OPINION — U.S. defense planning rests on the assumption that wars are fought abroad, by expeditionary forces, against defined adversaries. For decades, those assumptions held. But today, many of the most consequential security challenges facing the United States violate all three. They occur closer to home, below the threshold of armed conflict, and in domains where sovereignty is enforced incrementally.

The shift has exposed a chronic mismatch between how the United States defines its defense priorities and how it allocates resources and respect. While defense discourse continues to stubbornly emphasize power projection and high-end conflict, many of today’s challenges revolve around the more modest and rote enforcement of U.S. territorial integrity and national sovereignty - functions that are vital to U.S. strategic objectives yet lack the optical prestige of winning wars abroad.

Sitting at the center of this gap between prestige and need is the U.S. Coast Guard, whose mission profile aligns directly with America’s most important strategic objectives - the enforcement of sovereignty and homeland defense - yet remains strategically undervalued because its work rarely resembles the celebrated and well-funded styles of conventional warfighting. In an era of increased gray-zone competition and persistent coercion, the failure to properly appreciate the Coast Guard threatens real strategic fallout.

In the third decade of the 21st century, U.S. defense planning remains heavily oriented toward expeditionary warfighting and high-end kinetic conflict. Budget conversations still revolve around Ford-class supercarriers, F-35 fighters, and A2/AD penetration. This orientation shapes not only force design and budget allocations, but also institutional prestige and political capital. The services associated with visible combat power, with the Ford-class and the F-35, continue to dominate strategic discourse—even as many of the most persistent security challenges confronting the United States unfold close to home, in the gray-zone, without the need for fifth-generation air power or heavy armor.

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At the most basic level, any nation’s military exists primarily to defend territorial integrity, enforce sovereignty, and protect the homeland. Power projection, forward presence, and deterrence abroad are important—but they are secondary functions derived from the primary purpose of homeland defense. Yet U.S. defense discourse often treats homeland defense as a background condition when it should be revered as the first priority. The result is a blind spot in how security resources are evaluated and allocated.

The Coast Guard operates at a unique point where law enforcement, military authority, and sovereign enforcement all converge. On any given day, the Coast Guard may board foreign-flagged vessels suspected of sanctions violations, police maritime borders against illicit trafficking, secure ports that underpin global supply chains, and maintain a persistent presence in contested spaces, like the Arctic, without inviting escalation. The Coast Guard is equipped to intercept illegal fishing fleets, escort commercial shipping through sensitive waterways, and assert jurisdiction in legally ambiguous areas. These activities rarely resemble traditional warfighting, they rarely result in a Hollywood blockbuster, and they can be accomplished without nuclear-powered submarines or intercontinental ballistic missiles. But these are not peripheral activities—they are arguably amongst the most important daily functions the U.S. military undertakes.

Distinct among the military branches, the Coast Guard operates under a legal framework that is uniquely suited to today’s security environment. Under Title 14 status, the Coast Guard falls within the Department of Homeland Security, conducting law enforcement and regulatory missions on a daily basis. Yet, when needed, the service can transition to Title 10 status, under the Department of Defense, and operate as an armed service when required. This agility allows the Coast Guard to remain continuously engaged across the spectrum of competition, whether enforcing U.S. law in peacetime, managing escalation in gray-zone encounters, or integrating seamlessly into military operations. Few other elements of U.S. power can move so fluidly between legal regimes.

Still, despite such strategic relevance, the Coast Guard suffers from a persistent optical problem. U.S. defense culture has long privileged services and missions associated with visible, kinetic combat—those that lend themselves to clear narratives of victory, sacrifice, and heroism. The Coast Guard’s work rarely fits that cinematic mold. Its success is measured not in territory seized or targets destroyed, but in disruptions prevented, borders enforced, and crises that never materialize. Inherently quiet work with outcomes that reflect a force operating exactly as designed, although without generating institutional prestige or political support. In a system that rewards the loudest and the brightest, the Coast Guard’s quiet enforcement of sovereignty is easy to overlook.

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Continuing to overlook the value of the Coast Guard carries strategic consequences. Specifically, persistent underinvestment in the Coast Guard weakens maritime domain awareness, reduces sustained presence in key waterways, and narrows the set of tools available to manage gray-zone competition. As adversaries increasingly rely on legal ambiguity, deniable actors, and incremental pressure to test U.S. resolve, gaps in enforcement become opportunities. In this environment, the absence of credible, continuous sovereignty enforcement invites probing behavior that becomes harder to deter over time.

Advocacy for the Coast Guard does not require reassigning prestige, or elevating one service at the expense of others. It is merely an argument for strategic alignment. If territorial integrity, sovereignty enforcement, and homeland defense are truly core national-security priorities, then the institutions most directly responsible for those missions should be treated accordingly. As competition increasingly unfolds in the gray-zone between peace and war, the United States will need forces designed not only to win conflicts—but to prevent them from starting in the first place.

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CIPHER BRIEF EXPERT Q&A -- Deposed Venezuelan President Nicolás Maduro is scheduled to appear in a U.S. courtroom on Monday for the first time since being brought to New York to face narco-terrorism charges. The brief hearing will formally begin what is expected to be a lengthy legal battle over whether he can be prosecuted in the United States.

This, as intelligence professionals are considering what the seemingly flawless U.S. military operation to detain Maduro could mean for what’s next in the region. Cipher Brief Executive Editor Brad Christian spoke with former CIA Senior Executive Glenn Corn about the impact of the Venezuelan operation and what we still don’t know. Their conversation has been lightly edited for length.

Christian: Talk us through how you're reacting to the news of the last 72 hours.

Corn: If I had a hat, I'd take it off to our former partner colleagues in the intelligence community and the special operations community. I mean, great operation. Well planned and executed. I'm sure that the intelligence had to be very good. Honestly, I'm proud because it's good to have a reminder that the U.S. can do this kind of thing. I don't want to go into the international law piece. I'm not a lawyer. But really a great operation and thanks to the people that put it together. You probably remember that we talked recently about the importance of the Western Hemisphere and reasserting some of our influence there and reminding people that, this is our backyard. This administration has made the Western Hemisphere a priority and I think it's a good thing. And here's an example of something that the president is willing to do. I give the president credit - this is a pretty bold move. And the timing was interesting. The other thing I'll say is no leaks, right? Which is also very, very good news because we have a problem in Washington with leaks, and the administration was able to keep this one under wraps. I was completely surprised.

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Christian: What do you think are going to be some of the things that you're going to be watching most closely? President Trump has said that the United States is going to be involved in administering Venezuela in the near term. There's been a lot of talk about reviving Venezuela's oil industry. Obviously, that's not surprising. There's been some reaction from American adversaries, but everyone's still in a watch and wait mode yet for how China and Russia is going to respond to this. What are you paying attention to in terms of signals for this week?

Corn: The president's comments about some type of U.S. administration, at least in some kind of transitory period were interesting. I immediately am reminded of Iraq where the military operation was well done and we removed Saddam Hussein pretty quickly in 2003, but then what came after was not great. So, I hope we've learned that lesson and we're not going to repeat the mistakes we made there. Hopefully there is a plan in place. The president indicated that some people in the administration are going to be giving roles also to help administer.

And it’s interesting that President Maduro and his wife were detained, but it looks like everybody else is still in their roles which may be an indication that they learned the lesson from Iraq and our experience there.

By the way, if you're the Iranian supreme leader, you probably have to be very nervous right now. I went to bed thinking about Iran and what's happening there. And the president's comments that the U.S. will support those people that are coming out to peacefully protest and if they're... I forget his exact words, but basically, "We will punish those who use force against them or who killed protestors."

Christian: The way I interpreted that was that the U.S. was prepared to intervene militarily to protect the protestors.

Corn: And we may still be. Last week, I was very focused on Iran, then all of a sudden over the weekend, this operation went down. Now, whether that's the intent or not, I don't know, but it’s really interesting timing. What comes next will be very important. I've been saying for a while that this administration has had some very good foreign policy successes in the last year, since coming to office. Generally, I think they're doing well on the foreign policy front. They've done some bold things. Syria, Azerbaijan, Armenia. Now what comes next is important, and then consistency is important. Do we have the ability to see it through? We’ll have to see.

Christian: Russia is considered an ally to Venezuela. How might this impact Moscow’s foreign policy in the Western hemisphere, to include their planning and their ongoing operations as it relates to Venezuela or perhaps other parts of the Western hemisphere?

Corn: I think Putin has backed himself into a corner when it comes to a lot of these countries that he's aligned with. We saw that with Syria where he was overspent, and he really didn't have anything to help former President Bashar al-Assad when Assad was in crisis. And one of his main allies in the Middle East is no longer there.

In Venezuela, the Russians have come out with some statements in support of Caracas, of Maduro, but they really haven't done much. There was some reporting last year, that Moscow was shipping more air defense systems and weapons to Maduro and the regime as we were ratcheting up our military activity in the Caribbean. But none of that seems to have made a real difference. Putin has to understand right now that he's been unable to come to Assad's assistance and with Maduro, his ally has just been removed and detained. So, he's got to be watching Iran very nervously because that's his other main ally in the Middle East and they've invested a lot in that relationship, and it seems like the Supreme Leader is in trouble right now. The regime is in trouble.

With the President of the United States making bold comments about what the U.S. will do if the regime goes after protestors in Iran, it’s clear that Putin's influence is waning all over the world and he's eventually going to be unable to stand.

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The Russians used to like to brag that they stand by their allies when the U.S. abandons them. Actually, it's looking now like the Russians are abandoning their allies. And I assess that's partly because of this quagmire that Putin got himself into in Ukraine.

Maybe some of the Venezuelans who are celebrating the removal of their dictator should think about Ukraine and what the Ukrainians have done for them by stopping the Russian military the way they've done so effectively.

It also seems at first blush, that the intelligence services of Russia failed because it looks like this operation went down without any real warning to Maduro. And one would assess that if Putin is an ally of Maduro, he'd have tipped him off about the operation, which the Russians have tried to do in other circumstances in the past.

By the way, the Cuban bodyguards, what happened to them? Someone was telling me last week, that Maduro's main security force was made up of Cubans.

I think Putin has painted himself into a corner because I think he's afraid to really upset Trump because he knows that if Trump comes down hard on him on the Ukraine issue, he's in big trouble.

He's already in trouble. And many of us have assessed for a while that if President Trump decides that it's time to really ratchet up the heat on Moscow and the Kremlin, that will probably be a serious, serious blow to Putin and his power.

Christian: Do you believe that President Putin thinks he's backed into a corner in the way that you describe? And is it likely that there are people around him who may be telling him that?

Corn:. I don't even want to try to put myself in his head space. I've said for a long time, going back 10 years, that he's put himself in an information vacuum or echo chamber. So, who knows what he's thinking. But my guess is that he feels like he's backed into a corner. If you saw when the U.S. announced sanctions on Gazprom and Lukoil, the first thing Putin did was send a delegate to the United States in a rush. That showed me panic and fear. And I'm sure that people around Putin are upset and worried.

Now, let's watch Iran. I think Iran's a big piece on the chess board, and we should see what happens there. I don't think that the Russians are going to be able to help much if the Iranian regime starts to collapse.

Christian: The critics of the operation in Venezuela are saying things like, "This is a bad precedent to set. Other leaders around the world may decide, 'Okay, well, if the U.S. can do something like this...'" And obviously the criticism of this operation is it violates Venezuela's sovereignty. Do you worry about the knock-on effect and the second and third order effects of an operation like this being conducted by the United States, regardless of who's president, and being used in ways that may cause further instability in the world or being used by autocratic leaders or America's adversaries?

Corn: No, I think that ship sailed a long time ago. This is not the first time the United States has done something like this. This is not the first time other countries have done something like this. Countries have made land grabs, have assassinated leaders or tried to remove leaders, overthrow governments. So, there's nothing new here. There's no new precedent here that I see. We've already started down this very ugly road. And to me, now, what's important is to make sure that our national security structure and our intelligence community and armed forces are fully armed and capable of dealing with any threat to U.S. interests and to our allies.

Christian: At our most recent Cipher Brief Threat Conference in October, there was a lot of talk about global conflict. Some people use the phrase World War III. Do you believe it’s started and how are you thinking about 2026 from a national security standpoint?

Corn: Deterrence is critical right now. The U.S. has been deterred too much in the past, and we've been unable to deter our adversaries. It's very important that the U.S. maintains and demonstrates an ability to deter adversaries when they threaten our interests. The president is talking about U.S. oil companies going into Venezuela, rebuilding the infrastructure, reviving the Venezuelan oil industry, energy industry. I think this goes along with the administration's approach with commercial diplomacy, getting the U.S. business community actively involved around the world to help promote U.S. interests, which I support but you have to make sure that happens because you don't want vacuums to be created. A year ago in Syria, everybody was very excited about the opportunities, but those opportunities have been very hard to develop because of the realities on the ground. So, you need sustainment. You need the ability to really sustain and be patient and invest in taking advantage of opportunities and bringing some kind of economic development to regions that have suffered for a long time and are in very bad shape that are producing either jihadists or narco traffickers - probably because a lot of those people have no other choice to survive.

You and I have both served in countries where that is the case, where the majority of people are not bad people, but they have no choice. There's really no option. We want to give them something better, right? But we have to do it. And that's going to be the big challenge.

Again, kudos to the administration. This is part of a bigger game. I go back to the Reagan administration and the kind of rollback approach to the Soviet Union when Russia was challenging us around the world and Reagan finally responded to that by challenging them and calling out the Soviets where they were trying to poke on our interests.

I would say that the Trump administration seems to be doing that, which is good, but we've got to be very, very cognizant of the fact that it's going to take a lot of investment and a lot of persistent attention to do it.

If the Iranian regime collapses tomorrow, that could create a great opportunity or a vacuum. There’s a great opportunity in Venezuela right now. Let's take advantage of it.

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OPINION -- Venezuela presents a long-standing challenge tied to narcotics trafficking and transnational criminal networks. For years, the country has functioned as a major transit hub for illicit drug flows, money laundering, and organized crime, with direct consequences for U.S. domestic security and for stability across the Western Hemisphere. These realities alone justify sustained U.S. attention.

But criminal activity does not explain Venezuela’s full strategic significance. What distinguishes Venezuela today is not only the scale of illicit activity, but the conditions surrounding it: political isolation, economic dependence, weakened institutions, and contested legitimacy.

These conditions are familiar. These are precisely the environments external adversarial powers exploit in the gray zone to embed influence and preserve leverage without crossing the threshold of open conflict.

In such settings, influence is not imposed abruptly. It is embedded gradually, normalized through routine engagement, and retained for use when pressure mounts. That method, rather than any single triggering event - is what places Venezuela squarely within the scope of longer-term U.S. strategic concern.

Assessing Venezuela this way does not require assumptions about covert orchestration or crisis direction by outside states. It requires recognizing a recurring competitive approach that has played out repeatedly in fragile and isolated systems: establish access early, avoid responsibility for governance, and preserve optionality as conditions deteriorate.

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A Pattern Observed Across Multiple Theaters

Recent Cipher Brief analysis has highlighted that strategic competition increasingly unfolds below the threshold of armed conflict. In states facing internal stress or external isolation, influence is rarely asserted through overt coercion. Instead, it is accumulated through sustained presence, access to institutions, and normalization of engagement — creating leverage that can be exercised selectively during moments of crisis.

This pattern is not theoretical. It is consistent across actors and regions, even where tactics differ.

China: Economic and Technical Presence as Strategic Infrastructure

China’s approach relies on economic and technical engagement as strategic infrastructure. Commercial projects, administrative systems, and digital platforms provide access long before crises emerge. Over time, this presence enables intelligence collection, political influence, and situational awareness without requiring overt security commitments or visible military footprints.

The value of this approach lies in patience. By embedding early and remaining engaged through periods of instability, China preserves optionality when political alignments shift or governance weakens. Influence accumulated quietly can later be activated to protect strategic equities, shape outcomes, or constrain competitors’ freedom of maneuver.

This model avoids ownership. It does not require Beijing to stabilize fragile states or assume responsibility for their internal failures. Access is sufficient. Optionality is the objective.

Russia: Security Engagement and Access Without Ownership

Russia applies a more security-centric variant of the same logic. Moscow’s engagement with sanctioned governments or non-recognized actors has repeatedly prioritized intelligence access, operational insight, and regional buffers rather than political alignment or long-term stabilization.

By maintaining relationships across formal and informal power structures, Russia ensures continued relevance during periods of transition or escalation. This posture allows Moscow to influence events without absorbing the costs associated with governance, reconstruction, or economic support.

Here again, the emphasis is not control but access. Engagement is calibrated to preserve leverage while avoiding entanglement — a model designed to expand or contract as circumstances dictate.

Iran: Network Persistence and Crisis Adaptability

Iran’s approach centers on the durability of networks rather than institutions. Elite cultivation, security penetration, and proxy relationships are established early and maintained quietly. When political systems weaken or collapse, these networks remain intact.

The advantage is resilience. Preexisting relationships allow rapid recalibration during crises without the need to rebuild influence under pressure. This approach is particularly effective in environments where authority is fragmented and legitimacy contested.

Across cases, Iran’s method demonstrates how influence survives regime change when it is rooted in people, systems, and incentives rather than formal state structures.

Key Analytic Distinction

Across these approaches, a central distinction applies: Presence and enablement do not equal operational control. But sustained presence creates optionality — the ability to act, influence, or constrain outcomes when conditions shift. That optionality, accumulated quietly over time, is what allows external powers to convert instability into strategic advantage without triggering direct confrontation.

Venezuela as a Permissive Strategic Environment

Venezuela now exhibits many of the conditions that have enabled this form of competition elsewhere. Politically, it remains isolated and internally polarized, with contested legitimacy and eroded institutions. Economically, it is dependent on external partners and vulnerable to leverage through finance, energy, and technology. Strategically, it occupies a sensitive position - proximate to the United States, central to regional migration flows, and endowed with significant energy resources.

Open-source reporting has documented sustained external engagement consistent with these vulnerabilities. Chinese firms maintain long-term financial and energy exposure, while Chinese technology has been linked to state administrative and digital systems. Russia has pursued military cooperation and security ties with the Maduro government over several years. Iran has expanded defense-related cooperation, including activities now cited in U.S. sanctions actions.

None of this establishes direct operational control over events in Venezuela. That distinction matters. Modern competition does not depend on command-and-control relationships. It depends on positioning — ensuring access, protecting equities, and shaping the environment so that options exist when pressure mounts.

From this perspective, Venezuela is not an abrupt escalation point. It is the maturation of a permissive environment.

U.S. National Interests at Stake

Viewed through this lens, the U.S. interests implicated extend beyond narcotics enforcement.

Security and Intelligence Access: Adversarial access or technical presence in the Western Hemisphere creates intelligence and counterintelligence risks. Proximity amplifies the strategic consequences, particularly during crises when early warning and situational awareness are decisive.

Regional Stability: Venezuela’s instability already fuels migration flows, strains neighboring states, and sustains criminal economies. External actors that selectively stabilize the regime — without addressing governance or legitimacy - risk prolonging instability while insulating it from internal pressure.

Energy and Economic Leverage: Venezuela’s energy sector remains strategically significant. External involvement that secures preferential access or shields operations from pressure can distort markets and complicate sanctions, reducing U.S. leverage over time.

Alliances and Credibility: Regional partners watch not only U.S. actions, but their durability. Episodic pressure without strategic continuity reinforces perceptions that U.S. engagement is temporary, a perception that competitors routinely exploit.

The Risk of Tactical Action Without Strategic Effect

Military or law-enforcement action can disrupt illicit networks and impose immediate costs. But disruption alone rarely dismantles the access structures external powers cultivate over years.

When political or economic stress intensifies, those structures often remain intact, allowing competitors to protect their equities and adapt quickly. Pressure that is not paired with a longer-term access-denial strategy risks plateauing or incentivizing deeper external involvement.

In Venezuela, criminal disruption addresses symptoms. It does not, by itself, degrade the political, economic, and intelligence ecosystems that enable adversarial positioning. Without sustained follow-through, tactical success can coexist with strategic stagnation.

Narrative, Legitimacy, and the Competitive Space

Competition below the threshold of war is also a contest over legitimacy. External powers rarely challenge U.S. actions on operational grounds alone. Instead, they exploit ambiguity, sovereignty narratives, and perceptions of disproportion.

These narratives gain traction when objectives appear narrow, temporary, or disconnected from a broader political strategy. Countering them does not require rhetorical escalation. It requires clarity, about purpose, duration, and the outcomes the United States seeks to prevent or enable.

Strategic Implications Going Forward

Venezuela should be assessed as part of a broader competitive environment in which external actors exploit fragility, isolation, and economic dependence to secure enduring access.

Experience from other regions points to several implications:

Denying durable access matters more than disrupting individual activities.

Time favors persistent presence over episodic pressure.

Clarity of purpose constrains adversarial narratives.

Regional confidence and allied coordination reduce competitive space.

In this environment, success is measured not only by disruption, but by whether competitors are prevented from converting instability into lasting advantage.

Venezuela reinforces a familiar reality: in an era of competition below the threshold of war, strategic outcomes are shaped less by single actions than by whether access, influence, and legitimacy are denied over time.

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CIPHER BRIEF EXPERT INTERVIEW -- Economic grievances in Iran have sparked demonstrations for a fifth straight day, with protests surfacing in Tehran and multiple provincial cities as inflation, a collapsing currency, and worsening living conditions fuel public anger.

Reports from state-linked media, local officials, and rights groups confirm new clashes and at least one additional death, though accounts differ over whether the deceased was a member of a pro-government militia or a protester. Several other incidents of violence were reported in western and southern regions, but independent verification remains difficult.

President Masoud Pezeshkian, traveling in southwestern and eastern Iran, has acknowledged mounting public dissatisfaction and urged officials to address the population’s concerns, calling mismanagement - not foreign adversaries - the primary cause of the crisis. His remarks contrasted with harder-line figures who continue to blame unnamed “enemies” for the unrest.

The latest protests began after the Iranian rial plunged to record lows, prompting the resignation of Central Bank Governor Mohammad Reza Farzin.

The broader economic backdrop is bleak: inflation remains above 40 percent, food and household costs have surged, and nearly every major sector outside oil is contracting.

“The ongoing, still relatively small, economic protests now unfolding in several cities in Iran are the latest indicator of the Islamic Republic's fragility,” Middle East Expert and former National Security Manager for Iran at ODNI, Norm Roule tells The Cipher Brief.

Roule explains in this exclusive Cipher Brief analysis, why he believes the latest protests are likely a sign of what could be waiting for Tehran in the new year.

Norman T. Roule

Norman Roule is a geopolitical and energy consultant who served for 34 years in the Central Intelligence Agency, managing numerous programs relating to Iran and the Middle East. He also served as the National Intelligence Manager for Iran (NIM-I)\n at ODNI, where he was responsible for all aspects of national intelligence policy related to Iran.

ANALYSIS -- “Since 2017, Tehran’s domestic oppression, persistent inflation, declining standards of living, international isolation, and weak domestic policy credibility have produced periods of sharp and widespread unrest. Iran’s security forces have responded brutally. But the protests have shattered the Islamic Republic’s political self-confidence. Tehran’s response to the ongoing demonstrations reflects that mood.

A regime that once boasted that its high national election turnout reflected the support of its people is now unable to hide historic low voter turnout and accepts the threat of destabilizing national unrest as an inevitable consequence of life in modern-day Iran. Economic challenges are not the regime’s only concern. Iran’s historic drought and other environmental problems persist. Winter saw a sharp decline in air quality in large areas of Tehran, Khuzestan, and Isfahan provinces. In early December, Iran’s health minister announced that ongoing air pollution problems had sent more than 170,000 Iranians to emergency wards with heart and respiratory problems.

Whether the current unrest expands or dissipates - like prior waves of protest - remains uncertain. What is clearer is that the underlying drivers are durable, making future episodes virtually certain. The more consequential question is whether disillusionment will remain confined to civilians or will begin to test the cohesion and confidence of the security forces the Islamic Republic has relied upon for so many years to contain dissent.

The ongoing collapse of Iran’s currency, the rial, ignited the protests this week. After the currency fell as low as 1.42 million per dollar, Central Bank Governor Mohammad Reza Farzin resigned. The magnitude of the slide is best understood with some history: In 1979, the Iranian rial stood at 72 to the dollar. On July 14, 2015, the day the Iran nuclear deal was signed in Vienna, the Iranian rial was at 29,500 per dollar. When Farzin entered office in December 2022, the rial traded at about 430,000 to the dollar. Whatever the precise benchmarks, the trend is unmistakable: the rial’s weakness has become both a symbol of policy failure and a driver of unrest.

The currency’s decline has coincided with bleak economic signals. Except for anemic growth in the oil sector, every key sector of Iran’s economy is entering recession, foreshadowing higher unemployment. Industry and mining declined by 3.4%, construction by 12.9% and agriculture contracted by 2.9%. At the same time, inflation is growing. The Statistical Center of Iran (SCI) reported that Iran’s average annual inflation reached 42.2% in December. A close examination of this number indicates the significant impact of inflation on Iranian consumers. Food, tobacco, and beverages rose 72% year over year. This persistent high inflation erodes the purchasing power of Iranians and drives an increasing number into poverty.

Tehran’s options are few. Iran’s problems are deep and structural, and durable improvement would require political and ideological shifts beyond what the Pezeshkian administration is likely able to deliver. Even so, the government will be compelled to act on three fronts.

First, Farzin’s resignation provides the president with a convenient focal point for public anger, but it does nothing to address the issues that precipitated the crisis: fiscal mismanagement, sanctions pressure, and chronic credibility deficits. President Pezeshkian has reportedly selected 64-year-old former economy minister Abdolnaser Hemmati as Farzin’s successor.

Hemmati may at first seem a counterintuitive choice, given that the Iranian Parliament impeached him in March for failing in similar circumstances. However, he has a background that offers potential for stability. First, he is experienced. He led the Central Bank of Iran (CBI) from 2018 until late May 2021, during the Trump administration's earlier sanctions, and his work helped stabilize the foreign exchange market under similar difficult circumstances. He also qualifies as a regime insider with decades of experience with hardliners and more pragmatic conservatives. After beginning his career as an agricultural economist, he moved to Iran’s broadcasting organization, where he rose to become its political deputy and director general of news broadcasting. He then became the Director of Iran’s Central Insurance Corporation. Between 2006 and 2016, Hemmati led Sina Bank and Bank Mellat, banks with close ties to the Revolutionary Guard's Qods Force, to the extent that the U.S. and the European Union designated each. Hemmati attempted to enter the 2024 presidential election on a platform offering economic stabilization, but the Guardian Council rejected his candidacy. He instead became Pezeshkian’s economy minister, a position he held until his impeachment on 2 March 2024, following a spike in inflation and the rial's fall to 950,000 to the dollar. Ironically, that value would be seen as a significant improvement in its status today.

Hemmati will need to work quickly with Pezeshkian to propose measures to decelerate inflation, with an emphasis on protecting low-income and rural households. In the medium term, Hemmati will need to target Iran’s banking sector to strengthen balance sheets and prevent further failures. The downside of this last step is that it will inevitably involve some recognition of bad loans and credit tightening to prevent additional poor loan issuance.

Next, Pezeshkian will focus on budget reform. Details on his latest budget are limited, but we know that security and military entities remain well-resourced, which will constrain his options on the civilian side. He has proposed a 20% salary increase for public workers, but it will not keep up with inflation, and even here, he will struggle to find the funds. The budget debate will continue until 20 March 2026, and will likely remain contentious, given its emphasis on tax collection and subsidy cuts rather than oil revenues as a source of income.

Last, foreign policy will remain the most complicated aspect of Pezeshkian’s economic challenges. His government will do whatever it can to mitigate the impact of sanctions through engagement with Russia, China, and Africa, and will continue to seek talks with Washington. Initiating negotiations with the U.S., even without a prospect of an outcome, has in the past strengthened the rial. But if Pezeshkian would welcome talks with the West, the hardline actors within the regime responsible for Iran’s foreign policy remain focused on aggressive goals that remain one of the primary obstacles to peace in the region. The Quds Force shows every sign of seeking to rebuild its shattered proxies and establish new relationships with the Khartoum and other actors in Africa. The Trump administration’s approach to Tehran has been consistent. It will not waste time on talks that offer sanctions relief without seismic changes in the regime’s approach to nuclear, missiles, and regional issues. Gulf Arabs are willing to maintain a strategy of détente but will not consider rapprochement without an end to Qods Force activity in the region. Absent political rapprochement and a belief that capital invested in Iran will not be subject to terrorism or human rights sanctions, foreign investment for Iran will remain impossible.

Last, Iran’s leaders will inevitably recognize that this unrest is unfolding amid several hallmarks of a pre-revolutionary situation: institutional failure, fragmentation among the ruling elites, generational alienation, persistent fiscal crisis, widespread economic suffering, class antagonism, escalating and chronic protests, and the absence of a unifying state narrative. President Pezeshkian recently stated that his country was “in a full-fledged war with America, Israel, and Europe.” Such rhetoric will play to domestic hardline audiences while reinforcing Iran’s aggressive reputation abroad. During this sensitive period, Iran is unlikely to take actions that would further exacerbate its domestic fragility and instead seeks to gradually test Western red lines while navigating the Islamic Republic through what remains the regime's most sensitive and challenging economic and political period since the 1980s.”

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BOOK REVIEWS & RECOMMENDATIONS -- Welcome to our annual holiday book review and recommendations list, where we highlight some of the terrific books that have been reviewed and featured in The Cipher Brief in recent months. Since our summer newsletter, we've covered and reviewed more than 35 books – often sliced and diced by world-class subject matter experts. In this newsletter, we’ve singled out about a dozen that received our highest four out of four “trench coat” rating. As always, the books reviewed in The Cipher Brief represent an eclectic mix of topics ranging from the history of past wars to the prospects of future ones. We’ve included both fiction and non-fiction faves.

FICTION FAVORITES:

Tops on many folks’ list is The Persian: A Novel by veteran CIA analyst David McCloskey. For this one, we turned once again to Joe Zacks, a veteran of four-plus decades of government service, to offer his take. Zacks writes that The Persian may be the finest of McCloskey’s four spy novels to date (high praise given how well the first three were received). For this one, Zacks calls McCloskey’s novel “a sophisticated and multidimensional depiction of human nature and the motivations that propel people to action. It brings the HUMINT discipline to life, vividly portraying how a sophisticated intelligence service identifies, targets, and ultimately recruits and handles an agent while plumbing the depths of the agent’s psyche and inner conflicts.” To learn even more about the book – and its author – Cipher Brief CEO & Publisher Suzanne Kelly did a debrief with McCloskey in this fun-filled Cover Stories podcast.

To review veteran spy novelist Daniel Silva’s 25^th book, An Inside Job, we turned to a couple of CIA veterans – Anne and Jay Gruner. The latest Silva book brings back skilled art restorer and former Mossad chief Gabriel Allon, in a fast-paced tale involving art theft, European crime and corruption – and a newly elected Pope. The Gruners’ review declares that Silva has once again demonstrated that he is a master of his craft.

While Gabriel Allon, the hero of Silva’s novel, is a fictional former Mossad officer, a genuine Mossad alumni, Yariv Inbar, is also a prolific novelist. His latest book, Behind the Trigger, was reviewed for us by Dr. Ken Dekleva, a novelist in his own right and a former Regional Medical Officer/Psychiatrist for the State Department. With that background, Dekleva was quick to spot Inbar’s skill in describing the human, emotional, and psychological aspects of espionage. The book features two central female characters and a Middle East canvas.

Not all of the novels that won plaudits on The Cipher Brief came from long-time authors. There was the thriller The Moldavian Gambit by first-time novelist Brad Meslin about a man-portable nuclear device that goes missing at the time the Soviet Union was coming apart in the early 1990s and may have fallen into the hands of a terrorist -- and possibly smuggled into Paris. We asked James Lawler, a former CIA officer with deep experience in thwarting rogue state weapons proliferators and the author of several well-received novels himself to review it. Lawler gave Meslin high marks for technical accuracy and heart-stopping story telling. Meslin also joined us on a Cover Stories podcast to discuss what inspired him to write the novel and his sources and methods for keeping readers on the edge of their seats.

THE NON-FICTION BOOKS THAT ROCKED CIPHER BRIEF REVIEWERS:

With Latin American counternarcotics operations much in the news, a timely read is After Escobar: Taking Down the Notorious Cali Godfathers and the Biggest Drug Cartel in History reviewed by veteran government lawyer Terence Check. Written by former DEA agents Chris Feistl and Dave Mitchell with an assist from Jessica Balboni, the book tells the two-year saga in the mid-1990s of the investigation, apprehension, and prosecution of the leading “godfathers” of the Cali drug cartel (aka “Cocaine, Inc.”) one of the biggest multi-billion-dollar drug trafficking enterprises of all time. In his review, Check writes that After Escobar “is really a story about diplomacy, and the power it has as a force multiplier for our law enforcement and military….(showing) the reader the importance of the diplomatic cadre in helping to bring down the Cali Cartel by doing the hard work of negotiating with the Colombian government.”

The criticality of diplomacy was at the forefront of another book this fall. Great Power Diplomacy: The Skill of Statecraft from Attila the Hun to Kissinger by A. Wess Mitchell. The book was reviewed for The Cipher Brief by retired U.S. Ambassador Gary Grappo. In his review Grappo describes the book as “part history lesson and part instruction manual for national leaders and diplomats, reprising the tactics, strategies, methods and actions of previous major state leaders and diplomats who found themselves confronting similar great power contests.” Grappo lauds the book for being a: “resounding reaffirmation of the value and importance of diplomacy as an indispensable component of national power not just in the past but even more so today. The skills of its practitioners may need rejuvenating. But there is no denying that diplomacy ultimately holds solutions to the problems of today.”

Several books we will highlight here offer fresh looks at past history. Let’s start with one from Yale University Press: No More Napoleons: How Britain Managed Europe from Waterloo to World War One. The book was written by Andrew Lambert and one of our most prolific reviewers, Jean-Thomas Nicole, a Policy Advisor with Public Safety Canada, reviewed it. Nicole praised the book for its reminder of “the enduring utility of maritime power, the virtues of restraint, and the necessity of maintaining influence without overreach.” Nicole notes that these themes resonate strongly with today’s global challenges.

World War II and the events that led up to and followed it are often good fodder for books. Among those that stood out for us this year was “The Spy and the Devil” by Cipher Brief expert Tim Willasey-Wilsey. Journalist and author Michael Smith reviewed it for us and called it “one of the greatest untold stories of the Second World War intelligence.” It is the story of a Lithuanian-born ‘Baltic-German’ who ended up working for British intelligence and managed to penetrate the highest Nazi circles prior to the war including having several meetings with Adolf Hitler himself. Willasey-Wilsey also joined us on a Cipher Brief Cover Stories podcast to talk about this remarkable story.

In October, we published a review of The Traitor’s Circle: The True Story of a Secret Resistance Network in Nazi Germany – and the Spy Who Betrayed Them by Jonathan Freedland. Australian writer Susan Gorgioski reviewed it and told us the book reads like a detective novel but tells the real story of a “little-known group of opponents to the Nazi regime in Germany who were willing to sacrifice careers, social position, money, and ultimately for some, their lives.”

And then there was Rain of Ruin: Tokyo, Hiroshima and the Surrender of Japan by Richard Overy and reviewed by former senior CIA clandestine service officer (and Cipher Brief expert) Sonya Seunghye Lim. In her review, Lim praises Rain of Ruin for being a “thought-provoking and disturbing book” and its explanation for “why armed conflicts will continue to plague the world: dehumanizing the enemy, depersonalizing killings by making attacks as remote as possible, and glamorizing combat serve to palliate our collective conscience and to justify the persistence of jingoism.”

But not all the good stuff came from ancient history. CNN anchor Jake Tapper published a book in October called Race Against Terror: Chasing an Al Qaeda Killer at the Dawn of the Forever War. So, we turned to someone with deep expertise – Joe Zacks who was just wrapping up a 42-year career - half in the Army and half as a CIA officer - and whose final post was Deputy Assistant Director of the CIA for Counterterrorism, to review it for us. Perfect credentials to evaluate Tapper’s book which Zacks describes as “ a mix of detective story and legal drama” about a six-year odyssey of tenacious federal prosecutors trying to bring an al Qaeda terrorist to justice.

Some of our best received books were about future intelligence challenges. For example, there is The Fourth Intelligence Revolution: The Future of Espionage and the Battle to Save America by Anthony Vinci. We tapped Cipher Brief expert and principal with the Cyber Initiatives Group Glenn Gerstell to review that one for us. In his review, Gerstell describes the book as examining “the confluence of increasingly complex geopolitical challenges and of global technological advances” and tells us that the conclusion is that “America’s spy agencies must not merely adapt but also dominate this dynamic if we are to blunt (if not defeat) our adversaries.”

But no matter how good the technology is going forward, you’re gonna need people to make it all work right – and they need to be people who can get a security clearance. So, what do you need to know in order to try and do that? Fortunately, there’s a book for that. Trust Me: A Guide to Secrets: Who Gets Them and Why We Have Such a Mixed Track Record with Them by Lindy Kyzer. We trusted retired CIA Deputy Director for Analysis (and current Cipher Brief Expert) Linda Weissgold to review it. Weissgold is also a professor at Texas A&M’s Bush School of Government and Public Service in Washington, DC and says she now recommends the book to her students who want to understand the opaque yet crucial process of getting a security clearance. The book offers practical and philosophical advice that seeks to demystify the process.

While a little harder to give as holiday gifts, there are some podcasts interviews we highly recommend as well, including:

• A discussion with Marine and CIA ground branch veteran – and award-winning writer Elliot Ackerman discussing his latest novel Sheepdogs.
• A deep dive into North Korean matters with Ambassador Joe DeTrani on his memoir The North Korean Threat: Intelligence and Diplomacy.
• A discussion with journalist and Marine veteran Chas Henry about a devastating Pacific cyclone that triggered a horrendous fire at Marine Corps Base in Japan.
• And even a book by a publishing expert, Jane Friedman, who offers essential advice on how YOU can write your own book. Get her guide, The Business of Being a Writer, and maybe in a couple of years The Cipher Brief will be carrying a review of your book.

Before we go – we should note that some of our reviewers are really tough graders – and there are dozens of other books we’ve reviewed that came in with slightly under the four trench coat rating that we are certain you would enjoy. So, be sure to check out the complete list of reviews here.

Happy Holiday shopping and reading!

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EXPERT OPINION / PERSPECTIVE -- Reports from Moscow suggest that U.S. representatives Jared Kushner and Steve Witkoff are “optimistic” about the prospect of results from their discussion with Kremlin officials this week. But after months of fruitless negotiations, if they are optimistic about achieving a negotiated solution to Russia’s invasion of Ukraine, they have little reason for it, given comments from Russian officials on the Moscow discussions.

If, as has been recently suggested to me, a central priority behind Kusher and Witkoff’s participation in negotiations (instead of relying on more experienced U.S. diplomats with a record of dealing with autocrats like Vladimir Putin) is to secure business deals in Russia following the conclusion of hostilities, then both the negotiations over Ukraine’s future and future business deals in Russia will prove to be fool’s errands, the former first and the latter over time. President Trump should know better and should have selected better representation for U.S. interests.

Kremlin spokesman Dmitriy Peskov described the meeting between Putin and the U.S. representatives as “very useful, constructive, and highly substantive.” At the same time, he said no compromise on a peace plan was reached. He went on to note that Russia wants peace, but only if its objectives are met and reiterated that Moscow insists on achieving the goals of its “special operation.”

Peskov’s remarks are not surprising as they are completely consistent with the narrative that Putin has pushed before and during his ill-fated invasion of Ukraine. As if to emphasize the Kremlin’s rejection of the Kushner-Witkoff mission, Putin launched one of the largest drone and missile attacks on Ukraine, probably while the U.S. representatives were still in the air flying home.

Russia’s position in this “negotiation” is absolutely clear and has been for some time: The complete elimination of Ukraine as an independent nation; the breakup of the transatlantic alliance which has been the bedrock of European security since 1945; the creation and exacerbation of political division in the United States to weaken it as a strategic opponent and create the conditions for the establishment of a multi-polar world order with Moscow and Beijing leading the autocratic anti-democratic poles and a weakened U.S. and Europe, the other pole. Success in Ukraine is key to Putin and Chinese President Xi Jingping’s strategy.

As part of the red orchestra Putin is directing to set the stage for the achievement of his objectives, he is pushing two critical narratives. The first is that Russia can achieve through military conquest the subjugation of Ukraine - the narrative that Kyiv is losing and will inevitably lose the war. Secondly, he is pushing the argument in Washington and elsewhere that Europe is undermining the Trump Administration’s efforts to achieve a negotiated solution to the conflict (however feckless and unrealistic the 28 point peace plan was/is). Putin is also using a combination of “gray zone” clandestine kinetic and lethal operations across Europe to undermine public confidence in their security at home and undermine resolve to support Ukraine and resist Putin’s ambitions. The Russian leader has executed a number of these efforts in recent years with varying degrees of plausible deniability and certainly without any retribution or consequence paid.

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At Putin’s age and at this stage of his regime, he cannot back off his maximalist objectives in Ukraine, at least not until the pain from the war is felt by Russian elites and the Russian public to the point where his house of cards starts to tumble.

Ukraine’s ability to extract maximum casualties from Russia’s marginal territorial advances in Ukraine plus the cost being paid by Ukraine’s long-range strikes against energy infrastructure and military targets in the Russian Federation start to undermine support in those constituencies for Putin’s continued governance. The plan led by Kushner and Witkoff and endorsed by Trump works against undermining support in Russia for Putin’s aggression.

So, where does that leave Kushner and Witkoff with regard to a rumored undisclosed agenda of using the negotiations as cover for post-conflict business arrangements with Moscow? Dealing with business confidence in a kleptocracy is an oxymoron. If Kushner and Witkoff have never heard of Bill Browder, they should look him up.

Browder has consistently and accurately described the risks of doing business in Putin’s Russia. He again recently pointed out these risks in the specific context of warning Trump and his representatives of the risk they are taking on. Browder’s cogent observations and the wreckage of the hundreds of U.S. and western businesses that poured into Russia after the collapse of the Soviet Union show that you can put money in but getting it out is another matter entirely.

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Trump and his representatives seem to think they will be the exception to the Russian kleptocratic paradigm. They will not be.

One can be sure Putin and Dmitriev will be whispering all the promises into the ears of their U.S. interlocutors. Kushner and Witkoff will dutifully carry these messages back to the White House and share their pipe dream fantasies of the untold riches of being on Putin’s good side.

The only thing Putin asks Kushner and Witkoff to relay is that Trump stop aiding and supporting the two remaining obstacles to a negotiated settlement, Zelensky and the European members of NATO. End military, intelligence, and economic aid to Ukraine, Putin certainly will have said, and Ukrainian resistance will collapse speedily, and the war will brought more rapidly to its inevitable conclusion. And the U.S. certainly should be able to put enough pressure on its NATO puppets to end their futile support for Ukraine and there will be peace in our time.

The President should engage some sound and experienced counsel to provide more realistic and experienced guidance on Russian realities. The first bit of that counsel would be to remove any illusion that Putin is a man who can be trusted. Putin’s public and private comments as well as his actions over the twenty plus years he has been running the Russian Federation leave no doubt as to where he stands with regard to the West in general and the U.S. in particular.

He believes democracy and capitalism are outmoded and morally exhausted political and economic philosophies doomed to collapse. As President of the country to which Putin refers as the “glavniy protivnik” or main enemy, President Trump should realize in Putin’s mind, HE is the main enemy.

Any promises of business deals that will follow the conclusion of the Ukraine conflict will inevitably be broken by Putin and his representatives. President Trump should understand Putin wants to steal his money the most. What greater victory for Putin than to have the U.S. hand him victory in Ukraine and in the process set up the biggest theft of money from a U.S. entity in history.

A second bit of counsel President Trump might seek to provide his representatives is that it is very difficult to keep secret deals secret when you are represented by someone as manifestly incompetent and compromised as Steve Witkoff. No additional evidence needs to be provided than the leaked transcript of the call with Kirill Dmitriev in which Witkoff provides advice on how to persuade President Trump to accept the Russian proposals for the end of the conflict in Ukraine.

In addition to the naiveté of having such a conversation in the first place, Witkoff should also be advised that undertaking such actions looks a lot like he is acting as an agent of influence for the Russian Federation.

Lastly, President Trump should be reminded of former British Prime Minister Winston Churchill’s famous remarks to Neville Chamberlain after Munich, “You were given the choice between dishonor and war. You chose dishonor and you will have war.” In the context of the current negotiations Churchill might have added that a fool and his money are soon parted.

All statements of fact, opinion, or analysis expressed are those of the author and do not reflect the official positions or views of the U.S. Government. Nothing in the contents should be construed as asserting or implying U.S. Government authentication of information or endorsement of the author's views.

The Cipher Brief is committed to publishing a range of perspectives on national security issues submitted by deeply experienced national security professionals.

Opinions expressed are those of the author and do not represent the views or opinions of The Cipher Brief.

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EXPERT OPINION – The recently leaked 28-point peace plan to end the war in Ukraine is nothing short of an appeasement that satisfies the maximalist demands of the aggressor in the conflict, Russian President Vladimir Putin. This is nothing short of the side on the verge of victory (eg, the free world) conceding to the side on the verge of defeat (Putin, the leader of the anti-west coalition). Sadly, it comes at a time when the situation on the battlefield is more or less a draw, both sides are effectively attacking energy infrastructure, and Russia’s economy is moving toward recession.

According to Russian data, third Quarter GDP growth in Russia was 0.6%. The expectation is that Q4 data will show the beginning of a recession. Sberbank has just decided to let 20% of their workforce go. Russia has for the first time, begun to sell gold reserves, presumably to make up for lost revenue from the recently imposed sanctions on Rosneft and Lukoil. Russia’s wartime transition to a command economy is not sustainable with a declining workforce sapped by the loss of young men sacrificed in Ukraine and those who have voted with their feet by leaving Putin’s kleptocracy.

The key points of the 28-point plan amount to nothing less than surrender by Ukraine and make in vain the sacrifices made by their valiant soldiers and citizens in their three plus years of war of full-scale war since Russia’s deadly invasion.

The agreement will be remembered in history with the same ignominy of the Munich Agreement of 1938 and will have the same consequence of setting the stage for a larger war to come.

Perhaps most egregious in the terms of the draft agreement is the re-establishment of the Russian Orthodox Church in Ukraine and the establishment of Russian as the official language. This indignity on top of the kidnapping of hundreds - if not thousands - of Ukrainian children to Russia and the forced conscription into the Russian army of men from Russian occupied territory. Then, of course, there is the massacre of innocent citizens by Russian soldiers in places like Bucha, all of which will go unaccounted for under the draft agreement. No judgement at Nuremberg for Russian war criminals.

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The plan U.S. officials have negotiated is nothing more than cultural genocide against the people of Ukraine. That the U.S. would be part of an agreement that almost certainly would result in the arrest, deportation and incarceration of a generation of brave Ukrainians who have bravely resisted Putin’s aggression is simply unthinkable.

Mr. Trump, every member of your national security team should be required to watch episode nine of the brilliant HBO series Band of Brothers. The episode’s title is “Why We Fight” and the reasons for standing up to autocracy and evil portrayed in that episode are perfectly applicable to the situation today with the free world standing strong against the aggression of a malevolent dictator.

The Trump Administration’s desire to end the violence in Ukraine is commendable, but not at the price of setting the stage for the next war by giving victory to the aggressor. The men who reportedly negotiated the key points of the agreement have no experience dealing with Russia or Russians of the KGB ilk. The promises of “peace” offered by the Russian side are a chimera at best. Putin and the gang of thieves in his government know perfectly well how to manipulate representatives of the character of Steve Witkoff, President Trump’s real estate specialist now in charge of negotiating with Russia over Ukraine. Perhaps those negotiators are working with the idea of “Commander’s intent” that the President believes an agreement can be reached and counted upon with a counter-party like Putin. This is a serious misjudgment with serious consequences.

Those who have studied Putin for decades, understand clearly that he wants nothing but the destruction of the United States, our system of government and the set of ideals for which we stand. This is core to his beliefs. Putin and his security services will do everything they can to undermine the United States. One should not be surprised if the Russian services do not use every opportunity in the context of the Epstein revelations to attack every angle of the political spectrum in the U.S. that they can, including President Trump.

President Trump is now facing the most significant foreign and national security moment of his presidency. It appears the representatives he has chosen to negotiate with the Russian side have left him in a position to be remembered forever in history as the Chamberlain of the 21st century. Mr. Trump would do well to recognize that history does not remember Neville Chamberlain for any achievements in his political career in economic or domestic policy in Great Britain. He is remembered solely for Munich and "peace in our time". Mr. Trump is setting himself up to be remembered by history similarly. Sadly, it could also be the legacy of the country that was once the pillar of strength of the free world.

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EXPERT INTERVIEW — President Trump is welcoming Saudi Crown Prince Mohammed bin Salman to the White House today with an announcement that he plans to approve the sale of F-35 fighter jets to the Kingdom, signaling a policy shift by the U.S. Administration.

The visit to Washington marks one of the most consequential moments in decades for the U.S.–Saudi relationship. Both governments see the meeting as a chance to cement the expansion of the U.S.-Saudi partnership from one focused on energy and security to include advanced technology, AI, critical minerals and defense cooperation.

The trip follows President Donald Trump’s high-profile visit to Saudi Arabia in May, when both countries announced a multibillion-dollar deal that could potentially give Riyadh access to advanced U.S. AI technology. While sources tell The Cipher Brief that many of the details of those deals remain in various stages of negotiation, the Crown Prince’s Washington visit aims to build off of that momentum.

More widely, the visit comes at the end of a year of rapid geopolitical and technological change for the Middle East. Through these shifts, Saudi Arabia and other Gulf leaders like the United Arab Emirates are positioning themselves as centers for AI infrastructure, diversified cheap energy, and global supply chains.

To help unpack the stakes and expectations behind the Crown Prince’s Washington visit, The Cipher Brief spoke with Norm Roule, who spent more than 34 years in the Intelligence Community and has been following regional developments for 43 years - including his time as a business consultant. Roule is in frequent contact with Gulf leaders on energy, security, finance and technology issues and travels frequently to the region. Cipher Brief CEO & Publisher Suzanne Kelly began by asking Roule to summarize the expectations going into this visit. Our conversation has been lightly edited for clarity and length.

THE INTERVIEW

Roule: The visit of Crown Prince Mohammed bin Salman to Washington will likely represent a transformational moment in Saudi-American relations that will stand out among the most important events in the 80-year relationship between the two countries. Each side will likely seek to use this visit to change the traditional relationship from one of oil and security to one that is more of a blend of advanced technology, mining, and energy, which includes nuclear, and defense.

Each side now sees the other as an indispensable partner and views this visit as a way of establishing an architecture that will ensure that periodic political difficulties don't destabilize a critical relationship that needs to last decades. The Saudis seek this more predictable relationship and assets that will allow them to accelerate their evolution toward becoming a global power center.

Washington seeks to revitalize and cement ties with a rising middle power that will certainly have considerably more influence in the Middle East and the Global South and will become an important link in the global energy and supply chain. Regional issues will be discussed during the visit, but I don't think it's likely we're going to see significant shifts outside of the ongoing trends.

Kelly: This visit, of course, does follow the visit by President Trump to Saudi Arabia in May of this year where some signficant deals were announced with regard to technology sharing and investment opportunities.

Roule: That is correct. In essence, what you're looking at is the other side of the coin from those visits. President Trump and a team of unprecedented stature of American cabinet members and highly consequential American business leaders traveled to the Kingdom and concluded a vast array of business deals over the months since that time. American diplomats and business leaders have met to finalize and further expand upon those deals. And now we're looking at a meeting that will, in essence, conclude those agreements or take them to the next stage of developing memorandums of understanding. These are very complicated agreements that in and of themselves will take months, if not years, to play out. But they are indeed transformational for the economies of each of the two partners.

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Saudi Arabia and its neighbor, the United Arab Emirates are drawing on an unprecedented and historic combination of very focused policy decisions, massive domestic and global investment flows that they are developing with themselves and partners, and domestic social engineering that's been something that is unique in the world based upon AI and multiculturalism to redefine themselves from hitherto reliable energy suppliers into world-class members of the global supply chain - architects of the next generation of AI manufacturing and new nodes of political influence in a non-polar Middle East.

Each of these two countries is positioning themselves as models of rule of law, stable governance, and an oasis of multicultural life, open for business, open for boldness. And these two countries have a strategy that relies upon a tight weave of Liquified Natural Gas (LNG), chemicals, energy infrastructure, data centers, and finance. But each country also requires a deep, unprecedented and sustained access to the most advanced US AI technology.

So for this to happen, we're watching the Saudi Crown Prince come to Washington to build this new relationship with the United States. They know that this relationship brings tremendous benefits to the United States as well. It not only helps us build out our infrastructure, our employment at a time when we're having our own challenges, but in a way, it also sends a powerful message. They believe in us. They believe in the American future. They know that we will win, and often in ways that we sometimes don't express in ourselves.

Lastly, they're doing all of this in a way that means that they're not having to cut their commercial ties with China or offend Russia. In return for what they will give, they will receive technology that makes them global AI powers. And with the cheap energy that they are able to attach to that AI, they will be incredibly successful.

Kelly: Clearly, we're going through a dramatic shift in the Middle East right now. How important is this relationship to the United States?

Roule: It's critical. The Middle East remains vital to America's interest. The Middle East, as they say, it's in the middle. You look at any map and the Middle East is in the center of global trade, global transportation, multiple shipping routes move through the region, 80% of the data between Europe and Asia transit the region. You have global energy centered in the region. You have several of the world's major religions in the region. You have crossroads of multiple U.S. national interests.

At the same time, you're now looking at the development of an artificial intelligence infrastructure that is starting to blossom. And our ability to partner with that and to ensure that that technology does not threaten America's interests, and indeed sustains America's interest as that region partners with the Global South. It just protects our interest and expands our influence at a time when China would very much like to replace us.

Kelly: You talked about some of the ambitions of the Kingdom and the UAE, both in investment and AI. We've talked a lot in the past about their efforts and trying to lead when it comes to green energy. What do you think is driving their strategy?

Roule: Their strategy is driven by changes in the world that are just inevitable. If we were to go back one year and I were to tell you that knowledge is power, you would agree completely with me. But today, the adage is now, power is knowledge. The artificial intelligence system is inherently an energy system in and of itself. And artificial intelligence requires access to inexpensive, reliable 24-hour energy. And in the Middle East, Saudi Arabia and the Emirates and the other Gulf Cooperation Council states have access to tremendously inexpensive energy, and the prospect of additional inexpensive energy through their expansion of solar power and nuclear energy, which they're seeking. Those with access to such tremendous cheap energy and artificial intelligence have access to the benefits of artificial intelligence, which will bring them enormous economic advantage in the future.

Now, look at the other end of that stick. In Sub-Saharan Africa, at least 600 million Africans lack access to a reliable source of electricity. Imagine the social and economic disadvantage of those various societies. But let's go forward, just thinking about where the world is moving. By 2040, data center energy needs will rise fourfold. 1.5 billion people are estimated to move to cities. That means 2 billion new air conditioners will come online. And when you're in Saudi Arabia, a large portion of their oil needs, their oil production, is actually used for air conditioners in the summer. And you see their oil production move up in the summer for air conditioners. Global fleets of aircraft are expected to double from 25,000 to 50,000 aircraft by 2040. Jet fuel demand will be up by 30%. Six million kilometers of electrical transmission lines are needed by 2040. Imagine what that means in terms of copper.

So if you're looking at something like this, we're now looking at $4 trillion of investment needed annually for this energy architecture. We can't do this without partners with capital - like Saudi Arabia or the United Arab Emirates - and the many partners they bring together into their ecosystem.

So now let's look at energy. In recent years, you've had this great contest between the people who correctly talk about the need for us to battle climate change, and those who have talked about the need for more energy. Both issues must be dealt with. Well, now we realize oil demand is not going to drop. In fact, oil demand is expected to remain above 100 million barrels a day through 2040. This demand is going to be needed for materials and petrochemicals. LNG demand is expected to grow by 50%. Renewables will double. In essence, the world needs more energy, not replacement for these other energy sources.

Saudi Arabia and the Emirates and Qatar and Kuwait see themselves as becoming islands of cheap energy working with the United States. They see themselves at this moment in history - where, if they can capture a certain amount of extraordinary technology and a strategic relationship with the United States, and this ecosystem of multicultural partnership with the world - they can become a very different society. It's a fascinating dynamic. It's a very exciting time in history.

Kelly: Do you think falling oil prices are going to impact this strategy?

Roule: Well, we're watching that play out. So in essence, what we've seen is very prudent decision making. They have slowed some of the execution of major projects, but they have not stopped the projects themselves. They have extended timelines. They have delayed the rollout of certain large programs. If it has to do with their visions of Vision 2030 or Vision 2040, they have different visions in the Gulf, the projects remain on track. And it's because those projects are critical to where they need to go. If you look, for example, at the city of Neom that is often talked about, well, the port of Oxagon, which is critical to the infrastructure of trade in the Northwest Arabian Peninsula, that’s still functioning, it’s still out there. They're just going to slow the build out of that city because it's reasonable to say to slow the build out to the city. It's just not reasonable to think that you can slow the build out of trade and infrastructure in the Arabian Peninsula. That's going to happen on a different timeline.

Now, we've also seen reports that the Saudis have withdrawn some of their capital from not less productive, but maybe investments in the United States that aren't as relevant to the core vision of equities as in the past. That I think you may see a little more of, but I don't see a massive withdrawal of those investments unless we saw oil prices drop into say the low $50s or $40s. So what we're watching is prudent focus. We're watching attention to timelines. We're watching attention to anti-corruption. I'm impressed. I've not seen anybody waste money or do anything that is injudicious. And I've not seen anybody make allegations that such things have been noted by others.

Kelly: What will make this a successful visit to Washington, both on behalf of the Saudis and on behalf of the U.S.?

Roule: Architecture. And what you're looking for is something that lasts beyond one month, one deal. You're looking for something that binds us together over time. I think what you're going to hear will be announcements of MOUs. You will hear announcements of deals. And as important as it is to focus on the numbers associated with the deals, and there will certainly be focus on that and questions regarding that, it's really more important to focus on the industries, the sectors associated with those deals, and then the depth that each of those MOUs brings to the various societies.

For example, let's say that we see an aviation deal that might bring employment to the United States but will set up a manufacturing node in Saudi Arabia. If something like that were to happen, that would make Saudi Arabia part of a global supply chain. So 20 years from now, we would have a more reliable source of parts or an alternative source of parts. If mining is developed within the kingdom, well, it takes years to develop a mine, but we will have an alternative source of minerals, and Saudi Arabia is a rich source of multiple minerals that are important to the United States. Or if the Saudis invest in minerals in the U.S., it may take years for those to play out. So the architecture associated with those deals will mean employment but it's the depth and the timelines with those deals that will determine the depth of that relationship.

In terms of defense deals, I don't want to downplay that, but America has always stood with Saudi Arabia. People have often asked, 'If there's a single attack did we respond in as well or to the extent that we should have?' That's open to question. But there is no doubt in my mind, nor in the minds of regional leaders, that if there were a serious attack on Saudi Arabia by Iran or another country, we are absolutely going to be there. And do we need a defense deal to say that? I'll leave that to others, but not in my mind. But in any case, we will see some sort of defense architecture develop.

Should the Saudis have nuclear energy? Why not? Every other country does. They're looking for additional technology and there's no reason we can't provide that to them to assist them. But again, it's that architecture and the relationship over years that you seek, vice one delivery, one deal, and the announcements that go with it.

Kelly: Where do you see the region going in 2026? What will be the big headlines and the big drivers next year in the Middle East?

Roule: There's a lot of good news in the Middle East. The U.S. remains the dominant great power. Americans are not and likely will not be the target of a major military confrontation in the region. But the region itself continues to lack a strong cohesive narrative that pulls it together.

The biggest point in the region is that it remains a non-polar region. There's no reason to believe that this administration will cease its vigorous focus on the region. And we must applaud this administration for, in its first 11 months, having multiple emissaries and making visits and sending many cabinet ministers to the region. If you look at the recent conferences that have taken place in Manama, Qatar, Abu Dhabi and Riyadh, we've had cabinet level representation at all of those events to include during a government shutdown, which is no small thing, with representatives from multiple government departments. America is back and Russia and China are not.

Gaza is going to sputter along, and the U.S. commitment remains and CENTCOM is performing marvelously as a key force bringing things together. I think we're going to see that continuing. Neither side, Israel or the Palestinians, have a reason to return to war, but violence will continue. The largest or most significant political shifts in the region likely would come from a change in the Israeli government.

Iran is fragile. Iran nuclear talks are unlikely to begin until the administration sees evidence that the talks will not be a waste of time. Right now, the Iranians seek talks, but that doesn't mean they want to do anything other than have talks, because if they have talks, the rial will be strengthened and the Iranians don't have to bring anything up. The Quds Force will remain active. They will continue to deliver weapons to the Yemenis. But it's unlikely they're interested in looking for a conflict. We can't rule out a sudden collapse of Iran in case of an environmental disaster such as an earthquake, but the regime appears fragile at present.

Syria continues to make progress and I think we're going to see the progress continue in its current trend. Arab infrastructure investment continues to progress. I would watch for telecommunications and port investment work. And the reason that's important is that you're watching the Biden administration IMEC plan in essence or IMEC cooperation be realized as Gulf states put their lines up through Europe and through Syria.

Lebanon will likely remain a greater challenge. I think we're watching a lot of Saudi quiet diplomacy with Yemen and that will continue. GCC infrastructure will continue to develop. I would be surprised if we didn't see more Saudi work with Bahrain and Saudi work between the GCC and the West.

Oil will remain stable likely and soft in coming months. I think you're going to see a lot more natural gas come online. OPEC will continue to do everything it can to prevent oil from falling into the 50s while maintaining a relatively soft position so they can recapture market share from India and other places lost to Russia.

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EXPERT INTERVIEW — President Trump is welcoming Saudi Crown Prince Mohammed bin Salman to the White House today with an announcement that he plans to approve the sale of F-35 fighter jets to the Kingdom, signaling a policy shift by the U.S. Administration.

The visit to Washington marks one of the most consequential moments in decades for the U.S.–Saudi relationship. Both governments see the meeting as a chance to cement the expansion of the U.S.-Saudi partnership from one focused on energy and security to include advanced technology, AI, critical minerals and defense cooperation.

The trip follows President Donald Trump’s high-profile visit to Saudi Arabia in May, when both countries announced a multibillion-dollar deal that could potentially give Riyadh access to advanced U.S. AI technology. While sources tell The Cipher Brief that many of the details of those deals remain in various stages of negotiation, the Crown Prince’s Washington visit aims to build off of that momentum.

More widely, the visit comes at the end of a year of rapid geopolitical and technological change for the Middle East. Through these shifts, Saudi Arabia and other Gulf leaders like the United Arab Emirates are positioning themselves as centers for AI infrastructure, diversified cheap energy, and global supply chains.

To help unpack the stakes and expectations behind the Crown Prince’s Washington visit, The Cipher Brief spoke with Norm Roule, who spent more than 34 years in the Intelligence Community and has been following regional developments for 43 years - including his time as a business consultant. Roule is in frequent contact with Gulf leaders on energy, security, finance and technology issues and travels frequently to the region. Cipher Brief CEO & Publisher Suzanne Kelly began by asking Roule to summarize the expectations going into this visit. Our conversation has been lightly edited for clarity and length.

THE INTERVIEW

Roule: The visit of Crown Prince Mohammed bin Salman to Washington will likely represent a transformational moment in Saudi-American relations that will stand out among the most important events in the 80-year relationship between the two countries. Each side will likely seek to use this visit to change the traditional relationship from one of oil and security to one that is more of a blend of advanced technology, mining, and energy, which includes nuclear, and defense.

Each side now sees the other as an indispensable partner and views this visit as a way of establishing an architecture that will ensure that periodic political difficulties don't destabilize a critical relationship that needs to last decades. The Saudis seek this more predictable relationship and assets that will allow them to accelerate their evolution toward becoming a global power center.

Washington seeks to revitalize and cement ties with a rising middle power that will certainly have considerably more influence in the Middle East and the Global South and will become an important link in the global energy and supply chain. Regional issues will be discussed during the visit, but I don't think it's likely we're going to see significant shifts outside of the ongoing trends.

Kelly: This visit, of course, does follow the visit by President Trump to Saudi Arabia in May of this year where some signficant deals were announced with regard to technology sharing and investment opportunities.

Roule: That is correct. In essence, what you're looking at is the other side of the coin from those visits. President Trump and a team of unprecedented stature of American cabinet members and highly consequential American business leaders traveled to the Kingdom and concluded a vast array of business deals over the months since that time. American diplomats and business leaders have met to finalize and further expand upon those deals. And now we're looking at a meeting that will, in essence, conclude those agreements or take them to the next stage of developing memorandums of understanding. These are very complicated agreements that in and of themselves will take months, if not years, to play out. But they are indeed transformational for the economies of each of the two partners.

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Saudi Arabia and its neighbor, the United Arab Emirates are drawing on an unprecedented and historic combination of very focused policy decisions, massive domestic and global investment flows that they are developing with themselves and partners, and domestic social engineering that's been something that is unique in the world based upon AI and multiculturalism to redefine themselves from hitherto reliable energy suppliers into world-class members of the global supply chain - architects of the next generation of AI manufacturing and new nodes of political influence in a non-polar Middle East.

Each of these two countries is positioning themselves as models of rule of law, stable governance, and an oasis of multicultural life, open for business, open for boldness. And these two countries have a strategy that relies upon a tight weave of Liquified Natural Gas (LNG), chemicals, energy infrastructure, data centers, and finance. But each country also requires a deep, unprecedented and sustained access to the most advanced US AI technology.

So for this to happen, we're watching the Saudi Crown Prince come to Washington to build this new relationship with the United States. They know that this relationship brings tremendous benefits to the United States as well. It not only helps us build out our infrastructure, our employment at a time when we're having our own challenges, but in a way, it also sends a powerful message. They believe in us. They believe in the American future. They know that we will win, and often in ways that we sometimes don't express in ourselves.

Lastly, they're doing all of this in a way that means that they're not having to cut their commercial ties with China or offend Russia. In return for what they will give, they will receive technology that makes them global AI powers. And with the cheap energy that they are able to attach to that AI, they will be incredibly successful.

Kelly: Clearly, we're going through a dramatic shift in the Middle East right now. How important is this relationship to the United States?

Roule: It's critical. The Middle East remains vital to America's interest. The Middle East, as they say, it's in the middle. You look at any map and the Middle East is in the center of global trade, global transportation, multiple shipping routes move through the region, 80% of the data between Europe and Asia transit the region. You have global energy centered in the region. You have several of the world's major religions in the region. You have crossroads of multiple U.S. national interests.

At the same time, you're now looking at the development of an artificial intelligence infrastructure that is starting to blossom. And our ability to partner with that and to ensure that that technology does not threaten America's interests, and indeed sustains America's interest as that region partners with the Global South. It just protects our interest and expands our influence at a time when China would very much like to replace us.

Kelly: You talked about some of the ambitions of the Kingdom and the UAE, both in investment and AI. We've talked a lot in the past about their efforts and trying to lead when it comes to green energy. What do you think is driving their strategy?

Roule: Their strategy is driven by changes in the world that are just inevitable. If we were to go back one year and I were to tell you that knowledge is power, you would agree completely with me. But today, the adage is now, power is knowledge. The artificial intelligence system is inherently an energy system in and of itself. And artificial intelligence requires access to inexpensive, reliable 24-hour energy. And in the Middle East, Saudi Arabia and the Emirates and the other Gulf Cooperation Council states have access to tremendously inexpensive energy, and the prospect of additional inexpensive energy through their expansion of solar power and nuclear energy, which they're seeking. Those with access to such tremendous cheap energy and artificial intelligence have access to the benefits of artificial intelligence, which will bring them enormous economic advantage in the future.

Now, look at the other end of that stick. In Sub-Saharan Africa, at least 600 million Africans lack access to a reliable source of electricity. Imagine the social and economic disadvantage of those various societies. But let's go forward, just thinking about where the world is moving. By 2040, data center energy needs will rise fourfold. 1.5 billion people are estimated to move to cities. That means 2 billion new air conditioners will come online. And when you're in Saudi Arabia, a large portion of their oil needs, their oil production, is actually used for air conditioners in the summer. And you see their oil production move up in the summer for air conditioners. Global fleets of aircraft are expected to double from 25,000 to 50,000 aircraft by 2040. Jet fuel demand will be up by 30%. Six million kilometers of electrical transmission lines are needed by 2040. Imagine what that means in terms of copper.

So if you're looking at something like this, we're now looking at $4 trillion of investment needed annually for this energy architecture. We can't do this without partners with capital - like Saudi Arabia or the United Arab Emirates - and the many partners they bring together into their ecosystem.

So now let's look at energy. In recent years, you've had this great contest between the people who correctly talk about the need for us to battle climate change, and those who have talked about the need for more energy. Both issues must be dealt with. Well, now we realize oil demand is not going to drop. In fact, oil demand is expected to remain above 100 million barrels a day through 2040. This demand is going to be needed for materials and petrochemicals. LNG demand is expected to grow by 50%. Renewables will double. In essence, the world needs more energy, not replacement for these other energy sources.

Saudi Arabia and the Emirates and Qatar and Kuwait see themselves as becoming islands of cheap energy working with the United States. They see themselves at this moment in history - where, if they can capture a certain amount of extraordinary technology and a strategic relationship with the United States, and this ecosystem of multicultural partnership with the world - they can become a very different society. It's a fascinating dynamic. It's a very exciting time in history.

Kelly: Do you think falling oil prices are going to impact this strategy?

Roule: Well, we're watching that play out. In essence, what we've seen is very prudent decision making. They have slowed some of the execution of major projects, but they have not stopped the projects themselves. They have extended timelines. They have delayed the rollout of certain large programs. If it has to do with their visions of Vision 2030 or Vision 2040, they have different visions in the Gulf, the projects remain on track. And it's because those projects are critical to where they need to go. If you look, for example, at the city of Neom that is often talked about, well, the port of Oxagon, which is critical to the infrastructure of trade in the Northwest Arabian Peninsula, that’s still functioning, it’s still out there. They're just going to slow the build out of that city because it's reasonable. It's just not reasonable to think that you can slow the build out of trade and infrastructure in the Arabian Peninsula. That's going to happen on a different timeline.

We've also seen reports that the Saudis have withdrawn some of their capital from not less productive, but maybe investments in the United States that aren't as relevant to the core vision of equities as in the past. That I think you may see a little more of, but I don't see a massive withdrawal of those investments unless we saw oil prices drop into say the low $50s or $40s. So what we're watching is prudent focus. We're watching attention to timelines. We're watching attention to anti-corruption. I'm impressed. I've not seen anybody waste money or do anything that is injudicious. And I've not seen anybody make allegations that such things have been noted by others.

Kelly: Norm, what do you think would make this a successful visit to Washington, both on behalf of the Saudis and on behalf of the U.S. this week?

Roule: Architecture. And what you're looking for is something that lasts beyond one month, one deal. You're looking for something that binds us together over time. I think what you're going to hear will be announcements of MOUs. You will hear announcements of deals. And as important as it is to focus on the numbers associated with the deals, and there will certainly be focus on that and questions regarding that, it's really more important to focus on the industries, the sectors associated with those deals, and then the depth that each of those MOUs brings to the various societies.

For example, let's say that we see an aviation deal that might bring employment to the United States but set up a manufacturing node in Saudi Arabia. Well, what that might do, and if something like that were to happen, that would make Saudi Arabia part of a global supply chain. So 20 years from now, we now have a more reliable source of parts or an alternative source of parts. If mining is developed within the kingdom, well, it takes years to develop a mine, but we will have an alternative source of minerals, and Saudi Arabia is a rich source of multiple minerals important to the United States. Or if the Saudis invest in minerals in the U.S., it may take years for those to play out. So the architecture associated with those deals will mean employment but it's the depth and the timelines with those deals that will tell me do we have a relationship? Do we have something that is going to last a long time

In terms of the defense deals, I don't want to downplay that, but America has always stood with Saudi Arabia. People have often said, if there's a single attack did we respond in as well or to the extent that we should have, that's open to question. But there is no doubt in my mind, nor in the doubt of regional leaders, that if there were a serious attack on Saudi Arabia by Iran or another country, we are absolutely going to be there. And do we need a defense deal to say that? I'll leave that to others, but not in my mind. But in any case, we will see some sort of defense architecture develop.

Should the Saudis have nuclear energy? Why not? Every other country does. They're looking for additional technology and there's no reason we can't provide that to them to assist them. But again, it's that architecture and the relationship over years that you seek, vice one delivery, one deal, and the announcements that go with it.

Kelly: Norm, 2025 has been a really incredible year in the Middle East. We've seen so many things happen that a few of us probably would have predicted, other than you, perhaps, at the beginning of this year. But I wonder if you have your crystal ball handy. If you can tell us where you see the region going in 2026, what will be the big headlines and the big drivers next year in the Middle East?

Roule: There's a lot of good news in the Middle East. The U.S. remains the dominant great power. Americans are not and likely will not be the target of a major military confrontation in the region. But the region itself continues to lack a strong cohesive narrative that pulls it together.

The biggest point in the region is it remains a non-polar region. But if I'm asked to go almost country by country and just throw out a handful, I would say first, there's no reason to believe this administration will cease its vigorous focus on the region. And we must applaud this administration for, in its first 11 months, having multiple emissaries and making visits and sending many cabinet ministers to the region. If you look at the recent conferences that have taken place in Manama, Qatar, Abu Dhabi and Riyadh, we've had cabinet level representation at all of those events to include during a government shutdown, which is no small thing, and representatives from multiple government departments. America is back and Russia and China are not.

Gaza is going to sputter along, and the U.S. commitment remains and CENTCOM is performing marvelously as a key force bringing things together. I think we're going to see that continuing. Neither side, Israel or the Palestinians, have a reason to return to war, but violence will continue. The largest or most significant political shifts in the region likely would come from a change in the Israeli government.

Iran is fragile. Iran nuclear talks are unlikely to begin until the administration sees evidence that the talks will not be a waste of time. Right now the Iranians seek talks, but that doesn't mean they want to do anything other than have talks, because if they have talks, the rial will be strengthened and the Iranians don't have to bring anything up. The Quds Force will remain active. They will continue to deliver weapons to the Yemenis. But it's unlikely they're interested in looking for a conflict. We can't rule out a sudden collapse of Iran in case of an environmental disaster such as an earthquake, but the regime appears fragile at present.

Syria continues to make progress and I think we're going to see the progress continue in its current trend. Arab infrastructure investment continues to progress. I would watch for telecommunications and port investment work. And the reason that's important is you're watching the Biden administration IMEC plan in essence or IMEC cooperation be realized as Gulf states, in essence, put their lines up through Europe, through Syria.

Lebanon will likely remain a greater challenge. I think we're watching a lot of Saudi quiet diplomacy with Yemen and that will continue. GCC infrastructure will continue to develop. I would be surprised if we didn't see more Saudi work with Bahrain and Saudi work between the GCC and the West.

Oil will remain stable likely and soft in coming months. I think you're going to see a lot more natural gas come online. OPEC will continue to do everything it can to prevent oil from falling into the 50s while maintaining a relatively soft position so they can recapture market share from India and other places lost to Russia.

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EXPERT INTERVIEW – The United Nations has reimposed sweeping economic and military sanctions on Iran, ten years after lifting them under the 2015 nuclear deal.

Britain, France, and Germany triggered the “snapback” mechanism, accusing Tehran of nuclear escalation and blocking inspections. Iran had already halted oversight after U.S. and Israeli strikes in June damaged several nuclear sites and military facilities.

President Masoud Pezeshkian insists Iran has no intention of building nuclear weapons, calling the sanctions “unfair and illegal.” But the move marks another blow to the Joint Comprehensive Plan of Action (JCPOA), the deal meant to cap Iran’s enrichment and research while allowing civilian nuclear energy.

Iran accelerated banned nuclear activity after Trump pulled the U.S. out of the deal in 2018, repeatedly dismissing the accord as flawed.

The latest sanctions cut Iran off from global banks, reimpose arms and missile restrictions, and revive asset freezes and travel bans on key officials. Analysts say the measures hit Iran at a fragile moment with its economy shrinking, inflation surging, and the rial collapsing to record lows. Oil sales, foreign investment, shipping, and manufacturing are all expected to take a hit.

The Cipher Brief spoke with longtime Middle East and Energy Analyst Norm Roule, who formerly served as National Intelligence Manager for Iran at ODNI. Roule continues to travel regularly to the region for meetings with high-level officials throughout the Middle East.

Norman T. Roule

Norman Roule is a geopolitical and energy consultant who served for 34 years in the Central Intelligence Agency, managing numerous programs relating to Iran and the Middle East. He also served as the National Intelligence Manager for Iran (NIM-I)\n at ODNI, where he was responsible for all aspects of national intelligence policy related to Iran.

The Cipher Brief: Why are snapback sanctions different from other sanctions already imposed on Iran?

Roule: First, we should touch on what this means for the regime. The sanctions hit Iran at one of its most fragile moments since the late 1980s. The government remains unpopular to an unprecedented degree. Virtually every economic indicator in Iran is poor. Its national security architecture of militias, foreign proxies, Russia, China, and the Revolutionary Guard failed during the recent conflict with Israel and the U.S. The main driver of the regime is to maintain stability as it completes transitions to the post-revolutionary generation of leadership. Despite the absence of large-scale protests, destabilizing national unrest could occur at any time.

Over the past few months, Iran’s diplomats have used the prospect of a nuclear deal and the possibility of sanctions relief as a source of hope for the Iranian people. The return of UN sanctions strips Tehran of one of its few remaining political assets.

The primary difference between the latest sanctions and U.S. sanctions is that these measures are binding on all 193 member states of the United Nations. Iran will, of course, do everything it can to evade sanctions. Russia, China, North Korea, Venezuela, and other Iranian partners who already have a history of violating Iran sanctions are unlikely to enforce these sanctions with enthusiasm.

However, unlike U.S. sanctions, which they have argued could be ignored because they were imposed only by Washington, these sanctions are imposed by the United Nations. This will make it harder for these countries to involve other countries in their own violations. Likewise, it makes it much easier for the U.S. government to seek compliance worldwide due to the legal and reputational risks associated with countries and businesses that we might approach on this issue.

The Cipher Brief: Can you discuss the specific sanctions and your assessment of their likelihood of success?

Roule: First, and most damaging for Iran, these sanctions isolate Iranian banks from a large part of the global financial system and require that UN members prevent the use of their banking systems on sanctioned trade. Hence, Iran has lost the ability to manage its oil revenues through international banks. Instead, it will need to engage in oil bartering or use intermediaries, which is a slower and more expensive process. It will likely reduce its oil sales at a time when Saudi Arabia is trying to reclaim some of the market share lost to Iran in recent years.

Banks understand that Iran will seek to defy sanctions. They also know that there are expensive legal consequences if they fail to undertake due diligence operations to examine transactions and shipments, thereby demonstrating that they have fulfilled their sanctions obligations.

Next, there is the restoration of the conventional arms embargo: This bans traditional arms transfers to or from Iran. This should make it harder for Iran to acquire advanced weapons from Russia and China, but also to sell its weapons systems to Russia, Sudan, and other countries. I will admit that I am not sanguine on the last point.

Third, we have nuclear and missile restrictions: This includes a prohibition on uranium enrichment, reprocessing, heavy-water activities, and ballistic missile technology transfers or tests capable of delivering nuclear weapons (beyond 300 km range). Iran is likely to ignore most of these restrictions and will test the international community as it does so. But I think it will also try to do so in a way that avoids sparking a regime-destabilizing war with Israel or the U.S.

Snapback also restores restrictions on dual-use goods, materials, and technologies that could aid nuclear or missile programs. These sections require increased inspections of Iranian ships and aircraft to prevent the transfer of prohibited materials or goods. For governments and businesses, this requirement will be among the more intrusive and time-consuming, and thus expensive. At the same time, Tehran will game the system by introducing complicated, multi-country layers of shell companies to obtain critical materials. This is where international legal and intelligence partnerships will play an essential role in identifying and neutralizing these networks.

Next, snapback returns asset freezes and travel bans on designated Iranian individuals. This is a rather long list and includes Islamic Revolutionary Guard Corps officials, nuclear scientists, and officials related to their programs, as well as their assets worldwide. Travel bans should be successful. Asset bans are less so, primarily due to the small number of such assets located abroad. These restrictions, however, serve as a powerful reminder to businesses of the reputational impact of doing business with Iran.

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The Cipher Brief: Let’s go deeper. Can you break this down by sector? Is there any part of Iran’s economy that will be hurt more than another? Oil seems most likely.

Roule: We should keep in mind that, following the negative impact of the initial sanctions announcement, the effect of sanctions should be understood as corrosive. Further impact is shaped by how seriously and loudly we enforce sanctions, as well as how vigorously and successfully Tehran develops countermeasures.

To begin, Iran started the year in challenging economic conditions. The IMF’s projection for Iran’s GDP was dismal, 0.5%, so negative growth in the coming months would be far from surprising. Indeed, one wonders how it will be avoided.

The snapback announcement caused the Iranian rial to plummet to a new record low of 1.12 million to the dollar. Tehran will have little choice but to inject precious hard currency into the market to sustain its failing currency. I also expect more enthusiasm for the effort to cut some of the zeros from the Iranian currency. Iran’s leaders likely worry that the coming months will see a further weakening of the rial and a spike in inflation, which currently hovers around 43%.

Foreign investment, such as it is, will also take a hit. In 2024, Iran claimed – and probably overstated – that it attracted around $5.5 billion in foreign investment. That minuscule figure will shrink even further.

Let’s talk about sectoral impacts.

Shipping costs for Iran are likely to increase substantially. A significant portion of Iran’s seaborne trade will face new cargo inspections, bans on dual-use goods shipments, insurance difficulties, and possibly even port servicing complications.

Manufacturing and mining will be impacted in terms of both imports and exports as they face new pressures on supply chains and financing. This impact will affect trade with Europe, but it will also dampen Iran’s efforts to establish trade with Africa and complicate its trade relations with Iraq.

Although Iran’s defense industry may not be participating in trade shows, one suspects that its existing trade in drones and light arms will continue. Its current clients – Russia, Sudan, and other African countries, and reportedly Venezuela and Bolivia – may choose to ignore sanctions given their lack of alternative suppliers and animosity with the West.

The impact of sanctions on Iranian oil sales to China will be the most significant, if difficult to assess, in the coming months. Beijing and Tehran have deliberately obscured the payment relationship, and the former has imposed tough terms on Iran. China will view this new phase as an opportunity to offload more goods, machinery, and technology onto the Iranian market, and possibly to negotiate a larger price discount for the oil it acquires.

The use of intermediaries, smaller banks that are outside the scope of international monitoring, and shell firms will also increase costs for Tehran. Last, it isn’t unreasonable to think that Chinese oil sales could contract. Beijing – likely seeing the writing on the wall on this issue – has been building its reserves, and the Saudis and Emirates can fill the missing production, although they won’t discount their oil to match Iran’s prices.

The Cipher Brief: What are Iran’s likely next moves? Is diplomacy dead? What do you say to those who believe military action is expected?

Roule: Iran’s playbook is unlikely to be a surprise. Tehran’s leaders used Western media to issue their side of the story, projecting a blend of confidence, defiance, and dismissal of the impact of sanctions. Once home, Iran’s leaders will show that they won’t stop their nuclear work.

It is likely that even within Iran, the program's future remains under debate, with several options being considered. Tehran’s efforts to maintain close relations with Moscow and Beijing make it likely that it will seek to involve these capitals in its programs. One could imagine Iran dangling IAEA access at some point to gain international acceptance. Three possible programs could emerge in the coming months.

The most likely option is that Iran will seek to rebuild a modernized version of the enrichment and even the conversion facilities destroyed in the Twelve-Day War. This process would be expensive, and, depending on the number and location of facilities, could take years to complete. This option would be consistent with Iranian policy rhetoric but would risk a military attack and an extension of sanctions. The problem with lengthy construction is that this also delays benefits to Iran’s economy.

Tehran could reduce the likelihood of an attack by allowing the IAEA access to the sites or involving Russia or China in the operation and construction of the sites. Such an option, if involving advanced centrifuges, would allow Iran to retain the capability to produce highly enriched uranium, including weaponization levels, in the future should it wish to do so.

A far less likely option is to select a foreign fuel source for domestic reactors to provide power. Since this would mean abandoning a domestic enrichment program, this option is thus improbable in the foreseeable future.

Least likely for now would be weaponization. Such a decision would require Iran’s leadership to believe it could undertake and execute such an activity without discovery by Israeli or Western intelligence and, if discovered, would not face devastating military action similar to the June 2025 war.

In any case, activity at the recently reported Mount Kolang Gaz La facility in Esfahan Province is sufficient to be observable to the West, and as we have recently seen, to draw the attention of Western media, thereby sending a message. I expect construction at the site won’t be very fast until Tehran sees how Israel and the U.S. respond to this announcement and until Iran comes to a conclusion as to what direction it wishes to go in its nuclear program.

Diplomacy on Iran’s nuclear program is far from over, with low-level conversations perhaps taking place in Vienna and European capitals. The international community will remain – and should remain- insistent that the International Atomic Energy Agency (IAEA) gain access to Iran’s nuclear enterprise as soon as possible. Such a return cannot be achieved without engagement and diplomacy. However, it will take time for the politics to cool and a new paradigm of proposals to emerge.

Washington, Europe, and the Gulf will entertain serious proposals from Iran that it will accept a nuclear program that allows the IAEA access it requires. More broadly, Washington is looking for a deal that means Iran won’t have the capacity to build nuclear weapons, or accept constraints on its missile program, and end the regional operations of the Quds Force.

Iran’s current leadership is unlikely to make such a decision until sanctions begin to erode the economy. The death of the Supreme Leader could pave the way for a new generation of leadership, which – while no less assertive and potentially even hostile – might be more willing to be more accommodating on these issues to ensure the survival of the Islamic Republic.

Extreme caution should be exercised when discussing the possibility of military hostilities. The U.S. certainly doesn’t seek to start a war in the region. Israel may conduct military operations in Iran over Quds Force actions. Still, it is hard to see why Israel would argue it needs to undertake a costly military operation simply because Tehran is denying the IAEA access to rubble at Natanz. However, the Twelve Day War has changed the rules. An Israeli or US military attack on Iran is no longer unthinkable. If Iran were to undertake weaponization activity or attempt to conceal weaponization-related equipment or material, some in Tehran probably won’t be surprised if another surgical attack takes place.

Moving to Tehran, it is hard to see what benefits military action brings to Tehran. Iran is operating under some harsh realities. The Twelve Day War made it clear that Israel’s intelligence capabilities within Iran are extraordinary, and there is no reason to believe the capabilities aren’t still in place. If so, any plan would likely be discovered and perhaps neutralized before it could take off. Further, Iran’s air defenses continue to be no match for Israel or U.S. air and missile systems.

Iran’s missiles and drones not only had no strategic impact on the course of the Israeli attack but were significantly reduced in number by Israeli attacks. Iran fought alone in June: neither Russia nor China showed the slightest interest or capability in helping Iran during the June war. A conflict that spread to the region risks costing Iran its détente with the GCC and potentially jeopardizing its support from China. Iran’s population remains disillusioned, and testing their willingness to endure a conflict would be quite the risk. Much depends on specific events and drivers, but current conditions don’t seem to lean towards a regional conflict.

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