Iran now has an effective military advantage over the US and its allies in the Middle East because of its ability to wage war using third parties such as Shia militias and insurgents, according to a military thinktank.

In one of the most detailed assessments of Iran’s strategy and doctrine across Lebanon, Syria, Iraq and Yemen, the International Institute for Strategic Studies (IISS) concludes Iran’s “third party capability” has become Tehran’s weapon of choice.

The 16-month IISS study called Iran’s Networks of Influence claims these networks are more important to Iranian power than either its ballistic missile program, putative nuclear plans or its conventional military forces.

Overall, conventional military balance is still in favour of the US and its allies in the region, the report concludes, but the balance of effective force is now in Iran’s favour.

Despite US sanctions, the report says, Iran has met little international resistance for its strategy, even if it is now facing a fresh challenge from anti-Iranian nationalist protesters within some of the countries in which it wields influence. The findings are likely to strengthen the position of Western diplomats who argue that any new nuclear deal with Iran will have to include not only updated constraints on the country’s nuclear program, but also commitments on its regional behaviour.

The network, operating differently in most countries, has been designed, resourced and deployed by Tehran as its principal means of countering regional adversaries and international pressure, the IISS says. The policy “has consistently delivered Iran advantage without the cost or risk of direct confrontation with adversaries”.

The report finds “Iran is fighting and winning wars ‘fought amongst the people’, not wars between states. Iran avoids symmetrical state-on-state conflict, knowing it will be outgunned. Instead, it pursues asymmetrical warfare through non-state partners.”

The report claims the application of conventional force cannot counterbalance Iran’s sovereign capability over the past 40 years, since most conflicts in the Middle East are not defined by state-on-state warfare involving parity of forces subject to international law, “but are instead complex and congested battle spaces involving no rule of law or accountability, low visibility and multiple players who represent a mosaic of local and regional interests”.

No state has been as active or as effective as Iran in regional conflicts in modern times. The total cost to the Iranian economy of its activities in Syria, Iraq and Yemen is $16bn (£12bn), the report calculates, while Lebanese Hezbollah receives $700m annually from Iran.

Iran has developed its capability through the extraterritorial al-Quds force and enlistment of various militia – amounting to 200,000 fighters – and engaging in a “grey zone” of conflict that maintains hostilities below the threshold of state-on-state warfare.

The report argues that Iranian ideological and strategic thinking was exemplified in a speech given just after the September 2019 Abqaiq oil facility attacks by the supreme leader’s representative in the Razavi Khorasan province, Ahmad Alamolhoda.

He said: “The Iran of today does not have the geographical constraints of the past. Today, Iran is also the Popular Mobilisation Forces of Iraq, Lebanon’s Hezbollah, Ansarullah in Yemen, Syria’s National Front, Palestinian Islamic Jihad and Hamas. All of these have come to represent Iran and therefore Iran is no longer just us. The sayyid of the resistance [Hezbollah secretary general, Hassan Nasrallah] declared that the region’s resistance has one leader and that leader is the supreme leader of the Islamic Revolution of Iran.”

The IISS report says Iran’s tactics to gain influence have been different in each country.

In Iraq, Tehran used insurgents to attack the US army. In Syria, the al-Quds force commander, Qassem Suleimani, bolstered the regular Syrian army to fight multinational insurgents supported by the US.

In Lebanon, Hezbollah’s relationship with Tehran has evolved. Iran’s rocket, anti-tank and missile inventory, and 25,000 reservists given to Hezbollah have made the Lebanese group an expeditionary force in its own right.

Hezbollah, now the largest party in parliament, has grown because of a weak state lacking legitimacy, a mostly homogenised Shia community, a sectarian distribution of power that allows a united sect to block policy-making and the threat of Israel.

Countering Iranian influence requires not only local responses but also an understanding of its sovereign capability as a whole, which has become the cornerstone of the regime’s regional security strategy.

The report warns against simplistic labelling the third parties as “proxies”, pointing out Tehran does not expect an economic return from its partners, but – on the contrary – finances them.

The authors argue that Iran is resilient enough to resist the wave of anti-Iranian protests, but faces difficulties since “its influence relies on groups that either do not want to directly rule (as in Hezbollah in Lebanon) or are not capable of and equipped for governance (as in Iraq)”.