Iran to shield industry from blackouts at public's expense amid discontent

If Tehran has indeed introduced this idea in the fourth round of talks, it may represent new flexibility on the sticky point of enrichment and explain the positive assessment of both Iranian and American officials on the latest round of talks.

A commentary in the conservative Khorasan daily on Monday said the idea of creating a consortium may have been among what Omani Foreign Minister Badr al-Busaidi referred to as “useful and original ideas reflecting a shared wish to reach an honorable agreement” after the completion of the fourth round of talks on Sunday.

Some signals suggest this idea may have been quietly floated in diplomatic channels: ahead of the Muscat talks on April 11, Iran’s Foreign Minister Abbas Araghchi visited Riyadh and Doha, followed by a trip to the UAE after the talks.

The idea was originally proposed by former Iranian nuclear negotiator Seyed Hossein Mousavian and Princeton physicist Frank von Hippel long before the current Tehran-Washington talks in an October 2023 article in the Bulletin of the Atomic Scientists.

Such a body consisting of Iran, Saudi Arabia,and other interested Middle Eastern countries would oversee enrichment under international safeguards and ensure that the enriched uranium it produced would be used only for peaceful purposes, they argued.

On the eve of the April 11 nuclear talks in Muscat, Mousavian addressed the risk of failure if the US refused to acknowledge Iran’s rights under the Nuclear Non-Proliferation Treaty (NPT).

“Steve Witkoff recently made an unreasonable statement, saying that Iran cannot benefit from the right to peaceful uranium enrichment technology. This stance is a clear violation of the NPT treaty. If this is the final US position, tomorrow's negotiations... will end in failure,” he warned.

In the same post, Mousavian again floated the consortium idea: “The solution is ... the establishment of a joint nuclear consortium among the Persian Gulf countries.” He argued this would resolve the US’s contradictory stance of supporting enrichment in Saudi Arabia while denying the same to Iran.

He also hinted at a broader vision: an Iran-US economic agreement worth up to $1 trillion, involving American investment in Iran’s nuclear, fossil, and renewable energy sectors. Such a deal, he suggested, could help “open the deadlock in US–Iran relations.”

Some commentators have described the idea as a possibility for a breakthrough.

“Araqhchi's visit to Saudi Arabia and the UAE is probably not unrelated to the proposal to create a joint regional enrichment consortium,” Rahman Ghahremanpour, a commentator and analyst of Middle East politics in Tehran, posted on X.

“Iran is trying to break the deadlock on zero enrichment, and if the countries in the region agree to this proposal, perhaps the Trump administration will change its position. This is an important confidence-building measure in arms control,” he added.

Abdolreza Davari, a conservative politician who supports Pezeshkian, also supported the idea in a post on X on May 10. This, he said, would be “similar to the model implemented in Europe that supplies fuel even to the United States.”

“This consortium could be the center of regional cooperation in the areas of nuclear technology exchange, safety, environment, production of fresh water and radiopharmaceuticals, and also include a regional non-proliferation regime," Reza Nasri, another commentator in Tehran, wrote on X before Araghchi’s visit to Riyadh.

Hossein Aghaei, a Turkey-based senior security and geopolitics analyst, referred to Saudi Arabia’s wish to create a consortium in collaboration with the US and possibly Russia in a post on X on May 8. He said Iran could be a participant in the consortium to ensure it will not be able to build nukes.

However, he warned that Israel’s vision is completely different. “In the nuclear matter, Israel may not even trust Saudi Arabia, let alone the Islamic Republic.”

Iran's official strategy to jumpstart a sputtering economy must look beyond talks with Washington and address root problems, several analysts and editorials have said.

“The reality is that our economy reacts intensely to political developments,” former central bank deputy Kamal Seyyed-Ali told reporters in Tehran. “If the possibility of a full-scale war rises again, the dollar rate will once again break records.”

Seyyed-Ali, a senior economist, pointed to a March spike in the dollar-to-rial exchange rate—reaching 1.05 million—after Donald Trump warned of possible military action if Tehran refused to negotiate.

The rate dropped when talks began in Oman, then crept back up when negotiations stalled. This increasing sensitivity, he said, underscores how economic expectations in Iran have become “tethered to political headlines.”

Policymakers and markets alike, he added, are behaving as if diplomacy with Washington will dictate the fate of the economy.

The hardline daily Kayhan recently questioned the government’s economic strategy, asking in a published commentary: “What is the government doing besides negotiating with the United States?”

The paper argued that diplomacy should be a tool to improve economic performance, not a substitute for internal reform.

Inflated hopes for a post-deal recovery have masked structural failings—among them, a banking system in crisis, outdated industry, underinvestment in agriculture, and widespread dysfunction in pensions and public services.

Repeated blackouts caused by power shortages have disrupted everything from water distribution to digital connectivity, triggering price hikes in housing, transport, and healthcare.

Energy Minister Abbas Aliabadi admitted in April that Iran’s power plants can generate only 65,000 megawatts against annual demand of more than 85,000. A vicious cycle compounds the problem: water shortages disable power plants, while power cuts prevent water distribution.

Citizens have voiced growing anger through Persian-language media abroad. Callers to Iran International describe how outages in major cities now affect phone signals, Internet access, and even access to clean water.

The latest round of US sanctions targets the petrochemical sector—already plagued by multi-billion-dollar corruption scandals. While the judiciary has acknowledged these cases, many remain suppressed or unresolved, a fact critics say reflects both impunity and systemic failure.

Despite poor growth and repeated economic shocks—Iran’s industrial output contracted 1.6% in January—officials continue to blame sanctions alone. Few in power acknowledge the depth of mismanagement. Instead, each government accuses its predecessor, avoiding accountability as public frustration mounts.

Even if sanctions are eased, economists say, Iran’s crisis will not be resolved by diplomacy alone. Without tackling the roots—corruption, dysfunction, and decay—any recovery will be fragile, temporary, and externally dependent.

During a visit to Moscow Iran’s Oil Minister announced that Russia has agreed to export 55 billion cubic meters (bcm) of gas annually to Iran, claiming that this would turn Iran into a regional gas hub.

Mohsen Paknejad said on April 25 that various routes were considered and it was finally agreed that the gas would be delivered via land through the Republic of Azerbaijan, with Russia’s gas handed over to Iran in Astara.

While the Mozdok–Baku pipeline can transfer Russian gas to Azerbaijan, and the Baku–Astara pipeline can transport it to Iran, the combined daily capacity of these pipelines is only about six million cubic meters per day (mcm/d).

By contrast, Iran faces a gas shortfall of approximately 150 mcm/d during warmer months—rising to double that amount in colder seasons.

This means that the proposed Russian gas deliveries to Iran would not even cover a small portion of the country’s gas deficit—let alone turn Iran into a regional gas hub.

Paknejad has described this as the “first phase” of the gas deal, implying that new pipelines will be required to realize the full annual export volume of 55 bcm, which equals around 150 mcm/d.

The key issue here is that Gazprom, Russia’s state-run gas company meant to supply the gashas suffered massive losses of $18 billion over the past two years after losing its European markets following Russia's full-scale invasion of Ukraine.

Gazprom lacks the funds to complete an even more politically desirable “Power of Siberia 2” pipeline to China designed for the same annual capacity of 55 bcm.

Building a new pipeline connected to Russia’s main gas transmission network to deliver gas to Iran would require a stretch of at least 1,000 kilometers, demanding more than $10 billion in investment. If the pipeline were to cross the Caspian Sea, the cost could exceed $20 billion.

Another crucial point is that to become a regional gas hub, Iran must receive large volumes of gas from Russia and sell it to neighboring countries.

But Turkey already receives Russian gas directly via two pipelines, and most of Iran’s other northern and southern neighbors are gas producers or exporters themselves. Iran’s only potential customers would be Iraq, Pakistan, and Afghanistan.

Iraq plans to eliminate its need for gas imports within the next few years. Pakistan, despite a gas deal with Iran signed in 2009, has not built the pipeline due to sanctions.

Under the current contract, Iran would export only 7.5 bcm annually to Pakistan—raising questions about what Iran plans to do with the rest of the gas received from Russia.

Iran suffers from a gas deficit of 150 mcm/d in summer and 300 mcm/d in winter, and it could use Russian gas to meet its domestic needs.

However, 55 bcm of gas is worth around $15 billion, and Iran simply doesn’t have the money to pay for such a massive volume of gas. Even if it did, the government would need to provide enormous subsidies for its domestic use, given that gas prices in Iran’s domestic market are extremely low.

To illustrate, the Iranian government plans to sell 240 bcm of gas to the domestic market this year, earning only about 3,300 trillion rials in revenue—which, at the current exchange rate, amounts to less than $4 billion.

More Hollow Claims of New Oil Deals

Iran’s oil minister also announced that $4 billion in oil contracts have been signed with Russian companies.

Over the past two decades, Russian firms have signed more than a hundred contracts and memoranda of understanding (MoUs) with Iran, but almost none of the projects have ever gotten off the ground.

Paknejad provided few details, merely stating that “four contracts worth $4 billion have been signed with Russian companies for the development of seven oil fields.”

However, three years ago, Mohsen Khojastehmehr, then-CEO of the National Iranian Oil Company, made a similar announcement, saying that “contracts with Russian companies for the development of seven oil fields, worth $4 billion, have entered the operational phase.”

This strongly suggests that the contract Paknejad is referring to had already been signed years earlier—yet no action has been taken by the Russian side, contrary to Khojastehmehr’s assertions.

Back then, Iran and Gazprom had also signed 40 oil and gas memoranda of understanding, none of which led to any contracts or actual projects.

At the time, Iranian oil officials under President Ebrahim Raisi described the MoUs as being worth “$40 billion”, calling them “the largest deal in the history of the country’s oil and gas sector.”

Unlike formal contracts, MoUs do not carry any binding legal obligations, nor do they typically have a defined financial value—they are merely frameworks for studies and future negotiations aimed at signing actual contracts.

"This year, we will definitely pursue the removal of zeros," Farzin told an annual monetary and foreign exchange policy conference in Tehran. "It has been tried in about 70 countries such as Russia, Turkey, and Germany, and proven effective when implemented at the right time."

The announcement marks the clearest signal yet that Iran is moving forward with the redenomination plan first proposed in 2019 and approved by parliament in 2020.

The new currency system would peg one toman to 10,000 rials, aligning official usage with the informal practice already common among Iranians, who long abandoned the rial in everyday transactions.

Farzin stressed that the plan is being accompanied by broader reforms in the banking system, following the ratification of new legislation earlier this year.

"This is a year of transformation," he said. "We are moving from an old model of banking governance to a new one, underpinned by a series of newly approved laws and regulations."

Still, the move comes amid persistent economic headwinds. Iran’s inflation rate has hovered above 40% in recent years, and the national currency has lost more than 95% of its value over the past four decades.

A 10,000-rial note, once worth around $150 before the 1979 revolution, is now valued at less than 10 US cents.

Critics argue that striking zeros from the currency without addressing Iran’s underlying economic challenges—such as fiscal imbalances, monetary instability, and international sanctions—may prove cosmetic.

“The problem is not the four zeros, but the persistent inflation and monetary mismanagement,” economist Jamshid Assadi said in an earlier analysis. “Without reforms to central bank independence, fiscal discipline, and financial transparency, the redenomination will not have a lasting effect.”

Past experiences in countries like Zimbabwe, Venezuela, and Argentina have shown that currency redenominations alone do little to stabilize economies without deeper structural reforms. Conversely, countries such as Turkey and Germany only succeeded after implementing broad fiscal and institutional changes.

Iran’s caretaker Economy Minister Rahmatollah Akrami echoed some of these concerns at the same conference on Monday, warning that limited independence of the Central Bank, unclear inflation-targeting frameworks, and a lack of transparency have all contributed to Iran’s recurring macroeconomic instability.

“The effectiveness of monetary policy tools is limited in the absence of institutional strength,” Akrami said, urging a “redefinition of the Central Bank’s role” within Iran’s economic governance.

The new currency rollout is expected to span up to a few years, during which both the rial and the toman will circulate simultaneously. The Central Bank will oversee the withdrawal of rial notes and coins and their replacement with the new toman units.

While the psychological effect of dealing with smaller numbers may ease some frustrations for the public, analysts warn that without tackling deeper problems—such as rising liquidity, declining purchasing power, and a weakening private sector—the benefits of redenomination will be limited.

As global sanctions continue, not only for Iran's nuclear program, but for the country's human rights abuses and support of Russia's war on Ukraine, the economy is in its worst condition since the founding of the Islamic Republic.

Over one third of Iranians live below the poverty line with unemployment plaguing the population.

“The real question is whether this is meaningful reform—or just another economic shock dressed up as policy,” wrote Iran’s Jahan-e Sanat daily back in 2019 when the reform was first proposed.

Some warn that President Donald Trump is unpredictable and may change course at any moment; others go further, calling the talks a trap. There are even accusations of insider sabotage, with fingers pointed at those said to benefit from continued sanctions.

What are the doubters saying?

“The US government will block the lifting of sanctions on Iran’s oil sales and international banking,” vocal conservative analyst Foad Izadi asserted in an interview with the Didban Iran news outlet on Thursday.

Even if a deal is signed, Izadi warned, meaningful sanctions relief is unlikely because an entrenched hawkish faction in Washington is at work to undermine any agreement.

Recent comments by President Trump and his team—along with interventions from the likes of Senator Ted Cruz and Representative Mike Lawler—appear to have deepened concerns in Tehran, pushing hardliners like Izadi to break their begrudging silence.

“The Americans may attack Iran even in the middle of talks or afterward if they believe the costs of doing so are minimal. They did the same to Libya,” the US-educated pundit added.

What's the connection to Libya?

Slain Libyan leader Muammar Gaddafi gave up the North African nation’s nuclear and missile program in 2003 to improve ties with the West.

But in Tehran’s view he was betrayed once popular protests broke out in 2010, morphing into an armed revolution backed by NATO air strikes culminating in Gadaffi's grisly killing by rebels.

“Some Iranian politicians believe that if we abandon our nuclear and missile development programs, the US will treat us as favorably as it treats Saudi Arabia,” former MP Elias Naderan told Khabar Online on Thursday.

“But in reality, they will treat us just as they treated Syria and Libya.”

As long as the Islamic Republic is in conflict with Israel, there will be no rapprochement with the United States, Naderan asserted.

His comments signal a return to older hardline rhetoric that equates disarmament with vulnerability in the face of unwavering hostility from the US, hastening the downfall of the theocracy.

Who is being accused of sabotage?

Some moderate and centrist are accusing former security chief Ali Shamkhani of leaking confidential details about the ongoing talks.

The accusations have found more relevance because Shamkhani’s son is allegedly involved in exports of Iranian oil and his business could suffer, according to his critics, if sanctions are lifted.

Earlier this week, a website with links to Shamkhani published a report with some details from the ongoing talks between Tehran and Washington—including a claim that the US government had accepted that Iran does not possess nuclear weapons.

“Shamkhani’s disclosure … has fueled pressure from US neoconservatives on Trump and his Middle East envoy Steve Witkoff, thereby jeopardizing the negotiations,” centrist outlet Entekhab wrote in an editorial.

What do the critiques mean?

While Tehran continues its cautious diplomatic engagement with Washington, these public statements reflect a fractured elite struggling to agree on whether diplomacy is a shield or a trap.

The resurfacing of Libya parallels, warnings about war, and accusations of sabotage all point to a deeper anxiety about the outcome of the talks—and the fate of the Islamic Republic.