A (nuclear) escalation with Israel would be foolish for Iran

They don't have the economy for it.

Following recent exchanges between Iran and Israel, there has been extensive discussion about a potential “Iranian counterattack” on Israel. With considerable bravado in the press, Ayatollah Khamenei has claimed that Iran's response will be “crushing,” and some critics of U.S. foreign policy, like John Mearsheimer, argue that Israel has lost its “escalatory dominance,” given that Iranian missiles recently penetrated Israel’s allegedly ineffective Iron Dome.

But the proponents of “war with Israel” ignore an obvious fact about wars, which is that they are almost always funded through inflationary policies. Unless a country has a considerable economy to back it up, it won’t be able to sustain a long war.

Several key economic indicators suggest that the Iranian economy is in poor shape. Notably, it has faced hyperinflation of over 40% for the past few years.

Iran’s GDP per capita is comparable to that of South Africa (or the U.S. state of Maryland), and its military spending, which it cannot afford to increase, is just a third of Israel’s.

Given these constraints, it's hard to see how Iran could sustain a prolonged conflict with Israel and even less so with the United States of America (who undoubtedly would intervene if Israel is truly threatened). While Iranian leadership may issue threats or even launch a few missiles as "warning shots," the wiser observers understand that an extended war is beyond Iran’s economic capacity. This is why my advice to any Iranian would be to resist retaliation.

Iran has long adhered to a policy of “strategic patience.” Using this doctrine, it has weathered numerous blows, including assassination attempts on its key scientists, US sanctions, and American withdrawal from international agreements that Iran adhered to, such as the JCPOA.

While many nationalistic Iranians might view these actions as unjust, and some within the establishment may feel humiliated, reacting impulsively would be even more detrimental. The policy of openly confronting Israel may lead some elements within the military to view nuclear weapons as a path to gaining respect, though this would undoubtedly be a miscalculation. By not pursuing a nuclear weapon, Iran has managed to avoid an arms race within the region, and it furthermore prevented complete international isolation.

Even if that perspective shifts, a nuclear weapon is unlikely to help Iran. The real challenge facing the government is not military but internal: the revolt of a younger generation, the ongoing brain drain, and severe economic mismanagement and the water crisis (that is creating an ecological disaster). Addressing these issues requires policy changes that directly confront the political economy and entrenched cronyism.

Ultimately, Iranian leaders need to face the reality that the economy cannot support a long-term conflict. De-escalation, and making diplomatic moves towards accommodating both Israel and the US would serve their interests far better than pursuing a path they cannot afford.