U.S.–Iran Tensions Test Limits of Sanctions, Deterrence and Diplomacy
As Iran increasingly relies on asymmetric tactics and U.S. tools are constrained by legal and political limits, both businesses and policymakers face heightened risks amid an unpredictable path toward diplomacy.
Rising tensions between Washington and Tehran are exposing the limits of sanctions policy and traditional deterrence strategies, as policymakers confront a volatile mix of regional instability, domestic unrest inside Iran and uncertain diplomatic prospects.
Experts speaking at a recent policy discussion said the confrontation is increasingly defined by indirect conflict and legal constraints rather than direct military confrontation.
Iran is unlikely to respond to pressure through conventional warfare alone. Instead, analysts expect Tehran to rely on asymmetric tools that have long defined its regional strategy.
“Iran always depended on asymmetry in responding to attacks,” said Ibrahim Al-Assil, Senior Research Fellow at Harvard’s Middle East Initiative at the Belfer Center, noting that retaliation could include cyber operations or indirect action through regional actors. Even so, he added that Tehran’s regional network of militias is “much weaker… than it was five or six years ago,” after sustained military pressure and political shifts across the Middle East.
At the same time, escalating tensions are reshaping the risk landscape for multinational companies operating in sensitive sectors such as advanced technology and energy.
“The world’s eyes are on these particular regions,” said Trevor Schmitt, an attorney at Arnold & Porter specializing in export controls and sanctions. In that environment, companies must intensify compliance efforts, particularly around diversion risks and enforcement exposure. Heightened scrutiny from regulators means authorities may treat corporate violations as examples to deter broader sanctions evasion, he said.
For U.S. policymakers, the challenge is less about the availability of tools than about the legal and political constraints surrounding their use.
“Statecraft is the orchestration of military force, economic pressure, legal authority, and diplomacy toward political ends,” said Jason Wright, a partner at Steptoe LLP and a national security lawyer. Those tools remain powerful, he said, but legal authority, intelligence attribution and escalation management sharply narrow the range of viable responses.
The result is a strategic dilemma: pressure on Iran is intensifying, yet the path toward a stable diplomatic resolution remains unclear.