Executive Summary

This report assesses the recent Israel-Iran conflict, following coordinated Israeli strikes on Iranian infrastructure and retaliatory missile attacks targeting Israeli urban centres.

This conflict signifies a shift to direct state-to-state confrontation from proxy engagements, affecting regional stability significantly.

This report assesses strategic priorities, risks, and developing operational factors for both nations, and considers the possibility of broader US involvement. These developments will probably put more strain on the domestic institutions, economies, and militaries of both countries.

Key Takeaways

1. Israel has moved towards a strategy of overt strategic degradation, targeting Iran’s core infrastructure, altering the regional military balance.
2. Tehran’s retaliatory missile strikes on urban and strategic targets in Israel show an escalation threshold being crossed, with substantial civilian and psychological impact.
3. The increasing scale and tempo of bilateral escalation compel the United States, despite its caution, to clarify its position.

Background Information

On 13 June 2025, Israel launched coordinated strikes on Iranian military, scientific, and energy infrastructure, including an attack on the Arak heavy water reactor and the South Pars gas field. This marked a shift from Israel’s traditional pre-emptive containment strategy.

In retaliation, Iran launched ballistic missiles at several Israeli targets, including Unit 8200 headquarters in Herzliya, causing significant civilian damage in Ramat Gan, Holon, and Beer Sheva. The Iranian strikes intensified following the hitting of a hospital in southern Israel.

 Iranian Supreme Leader Khamenei publicly warned that US intervention would cause “irreparable damage.” The Israeli ambassador to Washington hinted at an upcoming operation of greater magnitude. President Trump has approved plans to attack Iran, but has not made a final decision on whether to strike the country.

Strategic Context

Israel. Tel Aviv’s shift from covert or proxy-based engagement to direct strikes on Iranian territory shows a recalibration of its deterrence posture. Targeting Tehran’s key energy and nuclear sites appears aimed at undermining its long-term strategic potential. The Netanyahu government faces internal pressure to uphold public confidence and maintain a strong security image, especially given the economic challenges posed by high military spending. Israel’s strategy now focuses on showing it would overwhelmingly retaliate against Iranian aggression, even if that means escalating the conflict.

Iran. Tehran’s response underlines its willingness to absorb strikes on sensitive infrastructure for demonstrating retaliatory capability and resolve. Tehran’s missile attacks suggest a willingness to risk retaliation from Israel and potentially the US. The military strategy appears calculated to inflict psychological and infrastructural damage while avoiding all-out wars. The IRGC is key to how Iran presents and implements its military strategy. Iran’s ability to escalate the conflict long-term might face further economic constraints, currency controls, and inflation; however, this does not rule out further short-term actions.

Risks and Constraints

1. US Military Involvement. Trump’s recent statements and actions seems that the United States have limited diplomatic space. Direct US action could regionalise the conflict, drawing in Iranian proxies and Gulf state militaries.
2. Economic Exhaustion. Both countries face severe economic risks. Extended high-intensity conflict would be devastating to Tehran’s fragile economy, severely affecting its essential energy exports. Although Israel has significant financial reserves, its daily military spending is unsustainable and threatens long-term economic stability.
3. Proxy Escalation. Iran may leverage Hezbollah, Iraqi militias, or Yemeni Houthis to pressure Israel indirectly. Activating proxy networks risks expanding the conflict geographically and overextending Israeli defences.
4. Internal Instability. Iran’s economic woes and security issues may spark internal unrest, despite the government’s ability to suppress dissent. Israel’s urban vulnerabilities and damaged infrastructure could worsen political divisions and lead to demands for policy changes.

Recommendations

Closely monitoring military actions, US involvement, and economic indicators is crucial to understanding potential conflict escalation and regional stability, as these factors shape decision-making and conflict dynamics. Monitoring proxy group mobilization, internal stability in Iran and Israel, and reactions regionally and internationally will illuminate potential future developments. The combined effect of these elements dictates whether the conflict will remain stable, escalate, or de-escalate.

Last Update Thursday, June 19, 2025 – Time 10.00 am CET