitment, saying only that Beijing hopes “all parties can properly resolve disputes through dialogue and negotiation” and will maintain communication with those involved.

This episode reflects a broader pattern in China’s response to the war: exerting influence while avoiding commitment.

Beijing is engaged, but only up to a point. It maintains economic ties with Iran, continues to purchase its oil, and provides forms of support that help sustain the Iranian economy under pressure. Yet none of this amounts to the kind of backing Tehran would need in an existential conflict. There are no security guarantees, no military involvement, and no willingness to absorb significant strategic risks.

China’s limited readiness to intervene reflects both its capabilities and its priorities. Its actions are ultimately directed toward ensuring that the conflict does not disrupt its broader strategic agenda at minimal cost. Contributing to de-escalation can serve that objective, but only insofar as it advances clearly defined interests.

When the conflict began on February 28, Beijing was relatively well positioned to absorb the initial shock with the strategic reserves it had built up throughout 2025, the increasing electrification of its economy, and its vast domestic coal resources. It also soon became clear that Tehran could withstand the initial decapitation strikes.

At the same time, China’s regional strategy has increasingly shifted toward the monarchies across the Persian Gulf, reinforcing its preference for a balanced and non-committal posture.

The conflict also presents certain strategic opportunities. As the United States diverts military resources and political attention to the Middle East, pressure on China in the Indo-Pacific decreases. The war also offers insights into US military capabilities and operational patterns.

These advantages, however, depend on the conflict remaining limited. A prolonged war—such as the one that loomed when President Donald Trump warned that a “whole civilization will die”—poses significant risks.

China is poorly positioned to weather a global recession with ease. Exports remain essential for sustaining industrial output, growth and employment. A decline in external demand, combined with disruptions to key industrial and agricultural inputs, would therefore undermine a critical pillar of its economy.

Beijing wants stable relations with Washington, not least to buy time to strengthen its economy against future US pressure. In addition, the question of how to protect or evacuate the hundreds of thousands of Chinese nationals in the region would become increasingly urgent if the conflict escalated further.

It was under these conditions that China chose to act. On the one hand, it vetoed a Bahrain-sponsored resolution at the UN Security Council that—even in revised form—could have provided legal cover for further attacks against Iran. On the other, it helped create a diplomatic off-ramp to a US president in clear need of one.

China’s role in the crisis thus highlights both the reach and the limits of its influence. Beijing has demonstrated an ability to shape outcomes at critical junctures, but it remains unwilling to assume the responsibilities of a security provider. Its actions are highly context-dependent: had Washington shown no interest in de-escalation, or had diplomatic openings not emerged, China’s ability to intervene would likely have been far more limited.

The Chinese leadership, in other words, is not seeking to resolve the conflict as much as to manage its consequences. It intervenes not to build a lasting order, but to prevent outcomes that would damage its broader strategic agenda.

As long as that calculation holds, Beijing will remain an influential—but ultimately cautious and constrained—actor in Middle Eastern security.

The ceasefire announced on April 7 has offered temporary relief to the United States and, by extension, the global economy. Oil prices have since fallen below $100 per barrel, the Strait of Hormuz may finally reopen, and global stock markets have rallied, recovering part of the losses recorded over the previous 40 days.

The coming days may prove crucial for stabilizing seasonal supply chains, particularly for fertilizer inputs transiting the strait during the peak planting period in the Northern Hemisphere.

Inside Iran, however, the outlook is far more complex.

The war effectively froze Iran's economic crises, shuttered markets, and halted price discovery. A similar pattern followed the 12-day conflict earlier in the war, when markets closed temporarily before reopening to renewed upward pressure as underlying imbalances reasserted themselves. This time, the damage is far greater.

During US-Israeli airstrikes on Iran’s strategic infrastructure, attacks on Mahshahr and Asaluyeh petrochemical facilities hit sites Iranian officials say account for 85% of the country’s petrochemical export capacity.

The steel industry was also hit. Since these sectors supply downstream industries from plastics to automotive manufacturing and construction, the full scale of disruption has yet to be assessed.

The Tehran Stock Exchange has been closed for more than 40 consecutive days.

The head of the Securities and Exchange Organization has indicated that war-damaged companies will return to trading at a later stage, meaning that even if the exchange reopens, a significant portion of major firms may remain inactive.

Reopening without viable export-oriented companies could trigger heavy selling pressure in a market where banks and automakers are already loss-making and reliant on state support.

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  Dollar-pegged pizza in Tehran points to a different kind of regime change

Inflation remains the most pressing crisis. Before the US-Israeli airstrikes, annual inflation had surpassed 70 percent — the highest since World War II. Food inflation reached triple digits, with bread and grains rising by 140 percent and cooking oil by more than 200 percent.

The war temporarily suppressed these pressures: demand fell amid unemployment, banking disruptions reduced the velocity of money, and property and automobile transactions slowed sharply.

With the Pakistani-brokered ceasefire, that suppressed demand is likely to return.

The fiscal picture offers no relief. The approved budget included a 65-percent rise in taxes, but roughly 60 percent of working-age individuals are currently unemployed.

In effect, the government is attempting to tax its way out of a fiscal crisis in an economy where the majority of working-age adults have no income to tax. Post-war military expenditures and reconstruction obligations have increased sharply, with no significant new revenue streams available.

Compounding this is the disruption of Iran's primary financial channel through Dubai, which for years served as a central hub for trade and currency transactions worth $16 billion to $28 billion annually.

Following recent attacks on Dubai, Emirati authorities reportedly detained dozens of currency dealers linked to Iran's Revolutionary Guard and shut down associated front companies.

Alternative channels in Herat and Erbil remain active but lack Dubai's scale. When suppressed demand for foreign currency returns, it will hit a narrower, less efficient set of channels, amplifying exchange rate volatility.

The ceasefire offered the world a reprieve. For Iran, it removed the only thing suppressing a crisis that had been building for months. When markets reopen, they will price in not only pre-war imbalances but the destruction of the export capacity that once generated foreign currency.

The rial will face a market that has every reason to reprice it sharply downward, and a state with fewer tools than ever to intervene. Iran's economy has not returned to its pre-war condition. It has moved past it.

Yet the ceasefire itself is fragile, reportedly violated several times within its first 48 hours. Even in the best-case diplomatic scenario, the technology and capital required for reconstruction will not materialize within weeks, and as long as the risk of renewed conflict remains, investors are unlikely to commit long-term capital.

What comes next at the negotiating table will shape whether any of it matters.