Nineteen weeks into the war, Iran is battered but not broken. Its navy is destroyed, its supreme leader is dead, and its economy is under severe pressure. Yet Tehran has dictated the terms of every ceasefire, retained control of the Strait of Hormuz, and forced the United States to negotiate on issues it never intended to discuss.
How did a country with a military budget one-twentieth the size of America’s adversary manage this?
“While the United States and Israel waged a war they believed would be defined by military force, Iran had a theory of victory its adversaries never understood,” write Pnina Shuker and Andrew Milburn in War on the Rocks. “A regime built for survival, manipulating global perception and economic levers, and converting military inferiority into geopolitical leverage.”
The core of Iran’s strategy was “mosaic defense,” a doctrine formalized in 2005 by the IRGC’s Center for Strategy, built around decentralized command to survive decapitation strikes. Iran’s theory of victory was simple: survive long enough to impose unbearable costs through maritime coercion, economic disruption, information dominance, and attrition of political will.
The Strait of Hormuz was the decisive theater. The US underestimated Iran’s willingness to close it entirely and failed to pre-position naval assets. The Pentagon had identified Hormuz as the key risk for decades, but operational planning never reflected it. “It took a while for them to understand how big that risk is,” Israeli Prime Minister Netanyahu said of Washington’s miscalculation.
Iran’s economic resilience also caught the US off guard. Tehran built a sanctions-proof economy over five years. Its tanker fleet grew from roughly 70 vessels in 2020 to about 550 by 2025. Chinese refineries bought roughly 90 percent of Iran’s oil exports, funding about half its government budget. Sanctions were supposed to starve the war machine. Instead, Iran kept selling oil.
On the battlefield, Iran targeted the wrong things. Instead of aiming for US strike aircraft, Iran went after tankers, radar sites, communications nodes, and command centers, the “architecture” of American airpower, degrading the enabling systems incrementally. The US followed a “list of targets.” Iran practiced decentralized mission command.
Iran also hit regional US partners hard, striking Saudi territory, UAE oil terminals, and Bahrain. The message was clear: supporting the US campaign has a price. Kuwait and Saudi Arabia closed their airspace to US aircraft. The UAE quit OPEC and threatened to leave the Arab League.
The deal that emerged reflects Iran’s leverage. The US lifted the naval blockade, withdrew forces from Iran’s vicinity, and issued sanctions waivers releasing oil revenue and frozen assets, all before Iran had to resolve a single hard issue about its nuclear program, missiles, or regional proxies.
One Israeli diplomat called the war “a glorious failure.” B.H. Liddell Hart wrote that the object of war is “a better peace.” By that measure, neither the US nor Israel achieved what they set out to do. Iran did not win the war in any conventional sense. But it proved that being outgunned is not the same as being outplayed.