It's the economy: grim livelihoods explain Iranian anger

Officials say the payments are meant to offset the elimination of a subsidized exchange rate previously used to import essential goods, a policy shift that has already pushed prices higher.

Under the plan, the government would issue monthly coupons worth one million tomans—about $7 at the open-market rate—to every Iranian.

Some economists have questioned whether the measure can achieve its stated aim.

In an editorial published on January 5, the daily Setareh Sobh described the policy as an “economic gamble,” warning that similar efforts in the past had failed to stabilize prices or restore public confidence.

The paper noted that Iran’s currency has lost roughly 20,000 percent of its value since the 1979 revolution, when the dollar traded at seven tomans.

“This devaluation,” the daily wrote, “is the result of policies such as hostage-taking, hostility toward the West and Israel, mismanagement and the exclusion of experts from parliament and government.”

Questions of feasibility

Mahmoud Jamsaz, a leading Iranian economist, went further, arguing that the handouts risk aggravating the very pressures they are meant to relieve.

“Under current conditions,” he wrote, “the president knows very well he lacks the executive power even to pay government employees’ salaries.”

The government has acknowledged inflationary risks. Fatemeh Mohajerani, a government spokeswoman, told reporters on Sunday that the policy could raise prices of some essential goods by 20 to 30 percent.

Labor Minister Ahmad Maydari said the payments would be issued as coupons redeemable for basic commodities, rather than cash transfers, in an effort to limit price pressures.

Still, critics question whether the state has the fiscal capacity to sustain such a program, particularly as tax revenues are already under strain.

A broader breaking point

Public reaction has been largely dismissive.

On social media, many pointed to continued protests despite the announcement, stressing that rising prices were only one factor behind demonstrations that have spread across more than 200 cities and towns.

Sociologist Taghi Azad Armaki told the Shargh newspaper that the unrest reflected “accumulated, unresolved social and political challenges,” adding that economic hardship had exposed deep divides within Iranian society.

“These gaps,” he said, “have eroded the government’s social capital and heightened concerns about the country’s future.”

Reformist commentator Abbas Abdi echoed that concern in Etemad, warning that Iranian society had reached a critical threshold. “Society has a breaking point,” he said, “and Iran is rapidly approaching it.”

Even Iran’s tightly controlled press has increasingly described the demonstrations as political in character, reflecting broader dissatisfaction with governance rather than price levels alone.

For now, the government appears to be betting that targeted relief can buy time. Whether it can ease public anger—or instead accelerate inflation while leaving deeper grievances unresolved—remains uncertain.

The Human Rights Activists News Agency said it had confirmed the deaths of seven protesters over the past 24 hours, including people killed in Azna, Marvdasht and Qorveh.

Of the 29 confirmed fatalities, two were members of Iran’s security forces. At least 64 protesters were also reported wounded, mainly by pellet and plastic bullets.

Iran International has independently identified 21 victims so far through interviews with relatives and friends.

Protests and strikes continued nationwide for a ninth day despite an intensified security presence and the use of live ammunition in some areas.

Verified data show that demonstrations, street rallies or labor strikes took place in at least 257 locations across 88 cities in 27 provinces. Protests were also reported at 17 universities, HRANA said

The report added that at least 1,203 protesters have been arrested so far, though the actual number is believed to be higher.

Mass arrests were reported in cities including Bojnord, Qazvin, Isfahan, Tehran, and Babol, with students among those detained.

HRANA said internet disruptions, security restrictions, and limited access to independent sources continue to hinder full verification of casualties and arrests.

Following a US attack on Venezuela on January 3 and the arrest of Maduro, its economic muddle is unchanged. Unpaid debts, legal claims and arbitration rulings total between $150 billion and $170 billion.

The scale of liabilities far exceeds the capacity of Venezuela’s collapsed economy, casting doubt on whether creditors will recover their losses.

Iran is among the countries exposed to the fallout. Analysts say the Islamic Republic is not just a conventional creditor but potentially one of the main financial losers of any transformational change in Caracas, especially as it is sanctioned by the United States.

Over nearly two decades, Tehran spent around 2 billion of dollars in Venezuela according to Iranian media.

The economic projects ranged from joint automobile production projects launched in 2007, housing schemes estimated at about 23,000 units, banking cooperation and oil and logistical exchanges carried out under sanctions.

Iran also used Venezuela as a political and logistical base to bypass international sanctions and advance regional objectives.

According to Heshmatollah Falahatpisheh, a former head of Iran’s parliamentary national security commission, Venezuela's debts to Iran reflect only officially recorded investments and assistance.

No estimates exist for the value of undeclared financial flows linked to what the US calls smuggling networks or military and security cooperation between the two allies, due to their classified nature.

Venezuela’s debt crisis dates back to large-scale nationalizations carried out between 2007 and 2012 under Hugo Chávez and the early years of Maduro’s rule, when foreign oil, mining and industrial assets were seized. Western companies later secured arbitration rulings, which Venezuela failed to pay.

From 2018 onward, US courts recognized those rulings as enforceable debt, allowing creditors to pursue Venezuelan assets abroad. Venezuela’s first bond default in 2017 accelerated the crisis, with unpaid principal and interest accumulating into tens of billions of dollars.

The International Monetary Fund estimated Venezuela’s nominal GDP at about $82.8 billion in 2025, far below its total external debt. Creditors have since focused on foreign assets, particularly Citgo Petroleum in the United States, whose ownership has been contested in US courts since 2019.

With Maduro removed from power, Venezuela’s debt case has moved out of political limbo. However, it is unlikely that losses tied to Iran’s investments in Venezuela will be recovered through US courts, given Iran’s own sanctioned status and the scale of competing claims.

Popular unrest is not unfolding in isolation. It comes amid sustained external pressure, legal constraint and strategic exposure that have narrowed the Islamic Republic’s room for maneuver.

The protests are best understood not as a discrete domestic episode, but as the internal manifestation of a broader convergence: sanctions enforcement, legal isolation, military attrition and fiscal strain now intersect more directly with the regime’s ability to manage society.

At the center of this convergence lies a structural tension.

Tehran has long prioritized the maintenance of its coercive apparatus as the ultimate guarantor of regime survival, assuming it could continue to fund and mobilize those forces even as the wider population absorbed economic pain. The present unrest tests that assumption.

The question is no longer simply whether the state can repress protest—it has done so repeatedly—but whether it can sustain that approach under prolonged economic pressure.

The war that reshaped Iran’s strategic landscape

In June 2025, the Islamic Republic faced sustained direct military action against core elements of its nuclear and missile infrastructure, followed not by rapid diplomatic de-escalation but by heightened scrutiny and enforcement.

While Tehran avoided immediate escalation beyond the conflict, the war unsettled long-standing assumptions about deterrence, sanctuary and escalation control.

In its aftermath, the state’s survival was framed domestically as vindication. Yet continuity did not amount to recovery. Vulnerabilities exposed by the war could not be addressed simply through rebuilding or rhetorical reaffirmation.

Iran’s leadership has often equated endurance with strategic success. In this case, endurance masked erosion. The post-war environment became more constrained, not more permissive.

Sanctions and their toll

The reactivation of pre-2015 United Nations sanctions through the snapback mechanism in September 2025 constituted a second rupture—less visible, but no less consequential.

These measures reimposed binding legal constraints independent of the JCPOA framework.

Whatever Tehran’s posture toward negotiations, its obligations under revived Security Council resolutions and the Nuclear Non-Proliferation Treaty remain formally intact.

Iran’s refusal to comply with inspection-related understandings, alongside renewed threats to withdraw from the NPT, reflected a strategy of legal brinkmanship. But brinkmanship has limits.

Snapback has proven difficult to circumvent, constraining access to finance, insurance and energy markets. Even states inclined to engage Iran have struggled to shield it from the broader effects of renewed enforcement.

These constraints have translated into economic pressure. The protests now visible across Iran are therefore not only political acts; they are also the social consequence of legal and economic containment.

Missiles and strategic trade-offs

Under this pressure, Tehran has prioritized strategic reconstruction, particularly in its ballistic missile program. Facilities linked to missile development and solid-fuel production have shown signs of renewed activity, even as nuclear infrastructure remains under close scrutiny.

This reflects a belief that missile capability can restore leverage by raising the costs of external pressure.

Missile reconstruction aims to reconstitute coercive leverage and recover lost influence. Yet the strategic context has shifted. Measures once tolerated as incremental are now interpreted as preparatory, intensifying scrutiny and compressing decision timelines.

The domestic trade-offs are significant. Resources directed toward military-industrial reconstruction are resources unavailable for economic stabilization or social relief.

Iran’s rulers appear to have judged that sustaining coercive capacity outweighs the risks of popular discontent—a calculation that depends on continued loyalty within the security apparatus, even as economic conditions worsen.

A narrowing set of options

During the war, US President Donald Trump publicly raised the prospect of regime change—not as declared policy, but as a conceivable outcome should Iran prove unable to govern or stabilize the country.

While ambiguous, the remarks widened the range of interpretations available to Tehran.

As protests spread, that signalling evolved. In early January, Trump warned that violent suppression of peaceful protesters would provoke an American response. The emphasis shifted from missiles and enrichment to repression itself.

Taken together, these statements suggest a growing linkage in US rhetoric between Iran’s internal conduct and its external confrontation, though how far this would translate into policy remains uncertain.

For a system long reliant on compartmentalization—treating internal repression and external escalation as separate domains—this rhetoric further narrows room for maneuver.

Repression now carries not only domestic costs, but potential external risk.

Resilience—and its limits

None of this points to inevitability. The Islamic Republic has weathered previous crises, including acute pressure in 2009 and again in 2022, through repression, fragmentation of opposition and strategic patience.

Those precedents caution against linear narratives of collapse.

Yet the present unrest differs in one important respect: it is embedded in sustained economic degradation rather than episodic political mobilization. Repression can suppress protest, but it cannot substitute for economic viability indefinitely.

In 1978, prolonged disruption in Iran’s oil sector did not immediately bring down the state, nor did repression collapse. What faltered was the state’s capacity to function as revenues declined and administrative coherence eroded.

The parallel should not be overstated. But it underscores a familiar pattern: regimes rarely fail at the height of coercion; they falter when the material foundations of governance erode to the point that authority can no longer translate power into control.

Whether the Islamic Republic is approaching such a threshold remains uncertain. What is clearer is that its margin for error has narrowed. The 12-day war did not end Iran’s confrontation with its adversaries, it reshaped it.

The unrest now visible across the country is not separate from that confrontation—it is one of its most consequential domestic expressions.

Fatemeh Mohajerani said the increase was the result of the government’s decision to end subsidized dollars for essential imports in an effort to stabilize the foreign exchange market and curb corruption, a move that has pushed up the local-currency cost of imports of goods and raw material.

“It is evident that by ending or reducing subsidized and preferential official foreign currency exchange rates, the prices of some items will rise,” she said.

Earlier on Monday, parliament said it had approved the general outlines of the budget for the next Iranian year, which begins in March, after the bill was initially rejected and subsequently amended by the government.

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  As Tehran fixates on the dollar, protests move beyond it

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  Iran president says government will stop subsidized dollar handouts

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  From Tehran’s Bazaar to the middle class, anger outpaces government

The government described the changes as reforms aimed at improving livelihoods, as authorities seek to ease ongoing anti-government protests and strikes.

The revisions are said to include a pay rise of up to 43% instead of 20%, a cut in value-added tax to 10% from 12%, and the allocation of $8.8 billion in subsidized foreign exchange to curb price rises for basic goods.

The budget was also reported to earmark funds for guaranteed wheat purchases to supply bread and for adjusting pensioners’ salaries.

Lawmakers approved the budget framework with 171 votes in favor, 69 against and six abstentions, out of 246 lawmakers present.

Meanwhile, nationwide protests entered a ninth day on Monday, with merchant strikes continuing in parts of the country.

The unrest began after the rial fell to record lows in late December and has since broadened into a wider test of the government’s ability to manage a country under sustained economic strain.