Maria-Louise Clausen, Danish Institute for International Studies (DIIS)
Armed non-state actors are increasingly important actors in international and regional politics. In the post-2011 Middle East the delegation of coercive tasks from an external patron to a local armed actor operating within another state’s territory is a defining characteristic of conflicts (Lynch 2018; Mumford 2013). These conflicts, often referred to as proxy wars, entail a principal–agent relationship, which offers the analytical framework for examining both the logic of delegation and its attendant challenges (Karlén and Rauta 2023, 114; Groh 2019, 3).
Iran has often been characterized as uniquely successful in developing principal–agent relationships with non-state actors, such as Hezbollah in Lebanon, which constitute a key pillar of its foreign policy (Juneau 2021, 2). This reflects how the regional network has functioned not only as a tool of influence but also as a form of deterrence, rooted in the possibility of asymmetric retaliation (see Hazbun in this collection). The network has provided Iran with strategic depth, extending its security posture beyond its borders while reducing the risks of direct interstate confrontation. But 7 October 2023 and its aftermath have prompted a reconsideration of assumptions about the benefits to Iran of these principal-agent relationships. The actions of armed non-state actors in Lebanon, Iraq, and Yemen (as well as the attack by Hamas itself) produced forms of agency slippage and escalation that threatened to undermine Iran’s national security.
While others focus on asymmetric deterrence, this essay argues that the events following 7 October 2023 require a reconsideration of plausible deniability as a core concept in principal–agent theories of proxy warfare. Deniability has often been treated as a strategic asset that enables delegation while limiting escalation risks. However, as armed non-state actors gain greater operational autonomy, deniability becomes more fluid and politically contested. Under these conditions, the attribution of responsibility for an agent’s actions can generate escalation pressures that undermine, rather than reinforce, the principal’s security. In this piece, I focus on the Iran–Houthi connection as a critical example of how the attribution of responsibility to Iran for a supposed agent’s actions came to threaten its national security, thus offering a lens through which to examine how one of principal–agent theory’s core assumptions perform under post-2023 conflict dynamics.
Principal–Agent Dynamics as Delegation
The most common description of principal–agent relationships holds that delegation is “a useful tool that principals use when they wish to avoid the costs, including time, resources, and developing knowledge, associated with particular tasks” (Salehyan, Gleditsch, and Cunningham 2011, 713). Existing work emphasizes that delegation is chosen by principals as a cost-saving strategy that allows them to influence events while avoiding the financial, political, and reputational burdens of direct intervention. Delegation can be facilitated by the agent’s comparative advantage in a particular skill set, greater knowledge of the local context, or localized legitimacy that enhances effectiveness (Byman and Kreps 2010, 3). This rationalist approach to delegation is complemented by accounts that emphasize delegation as a product of shared ideas and identities. Such work highlights the importance of interest alignment, particularly in the Middle East, where trans-state identities often resonate regionally (Phillips and Valbjørn 2018, 417).
Delegation, especially when framed as proxy war, is used colloquially as a label applied to a wide range of conflicts, but the academic literature has worked to develop proxy war into a more rigorous analytical category by examining variation within principal–agent relationships (Rauta 2021). This allows us to explore how relationships of delegation are negotiated, contested, and subject to reinterpretation over time, including how delegation itself can redistribute power and create new political actors. Delegation often takes place within a web of alliances and reciprocal dependencies in which actors may simultaneously function as both principals and agents. Agents may surpass their principals’ capabilities, thereby challenging the notion of clear hierarchies in which principals give orders and clients obey, underlining instead the co-constitution of principals and agents. This also brings attention to the agency of armed non-state actors, who pursue their own political and economic agendas through these relationships, using external support to advance strategic goals that may or may not align with those of the principal (Moghadam and Wyss 2020).
The purpose of delegation is often to manage the risks of direct involvement in conflict, but its ability to function as a tool of crisis management depends on a delicate balancing act that requires that principal control be both exercised in practice and recognized by rivals. Although the principal–agent literature emphasizes the “agency problem”, whereby self-interested agents may diverge from principal preferences, the relationship nonetheless presupposes that principals retain the capacity to monitor and discipline agent behavior within acceptable bounds (Salehyan, Gleditsch, and Cunningham 2011, 715; Salehyan 2010, 495, 502). Absent meaningful principal control, the analytical distinction between principal–agent relationships and looser forms of alignment become blurred. Yet it remains unclear how principal–agent theory specifies when rivals grant such space for restraint rather than escalate directly, how strategic reputation and bargaining dynamics shape that decision, and whether identifiable thresholds shift conflicts from indirect to direct confrontation. For instance, Iran is widely viewed by Yemen experts as lacking direct command and control over the Houthis’ maritime campaign since 2023 but despite the group’s apparent operational autonomy, its actions are still routinely ascribed to Iran. This suggests a potential blind spot in existing models, which tend to assume that control and external attribution move in tandem.
Deniability is one key mechanism explored within this literature. The principal reserves indirect action for issues where the costs of direct involvement are especially high, using delegation as a way to avoid or limit the risk of international penalties and negative blowback (Salehyan, Gleditsch, and Cunningham 2011, 714). The drone strikes against Saudi oil refineries in 2019, for example, were claimed by the Houthis, but responsibility remained contested, with Iran widely alleged to have orchestrated the attack. This ambiguity complicated the justification for direct retaliation. While plausible deniability is commonly understood as one of the key advantages of delegating conflict, in practice it has become increasingly difficult to sustain, as widespread surveillance and rapid attribution have made external involvement more traceable and documentable (Cormac and Aldrich 2018). Yet deniability can also serve a de-escalatory function, as ambiguity can raise the political and legal threshold for retaliation or create space for restraint, allowing actors to avoid escalation even where retaliation could be justified.
Iran’s use of the so-called Axis of Resistance reflects an attempt to balance plausible deniability with the desire to employ aligned non-state actors both as instruments of deterrence and as strategic force multipliers. Yet, as Cordesman and Kleiber already noted in 2007, the increasing implausibility of deniability raises the likelihood that Iran is drawn into far more serious conflicts than it intends through the actions of its agents (Cordesman and Kleiber 2007, 203). This likelihood increases as these dynamics now unfold in a context shaped by faster attribution, weakened international norms of restraint, and growing agent autonomy, all of which complicate escalation management and strain deniability as a risk-management tool. This highlights a problem of control that can be unpacked along three dimensions identified by Groh (2019): the compatibility of objectives, the agent’s capabilities, and its dependence on external support. These dimensions help illuminate different aspects of the challenge of principal control. While similar dynamics apply in the case of Iran’s relationship with Hezbollah, Iraqi militias, and other clients, this essay focuses on the evolving consequences of implausible deniability in the Iran–Houthi relationship.
The Houthis and the Challenge of Delegation
At the onset of the conflict in Yemen, Iran’s interests in the country were limited and centered on sustaining the Houthis’ capacity to challenge Saudi Arabia and draw it into a costly and protracted conflict, rather than on seeking to exert direct control over Yemen (Juneau 2021). The relationship provided Iran with a point of leverage against Saudi Arabia along its southern flank. Since Yemen was not a priority for Tehran or considered critical to Iran’s national security, Iran appears to have accepted limited control over the Houthis (Esfandiary and Tabatabai 2016). While Iran and the Houthis share anti-Israeli rhetoric and the Houthis have long sought to elevate their regional standing through a broader discourse of resistance to the US-led regional order, this posture became more pronounced after 7 October 2023 as the movement began targeting international shipping in the Red Sea. What had previously remained largely rhetorical thus appeared to take on a more operational character. The Houthis not only internationalized the conflict through maritime attacks but escalated further with direct strikes on Israel (Clausen 2022; Knights 2024, 4). These operations involved the use of long-range drones and ballistic missiles targeting southern Israeli locations, including a drone strike near Ilan and Asaf Ramon International Airport outside Eilat in September 2025. Israel responded with strikes on Yemen, stating that it targeted Houthi infrastructure.
The widening geographic scope of the conflict also drew in the United States more directly. In March 2025, US President Donald Trump warned Iran that it would be held responsible for “every shot fired by the Houthis” and face dire consequences if the attacks continued (BBC 2025). Iran officially maintained that the Houthis are an independent organization, but reports emerged that it had appealed to them to avoid further escalation (Reuters 2025). While some observers have argued that Iran orchestrated the involvement of the Houthis to “shield Iran and Hezbollah from direct U.S. pressure”, there are indications that the Houthis escalated in ways that ran counter to Iran’s preferences carrying direct strategic costs for Tehran as the presumed coordinator of the attacks. Although causality is difficult to establish, the Houthi campaign became embedded in the broader escalation dynamics leading to US-Israeli military action against Iran.
Existing analyses of Iran’s regional alignments have often foregrounded sectarian overlap as important to understanding the success of Iran’s relationships (Ostovar 2018). However, the sectarian narrative cannot explain the onset of conflict in Yemen even – if it has gained some credence as the conflict has dragged on (Clausen 2019). Rather than shared Shi’a identity, it is political-ideological alignment that appears particularly salient in this relationship. The Houthis’ strong anti-American and anti-Israeli rhetoric and their confrontation with Saudi Arabia largely reflect Iranian foreign policy messaging. Both actors have been able to derive reputational benefits from presenting themselves as defenders of the politically oppressed, most visibly through alignment with the Palestinian cause. This form of alignment facilitated cooperation on issues where interests converged but did not necessarily translate into shared assessments of acceptable escalation, limiting its effectiveness as a mechanism of principal control.
The Houthis have, since the Arab uprising, developed from a minor associated group to a defining member of the so-called Axis of resistance (Bank and Mohns 2012, 26). From an operational perspective, they have gone from localized insurgency activities in northern Yemen to being able to take and maintain control over most of the Yemeni population, a territory of approximately 110,000 km2, threatening international trade, and carrying out missile and drone strikes on Israel. Their ability to globalize the conflict reflects a determined effort to expand their military capacity, building on stockpiles looted from the Yemeni military, supplemented with black-market purchases and support from Iran (Clausen 2015). They have combined the growing availability of short-range drones with the import of high-value components from Iran or through smuggling networks as well as the acquisition of dual-use items. This has enabled the development of a domestic military industry that fuses technologically advanced imports with locally produced components (Juneau 2021).
In this process, the Houthis have not only developed their military capabilities but also their political acumen. They have built the ability to administer large parts of Yemen in a state-like manner, including gaining control over internal sources of income. As a result of the Houthis’ expanding capabilities, they have become less dependent on continued logistical, organizational, and military support from Tehran. In terms of political independence, the Houthis have sought to cultivate independent relationships with like-minded actors such as the Iranian-backed members of the Popular Mobilization Forces (PMF) in Iraq (Badawi 2024), while Iran has few ideologically viable alternatives inside Yemen that it could readily turn to in their place.
These dynamics complicate how responsibility is attributed. Plausible deniability in such a context depends not only on opacity, but also on reciprocal restraint and shifting attribution norms. Traditionally, plausible deniability has relied on uncertainty about the nature and extent of the principal’s support to an agent, making culpability harder to establish (Salehyan 2010, 503-504). This has been found to shield principals from direct responsibility and limit the reputational, strategic, and legal costs of involvement, as support is often difficult to prove conclusively and therefore less likely to provoke strong countermeasures (Pischedda, Cheon, and Moller 2024, 496). In the Iran–Houthi relationship, opacity leaves the precise significance of Iranian support for the Houthis indeterminate. Nevertheless, the linkage itself, regardless of the relationship’s exact character, became strategically consequential for Iran after 7 October 2023.
Conclusion
The weakening of international order, combined with a reframing of domestic Israeli politics toward more expansive security responses and a more confrontational U.S. stance toward Iran, have substantially changed the context of the Iran–Houthi relationship. The threshold for what is required in terms of public justification is declining and the consequences of deniability failures are increasing (Clausen 2026). Plausible deniability has historically helped shield principals from possible retaliation as well as international criticism. For instance, Israel found it “politically difficult” to retaliate against Iran for attacks committed by Hezbollah (Byman and Kreps 2010, 4). Hence, while the principal-agent literature has warned that delegation carries risks for the principal, the speed and degree of attribution that Iran experienced following 7 October stand out relative to earlier episodes of proxy escalation. The consequences that Iran is suffering demonstrate that its strategy of supporting armed non-state actors to expand its regional influence while managing escalation through a careful balance of acknowledgment and denial has become harder to sustain. Rather than insulating Iran from risk, delegation in this case exposed it to reputational, strategic, and military consequences it could not fully control, reflecting limits not only in principal oversight but also in shaping escalation dynamics and external attribution. As such, the piece shows the continued relevance of principal–agent theory for understanding proxy warfare but highlights the need to revisit plausible deniability as one of its core assumptions under contemporary conflict conditions.
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