The erosion of Iran’s influence over its regional proxies is accelerating, a year after assessments indicated a significant weakening of its “gray zone” strategy, according to geopolitical analyst Farzin Zandi. The shift follows a 12-day war that diminished Iran’s perceived invulnerability and prompted increased pressure from host governments on Iranian-backed groups.
Zandi, who in January 2025 authored an article titled “How Iran Lost Before It Lost: The Roll Back of its Gray Zone Strategy,” observed that the weakening of Iran’s deterrent credibility has led to a decline in morale among proxy groups, who previously believed Tehran was shielded from substantial repercussions. “Many of these actors long assumed Iran was strategically insulated from serious costs; recent events have decisively shattered that belief,” Zandi wrote in an analysis revisited following the recent developments.
Financing for these proxies, historically linked to Iran’s oil revenues, remains a critical vulnerability. While Iran continues to employ a sophisticated sanctions-evasion infrastructure to provide financial, training, and logistical support, arms transfers have become increasingly difficult, particularly for Hezbollah, facing pressure from Israel and the Lebanese state. Recent volatility in Iran’s oil sales, triggered by disruptions in oil-trading networks, has further exacerbated the situation, contributing to currency depreciation and widespread protests within Iran.
The internal crisis within Iran – marked by escalating protests, reported mass killings, and growing international condemnation, including consideration of terrorist designations for the Islamic Revolutionary Guard Corps – is compounding the structural constraints faced by its proxies. This is further complicated by increased regional competition, according to Zandi’s analysis.
Zandi specializes in Middle Eastern politics and Iran’s gray zone strategies, currently serving as a PhD student and research assistant in political science at the University of Kansas. His master’s project at the University of Tehran focused on clarifying the role of the “gray zone” in US-Iran geopolitical strategy post-Iraq War. He has also published work examining Iran’s geopolitical strategy through a geographical lens, focusing on the concepts of the “Gray Zone” and “Axis of Resistance.”
The future viability of these proxy groups hinges on their ability to secure alternative funding streams as Iran’s support diminishes. Whether they will be able to do so remains an open question.
