Ongoing conflicts, economic crises and the fallout from COVID-19 will likely destabilize several countries in the Middle East in 2021 and could even put some on the brink of collapse, according to the U.S. intelligence community's annual Threat Assessment Report, released on Tuesday.

Why it matters: The report is the most comprehensive assessment the intelligence community produces every year. It paints a portrait of conflicts, insurgencies, terrorism and protest movements across the Middle East.

• Popular discontent and socioeconomic grievances will continue to rise due to the pandemic, and leaders in the region will struggle to meet public expectations for political and economic reform.

According to the report...

Iran “will take risks that could escalate tensions and threaten U.S. and allied interests in the coming year,” but will attempt to avoid a direct conflict due to concerns about the U.S. response. Sparring between Iran and rivals in the region will continue.

• Excerpt: “We assess that Iran remains interested in developing networks inside the United States ... but the greatest risk to U.S. persons exists outside the Homeland, particularly in the Middle East and South Asia."
• On the nuclear deal, Tehran will be reluctant to engage diplomatically with the Biden administration in the near term without sanctions relief, and it will accelerate its nuclear program if sanctions relief does not arrive.
• The report notes that Iran is not currently developing a nuclear weapon.

In Iraq, the government will continue to struggle to fight ISIS and to control Iran-backed Shiite militias.

In Libya, the interim unity government will face enduring political, economic and security challenges that will make reconciliation very difficult.

• Excerpt: “Instability and the risk of renewed fighting in Libya’s civil war will persist this year — despite limited political, economic, and security progress — and might spill over into broader conflict."

In Syria, the crisis will continue for years to come, and President Bashar al-Assad will struggle to re-establish control over the entire country.

• Excerpt: “Iran is determined to maintain influence in Syria. [It's] pursuing a permanent military presence and economic deals."

Worth noting: An unclassified version of the annual threats report is published while a classified one is presented to the president and other senior officials.

• The unclassified report didn’t explicitly name the countries that could reach the point of collapse.

Read the report.

Nuclear talks are set to resume in Vienna on Thursday despite the explosion at Iran's Natanz nuclear facility and Tehran's vow to enrich uranium to unprecedented levels.

Why it matters: The talks started last week on an optimistic note, but the path forward now looks more complicated.

• Iranian Deputy Foreign Minister Abbas Araghchi is already in Vienna and negotiators from the EU, France, Germany, the U.K., China and Russia will arrive today and tomorrow.
• U.S. envoy Rob Malley is also returning to Vienna. Iran still won't meet directly with the U.S., so he's expected to hold separate talks with the various parties, as he did last week.

What they're saying: Iranian President Hassan Rouhani today blamed Israel for the Natanz explosion, but said it wouldn't weaken Iran's negotiating position.

• Instead, Iran will begin enriching uranium to 60% and replace the damaged IR-1 centrifuges in Natanz with more sophisticated IR-6 centrifuges that can enrich uranium much faster, Rouhani said.
• “You wanted to empty our hands in talks. You can't," Rouhani said. "If you commit a crime, we will cut your hands."
• In a message to the Biden administration, Rouhani said Iran would return to compliance with the deal on “the same day” as the U.S. That's a contrast, at least rhetorically, to previous Iranian calls for a lengthy "verification period" after the U.S. lifts sanctions.

The other side: France, Germany and the U.K. today condemned Iran's enrichment announcement and said it could jeopardize the progress achieved in the Vienna talks.

• “Iran’s dangerous recent communication is contrary to the constructive spirit and good faith of these discussions. ... [W]e reject all escalatory measures by any actor, and we call upon Iran not to further complicate the diplomatic process," the E3 said in a statement.
• “Iran has no credible civilian need for enrichment at this level," the statement noted.

What’s next: The Biden administration is signaling that it remains focused on the diplomatic track in Vienna, which a senior State Department official told me was “the best way to limit Iran’s nuclear program and to address the full range of concerns that the U.S. has with Iran’s activities in the region and beyond.”

With 21 days left to form a government, Israeli Prime Minister Benjamin Netanyahu is attempting to convince Naftali Bennett that he should stand behind him rather than trying to take his place.

Why it matters: Bennett's right-wing Yamina party won just seven seats in the March 23 elections, but an unprecedented set of political circumstances has created an opening for the former defense minister and tech entrepreneur to replace Netanyahu with the support of the center-left.

Driving the news: Netanyahu and Bennett have met four times in the last two weeks, including once at the prime minister’s official residence. Bennett had never previously set foot in the residence due to the fierce opposition of Sara Netanyahu, the prime minister's wife.

• Netanyahu has lobbied Bennett to recommit to the right-wing bloc and refuse to ally with the center-left, Bennett's aides say.
• Netanyahu offered something Bennett has always wanted: an opportunity to join forces with Likud and gain slots on the party's electoral list and government positions for his supporters. Bennett had previously been shunned by Netanyahu's party.

The state of play: Bennett has told Netanyahu he's ready to join a right-wing government, but that no such potential government exists.

• The radical right-wing Religious Zionism party has ruled out joining a coalition supported by the Ra'am Islamist party. Both would be required to reach a majority.

What they're saying: “Right now, Netanyahu doesn’t have a government and everything seems stuck. But Netanyahu will put huge pressure on the Religious Zionism to soften their position. If he succeeds, we will join his government," a Bennett aide told me.

The other side: Netanyahu’s aides think Bennett is playing for time in an attempt to run out the clock until Netanyahu has to return the mandate to the president.

• Then, Bennett will be able to say he tried his best to align with Netanyahu, but he'll instead form a government with the center-left to prevent a fifth election.

Last week's strategic dialogue between the U.S. and Iraq offered an indication that America's military role in the country is evolving rather than ending, Mustafa Alrawi, assistant editor-in-chief of The National, writes from Abu Dhabi.

Why it matters: The eventual redeployment or drawdown of the roughly 2,500 remaining U.S. troops is a politically charged issue ahead of the October elections in Iraq.

• The Iraqi government has to address the very real public discontent over foreign troops remaining in the country, while competing with anti-American candidates who will claim they have delivered on a promise to remove U.S. troops.

The state of play: The U.S. and other foreign forces are transitioning away from combat operations toward training and assisting the Iraqi Security Forces.

• That's a reflection of the success of the fight against ISIS, as well as of the growing capabilities of the Iraqi forces.
• It also represents Washington’s continuing efforts to de-escalate tensions in the region and limit attempts by Iran-backed militias to destabilize Iraq.
• There have been at least 14 attacks against American interests in the country since President Biden assumed office, but the U.S. has been restrained in its response, wary of the impact any escalation would have within Iraq.

Flashback: Previous escalation culminated in January 2020 with the killing by the U.S. of top Iranian general Qassim Soleimani, which put Iraq on the brink of war.

Now, both the U.S. and Iraq are working hard to avoid any escalation despite repeated provocations and threats by pro-Iran groups.

• A flurry of diplomacy in recent weeks on the part of Iraqi Prime Minister Mustafa al-Kadhimi’s government — including his trips to Saudi Arabia and the UAE — has lent an air of fledgling stability in the buildup to the October elections, which Kadhimi has said he will oversee but not contest.
• This week, Iraqi national security adviser Qasim al-Araji was due in Tehran for talks in the context of American support for stable relations between the two neighbors.

What's next: As it stands, neither Iraq nor the U.S. has yet to commit to a timetable for the complete handover of military operations. Even after that happens, the U.S. will likely continue to advise and equip Iraq's security forces.

• The Iraqi government also worries that U.S. interest in the country’s future will wane along with its military involvement. It hopes for more engagement on issues like economic cooperation.

The U.S. has raised concerns with the Palestinian Authority over death threats made against a prominent Palestinian American critic of President Mahmoud Abbas, two sources familiar with the issue tell me.

Why it matters: Fadi Elsalameen, an activist who writes to an audience of more than a million followers on Facebook and other social media platforms, has become a major irritant to Abbas and other senior Palestinian officials due to his criticism of corruption in the Palestinian Authority.

• Abbas, who is in the 16th year of his four-year term, faces growing rifts within his Fatah party ahead of parliamentary elections on May 22.

"My life is in danger and the Palestinian Authority’s refusal to condemn a death threat against a U.S. citizen is a green light to use violence against me."

How it happened: Elsalameen, also a non-resident fellow at Johns Hopkins School of Advanced International Studies, traveled to the West Bank in March to visit his family in Hebron.

• After he arrived, the al-Aqsa Martyrs Brigade, an armed group affiliated with Fatah, issued a statement threatening to shoot him.
• State Department officials including deputy assistant secretary for Israeli-Palestinian affairs Hady Amr subsequently raised the threats with Palestinian officials and stressed that the U.S. was concerned by the situation.
• Lawmakers including Sen. Bernie Sanders, Rep. Lee Zeldin and Rep. Ilhan Omar also asked the State Department for clarifications about the threats against Elsalameen, a source familiar with the issue tells me.

What they're saying: Elsalameen said that even after the State Department registered a complaint, the Palestinian Authority refused to condemn the death threat or call it off.

• A senior U.S. official said the State Department was aware of the situation but wouldn't comment on the specifics. “The welfare and safety of U.S. citizens abroad is the State Department's highest priority," the official said.