Economic crisis, the consequences of war, and external pressures are merging into a single explosive moment—can Iran’s authorities control how events unfold?
Protests and strikes are ongoing in Iran, triggered by a new record collapse of the national currency. It all began with the closure of shops in Tehran’s Grand Bazaar after the rial on the black market broke a threshold that until recently no one thought possible. Protests soon spread from the capital to a number of other cities, from Karaj and Isfahan to Kermanshah, Shiraz, and Yazd, with university students joining in as well. Footage circulating on social media features chants against the Supreme Leader, Ayatollah Khamenei, alongside slogans in favor of the former monarchy—showing how deep the dissatisfaction runs and how social, political, and historical motives are blending within the same wave. In fact, this combination has long been present in Iran—sometimes quietly, on the margins, and sometimes openly, as we are witnessing again now.
Although the scale of these protests has not yet reached that of a classic mass uprising, it is clear that this is the most serious wave of discontent since the major protests of 2022. Different social groups are taking to the streets: merchants and craftsmen who can no longer run their businesses amid the wild exchange-rate swings; students who have for years felt the burden of economic insecurity; ordinary citizens whose wages are worth less with every passing month. On the other side are police and security forces, special units, and the Basij, who for now are responding with a combination of tear gas, attempts to disperse protests, and targeted arrests—though without the level of violence seen in some earlier episodes.
At the heart of the crisis lies the collapse of the currency and inflation officially above 40%, while in reality many basic goods are rising even faster. Over the course of this year the rial has lost nearly half its value—the exchange rate is measured in hundreds of thousands of rials per dollar, and trust in the national currency has practically collapsed. Anyone who manages to save anything immediately “flees” into dollars, euros, or gold, while traders no longer know at what price to order goods. An energy crisis, water shortages, air pollution in major cities, and outdated infrastructure further intensify the sense of hopelessness and erode the legitimacy of the entire system.
What many media outlets have failed to mention in recent days, however, is that Western sanctions continue to play a key role in this picture. For years Iran has been subjected to U.S. and European “punitive measures,” which, after a brief period of partial easing, have been intensified again. UN Security Council sanctions have also been reinstated, further restricting oil exports and access to the international financial system. In practice, this means far less foreign currency is flowing into the country, the state is plugging budget holes by printing money, and inflation has become chronic. As always, ordinary people suffer the most. The elite can more easily navigate the gray zones, using parallel exchange rates and networks inaccessible to ordinary citizens.
Whenever Iran is discussed, the question of foreign policy inevitably arises. Iran is one of the few states that has at least attempted to realistically limit Israeli aggression in Gaza, both indirectly and directly. In Gaza, tens of thousands of people have been killed in Israeli attacks, and Tehran’s responses to this are now turning into an additional burden. The war between Iran and Israel in June, U.S. strikes on Iranian nuclear facilities, the killing of high-ranking officers, and the subsequent tightening of sanctions are now being reflected in the rial’s exchange rate and the prices of basic foodstuffs.
The external dimension does not end with sanctions. Over the past two years Iran has lost part of the regional position it spent decades building. The fall of Bashar al-Assad’s government in Syria destroyed a key pillar of Iranian influence in the Arab world. In Lebanon, Hezbollah has been weakened, and the killing of Hassan Nasrallah seriously damaged the movement’s symbolic capital. Hamas in Gaza has suffered heavy blows (though it has not been destroyed), and Iran’s infrastructure within that network has been fragmented. Direct war with Israel and U.S. involvement in attacks on Iranian territory exposed certain weaknesses in Iran’s defenses. Numerous high-ranking military commanders and specialists were killed. On top of all this, the return of U.S. President Donald Trump and his readiness to threaten new strikes if Iran resumes its missile or nuclear program further heighten nervousness in the markets and among a population that pays the price through rising costs.
At home, the Iranian authorities are simultaneously trying to calm the streets and restore a minimum level of confidence in economic policy. President Masoud Pezeshkian has publicly stated that the government recognizes the protests as an expression of pressure on ordinary people’s lives, promising that the voices of the dissatisfied will be heard and solutions sought. The central bank governor has been dismissed, an older and more experienced figure has been returned to the post, and the public has been presented with a package of measures intended to stabilize the exchange rate and inflation—from subsidy reforms and vouchers for basic foodstuffs to tax relief for the poorest and pay rises for public-sector employees. There is also talk of cutting an oversized state apparatus, addressing the budget deficit, and fixing a troubled banking system. All of this sounds like an acknowledgment of the depth of the crisis and a turn toward a more grounded economic approach, but the key question remains whether the authorities have any real room to maneuver while the main sources of foreign currency are blocked.
At the same time, the classic instruments of repression remain active. Arrests have already been reported, raids on student campuses, and attacks by paramilitary formations on gatherings. Authorities periodically close public institutions and schools under the pretext of bad weather in order to reduce the possibility of assemblies. These are softer methods, but Iran’s experience shows that if protests persist and grow into broader strikes and blockades, the authorities resort to harsher responses. In previous waves of unrest, hundreds were killed in crackdowns and thousands ended up in prison, where death sentences were also handed down. Today the situation is more complex. After the war with Israel and a series of regional setbacks, the authority of the security apparatus has clearly been weakened, and internal unity among elites may be strained. For now, however, there are no signs of a split at the top. The military and the Revolutionary Guard remain the backbone of the system, and any potential cracks are not easily visible to the public.
In all of this, the question of the role of external actors in the current unrest inevitably arises. The Iranian people have every right to self-determination, to protest against poverty and injustice, and to demand change. At the same time, Iran’s history and the way great powers have used internal discontent in the country always call for additional caution. Media linked to the opposition abroad—such as structures around the MEK organization or certain satellite TV channels—are already presenting events as the beginning of the “final collapse of the Islamic Republic,” claiming that their networks on the ground are coordinating the protests. On the other hand, some protesters are indeed chanting in favor of Reza Pahlavi, the son of the last shah, which aligns with Western power centers that see the monarchist option as one possible path of transition. How real these influences are, and how much the protests stem from a genuine internal explosion of dissatisfaction that has been maturing for decades, is difficult to fully disentangle. Most likely, as many times before, two processes are intertwined. An authentic social rebellion emerging from Iranian cities intersects with the interests of those eager to exploit Tehran’s weakness to further reshape the geopolitical map of the Middle East.
It is difficult to predict where the current crisis is heading. Iran today is simultaneously bearing the consequences of a short but direct conflict with Israel, the loss of part of its regional influence, the harshest wave of sanctions, and deep internal economic erosion. Under such conditions, various scenarios are possible. The protests may gradually fizzle out if the authorities manage to offer sufficiently concrete economic relief and avoid a bloody crackdown. They may expand, connect with existing networks of labor and student dissidents, and take on a broader political character. They may also turn into yet another cycle of violent repression, after which dissatisfaction will remain, but on the surface it will appear as if everything has been extinguished. History suggests that Iranian authorities will sooner or later resort to force if they judge the threat to be too great. What remains open is whether the apparatus of coercion, after all the blows and internal wear, can still effectively control nearly ninety million people living under the pressure of sanctions, inflation, and the constant threat of a new war (there is no doubt this was a key topic of this week’s Trump–Netanyahu meeting!). It is precisely in this tension between the resilience of society and the resilience of the authorities that the key to understanding what is happening today on the streets of Tehran, Isfahan, Shiraz, and many other Iranian cities should be sought.
About the Author
