Iran After Velayat-e Faqih: Dismantling the Parallel State and the Future of the Regional Order

Executive Overview

Iran is approaching a critical inflection point that could lead either to a managed transition toward a constitutional state or to a destabilizing collapse with severe regional and global consequences.

This memorandum does not assume the inevitability of regime change, nor does it rely on aspirational narratives. Instead, it presents a structural assessment of Iran’s internal power architecture, identifies the real centers of authority, and outlines the strategic risks of an unmanaged transition.

The central question is not whether Iran’s ruling ideology weakens, but whether the parallel state embedded within Iran’s political-security system is dismantled or merely rebranded.

I. The Core Problem: Iran Is Not Governed Solely by Ideology but by a Parallel State

The Islamic Republic did not evolve into a conventional institutional state. It developed into a hybrid system composed of three interlocking pillars:

a politicized religious legitimacy,

a parallel military-security apparatus,

and a sanctions-driven shadow economy.

The decisive actor within this system is not the formal government but the Islamic Revolutionary Guard Corps (IRGC), which has consolidated control over strategic sectors including energy, ports, construction, telecommunications, logistics, and large segments of the informal economy.

Any political transition that fails to dismantle this parallel structure will not produce genuine change. It will merely recycle the system under a new political façade, preserving Iran’s capacity to project instability through proxy networks with greater operational efficiency and reduced ideological visibility.

II. Iran Is a Plural State: Unmanaged Transition Equals Fragmentation Risk

Iran is not a homogenous polity. It is a forcibly integrated state comprising multiple ethnic and regional components: Persians, Azeris, Kurds, Arabs in Ahwaz, Baluch, and Turkmen.

Under a strong central authority, this diversity has been contained through coercion. In the event of a weakened center without a constitutional framework, diversity will rapidly translate into competing political claims.

Ahwaz represents the most sensitive case: a resource-rich region with a long history of marginalization. Ignoring Ahwaz in any transition framework risks transforming it into a focal point of internal conflict with cross-border ramifications.

III. The Viable Alternative: A Unified Constitutional State—Under Strict Conditions

A managed transition remains possible if a credible civilian leadership emerges from outside the clerical establishment—particularly liberal or constitutional monarchist currents shaped by long exposure to rule-of-law systems in Europe and North America.

However, this scenario is viable only if four non-negotiable conditions are met:

A clear civilian constitution defining center-periphery relations.

1. A binding social contract guaranteeing political rights for all components.
2. Full subordination of the military and security apparatus to elected civilian authority.
3. Systematic dismantling of the IRGC’s economic empire.

Absent these measures, Iran will remain a dual state: an elected façade overshadowed by an unaccountable security-economic complex capable of vetoing reform and perpetuating regional proxy warfare.

IV. Regional Implications of Success or Failure

A successful transition would likely result in:

• The gradual dismantling of Iran’s proxy warfare model.
• Reduced pressure on Arab national security, particularly in the Gulf, Iraq, Lebanon, and Yemen.
• Reintegration of Iran into global markets, contributing to energy stability.
• Strategic weakening of the Russia-China axis in the Middle East.

Conversely, a failed or chaotic transition would trigger:

• Internal fragmentation and violent competition over resources.
• Direct threats to the Strait of Hormuz and global energy flows.
• Refugee movements and cross-border instability.
• Heightened likelihood of external intervention, particularly by Russia seeking to preserve strategic depth.

V. High-Risk Scenarios Requiring Preemptive Planning

Three scenarios pose particular danger:

1. A conservative military-security takeover preserving the parallel state under new leadership.
2. Internal collapse, with IRGC and Basij units transforming into resource-based militias.
3. External intervention, exploiting the vacuum to secure strategic assets and corridors

Each scenario carries higher long-term costs than a managed constitutional transition, even if such a transition is politically complex and initially unstable.

VI. Strategic Implications for the United States

The United States faces a binary strategic choice:

either actively shape the transition environment,

or absorb the consequences of uncontrolled collapse.

The rational approach is neither forced regime change nor passive neutrality, but risk management through conditional engagement, anchored in the following principles:

• Support constitutional frameworks, not personalities.
• Condition economic normalization on dismantling the parallel state.
• Block cosmetic transitions that preserve IRGC dominance.
• Prevent the ethnicization of conflict and the emergence of proxy civil wars.

Executive Conclusion

Iran after Velayat-e Faqih is not inherently a threat.

It becomes a threat if the parallel state survives the transition.

The decisive variable is not who governs Iran, but whether Iran is governed as a state rather than as an ideological-security enterprise.

Failure to internalize this distinction will result in crisis recycling rather than resolution.

Author’s Assessment:

This memorandum is suitable for senior-level strategic review.

It avoids ideological framing, wishful assumptions, and media-driven narratives.

It is grounded in structural analysis and risk mitigation logic.