Dubai, Jan 9 (AP) Iran is reeling from a cratering economy and stinging military setbacks across its sphere of influence in the Middle East. Its bad times are likely to get worse once President-elect Donald Trump returns to the White House with his policy of “maximum pressure” on Iran.

Facing difficulties at home and abroad, Iran last week began an unusual two-month-long military drill. It includes testing air defences near a key nuclear facility and preparing for exercises in waterways vital to the global oil trade.

The military flexing seems aimed at projecting strength, but doubts about its power are high after the past year's setbacks.

The December overthrow of Syrian President Bashar Assad, who Iran supported for years with money and troops, was a major blow to its self-described “Axis of Resistance” across the region. The “axis” had already been hollowed out by Israel's punishing offensives last year against two militant groups backed by Iran – Hamas in Gaza and Hezbollah in Lebanon. Israel also attacked Iran directly on two occasions.

An Iranian Revolutionary Guard general based in Syria offered a blunt assessment this week. “I do not see it as a matter of pride that we lost Syria,” Gen. Behrouz Esbati said, according to an audio recording of a speech he gave that was leaked to the media. “We lost. We badly lost. We blew it.” At home, Iran's economy is in tatters.

The US and its allies have maintained stiff sanctions to deter it from developing nuclear weapons — and Iran's recent efforts to get them lifted through diplomacy have fallen flat. Pollution chokes the skies in the capital, Tehran, as power plants burn dirty fuel in their struggle to avoid outages during winter. And families are struggling to make ends meet as the Iranian currency, the rial, falls to record lows against the US dollar.

As these burdens rise, so does the likelihood of political protests, which have ignited nationwide in recent years over women's rights and the weak economy.

How Trump chooses to engage with Iran remains to be seen. But on Tuesday he left open the possibility of the US conducting preemptive airstrikes on nuclear sites where Iran is closer than ever to enriching uranium to weapons-grade levels.

“It's a military strategy,” Trump told journalists at his Mar-a-Lago resort in Florida during a wide-ranging news conference. “I'm not answering questions on military strategy.” Iran insists its nuclear programme is peaceful, yet officials there increasingly suggest Tehran could pursue an atomic bomb.

Europe's view of Iran hardens It's not just Trump or Israeli Prime Minister Benjamin Netanyahu, a longtime foe of Tehran, that paint Iran's nuclear program as a major threat. French President Emmanuel Macron, speaking Monday to French ambassadors in Paris, described Iran as “the main strategic and security challenge for France, the Europeans, the entire region and well beyond.” “The acceleration of its nuclear program is bringing us very close to the breaking point,” Macron said. “Its ballistic program threatens European soil and our interests." While Europe had previously been seen as more conciliatory toward Iran, its attitude has hardened. That's likely because of what Macron described as Tehran's “assertive and fully identified military support” of Russia since it's full-scale invasion of Ukraine.

France, as well as Germany and the United Kingdom, had been part of Iran's 2015 nuclear deal with world powers. Under that deal, Iran limited its enrichment of uranium and drastically reduced its stockpile in exchange for the lifting of crushing, United Nations-backed economic sanctions. Trump unilaterally withdrew America from the accord in 2018, and with those UN sanctions lifted, it provided cover for China's to purchase oil from Iran.

But now France, Germany and the United Kingdom call Tehran's advances in its atomic programme a "nuclear escalation" that needs to be addressed. That raises the possibility of Western nations pushing for what's called a “snapback” of those UN sanctions on Iran, which could be catastrophic for the Iranian economy. That “snapback” power expires in October.

On Wednesday, Iran released a visiting Italian journalist, Cecilia Sala, after detaining her for three weeks — even though she had received the government's approval to report from there.

Sala's arrest came days after Italian authorities arrested an Iranian engineer accused by the US of supplying drone technology used in a January 2024 attack on a US outpost in Jordan that killed three American troops. The engineer remains in Italian custody.

Iran holds military drills as worries grow The length of the military drills started by Iran's armed forces and its paramilitary Revolutionary Guard may be unusual, but their intended message to the US and Israel — and to its domestic audience — is not. Iran is trying to show itself as capable of defending against any possible attack.

On Tuesday, Iran held air-defence drills around its underground nuclear enrichment facility in the city of Natanz. It claimed it could intercept a so-called “bunker buster” bomb designed to destroy such sites.

However, the drill did not involve any of its four advanced S-300 Russian air defence systems, which Israel targeted in its strikes on Iran. At least two are believed to have been damaged, and Israeli officials claim all have been taken out.

“Some of the US and Israeli reservations about using force to address Iran's nuclear programme have dissipated,” wrote Kenneth Katzman, a longtime Iran analyst for the US government who is now at the New York-based Soufan Centre. “It appears likely that, at the very least, the Trump administration would not assertively dissuade Israel from striking Iranian facilities, even if the United States might decline to join the assault.” There are other ways Iran could respond. This weekend, naval forces plan exercises in the Persian Gulf and the Strait of Hormuz. Iran for years has threatened to close the strait — a narrow lane through which a fifth of global oil supplies are transported — and it has targeted oil tankers and other ships in those waters since 2019.

“Harassment and seizures are likely to remain the main tools of Iranian counteraction,” the private maritime security firm Ambrey warned Thursday.

Its allies may not be much help, though. The tempo of attacks on shipping lanes by Yemen's Houthi rebels, long armed by Iran, have slowed. And Iran has growing reservations about the reliability of Russia.

In the recording of the speech by the Iranian general, Esbati, he alleges that Russia “turned off all radars” in Syria to allow an Israeli airstrike that hit a Guard intelligence centre.

Esbati also said Iranian missiles “don't have so much of an impact” and that the US would retaliate against any attack targeting its bases in the region.

“For the time being and in this situation, dragging the region into a military operation does not agree (with the) interest of the resistance,” he says. (AP) SCY SCY