US-Iranian relations remain on track for escalation

Iran is currently facing an incredibly unlucky alignment of pressure sources that are interrelated and will force the regime to engage in risky or experimental behavior, most likely in 2020. The COVID-19 epidemic simply exacerbates the combined challenges of a regime squeezed by an international sanctions network and a restive population reaching a breaking point with economic hardship. A continued acceptance of the status quo is untenable; thus, the regime will likely begin to undertake various initiatives in the coming months, more likely military than diplomatic in nature, that could force the United States to ease the isolation of the country.

While regime continuity is not in doubt, Iran is undergoing its worst period of turmoil since the 1980s. The sudden closing of external trade, currency depreciation, and concomitant inflation has imposed severe economic burdens on the population just a few years after the previous episode of sanctions-induced recession in 2012. As Fig. 1 shows, the IMF estimates that the economy may have shrunk by nearly ten percent in 2019 while inflation has risen above thirty-five percent.

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