Iran began its dayslong public funeral for Supreme Leader Ayatollah Ali Khamenei on Saturday, July 5. Khamenei, 86, was killed in an Israeli airstrike on February 28, 2026 — the opening salvo of the brief but devastating war between Israel and the United States on one side and Iran on the other. His son Mojtaba Khamenei has since been named the new Supreme Leader, though he remains wounded and reportedly in hiding. Meanwhile, Iran is demanding a toll from ships passing through the Strait of Hormuz — an unresolved issue in U.S.-Iran post-war negotiations. General Ahmad Vahidi, commander of Iran’s Revolutionary Guard, made his first public appearance in months at the funeral proceedings, issuing a defiant warning to both Washington and Jerusalem.
The received wisdom
The mainstream reading of Iran’s position is one of managed decline. A country that lost its founding Supreme Leader to a foreign airstrike, that suffered the decimation of its proxy network, that saw the Strait of Hormuz briefly closed with catastrophic knock-on effects for global fertilizer and energy markets — such a country, the consensus runs, is negotiating from weakness. The funeral itself is read by Western analysts as a domestic legitimacy exercise: the new government needs to rally a traumatised population behind a leadership transition that remains fragile and contested. The banners reading “We must rise,” the red flag of Ya Hussein draped over the casket, the Revolutionary Guard commander materialising from months of enforced obscurity — all of this is dismissed as revolutionary theatre, the last performance of a dying ideology.
There is genuine truth in that reading. Iran has lost territory, proxies, and its most consequential leader since Khomeini himself. The new Supreme Leader carries his father’s name but not yet his authority. And the ceasefire, however fragile, represents an Iranian climb-down from the maximalist posture it held before February.
A different read
But the weakness narrative misses something important about how coercive leverage actually works, and about what the Hormuz toll demand represents strategically.
The Strait of Hormuz is not merely symbolic. According to the UN Trade and Development data cited by NPR, roughly a third of the world’s seaborne fertilizer passed through the strait before the war. When Iran closed it in late February, the disruption rippled through global food systems: seventy percent of American Farm Bureau respondents said they could not afford all the fertilizer they needed this season; corn acreage in the United States dropped from 98.8 million acres to a projected 95.3 million. The effects on developing nations — Sudan, Somalia, Sri Lanka, Tanzania — were far more severe. A Cornell agricultural economist quoted by NPR described the situation as a “layer cake” of compounding food system pressures.
Iran knows this. The toll demand is not a face-saving gesture; it is an attempt to convert temporary military leverage — the capacity to close a chokepoint — into a permanent revenue and sovereignty claim. This is classical statecraft of the Bismarckian variety: using a negotiating table to lock in gains that might otherwise be reversed by a stronger opponent once the immediate crisis passes. The United States has not resolved this demand. It remains “yet another unresolved issue,” as NPR’s correspondents put it.
Now consider the funeral’s dual function. On one level, yes, it is domestic theatre. But on another level, the mass mobilisation of millions in Tehran streets — comparable, Iranian authorities promise, to the 1989 funeral of Khomeini — serves a precise diplomatic purpose. It tells American negotiators that the Iranian government has popular legitimacy behind its tough stance. The timing is not accidental: the NATO summit convenes in Ankara on July 7-8, a gathering at which Western unity on Ukraine, Iran, and Middle Eastern security will be tested simultaneously. Iran’s military leadership, with General Vahidi’s reappearance, is signalling that the command structure survived the war intact and retains the capability to escalate.
History offers a useful parallel. After the 1973 Arab-Israeli war, Egypt under Sadat had been militarily defeated in the Sinai counteroffensive — yet parlayed its initial success in crossing the Bar-Lev Line into the negotiations that eventually produced Camp David. The lesson: a power that has demonstrated a willingness to absorb devastating costs can negotiate above its post-war military position if it controls something the other side needs. Egypt had Suez; Iran has Hormuz. The red flag of Ya Hussein is not just a mourning banner. In the Islamic Republic’s theological-political grammar, it is a promise of redemption through suffering — and a warning that suffering produces not compliance but the opposite.
The fertilizer story is the underreported half of this picture. The Trump administration temporarily suspended countervailing duties on certain phosphate imports to cushion American farmers. That is a domestic-policy concession driven by foreign-policy failure. Meanwhile, the nations least able to absorb the disruption — Sub-Saharan Africa, South Asia — are watching the U.S.-Iran diplomatic track with a different kind of attention than Western capitals are.
What to watch
- Whether the U.S. formally concedes or contests Iran’s Hormuz toll demand in the next round of negotiations — this is the structural hinge of any durable post-war settlement.
- The NATO Ankara summit (July 7-8): whether leaders produce a unified posture on Iran or allow the Middle East track to fragment the alliance.
- General Vahidi’s movements and public statements; his reappearance after months of absence is the clearest signal of who actually controls Iran’s military posture.
- Autumn food price data in developing countries — the fertilizer disruption’s worst effects will be felt at harvest time, and food insecurity historically generates political instability that reshapes the geopolitical chessboard.
— J