Reimagining the Future: Iran's Proxy Strategy and the Role of Hezbollah

Setting the Stage: Iran’s Diminished Landscape

In March 2025, the Scowcroft Middle East Security Initiative hosted a War Game to delve into how Iran might reshape its proxy strategy, specifically its engagement with Hezbollah. This significant event brought together groups representing Iran, Hezbollah, the US, Israel, and experts from countries like Syria, Russia, China, and Turkey. At the heart of these discussions lay a critical evaluation of Iran’s current geopolitical landscape. Weakened by Israeli military actions and a faltering logistical chain due to the collapse of the Assad regime, Iran faced formidable challenges in sustaining Hezbollah’s military capabilities.

Reconsidering the Proxy Strategy

With Iran undergoing a severe financial crisis amid US-imposed sanctions, a pivotal question arose: Is Iran’s proxy strategy with Hezbollah still viable? Recognizing the urgency of domestic stability, the Iranian group decided to deprioritize its proxy endeavors, opting instead for cautious financial support to help Hezbollah rebuild without incurring further Israeli strikes. Meanwhile, Hezbollah actively sought alternative funding routes, such as aid from Africa and the Gulf, drug trafficking, and self-financing, highlighting a shift towards self-reliance.

Hezbollah’s Rebuilding Blueprint

Amidst internal and external pressures, Hezbollah’s strategy focused on enhancing its position within Lebanon by bolstering public opinion against the country’s leadership. This strategic maneuver aimed to secure Hezbollah’s role as a provider of aid and services. Moreover, efforts to regain military deterrence against Israel were vital to safeguarding Lebanon’s northern borders. Together with Iran, Hezbollah explored diverse funding sources and actively worked to maintain Lebanon’s stability, leveraging opportunities created by the ceasefire with Israel.

Strategic Shifts: Diplomatic Talks and Nuclear Concerns

The war game discussions transitioned towards Iran’s broader geopolitical positioning, particularly its nuclear program. While contemplating a possible agreement with the US, the Iranian group indicated a preference for starting nuclear talks, cautiously but firmly. Simultaneously, the US and Israeli groups prioritized diplomacy over military action, though contingency plans for potential military preemptive strikes were mapped out. Maintaining the delicate balance between negotiation and security readiness remained a focal point.

Key questions also emerged on how the global powers positioned themselves in this evolving landscape. Russia, despite Iran’s attempts to fortify the alliance, chose to preserve its rapport with the US and major Middle Eastern players. China, focusing on stronger ties with the Gulf, remained less invested in Middle East turmoil. The Syrian group, alongside Israel and the US, opted against a significant Iranian presence, aligning regional priorities with broader diplomatic avenues.

As highlighted, the intricate dynamics of proxy play, Iran’s domestic challenges, and nuclear diplomacy presented a complex yet pivotal crossroads for geopolitical strategists, reflecting shifts towards nuanced regional engagement.

According to Atlantic Council, this intricate analysis underscores the strategic recalibrations unfolding in the Middle East stage, where every move sparks significant reverberations.