Sanctions snapback augurs deeper pain for Iran's ailing economy

Iran has charged a comedian over a satirical sketch mocking Ferdowsi, the 10th-century poet behind the epic Shahnameh, after the performance provoked uproar across society.

The sketch, which recited verses of the Shahnameh with irreverent commentary, drew condemnation online and from prominent cultural figures who called it an insult to Iran’s heritage.

The Shahnameh, chronicling Iran’s mythical past and heroic kings, is widely regarded as a cornerstone of national identity.

The comedian at the center of the storm, Zeinab Mousavi—known by her stage name Empress Kuzcooo—said she had not intended for the recording to circulate.

But prosecutors accused her of producing “offensive content”, framing it as an insult to Ferdowsi and a provocation to public sentiment.

‘Symbol of noble land’

The move appears aimed at rallying patriotic sentiment in the aftermath of the June war with Israel—underscored by interventions from hardline corners not usually associated with nationalist discourse.

Tasnim, a news agency affiliated with the Revolutionary Guards, cast the affair in those terms.

“Hostility toward Iran is one of the round-the-clock activities of Zionists and their agents. Just as the brave Iranian people defended the country against attacks from the United States and Israel, they will also defend the symbols of this noble land.”

Mousavi told Rouydad24 that the YouTube program scheduled to air the sketch had promised to cut the segments, and she was unaware of their circulation on social media.

“Comedy has no boundaries,” she said. “I have harmed no one.” She did not issue an apology.

Clerics vs Ferdowsi

Some hardline Shia clerics have long viewed Ferdowsi with disdain over the Shahnameh’s anti-Arab verses and his praise for pre-Islamic monarchy.

Under their influence, murals depicting scenes from the epic were removed from Mashhad, and a statue of Ferdowsi was blocked from installation at Ferdowsi University.

Supreme Leader Ali Khamenei, however, has downplayed these objections, presenting Ferdowsi as a devout Shia and framing the Shahnameh as consistent with Islamic thought.

Critics call the state’s current posture opportunistic.

“Until yesterday they were erasing Shahnameh murals,” wrote one user, Soroush. “Now, to preserve the regime in wartime, they wave nationalist symbols. Tomorrow they might even parade Achaemenid soldiers.”

Since the 12-day war with Israel and the United States, officials have leaned heavily on patriotic messaging, even infusing this year’s Muharram mourning ceremonies with nationalist songs and imagery.

Free speech debate

Mousavi, a 35-year-old software graduate, is no stranger to controversy. Her biting humor, scathing critiques of clerics and politicians, and occasional sexual references have repeatedly attracted the authorities’ attention.

She has been arrested several times on charges such as “insulting religious sanctities,” often over satire targeting compulsory hijab laws.

Her Instagram account was deleted in 2022 after she mocked President Ebrahim Raisi’s televised prayers in Moscow.

The case has reignited debate about freedom of expression and the limits of satire in Iran.

“Insulting Ferdowsi and his enduring masterpiece, the Shahnameh, is an affront to our cultural roots. It deserves criticism, but the response should not be prison,” wrote reformist politician Azar Mansouri on X.

“Judicial punishment neither builds culture nor fosters respect.”

Journalist Milad Alavi echoed the point: “Zeinab Mousavi’s jokes about Ferdowsi were at times offensive, but they were not a crime. Criminal prosecution undermines freedom of expression and erodes the rule of law.”

The sharp drop extends a steady decline in the rial over recent weeks. Currency dealers quoted the dollar at around 1,030,000 rials on the open market, according to local reports, compared to 957,000 rials last week.

Reuters has reported that Britain, France and Germany could begin the snapback process as early as Thursday after Iran failed to resume talks or restore cooperation with the International Atomic Energy Agency. The three countries set a late August deadline earlier this month.

Markets react to snapback risk

The currency’s continued slide has heightened concerns among traders and the public, as sanctions could further restrict Iran’s access to global markets and increase pressure on imports, inflation, and employment.

Once triggered, the snapback process leads to the automatic reimposition of UN sanctions after 30 days unless the Security Council adopts a resolution to continue lifting them — a step that any permanent member can veto.

The measures would freeze Iranian overseas assets, ban arms deals with Tehran, and penalize missile development activities. They could also affect oil sales to China, one of Iran’s top customers.

Earlier this month, Iran International reported that Iran’s Intelligence Ministry has warned senior officials and companies to prepare for renewed economic disruptions. Confidential guidance cited risks of "severe currency fluctuations, reduced purchasing power, increased unemployment, layoffs, and heightened social discontent."

Business group warns of worst-case currency spike

Iran’s Chamber of Commerce this week published a report forecasting three scenarios for the economy in the event of snapback sanctions. In its most pessimistic case, the rial could fall to 1.65 million per dollar, with annual inflation reaching 90 percent by the end of the year. Economic growth was projected to remain negative under all scenarios.

Time running out

The current UN resolution allowing use of the snapback mechanism is set to expire on October 18. Russia, which will assume the rotating presidency of the UN Security Council that month, has floated proposals to extend the measure. After the resolution expires, any future effort to restore UN sanctions would likely face a veto from China or Russia.

Under the existing mechanism, any party to the 2015 nuclear deal can initiate snapback by notifying the Security Council of Iranian non-compliance. Sanctions would then be automatically reinstated after 30 days unless the Council votes to continue lifting them — a step that can be blocked by any permanent member.

In recent weeks, Iran has made only limited diplomatic efforts to prevent that outcome. Foreign Minister Abbas Araghchi said last week that talks alone were unlikely to avert further escalation, noting that negotiations had been ongoing when the June conflict with Israel erupted. “Sometimes war is inevitable,” he said in an interview with state media.

The IAEA, meanwhile, has called for inspections to resume “as soon as possible.” Inspectors were recently present to observe fuel replacement at the Bushehr nuclear reactor, operated with Russian support, but broader access to key enrichment and research sites remains suspended.

Mohammad Sadr, a member of Iran's Expediency Council appointed by Supreme Leader Ali Khamenei, suggested that Russia may have provided Israel with Iranian air-defense intelligence from prior conflicts, including a limited Israeli strike in November 2024.

According to Sadr, this could have enabled Israel to precisely target Iranian defense sites during a 12-day war in June. He was speaking in an interview published on Sunday by online outlet Seenergy — a lesser-known podcast channel dedicated to foreign policy and energy issues.

“I’m telling you, analytically, that the Russians had given the specifications to Israel,” Sadr said, but suggesting he was also in possession of information on the matter.

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Iran's judiciary announced on Wednesday that the Tehran Prosecutor's Office has filed charges against him for "making false statements," in a possible sign of officialdom's keenness not to upset one of Iran's few strong foreign relationships.

Sadr, a former senior deputy foreign minister under reformist President Mohammad Khatami, is one of the very few reformists Iran's Supreme Leader Ali Khamenei has ever appointed as a member of the Expediency Council.

He also criticized Russia's sale of the S-400 system to Turkey, a NATO member, and a delay in delivering the Sukhoi Su-35 fighter jets to Iran.

According to Sadr, these developments prove that the so-called Iran-Russia 20-year strategic partnership is “hollow and empty.”

He argued that Russia’s willingness to prioritize other international partnerships, including its defense deals with India and cautious approach toward Israel, highlights the limits of Moscow’s commitment to Tehran.

While he stressed that relations with Moscow should not be severed, he warned against placing too much trust in it. Sadr emphasized that Iran must maintain strategic autonomy, diversify its defense and diplomatic relationships, and be wary of over-reliance on a partner whose interests may not align with its own.

Hardliner furor

The controversial remarks were widely covered by domestic media and drew immediate reactions, including a denial by the Foreign Ministry and criticism from the ultra-hardline Kayhan daily and conservative Farhikhtegan.

Foreign Ministry spokesman Esmail Baghaei emphasized that Sadr’s views were personal opinions and did not necessarily reflect official policy.

Kayhan, funded by the Supreme Leader’s office, dismissed Sadr’s remarks, writing: “If Russia had not called the snapback mechanism illegal, and if it were not confronting the United States in Ukraine, and if it had not defended Iran at the United Nations, and so on, the reformists would not be spouting this nonsense. Many of these reformists oppose any current that stands against America.”

The article was referring to the so-called snapback of international sanctions which European powers are due to trigger soon which could seriously hurt Iran's already ailing economy.

Mashregh News, reportedly linked to the Revolutionary Guard Intelligence Organization (SAS), also criticized Sadr, saying he portrayed the situation as a gain for Israel while voicing anti-Russian rhetoric without offering supporting evidence.

“Making such statements—even if they contained a grain of truth, which Sadr’s unsubstantiated approach clearly undermines—serves no purpose other than fueling tensions in international relations,” Mashregh wrote.

Growing scrutiny over Russia’s commitment

While long considered a staunch ally by Iranian hardliners, Russia came under scrutiny from Iranian media figures, former diplomats and politicians who argued that Moscow’s support for Iran during the 12-day war fell short of meaningful military backing.

Earlier in August, hardline Expediency Council member Mohammad-Hossein Saffar-Harandi claimed that Russia had knowledge of Israel’s plans to topple the Islamic Republic before Israel’s strikes in June but did not inform Iran, highlighting concerns over Moscow’s commitment.

Such an explicit accusation of Russian cooperation or intelligence-sharing with Israel against Iran, however, had never been publicly raised by any official. This made Sadr’s remarks, as the first public statement of its kind by a leader-appointed member of the Expediency Council, unusually rare and sensitive.

Iranian-designed attack drones have been increasingly deployed by Moscow in Ukraine, but Russian military help has been elusive as Iran has suffered harsh blows from Israel and the United States.

The controversy comes amid growing scrutiny of Russia’s broader foreign policy priorities, including its expanding defense ties with other countries.

The contrast between Russia’s limited support for Iran and its robust defense cooperation with other countries is stark.

Following the 12-day conflict with Israel, Moscow finalized a deal to provide India with 117 Su-35 fighter jets and joint production of the Su-57 stealth aircraft, including full technology transfer—capabilities Tehran has long sought but has yet to secure.

Critics argue that Moscow’s military entanglement in Ukraine coupled with its cautious approach toward Israel, reflects limits to its commitment to Iran—raising questions about how dependable Russia is as a strategic partner.

The country is already grappling with one of the worst water crises in the Middle East, with more than 300 cities currently experiencing water stress according to official statistics.

Former Agriculture Minister Isa Kalantari put the situation starkly in an interview with the Entekhab newspaper, saying the agricultural sector consumes 77 billion cubic meters of water annually—85–90 percent of Iran’s total water withdrawals—producing $40 billion in output but imposing an environmental cost of $44 billion.

A political push for food independence

Since the Islamic Revolution, food self-sufficiency has been treated as a pillar of economic independence. This strategy gained momentum during the 1980–1988 Iran–Iraq War and amid international sanctions.

“Tensions in foreign policy have led the state to treat food sovereignty as a security issue; this approach, instead of promoting genuine development, has merely resulted in the unchecked expansion of agriculture,” said Morad Kaviani-Rad, professor of hydro-politics at Tehran University, in an interview with Entekhab.

Kaviani-Rad said that Iran’s Planning and Budget Organization recognized as early as the 1950s that the country lacked the natural capacity for full agricultural self-sufficiency and should instead prioritize industrialization.

Nevertheless, Supreme Leader Ali Khamenei has repeatedly called for increased domestic food production and population growth. In a 2021 speech, he said Iran could feed four times its current population with existing rainfall if resources were managed properly.

The emphasis on food self-reliance and export-oriented agriculture has long drawn criticism from experts.

“Failing to understand the subtle yet strategic difference between ‘food self-sufficiency’ and ‘food security’ ... will destroy agriculture, the economy, water, land, natural resources, farmers’ livelihoods and the security of an entire nation,” warned Kaveh Madani, a leading Iranian environmentalist, in a December 2023 post on X.

Water-intensive exports deepen the crisis

Despite mounting evidence, Iran’s agricultural expansion continues largely unchecked, with subsidies and government incentives still promoting cultivation of thirsty crops for export, a practice often described as “exporting virtual water.”

Pistachios, for example, earned $1.5 billion in export revenues in the year to March 2025 but require 5,000–7,000 cubic meters of water per hectare annually. They are mainly grown in Kerman province, one of Iran’s driest regions, where over-extraction has led to aquifer depletion and land subsidence.

According to Iran’s Trade Promotion Organization, agricultural products accounted for approximately 12 percent of the country’s non-oil exports in the year to March 2025, underscoring their economic significance.

This year’s severe drought and worsening water shortages in areas including Tehran, however, have amplified warnings about growing water-intensive crops for export.

"Just as the reservoirs are one by one approaching zero, truckloads of cucumbers, watermelons, and potatoes are being shipped to Iraq and Russia," wrote Iranian journalist Azadeh Mokhtari in Rokna News on August 22. "This isn't called export; it's called an emergency outflow of the country's water resources—with no return."

"The government has decided to increase the price of unleaded gasoline, which is primarily used by luxury vehicles," Mohsen Hajimirzaei, chief of staff to President Masoud Pezeshkian, said on Monday night.

Hajimirzaei added that the decision was delayed to address concerns about its impact on those whose livelihoods depend on unleaded fuel, in a likely reference to taxi drivers.

"To eliminate worries over the price hike’s effect on vulnerable groups, the decision took considerable time."

Price increases tend to make other fuel types more costly, economic analysts speaking to Iranian state TV and Persian-language outlets abroad said, adding that they also generally drive up the cost of goods and services.

Previously, President Pezeshkian had proposed reducing the gasoline quota for low-income households while capping allocations for wealthier families.

Typically, fuel price increases are accompanied by a quota system for subsidized gasoline, where consumption beyond that quota is charged at higher rates.

Defending the move, Hajimirzaei said government subsidies could no longer be justified.

"We decided to import unleaded gasoline at a cost of $3.5 billion. It cannot be sold cheaply. Owners of new luxury cars will have to pay international prices," he told the Iranian Students' News Agency

Hundreds killed in 2019

The memory of November 2019 looms large, when a gasoline price hike sparked protests in over 110 cities and attacks by security forces on demonstrators claimed hundreds of lives.

Although that decision had been jointly made by the heads of the executive, legislative and judiciary branches, none accepted responsibility once unrest erupted.

Several Iranian outlets, including the reformist Rouydad24, warned on Tuesday that the unleaded gasoline price hike could fuel inflation and intensify financial pressure on middle- and lower-income groups. Serious unrest could recur, the outlet warned.

At the same time, serious challenges abroad further darkened the outlook.

Parliament speaker Mohammad Bagher Ghalibaf warned on Tuesday that Iran would abandon military restraint and open new battlefronts if war with Israel reignites.

"In the next possible war, our restraint will end," he declared in parliament, adding that "New geographic areas and targets will be added to our response. And if the enemy overreaches again, the war could expand into economic and political arenas as well."

This statement strongly suggests that Iran may target shipping lanes in the Persian Gulf and strike neighboring countries—reminiscent of its actions during the 1980s Iran-Iraq War, when it attacked oil tankers and launched missiles at Kuwait and the United Arab Emirates, often without claiming responsibility.

The move could send global oil prices soaring but also restrict Iran's own foreign trade, exacerbating already deep economic problems.