The Language of Force and the Logic of Survival: Game Theory and the Islamic Republic’s Hybrid Negotiations with the United States and Israel

We are witnessing a moment that would have seemed inconceivable only a few years ago. The Islamic Republic of Iran, a regime that for over four decades has based its ideological legitimacy on the slogans “Death to America” and “Erasing Israel from the Map,” now finds itself on the threshold of opening its economy to American investment. At the same time, there are signs—tentative yet meaningful—that it may also be recalibrating its long-standing enmity toward Israel. This transformation is not voluntary or ideological; it is the product of accumulated defeats, pressures, and credible threats that now tighten like a noose around the regime's survival.

Three critical factors have pushed Supreme Leader Ali Khamenei toward hybrid negotiations—both direct and indirect—with the United States. First, the regime is grappling with a profound domestic legitimacy crisis. Public dissatisfaction is rampant, economic despair has hollowed out hope, and fear of mass uprisings haunts the ruling elite. Second, the specter of military confrontation with the United States looms large, particularly with the potential return of Donald Trump to the White House—a figure whose rhetoric and policies toward Iran have always been aggressive and unapologetic. Third, suffocating economic sanctions, compounded by the looming succession issue and internal factional tensions, have made the cost of ideological rigidity dangerously high.

In the logic of game theory, the Islamic Republic now resembles a weak player deprived of its traditional resources, forced to accept the rules of a game designed by its adversaries in order to survive. Today, more than ever, Khamenei is reacting to what game theorists call “credible threats.” These threats—economic, military, and symbolic—emanate from the United States and its allies, and they have limited Tehran’s maneuverability to near-zero. Given its record of reneging on agreements—most notably undermining the nuclear deal (JCPOA) after 2015—Iran holds little credibility in the eyes of potential negotiating partners.

Still, when a zero-sum victory is impossible, a rational player seeks to transform the game into a repeated, multi-round scenario with relative payoffs. This is the pivot Khamenei is attempting—a shift from maximalist confrontation to tactical cooperation. Game theory explains this through the logic of iterated games, where even sworn enemies can develop patterns of cooperation to avoid mutual destruction.

One of the tools Khamenei is now employing is the offer to allow the United States to participate in major infrastructure and economic projects within Iran. This is not a genuine act of reconciliation but rather an attempt to construct a new bargaining chip in a game where all the strong cards are held by the opponent. Strategically, this is a move to reshape the Zone of Possible Agreement (ZOPA), a space where both sides might find acceptable trade-offs—even if the trust deficit remains wide.

Beyond the U.S. file, the Islamic Republic’s posture toward Israel is undergoing a subtle yet consequential re-evaluation. The October 7, 2023, attack by Hamas on Israel—a surprise assault marked by brutality and scope—was publicly lauded by Iranian state officials as a victory for the “Axis of Resistance.” But far from strengthening Iran’s regional hand, the fallout from that event has exposed its vulnerabilities. Israel’s ferocious retaliation in Gaza, the global realignment in favor of Israeli security, and the bolstering of U.S.-Israeli-European military cooperation have all increased the costs of Iran’s continued hostility.

Moreover, Iran’s recent missile and drone attacks on Israel, ostensibly in retaliation for the assassination of IRGC commanders in Syria, appear less like demonstrations of strength and more like strategic messaging. The Islamic Republic was careful to calibrate these responses to avoid a full-blown war. In game-theoretic terms, this reflects what is known as an “imperfect mutual deterrence game,” where both sides are aware that escalation could spiral into uncontrollable destruction. Israel seeks to contain Iran regionally; Iran seeks to retain its deterrent capacity without triggering regime-ending consequences.

Interestingly, despite these military gestures, Tehran has also been signaling—through diplomatic backchannels and rhetorical shifts—that it is not seeking wider conflict. The language of absolute hostility is slowly being toned down in regime-affiliated media. Where once “wiping Israel off the map” was a daily chant, today the focus has shifted to “defending resistance” or opposing “Zionist aggression.” This linguistic de-escalation may well precede a broader strategic recalibration.

Khamenei understands that maintaining open hostility toward Israel while attempting rapprochement with the United States is unsustainable. The new Middle East order—defined by the Abraham Accords, normalized Arab-Israeli relations, and growing Israeli influence in Arab capitals—leaves Iran increasingly isolated. Continuing its vendetta against Israel could brand the regime as the last rogue actor in a region trending toward strategic convergence.

From a game theory standpoint, a player who cannot alter the game’s rules must eventually redefine its role. Iran may not declare peace with Israel, but it could engage in a form of “non-conflictual coexistence.” This would resemble the kind of cold war standoff seen between North and South Korea—a theater of ideological confrontation without kinetic warfare. Such a transition could allow Tehran to retain face domestically while easing international tensions enough to allow economic breathing space.

In this context, any potential U.S.–Iran deal—especially one involving large-scale American investments—would necessitate a significant softening of Tehran’s anti-Israel stance. It would be unrealistic to expect the U.S. to pour billions into an economy whose leadership is actively threatening one of its closest allies. Thus, even if unspoken, any economic détente with Washington would require at least a tacit de-escalation vis-à-vis Tel Aviv.

Importantly, this recalibration does not signify an ideological conversion or internal democratization. Rather, it is a function of external compulsion and regime preservation. As game theory teaches us, when the cost of inflexibility surpasses the benefits of ideological purity, rational—even authoritarian—players adjust their strategy. The Islamic Republic is no longer playing to win; it is playing not to lose.

Ultimately, we are not witnessing the birth of peace or the triumph of diplomacy, but the slow, reluctant death of a failed ideology under pressure from all directions: domestic revolt, economic collapse, military threats, and geopolitical isolation. As Khamenei inches toward the negotiation table, he does so not from strength but from fear. And while the regime may try to paint this as a masterstroke of long-term strategy, the underlying reality is more sobering: only the language of force could make it listen, and only the logic of survival could make it bend.