“US-Iran: Escalation Toward All-Out War or Diplomatic Resolution Through Mediation?” - CSIS

As military clashes between the United States and Iran develop into a vicious cycle of retaliation and international oil prices surge, the Center for Strategic and International Studies (CSIS), a leading U.S. foreign policy and security think tank, has pointed to both the risk of escalating conflict through military expansion and the possibility of diplomatic resolution through mediation.

On July 20 (local time), CSIS published an article titled “Is the Iran War Entering a Dangerous New Phase?”, analyzing pathways that could lead to either outcome.

First, there is a possibility of further escalation. The United States is deploying additional strategic military assets to the Middle East, and Iran could launch increasingly targeted attacks on Gulf region energy infrastructure in a bid to inflict greater pain on the Gulf economy and the global energy market. If Iran were to intensify its attacks on key infrastructure in the Gulf region, the Gulf states could become involved in an open military confrontation with Iran.

In terms of a diplomatic resolution, both the United States and Iran maintain an interest in avoiding all-out war, while key mediators Pakistan and Qatar are actively engaged behind the scenes to find a way out of the escalating crisis. However, the ambiguity of the Memorandum of Understanding (MOU) between Washington and Tehran initially enabled successful negotiations but also hastened their collapse, making it uncertain whether mediation can pave the way for a diplomatic solution.

The following is a summary of the main points.

Military clashes between the United States and Iran are intensifying, and this conflict may be entering a dangerously new phase. Sparked by deep disagreements over how to manage the Strait of Hormuz, the current flare-up is now spiraling in unpredictable ways. Yet despite mounting tensions, both sides are signaling openness to diplomacy. The coming days will be critical. Will the United States and Iran continue to climb the escalation ladder toward open confrontation? Or will discreet mediation efforts forge a path out?

Notable Escalation

The past few days have seen a dramatic return to conflict. Escalating tit-for-tat military strikes resulted in the first U.S. fatalities in months, while Iran continued to target ships passing through the critical chokepoint of the strait. The United States reimposed naval blockades on Iranian vessels, expanding the range of targets once again to include civilian infrastructure. Although the recent escalation was triggered around the disputed Strait of Hormuz, renewed hostilities have now spread beyond strategic chokepoints. Driven by the self-reinforcing logic of escalation, the conflict could evolve in ways that even the main adversaries cannot foresee or control.

In consecutive days of operations, U.S. airstrikes targeted Iran’s key infrastructure, broadening geographically to hit various regions in Iran. In retaliation, Iran struck civilian targets in neighboring Gulf states, including repeated attacks on desalination plants and power stations in Kuwait. Iran also expanded the geographic scope, hitting targets in Saudi Arabia for the first time in three months, as well as Aqaba on the southern Red Sea coast of Jordan, among others.

Could a Larger Escalation Be Coming?

There is a risk of further escalation. Following reports that a range of military options were discussed at the July 16 National Security Council (NSC) meeting, the United States deployed more fighter jets to the region—potentially a prelude to a broader assault. Possible U.S. targets include Iran’s secret military facility at Piqex Mountain, or efforts to seize Kharg Island, where Iran’s major oil export facilities are located. However, such operations would carry significant risks.

Iran, too, could escalate further. Tehran has reportedly asked Houthi allies in Yemen to prepare to close the Bab-el-Mandeb Strait—another critical regional chokepoint. Iran could also carry out more focused attacks on Gulf energy infrastructure to inflict greater pain on the Gulf economy and the global energy market. Should the Strait of Hormuz be closed, Iran might target alternative energy facilities such as Yanbu, the Red Sea port that serves as a key bypass route for Saudi Arabia. Meanwhile, Israel is preparing for the possibility of being drawn into the conflict again should Iran decide to target it.

Should Iran further intensify attacks on key Gulf infrastructure, Gulf states could be drawn into an open military conflict with Iran, further escalating the clash. While these states have tried to downplay prospects of direct confrontation and seek de-escalation, their calculus could change if they feel cornered by Iranian aggression.

Where Does Diplomacy Stand?

The renewed outbreak of war has been accompanied by a breakdown in diplomacy. First, at a July 8 NATO summit side event, following an Iranian drone attack on shipping in the strait, President Trump declared that the Memorandum of Understanding (MOU) “was finished” and referred to Iranians as “trash.” Subsequently, on July 18, Iran announced it would suspend its commitments under the MOU, with new leader Mojtaba Khamenei dismissing President Trump’s signature as “worthless and void.” Iran coupled its anti-Trump rhetoric with provocative displays: a mural in central Tehran now depicts President Trump lying inside an open coffin. The latest escalation has deepened mutual distrust, further eroded confidence in agreements, and raised the bar for any renewed diplomatic breakthroughs to succeed in the next round.

Key mediators Pakistan and Qatar are working tirelessly behind the scenes to find a way out of the escalating crisis. Iran has stated it has received and is reviewing various proposals from these mediators. Pakistan and Qatar continue to commit to the MOU and urge its implementation, but must grapple with the challenge of intentionally vague wording—the same ambiguity that enabled the successful negotiation of the agreement also hastened its collapse.

Opening for De-escalation?

Despite the turmoil, both the United States and Iran share an interest in avoiding all-out war. Both sides recently reaffirmed their willingness to engage in dialogue. U.S. Secretary of State Marco Rubio has said that “the door is open” if talks resume, and the Iranian Foreign Ministry spokesperson has likewise stressed the positive role of diplomacy. There have already been some subtle signals in this regard. Iran recently released an American woman who had not been able to leave Iran since December 2024. And although at least two U.S. soldiers were killed by Iranian attacks, in contrast to earlier threats, the president did not dramatically escalate in response. In fact, his rhetoric after the attack remained relatively restrained.

For now, both Washington and Tehran appear locked into a deeper path of military escalation. The renewed conflict initially focused on breaking the deadlock around the Strait of Hormuz—a new sticking point that did not exist before February 28—but the escalation has triggered a self-reinforcing pattern of retaliation and counter-retaliation. Both sides appear to believe that inflicting enough pain will force the other to back down, a logic that sustains the war. Yet even if an immediate exit is not readily apparent, the pain inflicted on both sides might also create new openings for de-escalation.

This content was produced with the assistance of AI translation services.