Understanding Iran’s domestic political situation has become increasingly difficult. Conventional models that assume a trajectory toward stabilization or collapse no longer provide a reliable guide to developments on the ground and risk misreading current dynamics.

This report responds to that challenge. It offers an analytical lens for interpreting Iran’s rapidly shifting and complex political environment by applying the concept of the “gray condition” to post-war Iran. It assesses possible trajectories without assuming a linear transition toward either stability or breakdown.

The gray condition describes a political order that has remained formally intact but no longer develops in a clear or stable direction. Authority persists, while governance is increasingly fragmented, uneven, and difficult to coordinate. Instability is continuously reproduced through interacting internal and external pressures. Within this condition, multiple trajectories remain possible and no single end state can be assumed.

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What Sustains the Gray Condition

The gray condition in Iran manifests itself in the following ways:

• Fragmented authority across formal government institutions and informal security actors, operating at both the national and regional levels.
• Increasing securitization of governance and civic life, narrowing the space for public and institutional activity
• Sustained foreign pressure through (periodic) military escalation, diplomaticisolation, and sanctions
• Uneven state capacity and persistent structural fragility.

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Main Consequences

Together, these characteristics prevent both institutional consolidation and systemic breakdown as well as:

• Erosion of trust between state and society.
• Continued contraction of civic and political space.
• Expansion of informal and opaque governance mechanisms.
• Fragmentation of collective action and social organization.
• Erosion of power of the civilian government and subsequent failure in delivering public services

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Scenarios

Possible trajectories from within the gray condition include:

• Scenario 1 (Strong State): Restoration of state capacity.
• Scenario 2 (Weak State): Persistent weak governance with prolonged formal continuity.
• Scenario 3 (Garrison State): In a situation of maximum uncertainty due to a state of no-war and no-peace, security becomes the organizing principle ofgovernance, with civilian institutions increasingly subordinated to military priorities and public life shaped by permanent threat mobilization.
• Scenario 4 (New Authoritarian Rule): Rise of a (new) authoritarian regime, reducing systemic flexibility and a main obstacle towards more civil space and democracy.
• Scenario 5 (Balkanization): Territorial fragmentation leading to highly autonomous, multi-centered regional authority.
• Scenario 6 (Puppet Government): Severe crisis resulting in partial loss of policy sovereignty to external actors.

On 14 June 2026, mediators announced that the United States and Iran had reached a Memorandum of Understanding (MoU), an interim framework, not a final agreement, intended to bring the war to a formal end within 60 days. The MoU declares an immediate and permanent end to hostilities on all fronts, including in Lebanon, and provides for reopening the Strait of Hormuz and lifting the U.S. naval blockade. It also includes immediate U.S. Treasury waivers allowing Iran to export oil, the release of frozen Iranian assets, a U.S.-backed reconstruction plan of at least $300 billion, and the start of negotiations on Iran's nuclear programme within 60 days.

This development favours scenarios 1 and 2, increasing their likelihood significantly. However, the deal leaves the most consequential issues, chiefly uranium enrichment and the fate of Iran's enriched-uranium stockpile, to later talks, and renewed Israeli strikes in Lebanon nearly derailed the signing, underscoring how fragile the regional situation remains. Whether a final agreement is reached will determine the trajectory between continuation of scenario 3 (garrison state) and scenarios 1 and 2. Should an agreement be reached, its specific terms will determine where Iran lands between a strong state and a weak state.

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Early Warning Indicators

Shifts between these trajectories can be assessed through targeted tracking of:

• Service delivery and infrastructure performance.
• Civic space and digital access.
• Transparency in governance and reconstruction processes.
• Institutional coherence and clarity of authority.

Patterns across these indicators matter significantly more than individual, isolated signals.

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Implications and Policy Direction

The central risk facing post-war Iran is not sudden collapse, but the gradual entrenchment of fragmented governance alongside declining institutional capacity, social cohesion and civic space. The termination of open foreign conflict will not automatically resolve these tensions.

In this environment:

• Informal and opaque governance mechanisms are highly likely to expand.
• Civil society remains a vital anchor for trust, coordination, and resilience.
• External engagement may reduce or reinforce internal fragmentation depending on its design.
• Ordinary citizens become increasingly absorbed by everyday survival pressures, reducing the capacity for sustained political organization.

Engagement strategies should therefore prioritize preventing further institutional fragmentation, supporting baseline human security, ensuring reconstruction is linked to strict transparency, and avoiding approaches that risk further military escalation.

Safeguarding civic space remains central to any viable long-term trajectory for Iran. A functioning civic sphere, however restricted, serves as the primary conduit for cultivating social trust, demanding accountability, and facilitating a peaceful resolution to the country's protracted crisis. Cultivating and expanding this space is therefore a critical prerequisite for establishing a sustainable, indigenous democratic foundation.

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