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With Iran's rial hitting fresh depths daily amid new international sanctions, it's helpful to remember how the Islamic Republic's founder viewed the economy. The late theocrat famously said it's for the donkeys.
Half a century ago, Ayatollah Ruhollah Khomeini dismissed economics as trivial. “Those who see the economy as the foundation of everything—they see man as an animal,” he said. “An animal’s foundation is its economy."
"A donkey’s foundation, too, is its economy.”
The words were meant as a rebuke to materialism, a call to put ideology and faith above worldly matters. But today, with the rial in free fall, his words feels prophetic. If the economy was fit only for donkeys, the donkey has finally brayed back.
In Iran, the value of money is measured in hours, not days. A few decades ago, a paycheck might last a week. Today, it barely stretches through the weekend. By Monday, the cash in your pocket feels lighter, not because you spent it, but because it has already lost its worth.
The rial, Iran’s national currency, has been devalued so many times that it now flutters like a useless note in the wind. Days after the reimposition of UN snapback sanctions, it trades on Iran's black market at a new low of more than 1.18 million rials to the US dollar.
The rial is no longer currency; it is confession: a declaration that the state has failed to keep its promise to protect the value of people’s lives.
A Broken Machine
Iran’s economic malaise is neither sudden nor accidental. The collapse of the rial is the product of a machine designed to fail: decades of chronic budget deficits, an overreliance on oil, institutional corruption and a governing class that treats money as both tool and weapon.
When oil revenues fall, the state reaches instinctively for the central bank, borrowing and printing money without backing.
Inflation rises; the rial weakens. Banks offer interest rates that lag far behind inflation, eroding public trust. Who, then, would save in rials? Instead, households convert earnings into safer stores of value: gold coins, real estate, US dollars.
Sanctions, too, are the invisible hand pushing Iran’s economy down. Restrictions on oil exports and banking channels cut the country off from hard currency.
Each new penalty, each geopolitical flare-up—whether a US Treasury announcement or a skirmish in the Strait of Hormuz, triggers panic. People rush to buy dollars, and the cycle repeats.
The market itself has become a theater of fear. A small uptick in the dollar can unleash a stampede. Rumors spread faster than official statements. In the currency shops of Tehran, the mere sight of a crowd can turn hesitation into frenzy.
Corruption by Design
If panic is the fuel of this collapse, corruption is its engine. Iran’s multi-tiered exchange-rate system all but invites abuse. Those with political connections receive dollars at subsidized “official” rates.
Some import nothing at all; others flip their cheap dollars on the black market. Either way, fortunes are made. The public pays the price.
This dual economy—one rate for the powerful, another for the powerless—has created a new class of profiteers: the sanctioned, the middlemen, the “dollar kings.” They thrive on scarcity. Every collapse in the rial fattens their accounts.
The Human Ledger
The first line of casualties runs straight through the Iranian kitchen. Rice, meat and fruit—staples of family meals—climb in price by the week.
Medicine, though never formally sanctioned, becomes unaffordable as the exchange rate pushes drugs beyond reach. A prescription that cost ten dollars last year now devours an entire month’s salary.
Rents rise, transportation costs surge, fuel becomes scarce. Savings—those careful stacks of rials stored for weddings, tuition or emergencies—melt like ice left on a Tehran rooftop in a hot summer.
Small manufacturers and workshops, unable to plan around daily price swings, shutter their doors. The result is a slow bleed of jobs, dignity and trust.
What remains is despair.
Young entrepreneurs who once dreamed of building companies now dream only of leaving. Pensioners find their stipends shredded by inflation. Families count coins at night and wonder how to stretch them through the morning.
Winners and Losers
The gulf between winners and losers is vast. On one side are exporters of oil, petrochemicals and metals. Every dollar they earn abroad multiplies when converted into rials.
They are joined by speculators and brokers who treat volatility as opportunity, buying and selling on rumor. And above them, perched like hawks, are those closest to power—officials and insiders who profit from the state’s controlled currencies and the rents they generate.
On the other side is everyone else. Office clerks, teachers and factory workers watch their wages dissolve.
Pensioners shrink under inflation’s weight. Small producers collapse under the cost of imported materials. Patients forgo medicine. Children see parents’ hopes dim.
The Donkey’s Reckoning
The fall of the rial is often described in the language of catastrophe—an earthquake, a storm, a collapse. But unlike those, it is no act of nature. It is a man-made disaster, engineered by structural weakness, amplified by sanctions and perpetuated by fear.
There is a cruel symmetry to it: the winners are narrow and known, the losers broad and nameless. The gains of exporters, speculators and power brokers stand in direct proportion to the losses of the public. The more the rial falls, the higher the profits for those at the top.
In the end, Khomeini’s sneer at economics has come to define the very fate of the Islamic republic he built. To treat the economy as beneath concern is to condemn it to ruin. To deride bread and butter as donkey’s business is to ensure that ordinary people bear the burden of hunger.
The rial’s collapse is not just an economic fact; it is a political one. It testifies to the bankruptcy of a system that equates survival with endurance, not prosperity. It reminds Iranians that in their country, profit flows upward, into the pockets of the few, while loss is spread thinly but cruelly across the many.
And it leaves them with a bitter lesson: you can mock the donkey all you want, but when the donkey finally collapses, it takes the cart with it.
A verdict looms for a British tourist couple tried in Iran over the weekend on espionage charges just as Tehran's relations with London plumb new lows over a European move to impose new international sanctions.
Lindsay and Craig Foreman, from East Sussex, were arrested during a motorcycle world tour in January and accused of spying - allegations they deny.
Lindsay's son Joe Bennett said the pair made a court appearance on Saturday and that a verdict was expected within days.
"Although they're mentally resilient, I think their physical health is really starting to suffer," he was quoted as saying by BBC Radio 4. Their family is "exhausted", he added, and "terrified by what may come next".
"I have nightmares thinking about how Mum and Craig can possibly be coping with this injustice, hearing false accusations, feeling helpless to be able to defend themselves, knowing that their words have been mistranslated," he added.
A UK Foreign Office representative was not allowed to attend the couple's Tehran trial on Saturday, the Guardian reported on Thursday, citing their family.
Critics and rights groups have long accused Tehran of engaging in so-called hostage diplomacy by detaining foreigners in exchange for jailed nationals abroad or economic and political concessions.
Iran denies the accusations and says it faces Israeli and Western intelligence infiltration.
France, the United Kingdom and Germany last month triggered the resumption of long dormant international sanctions on Iran which took effect over the weekend, accusing Tehran of evading its nuclear inspections. Iran denies seeking a bomb.
Three French nationals also remain in Iranian custody. Two of them, Cécile Kohler and Jacques Paris, were detained in May 2022. Iran's state TV aired a confession from the pair in October of that year in which they admitted spying charges.
Rights advocates say they are being held in torture-like conditions in Iran's Evin prison and that authorities routinely extract false admissions through physical and emotional pressure.
The last prisoner swap between Iran and a European country came when Italy freed an Iranian national wanted by the United States for allegedly supplying Tehran with drone technology in exchange for an accredited Italian journalist arrested in Iran.
''If you impose sanctions, if you threaten us, if you take any action (against Iran), our people will become stronger, more resilient,” deputy coordinator of the Revolutionary Guards’ Quds Force said on Thursday.
“The people of Tehran and all segments of the Islamic Republic will stand against the enemies with all their strength and will ultimately defeat them,” he added, speaking at ceremony in Tehran marking the anniversary of the deaths of Hassan Nasrallah, the slain Secretary General of Hezbollah, and his deputy.
Washington is seeking stiff concessions from Iran for any peace deal, the Washington Post reported on Thursday citing a US official, including curbs to its missile program and support for armed allies in the region.
Iranian officials are downplaying talk of another war with Israel and the United States but US carrier and tanker movements have sparked anxiety as weary citizens weigh readiness for a possible re-run of a punishing summer war.
Mohammad-Jafar Ghaempanah, the President’s executive deputy, told reporters after a cabinet meeting on Wednesday that Iran is “fully prepared” for any new war, though he judged it unlikely Iran's foes would “repeat the mistake”.
Ali Saeedi, head of the Supreme Leader’s Ideological-Political Office, told state media he “could not give a clear answer” on whether war will come.
“The armed forces must be fully prepared, but people should continue their lives and should not be inflamed. At present, we do not observe signs of an enemy attack.”
Flight tracking data over the weekend showed a rapid deployment of aerial refueling craft to the Al Udeid airbase in Qatar, the largest American military installation in the region.
The last large-scale movement of such assets coincided with surprise US and Israeli attacks on Iran in a brief June war. That conflict sent tens of thousands of Iranian civilians heeding Israeli warnings to flee major urban areas. Hundreds were killed.
Open-source satellite imagery and flight tracking date shows the USS Nimitz aircraft carrier and its attendant aircraft operating in the Persian Gulf and docked at Dubai's Jebel Ali port as of last month. Such port calls are largely routine.
Behnam Saeedi, secretary of parliament’s National Security Committee, rejected a link between snapback of UN sanctions and war: “Whether a war restarts or not, in the current circumstances, it has nothing to do with the snapback.”
Still, he described the situation as “not a ceasefire but a suspension of combat operations.”
Military posture: beefing up deterrence
Nour News, a news outlet close to Iran's mercurial ex-security boss Ali Shamkhani, on Tuesday framed new US deployments as a “political message” of support to regional allies and a warning to Iran that the military option is still on the table.
Chief of the General Staff Major-General Amir Mousavi declared the Army and the Revolutionary Guards maintain “extraordinary readiness for a possible future clash.”
Brigadier General Mohammad-Jafar Asadi of the Khatam al-Anbiya headquarters promised Iran would “increase the range of its missiles as far as necessary,” while maintaining that Tehran “will not initiate a war but will give a decisive response to any aggression.”
Competing calculations: low or high risk?
Journalist Hossein Yazdi assessed the probability of renewed large-scale strikes as low. He argued Iran’s nuclear sites, already hit, have not been rebuilt; Israel has extracted its revenge; and the US would likely block further escalation.
“The military phase is over,” he wrote on X, suggesting Israel is now using psychological pressure to sap Iran’s economy.
But others warn that the prospect of strikes are high.
“If you think that the deployment of this volume of armaments, refueling aircraft, fighter jets, and so on by America is random, accidental, or merely for the sake of creating fear and intimidation, congratulations," writer Mohammad-Reza Mohajer posted on X. "You are extremely optimistic, and no other event can destroy this optimism in you."
Political analyst Ali Nasri called endless speculation corrosive: “Keeping society continually struggling to ‘predict’ or ‘await’ a military attack is itself a tool of psychological warfare and collective torture of the Iranian people."
"It aims to further damage the economy and disrupt life. If there is a war, we will respond proportionately," he added on X. "For now, our challenge as citizens is to continue ordinary life.”
Street-level voices: fear, anger, fatigue
Signals of potential conflict are already being priced in Iran's moribund markets.
The rial and gold have reacted, with the dollar rate again breaking records against the prone rial and gold hitting new highs. On social media, frustration dominates.
One user lamented: “Instead of enjoying the weekend, everyone I meet talks about war and the dollar and the misery the clerics have given us!”
Another wrote: “Dollar, sanctions and the possibility of war — I really have no strength left to continue.”
