Iran's ‘Victory' Dilemma Explained

As U.S. and Iranian officials report progress in the latest talks designed to end their nearly four-month conflict, both sides are looking to translate battlefield achievements into lasting diplomatic gains.

For Tehran, which has thus far succeeded in keeping its core demands on the negotiating table, this means maintaining leverage against a global superpower still threatening to resume or even escalate hostilities should talks unravel as they have so many times in the past.

Masoud Rezaei, senior visiting fellow at the Center for Middle East Strategic Studies in Tehran, argued that key decision-makers within the Islamic Republic view the memorandum of understanding (MoU) signed by the two sides last week “not merely as a final diplomatic victory, but rather as the emergence of a new strategic situation that reaffirms Iran's position as an unavoidable actor in regional and international security calculations.”

“From this perspective, the significance of the memorandum lies less in its immediate technical outcomes and more in the fact that it emerged after a period of direct military confrontation and sustained escalation,” Rezaei told Newsweek.

“Within Iran, this sequence may be understood as reinforcing a long-standing strategic narrative,” Rezaei said, “that pressure, sanctions, and military coercion did not eliminate Iran's regional role but instead ultimately brought external actors back to the negotiating table.”

But caution based on both present and past circumstances prevails.

“At the same time, concerns in Tehran regarding the future trajectory of negotiations with a Trump administration and the credibility of any prospective agreement remain very serious,” Rezaei said. “These concerns are not solely related to President Trump himself; part of this caution is rooted in Iran's own historical experience.”

“For this reason,” he added, “Iran may now see itself as standing at a highly sensitive historical moment-one that evokes difficult memories from the eight-year Iran–Iraq War.”

Why the Past Matters

The 1980-1988 Iran-Iraq war marks the last major conflict fought by Iran. Then-Iraqi President Saddam Hussein ordered a full-scale invasion of the neighboring nation, seeking to capitalize on perceived instability in the newly established Islamic Republic to curtail the potential spread of its revolutionary ideology and achieve territorial gains.

But Iran quickly turned the tide, expelling Iraqi forces and bringing the fight to Hussein’s territory. By 1986, Iran had captured the strategic Faw Peninsula, Iraq’s only direct outlet to the Persian Gulf in a move that appeared to cement Tehran’s victory and accelerated Arab aid to Baghdad.

When the United Nations called for a ceasefire in 1987, Iran famously refused. The decision would prove costly as Iraqi troops regained the initiative the following year and reversed Iranian gains, resulting in a truce on less favorable terms.

“From February 1986 until April 1988, Iran controlled the Faw Peninsula for approximately 28 months and sustained roughly 12,000 casualties during that period,” Rezaei said. “Yet Tehran was ultimately unable to convert battlefield gains into diplomatic success.”

“In this context, Iran declined to accept United Nations Security Council Resolution 598 in July 1987 while it still held Faw; however, after losing control of the peninsula, it accepted the same resolution in July 1988 from a position of strategic urgency,” he added.

Rezaei describes the primary lesson derived from the so-called “Faw dilemma” as being “the perception that military resistance and resilience, as well as political leverage lose value if they are not translated into diplomatic outcomes at the right moment and under favorable conditions.”

That perception lives on today as Iran, while having demonstrated some key asymmetrical advantages in the war launched by the U.S. and Israel on February 28 and brought to a ceasefire on April 8, risks overextending itself in a prolonged confrontation exacting military, diplomatic and economic costs.

“Today, some political and strategic voices in Tehran appear to raise a similar concern regarding the future of negotiations with the United States,” Rezaei said.

“Their argument is that after the 40-day war, after demonstrating military endurance under pressure, and after the visible social mobilization witnessed across Iranian cities, Tehran does not wish to repeat what they see as the lesson of Faw,” he added, “namely, entering negotiations from a position where strategic assets have already been exhausted rather than consolidated.”

Where the Talks Stand Now

Unlike the battle with Iraq some four decades ago, it’s not necessarily territorial control at the heart of the dispute, though the fate of Tehran’s sway over the Persian Gulf has once again emerged as a major talking point.

The Islamic Republic’s efforts to close the Strait of Hormuz proved crucial in putting pressure on the U.S. and global markets, and its say on the oil and gas chokepoint is set to be the subject of talks with neighboring states as outlined in the current memorandum of understanding.

Even after the hard-won MoU was reached last Thursday, the Islamic Revolutionary Guard Corps (IRGC) threatened to shut down the Strait of Hormuz over the weekend in response to Israel’s continued strikes on Iran’s Lebanese ally, Hezbollah. The deal included a Hezbollah-Israel ceasefire, which ultimately came into effect on Saturday despite lingering reservations from Israeli Prime Minister Benjamin Netanyahu.

When Trump threatened new strikes if Iran did not restrain Hezbollah, reports surfaced Sunday that the Iranian negotiating team had walked out of ongoing talks with U.S. counterparts led by Vice President JD Vance in Switzerland.

On Monday, however, Vance denied that the Iranian team had quit the discussions and said the two sides had, in fact, achieved “very good progress.” Iranian Foreign Minister Abbas Araghchi also described “good progress” in the meetings.

The White House’s apparent satisfaction was manifested Monday in its decision to ease oil sanctions on Iran, which the Trump administration said had agreed to invite inspectors to nuclear sites also at the center of the U.S.-Iran feud.

Iran has reaffirmed its longstanding denial of ever seeking nuclear weapons. However, U.S. officials have also sought to extract or destroy Iran’s highly enriched uranium stockpile, much of it buried under the rubble of U.S. strikes targeting facilities last June, as well as to restrict Tehran’s future ability to enrich uranium, two objectives so far postponed for a broader deal as per the MoU.

Iran’s Monetary Demands

Another point of order is Iran’s monetary demands. The MoU outlined the release of frozen Iranian assets held abroad, along with a $300 billion reconstruction fund to be established alongside U.S. partners in the region.

The precise mechanism for the release of either tranche remains undetermined, though the Trump administration has emphasized none of the bill would be footed by U.S. taxpayers, who have expressed dissatisfaction with the growing cost of the conflict, including heightened energy prices.

Iran’s Two Main Challenges

There are also domestic factors that complicate Iran’s calculus.

Gregory Brew, analyst with the Eurasia Group’s Energy, Climate and Resources team, described what he called “two main challenges” that Iranian leadership faces after having already successfully brought the war to the negotiations phase.

“The first stems from the high level of public discontent, driven mostly by the poor state of the economy, as well as the regime’s lack of credibility,” Brew told Newsweek.

“Iran’s leaders will need to restore a degree of confidence in the direction of the country,” Brew said. “While I don’t doubt they will spend some of their new windfall rebuilding the country’s military capabilities, they will also need to spend money at home, rebuilding infrastructure and industries that were damaged during the war, and undertaking reforms to the business and financial sectors to generate new confidence.”

The second challenge lies within potential differences among voices within the government. Iran’s political system-while ultimately ruled by the supreme leader, a title now held by the slain Ayatollah Ali Khamenei’s largely absent son, Mojtaba-remains divided between reformists and principlists.

President Masoud Pezeshkian’s more moderate position may be bolstered by a successful deal, but rising hard-liners within the IRGC and clerical circles are simultaneously seeking to highlight a hard-power narrative.

And then there’s Parliament Speaker Mohammed Bagher Qalibaf. A former IRGC commander and mayor of Tehran, Qalibaf has a long history of political pragmatism, and his profile has been substantially raised by his role as negotiations co-chief alongside Araghchi.

“Though united in the context of the war, the group of individuals governing the country is likely to find itself at odds over new issues, as the urgency of wartime conditions ebbs and the more practical issues of governance emerge to dominate domestic discourse,” Brew said. “There will be thorny debates over who exercises power in the system.”

“Is the power still with the Supreme Leader, or is it with the IRGC? Is the President now just a bureaucrat, or does he have real influence? What will Qalibaf’s role be? He is speaker of the house, but his role has widened now that he leads the negotiating efforts,” Brew said. “A collective leadership is an inherently unstable governing system, and there could be a degree of friction among the elites as the ‘new’ regime consolidates itself.”

Contact Newsweek editors on this story: Gray R. Thomas

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This story was originally published June 22, 2026 at 12:23 PM.