The times, they are a changin’. Iranian leaders may not be Bob Dylan fans, but his words are likely to resonate, as the mullahs contemplate their next steps in Iraq, Iraqi Kurdistan, Lebanon, and Azerbaijan.

The same is true for Turkish President Recep Tayyip Erdogan — a fierce defender of Muslim causes, except for when there is an economic price tag attached, as is the case of China’s brutal crackdown on Turkic Muslims. He’s also been attacked on charges of money laundering and economic mismanagement.

Turkey this weekend threatened to expel the ambassadors of the US, Canada, France, Finland, Denmark, Germany, Netherlands, New Zealand, Norway, and Sweden for calling for the release of philanthropist and civil rights activist Osman Kavala, in line with a European Court of Human Rights decision.

Neither Turkey nor Iran can afford these setbacks. Both have bigger geopolitical, diplomatic, and economic fish to fry and are competing with Saudi Arabia and the UAE — as well as Indonesia’s Nahdlatul Ulama — for religious soft power, if not leadership of the Muslim world.

That competition takes on added significance in a world in which Middle Eastern rivals seek to manage rather than resolve their differences by focusing on economics and soft power.

Turkey’s integrity as a country that forcefully combats funding of political violence and money laundering has been called into question by the Financial Action Task Force (FATF), an international watchdog, and a potential court case in the United States that could further tarnish Erdogan’s image.

A US appeals court ruled on Friday that state-owned Turkish lender Halkbank can be prosecuted over accusations it helped Iran evade American sanctions.

Halkbank has pleaded not guilty and argued that it is immune from prosecution under the federal Foreign Sovereign Immunities Act because it was “synonymous” with Turkey, which has immunity under that law.

FATF placed Turkey on its grey list last week. It joins countries like Pakistan, Syria, South Sudan, and Yemen that have failed to comply with the group’s standards. The International Monetary Fund (IMF) warned earlier this year that graylisting would affect a country’s ability to borrow on international markets, and cost it an equivalent of up to 3 percent of gross domestic product, as well as a drop in foreign direct investment.

Erdogan’s management of the economy has been troubled by the recent firing of three central bank policymakers, a bigger-than-expected interest rate cut that sent the Turkish lira tumbling, soaring prices, and an annual inflation rate that last month ran just shy of 20 percent.

A public opinion survey concluded in May that 56.9% of respondents would not vote for Erdogan, and that the president would lose in a run-off against two of his rivals, Ankara Mayor Mansur Yavas and his Istanbul counterpart Ekrem Imamoglu.

In Iran’s case, a combination of factors is changing the dynamics of Iran’s relations with some of its allied Arab militias. A just-published report by the Combatting Terrorism Center at the US Military Academy West Point concluded that Iran’s Islamic Revolutionary Guards Corps (IRGC) faced “growing difficulties in controlling local militant cells. Hardline anti-US militias struggle with the contending needs to de-escalate US-Iran tensions, meet the demands of their base for anti-US operations, and simultaneously evolve non-kinetic political and social wings.”

Iranian de-escalation of tensions with the United States is a function of efforts to revive the defunct 2015 international agreement to curb Iran’s nuclear program — and to improve ties with Saudi Arabia.

In addition, like in Lebanon, Iranian soft power in Iraq has been challenged by growing Iraqi public opposition to sectarianism. Even worse, militias, including Hezbollah, the Arab world’s foremost Iranian-supported armed group, have been identified with corrupt elites in Lebanon and Iraq. Many in Lebanon oppose Hezbollah as part of an elite that has allowed the Lebanese state to collapse to protect its vested interests.

Similarly, an alliance of Iranian-backed Shiite militias emerged as the biggest loser in this month’s Iraqi elections. The Fateh (Conquest) Alliance, previously the second-largest bloc in parliament, saw its number of seats drop from 48 to 17.

One bright light from Iran’s perspective is the fact that an attempt in September by activists in the United States to engineer support for Iraqi recognition of Israel backfired.

Last month, Iran also targeted facilities in northern Iraq operated by Iranian opposition Kurdish groups. Tehran believes they are part of a tightening US-Israeli noose around the Islamic republic that involves proxies and covert operations on its Iraqi and Azerbaijani borders.

With a revival of the nuclear program in doubt, Iran fears that Azerbaijan could become a staging pad for US and Israeli covert operations.

Eldar Mamedov, a political adviser for the social-democrats in the Foreign Affairs Committee of the European Parliament, warned that “the US government should resist calls from hawks to get embroiled in a conflict where it has no vital interest at stake, and much less on behalf of a regime that is so antithetical to US values and interests.”

He noted that Aliyev has forced major US NGOs to leave Azerbaijan, has trampled on human and political rights, and been anything but tolerant of the country’s Armenian heritage.

Still, it’s clear that Iran and Turkey are struggling to manage their soft power on the international stage.

Dr. James M. Dorsey is an award-winning journalist and scholar and a Senior Fellow at the National University of Singapore’s Middle East Institute.

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