What Iran can—and can’t—do in response

Following a series of airstrikes that damaged key Iranian nuclear and military infrastructure, global observers are now asking: Will Iran retaliate, and if so, how? Despite its ideological drive and regional reach, Iran faces significant limitations when it comes to striking back against Israel or the United States. Its military tools are real, but its vulnerabilities are greater. Geography, proxy unpredictability, economic fragility, and fear of escalation all act as brakes on its decision-making. The real danger may not lie in what Iran chooses to do—but in how close it stands to the edge of miscalculation.

1. Iran’s Firepower Doesn’t Equal Freedom of Action

Iran has long invested in building up a multi-layered deterrence posture. Its ballistic missile program is one of the largest in the region, and it regularly showcases long-range drones and hypersonic claims in state media. But possessing weapons is different from being able to use them strategically.

Iran is hemmed in by a hostile regional environment and faces the overwhelming military superiority of the U.S.-Israeli alliance. Any direct strike against Israel could provoke a multi-theater response that Iran is ill-equipped to endure. Its air defense systems remain outdated, and despite localized upgrades from Russian and indigenous systems, its skies remain permeable.

Additionally, the targeting of its Natanz and Isfahan facilities has made it clear that its core defense assets are not immune. Satellite surveillance, cyber intrusions, and stealth drones have made even fortified installations vulnerable. Iran now knows it cannot guarantee reciprocal damage without inviting even greater consequences.

“Iran doesn’t need more missiles—it needs more insulation,” noted Behnam Ben Taleblu, a senior fellow at the Foundation for Defense of Democracies. “And right now, it’s all too exposed.”

2. Proxy Warfare Is Both Strategy and Constraint

Iran’s influence strategy hinges on a network of regional allies and militias—Hezbollah in Lebanon, the Houthis in Yemen, Shiite armed groups in Iraq and Syria. These groups give Iran reach without visibility, allowing it to project power while maintaining plausible deniability.

But this model has limits. For one, these groups have their own political calculations. Hezbollah, though strongly aligned with Tehran, must manage Lebanon’s fragile domestic balance. Escalating on Iran’s behalf could destabilize Hezbollah’s standing or provoke a devastating Israeli response, like in 2006. The Houthis are more aggressive, launching missiles toward Israel and Saudi Arabia, but their aims are increasingly driven by internal Yemeni dynamics and negotiations.

Meanwhile, Iranian-backed militias in Iraq have faced growing counter-pressure. U.S. and Iraqi forces have repeatedly targeted militia installations and leadership hubs. The old assumption—that Iran could act cost-free via surrogates—is eroding fast.

“Proxies don’t act like drones—they act like people,” says Dina Esfandiary, a senior advisor at the International Crisis Group. “Iran’s command and control is real, but not absolute.”

This means Iran’s most responsive military tools are also its least controllable. If it wants a calibrated message, it cannot wholly rely on them.

3. Economic Reality Narrows Iran’s Strategic Bandwidth

Iran’s ability to escalate is deeply constrained by its internal economic situation. Years of sanctions, corruption, and fiscal mismanagement have left the country’s economy in a precarious state. Inflation remains in double digits, the rial continues to lose value, and unemployment—especially among youth—is persistently high.

Social unrest continues to simmer. The 2022–2023 Mahsa Amini protests revealed deep generational frustration with the Islamic Republic, and the security crackdown that followed only deepened resentment. In this climate, any costly military adventure risks sparking further dissent.

Tehran understands this. It cannot afford a prolonged war that further isolates it diplomatically and economically. The leadership may embrace ideological resistance, but the economic realities favor caution.

Additionally, any war that interferes with Iran’s oil exports—particularly to China—would endanger one of its few remaining economic lifelines. Despite sanctions, Iran has managed to boost crude exports above 1.5 million barrels per day, largely through backdoor trade with Asia. War jeopardizes that.

“Iran’s retaliation is tempered by its fear of losing the few channels it still has,” said a Middle East energy analyst with S&P Global. “The question isn’t just military—it’s market survival.”

4. Cyber and Gray Zone Tactics May Be Iran’s Path Forward

Given these constraints, Iran may pivot toward less visible, less attributable forms of retaliation. This includes cyberattacks on Israeli or U.S. critical infrastructure, coordinated harassment of maritime routes in the Persian Gulf, or limited precision strikes by proxies.

Iran has previously used cyber tools effectively. In 2020, its hackers were linked to cyber intrusions into Israeli water utilities and rail networks. In 2021, ransomware attacks with suspected Iranian links targeted American hospitals and universities. These attacks fall below the threshold of war, but still inflict political and psychological pressure.

On the maritime front, Iran can disrupt oil transit routes through the Strait of Hormuz or Red Sea choke points via the IRGC Navy or Houthi-aligned operations. This can raise global shipping costs without offering a clear target for retaliation.

“Iran’s doctrine has evolved to embrace ambiguity as a shield,” observed Sanam Vakil of Chatham House. “It doesn’t want clean escalation—it wants muddy responses.” Such tactics buy time and preserve deniability, but also risk triggering unintended consequences if a cyberattack causes civilian harm or if a proxy action is misattributed.

5. The Risk Isn’t Retaliation—It’s Miscalculation

What makes the current moment dangerous is not Iran’s eagerness to retaliate, but the complex web of actors and interests that could accidentally escalate the situation. Hezbollah could misjudge Israeli resolve. A cyberattack could hit a hospital or airport, drawing a disproportionate response. A drone strike might cross into U.S. jurisdiction. These aren’t hypotheticals—they’ve nearly happened before. In January 2020, the U.S. assassination of Qassem Soleimani was followed by Iranian missile strikes on U.S. bases in Iraq, injuring over 100 personnel. At the time, both sides pulled back. But that restraint may not hold in a more charged 2025 environment.

The Israel-Iran shadow war has now gone public, with direct hits on Iranian nuclear sites and retaliatory strikes in Syria. The balance is more fragile than ever, and the guardrails thinner. “We’re closer to the edge than people think,” one former U.S. intelligence official told Foreign Policy. “It’s not about whether Iran strikes—it’s about how badly things go if they do.”

Iran is not out of options—but it is out of easy ones. The leadership faces a paradox: act boldly and risk ruin, or act subtly and risk irrelevance. Its most effective retaliation may not look like a missile strike or an explosion. It may look like a wave of cyber intrusions, proxy skirmishes, and diplomatic disruption—enough to signal resilience, but not enough to provoke total war.

Yet this kind of strategy is fragile. It relies on others interpreting Tehran’s ambiguity correctly and not overreacting. In that sense, Iran’s greatest strength—its ability to operate in the shadows—may also be its greatest liability. The longer this shadow war continues, the higher the chances that miscalculation becomes catastrophe.