Middle East faces renewed Israel-Iran confrontation
Published July 5, 2025
By Collins
Overnight on June 12th-13th Israel’s armed forces and intelligence agencies staged a two-pronged attack on Iran involving air strikes and ground operations by commandos inside Iranian territory. The operation, which Israel says may continue for days or weeks, targeted Iranian nuclear facilities, aerial defences, top military leaders and nuclear scientists. Iran has retaliated with a drone attack on Israel that Israel was easily able to halt. On June 13th Israel engaged in a second, apparently smaller round of attacks.
The US was notified by Israel of the attacks but has publicly distanced itself from direct involvement or support for Israel for its actions against Iran, seeking to protect its assets in the region.
EIU expects Iran to respond, but the degrading of its capabilities and that of its key proxies in the region, in particular Hizbullah, a Lebanese Shia militia, following its support for Hamas in the conflict that began in October 2023, will constrain how it can operate. The risks of wider escalation nevertheless remain significant, particularly if the US becomes enmeshed in the conflict or significant damage caused by Iranian retaliation leads to a further ramp-up of Israel’s attacks and Iran mobilises its forces and proxies against other US or western targets in the region.
Israel’s prime minister, Benjamin Netanyahu, has long rejected the idea of
June 13th Israel engaged in a second, apparently smaller round of attacks.
The US was notified by Israel of the attacks but has publicly distanced itself from direct involvement or support for Israel for its actions against Iran, seeking to protect its assets in the region.
EIU expects Iran to respond, but the degrading of its capabilities and that of its key proxies in the region, in particular Hizbullah, a Lebanese Shia militia, following its support for Hamas in the conflict that began in October 2023, will constrain how it can operate. The risks of wider escalation nevertheless remain significant, particularly if the US becomes enmeshed in the conflict or significant damage caused by Iranian retaliation leads to a further ramp-up of Israel’s attacks and Iran mobilises its forces and proxies against other US or western targets in the region.
Israel’s prime minister, Benjamin Netanyahu, has long rejected the idea of a diplomatic solution to restraining Iranian nuclear ambitions, but initially deferred to the US president, Donald Trump, who has repeatedly both warned Israel against acting and leveraged the threat of a potential Israeli unilateral attack on Iran in his efforts to advance relaunched talks with Iran on its nuclear programme. However, Israel’s concerns over Iran’s advancing nuclear programme have grown while the window of opportunity for an Israeli strike has opened over the past few months. Iran’s air defences were severely degraded after an Israeli attack in October, and Hizbullah, which in the past would have been expected to attack Israel forcefully in the event of an Israeli assault on Iran, was in effect defeated by Israel in late 2024 and has remained subdued. Next steps and potential scenarios:
Further Israeli strikes
Iranian retaliation
Wider war
Nuclear talks
Prospects for de-escalation
Diplomatic efforts are likely to intensify in the coming days, with key regional actors—particularly Gulf states—expected to play a mediating role in seeking to de-escalate the conflict. Much will depend on Israel’s assessment of whether it has achieved its immediate military objectives, and Iran’s decision on whether to continue or scale back its retaliatory strikes. The brief tit-for-tat missile exchanges between Israel and Iran in April and October 2024 suggest that de-escalation is possible, even after direct confrontation. However, Israel’s latest strikes have crossed Iran’s declared red lines, and the Iranian regime now faces a critical decision: whether to escalate further or seek a face-saving off-ramp.
The analysis and forecasts presented in this article are drawn from EIU’s Country Analysis service. This comprehensive solution offers essential insights into the political and economic outlook of nearly 200 countries, empowering businesses to manage risks and develop effective strategies.
