Lebanon becomes a test of Trump's Iran diplomacy

President Donald Trump announced Monday that Israel and Hezbollah had agreed to halt attacks following a flurry of calls with Israeli Prime Minister Benjamin Netanyahu and intermediaries linked to the Iranian-backed group.

Hours earlier, however, Iran suspended talks with Washington, citing Israel's military operations in Lebanon and threatening to open new fronts in the conflict.

The diplomatic turmoil comes as Israel carries out its deepest military operations in Lebanon in more than two decades.

Tehran argues the operations violate the broader ceasefire framework established after the US-Iran war, while critics counter that Iran helped create the crisis by insisting Lebanon be included in ceasefire discussions and then backing Hezbollah attacks that prompted Israel's response.

Turning Lebanon into leverage

For some analysts, Iran's actions suggest a regime that believes it emerged from the war with more leverage than many expected.

"I fear that the Iranians are doing what they're doing because they feel that they have the upper hand," Yaakov Katz, an Israeli-American journalist and author of While Israel Slept, told Iran International.

Katz said Tehran may see itself as having weathered the conflict relatively well. The regime survived, its military remains intact despite significant losses, its nuclear program remains unresolved and Washington is still negotiating with it.

From that perspective, Iran may believe it can broaden the scope of diplomacy beyond its nuclear program and force the United States to account for developments in Lebanon.

That is precisely what concerns Katz.

"It's a disaster to connect the two," he said.

If Washington accepts Lebanon as part of the negotiating framework, Katz argues, Tehran could repeatedly use Hezbollah's confrontation with Israel as leverage whenever future diplomatic disputes arise.

The concern comes as Trump balances two competing objectives: preventing a wider regional war while preserving a diplomatic path with Tehran.

On Monday, Iranian-linked media warned that Tehran could expand pressure to the Bab el-Mandeb Strait, another vital global shipping route, while tensions remain elevated in the Strait of Hormuz. The threats renewed concerns about global energy supplies and the economic fallout from a broader regional confrontation.

The price of Tehran's red lines

Eric Mandel, founder of the Middle East Political and Information Network, believes the Lebanon crisis, threats to maritime shipping and suspension of talks are all part of a broader Iranian strategy.

"This is a coordinated strategy that they are using," he told Iran International. "The biggest part of it is that they are looking to delay."

Mandel argues Tehran is attempting to stretch out negotiations while increasing economic and geopolitical pressure on Washington.

The goal, he says, is to test whether the Trump administration is willing to sustain a prolonged confrontation or whether concerns over oil prices, shipping disruptions and economic instability will eventually force concessions.

He believes Iran benefits from uncertainty.

"I think what Iran wants overall is to create a global recession," Mandel said.

Danny Citrinowicz of Israel's Institute for National Security Studies and former head of the Iran branch in Israeli military intelligence sees the situation somewhat differently.

While Katz and Mandel largely view Tehran's behavior through the lens of leverage and strategy, Citrinowicz argues that ideology remains a central factor.

He says Iran does not view Hezbollah, its missile arsenal and its enrichment program as bargaining chips that can simply be traded away. Rather, they are core pillars of the Islamic Republic.

"They cannot sit aside and not retaliate. That is their mentality," Citrinowicz told Iran International.

From Tehran's perspective, he argues, failing to respond to Israeli operations in Lebanon would amount to abandoning a strategic commitment to Hezbollah and undermining principles the regime considers fundamental to its survival.

That distinction may prove critical as Washington weighs its next move.

For Katz, Iran is attempting to exploit Trump's desire for a deal by transforming Lebanon into a bargaining chip. For Mandel, Tehran is deliberately prolonging the crisis to increase pressure on the United States. For Citrinowicz, Iran's actions are driven less by tactical calculations than by ideological red lines it believes it cannot abandon.

What all three agree on is that Lebanon is no longer a side issue. It has become a central test of the fragile diplomacy between Washington and Tehran.

If Trump pressures Israel to halt operations, Tehran may claim it forced Washington's hand. If he does not, Iran appears prepared to use Lebanon, Hormuz and potentially other fronts to argue that the ceasefire framework has already collapsed.

Either way, Tehran appears willing to increase the costs associated with both diplomacy and confrontation as it seeks to shape the next phase of negotiations.

Iran’s conservative establishment appears to be pushing back against its own ultra-radical fringe after a hardline lawmaker accused President Masoud Pezeshkian of bypassing the Supreme Leader over the April ceasefire with the United States.

Some Iranian hardliners now appear to be distancing themselves from the “extremist” ultraconservatives who have spent recent weeks attacking the president and the nuclear negotiating team.

Two prominent conservative figures with longstanding ties to Iran’s security establishment have publicly condemned hardline MP Kamran Ghazanfari after he accused Pezeshkian of undermining the authority of Supreme Leader Mojtaba Khamenei.

The fallout from these interventions, and from the incident itself, points to a visible fracture inside Iran’s right wing. It highlights the growing fragmentation of the hardline camp and the marginalization of its far-right fringe, a dynamic that may inadvertently provide the embattled president with some political breathing room.

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Some Iranian hardliners now appear to be distancing themselves from the “extremist” ultraconservatives who have spent recent weeks attacking the president and the nuclear negotiating team.

Two prominent conservative figures with longstanding ties to Iran’s security establishment have publicly condemned hardline MP Kamran Ghazanfari after he accused Pezeshkian of undermining the authority of Supreme Leader Mojtaba Khamenei.

The fallout from these interventions, and from the incident itself, points to a visible fracture inside Iran’s right wing. It highlights the growing fragmentation of the hardline camp and the marginalization of its far-right fringe, a dynamic that may inadvertently provide the embattled president with some political breathing room.

In a video clip that went viral last week, Ghazanfari accused the president of bypassing the Supreme Leader, demanding: “Why did you accept the ceasefire without Khamenei’s permission?”

He claimed that the Leader’s silence in public messages signaled disapproval and alleged that Pezeshkian had similarly accepted an unauthorized ceasefire during a previous 12-day conflict.

Ghazanfari argued that by halting military operations, Pezeshkian had effectively “saved America and Israel from the crushing blows of Iran’s missiles and drones” just as they were facing destruction.

Ghazanfari's remarks were criticized by hardline commentator Abbas Salimi Namin in an interview with the pro-reform Rouydad 24 website, and by Abdollah Ganji in an editorial in the IRGC-linked Javan newspaper.

The reactions represented unusually sharp internal pushback from within the broader conservative, or principlist, spectrum.

Their target is the extreme and destabilizing fringe of their own camp.

Salimi Namin warned that “extremism damages the system from within.” He argued that the presence of ultra-radicals like Ghazanfari in the parliament is a disaster that alienates the public and degrades political discourse. He also accused radical hardliners of weakening the Supreme Leader’s authority rather than defending it.

“The presence of people like Ghazanfari in the Majles is a disaster,” Salimi Namin said, adding that such statements, “before being an accusation against Pezeshkian, are an insult to the leadership and the armed forces.”

Ganji, who previously served as managing editor of Javan before moving to Hamshahri, made a similar argument in an editorial titled “The Reckless Ghazanfar(s).” The headline used “Ghazanfar,” a colloquial Persian term for a clumsy teammate who scores an own goal, as a pointed play on the MP’s name.

Ganji reminded the “rogue” ultraconservative lawmaker that under Article 110 of the Constitution, decisions on war, peace and major strategic shifts rest with the Supreme Leader and the Supreme National Security Council, not the president.

He described Ghazanfari’s outbursts as “a psychological pathology rather than legitimate political criticism.” He also accused him of exploiting parliamentary questioning as a legal loophole to smear opponents with labels such as “spy,” “Bahai” or “secular.”

Ganji urged “revolutionary youth and elites” to break their silence and “push back against these reckless figures who drive people away from the revolution.”

He characterized Ghazanfari’s accusations as “so disgusting, illogical, insulting, and slanderous… that at first, I thought it was generated by artificial intelligence.”

Both articles unequivocally condemned Ghazanfari’s conspiratorial attacks on Pezeshkian. They argued that although Ghazanfari claims to defend the Revolution and the Leader, his logic ultimately insults the Leader by implying that a president could easily bypass his authority on matters such as striking Israel or agreeing to a ceasefire.

Both warned against mistaking such toxic behavior for revolutionary zeal.

Together, these interventions expose a major structural tension in Iranian politics: how the system manages a reformist or moderate president operating within a conservative-dominated state.

Pezeshkian entered office on a platform of consensus-building, direct engagement with the West to ease sanctions, and domestic de-escalation. The recent criticism of Ghazanfari suggests that mainstream institutional conservatives recognize that, for the system to function, the president must retain at least a basic level of legitimacy.

By attacking the president over core security decisions, the ultra-radicals disrupt the carefully calibrated systemic harmony engineered by the leadership.

The fact that high-profile conservatives are publicly rebuking an ultra-hardline MP indicates that, at this moment, the establishment is prioritizing state stability over factional purity.

Hojattollah Mirzaei, an economics professor at Allameh Tabataba'i University and former head of the country’s retirement funds, shed light on the compounding crisis at a panel hosted by Donya-e-Eqtesad newspaper.

He said rising exchange rates, import restrictions, higher transportation costs, intensifying inflationary expectations, internet shutdowns and government financial deficits are driving up unemployment and eroding household purchasing power.

According to Mirzaei, an additional 3.5 million to 4.5 million people are expected to fall into poverty this year alone due to the economic fallout from the March war.

The cost-of-living crisis and the inflationary spiral

The macroeconomic pressure is being felt most sharply in household expenses.

The Central Bank of Iran reported an annual inflation rate of more than 50.6% in April. According to the same report, monthly inflation spiked to 67%.

Prices of some goods and services rose by up to 100% during the same period, vastly outpacing stagnant wage growth.

Prominent economist Masoud Nili warned that even if military tensions ease, economic conditions will not easily return to normal.

“The greatest current danger to Iran’s economy is being caught in an escalating inflationary spiral,” Nili said, calling it “a path that becomes increasingly difficult to control the further it goes.”

Market paralysis and the rise of the working poor

The inflationary pressure is coinciding with severe economic contraction.

Mirzaei projected that Iran’s economy will shrink by 8.8% to 10% in the current Iranian year, adding that even the 10% forecast may be optimistic.

The downturn has also frozen the labor market.

Hossein Rajabpour, head of the Saba Research Institute, said job creation has sharply declined, with the industrial sector suffering the heaviest losses following the recent conflict.

The crisis has also changed the profile of poverty in Iran. Social policy researcher Kowsar Yousefi said a significant share of those who are employed still live below the poverty line.

Frozen assets and the limits of a short-term fix

To ease the acute economic pressure, Iran is pushing for the release of roughly $24 billion in assets frozen in foreign banks.

Tehran hopes access to those funds could help stabilize the currency market, lower inflationary expectations and reduce the cost of importing basic goods and raw materials. Iranian officials have said “meaningful negotiations will not begin without the release of these assets.”

But economists warn that such cash injections would offer only temporary relief.

While access to foreign exchange reserves could help exchange rates, inflation and short-term growth, deeper structural problems would remain.

Iran is also hoping that a deal with Washington will end the blockade that has severely restricted its access to oil revenues in recent months, leaving 60 million barrels worth $6 billion stranded on tankers, according to TankerTrackers.

Even if a deal resolves those issues and sanctions are lifted, chronic weakness in domestic and foreign investment would continue to weigh heavily on the economy.

That vulnerability is reflected in global resilience data. According to a business environment resilience index compiled by Factory Mutual Insurance Company, which evaluates how effectively 130 countries withstand and recover from economic shocks, Iran ranks near the bottom at 125th.

The ranking stands in sharp contrast to regional peers such as Qatar and Saudi Arabia, both of which are among the world’s top 50 most resilient economies.

More than six weeks after Iran disrupted shipping through the Strait of Hormuz and the United States moved to enforce a naval blockade, the confrontation increasingly appears to be entering a new phase: negotiations driven by exhaustion.

What began as a military and geopolitical standoff has evolved into a contest over economic endurance, one that neither Iran nor the global economy appears capable of sustaining indefinitely.

After weeks of escalation, diplomacy has regained momentum. Talks involving Tehran, Washington and regional mediators have intensified, while US President Donald Trump has repeatedly suggested a deal may be close.

At the center of the latest negotiations lies the issue of frozen Iranian assets.

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