Seventeen years ago, while serving as an Iran desk officer in the U.S. State Department, I asked a more veteran colleague about the latest inflammatory statement by Mahmood Ahmadinejad, then the Iranian president. My colleague responded: “Stop paying attention to Ahmadinejad. Only focus on Iranian Supreme Leader Ali Khamenei. He makes the important decisions.” He added: “But don’t worry. Change is coming. Khamenei”—who was then 69 and widely believed to have cancer—“could die at any moment.”

Khamenei did not die. Not until two weeks ago, when U.S. President Donald Trump and Israeli Prime Minister Benjamin Netanyahu did what nature had not and ended the supreme leader’s 36-year stewardship of the Islamic Republic. Khamenei left a damning legacy. Since his ascension in 1989, the Iranian rial has lost almost all of its value against the dollar. Although rich in natural resources, Iran consistently experiences electricity and water shortages. Over the past year, food prices surged more than 70 percent.

Iran’s economic woes are in large part the consequence of a foreign policy designed to counter U.S. interests. When faced with popular discontent, Khamenei consistently resisted reforms and resorted to violence to repress his people—most notably in January, when his regime murdered thousands of its citizens. But he clearly prepared Iran for this moment. Confronted with a truly existential threat, Iran has mounted a much more deliberate, decentralized, and effective response than many expected, striking not only Israeli territory and U.S. diplomatic and military installations but also civilian targets throughout the Persian Gulf, including airports, hotels, and energy infrastructure.

Trump likely wants to declare victory soon. The Iranian military has been severely degraded. Israel may be running low on missile interceptors, and keeping global markets stable will require reopening the Strait of Hormuz, which Iran has declared closed to its enemies. But he cannot force surrender on a government that refuses it. Even after the heavy damage to Iran’s military, the regime that Khamenei put in place has powerful incentives to pursue continued conflict, and it retains a variety of tools to sustain a war of attrition.

The war is thus barreling toward an inflection point at which all the potential options are bad. To agree to a cease-fire, Tehran will almost certainly demand assurances that the United States will constrain future Israeli strikes on Iran, Trump retains substantial leverage over Netanyahu because........

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