IRGC pressured Pezeshkian to appoint Zolghadr as security chief

Over the past year, a pattern has emerged across markets, policy decisions and price behavior pointing to the early stages of de facto dollarization.

In April 2025, when a “five-dollar pizza” shop opened in Tehran’s affluent Niavaran neighborhood, many dismissed the fixed dollar price as a marketing gimmick. At the time, one pizza cost roughly 5 million rials, with inflation reportedly above 40%.

Less than a year later, on the eve of the current war, the same pizza was priced at 8.6 million rials, while officials acknowledged inflation exceeding 70%. What initially appeared symbolic began to look practical.

The shift was not confined to niche businesses and high-end stores. Informal dollar transactions, once largely limited to luxury goods or services aimed at foreign customers, steadily expanded.

In the months leading up to the 12-day war, despite the departure of many foreign nationals, dollar-pegged property sales and rentals increased noticeably. While upscale properties led the trend, mid-range apartments also entered the market with dollar-based pricing.

By the end of 2025, the US dollar had climbed to 1,430,000 rials, up from 800,000 in January of the same year. The volatility hit the automotive market hard. With car production concentrated among three major state-linked manufacturers and supply unable to meet demand, the price of second-hand cars in rial terms outpaced the increase in the dollar exchange rate.

Media headlines read, “The dollar is in the driver’s seat,” and traders increasingly priced vehicles in dollars. In December, automobile market expert Abdollah Babaei warned that if current trends continued, car transactions would effectively become dollarized.

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  Stealth austerity: Tehran seeks fuel price hike without a reckoning

Economists began warning of a structural shift. Former Tehran Stock Exchange chief Hossein Abdeh Tabrizi cautioned that Iran "will enter the stage of dollarization" if 60% inflation and government overspending continued.

he statement went viral, and many echoed the growing concern that “Iran’s economy is on a dangerous path,” with the rial losing its function both as a store of value and as a unit of account.

Government policy after the 12-day war reinforced these anxieties.

The administration’s 2026–2027 budget introduced three pivotal shifts. First, gasoline subsidies moved from a liter-based rationing system to cash transfers. Second, an inflation coefficient was added to the pricing formula of Iran’s key commodity anchor. Third, the preferential exchange rate was abruptly removed in December, converting the government’s largest dollar commitment into rial-based direct subsidies.

Perhaps most striking was the historic decline in oil revenue’s share of the budget—from about 32% in 2025–2026 to just 5% in 2026–2027, the lowest level since the 1960s.

To compensate, taxes were increased by more than 60%. Across these measures, the common denominator was clear: the state systematically reduced its foreign-currency and commodity obligations, converting them into rial-based commitments. The administration that campaigned on taming inflation now appeared increasingly reliant on inflationary financing to navigate wartime pressures.

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  Capital flees Tehran stocks as geopolitical tensions deepen

In February, before the outbreak of the second war, average inflation for basic necessities reached triple digits, estimated between 105% and 115%. Reacting to these concerns, the administration pushed to remove four zeros from the rial, presenting it as a technical reform to simplify calculations.

In reality, redenomination in a high-inflation environment is an expensive cosmetic surgery on a patient on his deathbed—an adjustment that quickly loses meaning as prices continue to rise.

During the second war, market closures, the suspension of price discovery in the exchange market, and reduced demand slowed money circulation and provided short-term inflationary relief. At the same time, large banks halted operations, increasing demand for physical cash.

The Central Bank responded by issuing a 10-million-rial banknote—raising the highest denomination one hundredfold from 100,000 rials—a step it had resisted for years.

But such pauses rarely eliminate underlying pressures. When markets fully reopen and normal trading resumes, deferred demand for foreign currency is likely to return. A similar pattern followed the 12 day war, when pent-up demand translated into a rapid adjustment in prices once restrictions eased.

Even under conservative assumptions, inflation could move decisively into triple-digit territory if monetary expansion continues. At that point, the shift toward dollar pricing would no longer be limited to select sectors. It would spread more systematically across contracts, wages and savings behavior.

Dollarization rarely begins with legislation; it begins with economic self-preservation. It starts with a pizza menu, moves to apartment contracts and car listings, and eventually reshapes fiscal expectations.

If post-war reopening triggers another inflationary wave, the timeline may not be measured in years but in quarters. Under such conditions, the transition toward de facto dollarization would become increasingly difficult to reverse.

Staff of an Iranian hospital in Dubai have vacated accommodation linked to the facility after an order by authorities in the United Arab Emirates, Iran International has learned.

Residents were initially given one month to leave, but the deadline was cut to one week after the hospital was shut. Doctors, nurses and other staff living in the housing began leaving on Tuesday, and the evacuation was completed on Wednesday.

The visas of some employees whose residency was tied to the hospital were canceled. Those affected have had to return to Iran through third countries, including Afghanistan.

Earlier, housing linked to Iranian schools in Dubai was also vacated after those schools were shut, and staff returned to Iran.

The longtime hardliner is the new chief of the Supreme National Security Council to replace his slain predecessor Ali Larijani, state television said Tuesday.

Zolghadr is not a new figure emerging in a moment of crisis, but a product of the Islamic Republic’s original revolutionary security networks. A man whose career spans armed militancy, senior command within the Islamic Revolutionary Guard Corps (IRGC) and influential roles across Iran’s political and judicial institutions.

“He is one of the last remnants of the radical revolutionaries that armed themselves against the Pahlavi monarchy,” historian Shahram Kholdi told Iran International.

A former deputy commander of the IRGC, Zolghadr belongs to the generation that helped transform the Guards into the backbone of the Islamic Republic not only as a military force, but as a political and economic power center. Over decades, the IRGC expanded its reach across the state, embedding itself in key institutions from the interior ministry to the judiciary.

Kholdi traces Zolghadr back to the early networks that evolved into the Quds Force — the IRGC’s elite unit responsible for managing Iran’s proxy militias and projecting power across the Middle East placing him alongside the system later commanded by Qassem Soleimani, the architect of Iran’s regional strategy.

His appointment following the killing of Larijani underscores what many analysts see as an accelerating trend: the consolidation of power by hardline military figures. What has been a gradual shift over decades appears to have intensified amid the current conflict, with the Guards tightening their grip over both national security and political decision-making.

The Quds Force, the IRGC’s external arm, has been at the center of Iran’s regional power projection, training and directing militias from Iraq to Syria, where it helped sustain Bashar al-Assad’s war in a conflict marked by widespread civilian suffering.

“He is part of the three to four thousand families that have been forming the power core of the Islamic Republic,” Kholdi said.

Zolghadr’s rise does not mark a departure from that system, but a continuation of it, reflecting the enduring dominance of a tightly knit network of insiders drawn from the Islamic Republic’s revolutionary and security institutions.

His role in internal repression also stretches back decades. During the 1999 student protests — a pivotal moment in the regime’s violent suppression of dissent— Zolghadr was among a group of senior IRGC commanders who signed a sharply worded letter to then-reformist President Mohammad Khatami. The message warned that if the government failed to decisively crush the unrest, the Guards would act on their own. The episode is widely seen as a turning point, marking a more overt willingness by the IRGC to intervene directly in politics and, for many Iranians, cementing the reform movement’s ultimate failure.

His political trajectory has long aligned with Iran’s most hardline currents. He played a role in the rise of former hardline president Mahmoud Ahmadinejad and later acknowledged that conservative factions had carried out coordinated efforts to secure that victory. In office, he adopted a confrontational posture toward the United States, warning that Iran would respond to any attack with overwhelming missile strikes.

During the Iran-Iraq War, he led units he fought in cross-border operations, which is experience that would help shape the regime’s enduring emphasis on asymmetrical warfare.

According to Kholdi, Zolghadr was among those who helped design that doctrine alongside figures like Qassem Soleimani — building a decentralized system capable of operating even under sustained attack.

“They created this asymmetrical hierarchy where units can act independently… and continue operating even if leadership is cut off,” Kholdi said.

That system is now visible in Iran’s military posture, with dispersed missile and drone capabilities across the region.

Kholdi also points to Zolghadr’s deep institutional knowledge as a key factor in his significance today.

“The fact that he hasn’t been eliminated is bad news — he is one of the main people who knows a lot about how this system works,” he said, adding that Zolghadr likely has insight into sensitive areas including the country’s nuclear program.

For ordinary Iranians, his rise is much the same as his predecessor Ali Larijani, who was eliminated in an Israeli airstrike overnight on March 16 in Tehran.

“No, he is much the same,” Kholdi said when asked whether Zolghadr differs from figures like Larijani.

His appointment underscores a consistent reality: power in the Islamic Republic remains concentrated within a small circle of entrenched insiders — many of whom have been at the center of the system since its earliest days.

The controversy intensified after reports by Israel’s Channel 11 and Politico suggested that Parliament Speaker Mohammad-Bagher Ghalibaf could be the “pragmatic partner” potentially engaging with the Trump administration.

According to the Politico report, “at least some White House officials see him as someone who could lead Iran and negotiate in a next phase of conflict with the Trump administration.” However, the report added that the White House “is not yet ready to bet on a single figure” and is exploring multiple options.

The mere suggestion that a sitting Iranian parliament speaker could be engaged—formally or informally—with Washington carries significant implications within Iran’s political system, where any perception of independent diplomatic outreach can trigger backlash, particularly during periods of heightened tension.

Iran’s Revolutionary Guards (IRGC)-linked media outlets have strongly rejected claims of secret negotiations.

Fars News Agency described the reports as a “psychological operation,” asserting that the narrative was designed with three goals: “character assassination of Ghalibaf, incitement toward possible physical targeting, and sowing division in the country.”

Similarly, Tasnim News Agency called the reports a “complex enemy design to create the perception of internal tension,” arguing that it aimed to distract political forces from the ongoing conflict.

Even political figures outside Ghalibaf’s immediate camp have echoed concerns about psychological warfare.

Mohammad-Javad Azari-Jahromi, telecommunications minister under President Hassan Rouhani, wrote on X that Trump’s contradictory statements—and media suggestions that Ghalibaf could be conducting secret talks—are intended to “create division within the government and among military forces.”

Hesameddin Ashena, a former media adviser to Rouhani, also warned of “character assassination,” describing the amplification of such claims as effectively “aligning with the enemy.”

Iranian officials have acknowledged indirect communications with Washington through intermediaries. Foreign Minister Abbas Araghchi and spokesman Esmail Baghaei said countries such as Egypt, Turkey, and Pakistan have been exchanging messages between the two sides in recent days in an effort to reduce tensions.

At the same time, Iranian officials stressed that Tehran’s core positions remain unchanged.

These include its stance on the potential closure of the Strait of Hormuz—a position that has contributed to escalating rhetoric, including reported threats by Trump to target Iran’s energy infrastructure and impose a short deadline.

An Iranian official told Al Jazeera that Washington has so far refused to meet Tehran’s key conditions for negotiations: “payment of war reparations and acknowledgment of aggression against Iranian territory.”

Meanwhile, reports from Reuters and The Wall Street Journal suggest that potential talks to end the conflict could take place in Pakistan or Turkey, possibly involving figures such as Steve Witkoff, Jared Kushner, and Vice President J. D. Vance in the coming days.

Despite official denials, the issue has gained traction on social media—particularly among Iranians abroad, given severe internet restrictions inside Iran since the war began.

Thousands of responses to Ghalibaf’s denial of secret talks with Washington on X framed the issue in terms of suspicion and alleged betrayal.

Some users pointed to his absence from certain recent public events, while others noted that his name had not appeared in US bounty lists targeting Iranian officials, interpreting this as suspicious though without evidence.

Others revived longstanding allegations of financial corruption and nepotism raised by hardline factions such as the Paydari Front and supporters of Saeed Jalili—claims that have circulated in Iran’s political rivalries for years.

The projectile was not intercepted in Lebanese airspace and instead landed on the coast, according to Iran International sources, disputing earlier reporting by Reuters.

The strike came shortly after Lebanon declared Iran’s ambassador to Beirut, Mohammad Reza Raouf Sheibani, persona non grata and ordered his expulsion.

Lebanese Foreign Minister Youssef Raggi said on X that the decision had been formally communicated and that the envoy must leave the country by March 29.

Lebanon also recalled its ambassador from Tehran for consultations, accusing Iran of violating diplomatic norms and established protocols between the two countries.

Israel’s military said that, based on its assessments, a ballistic missile launched from Iran fell in Beirut around the same time as missile attacks targeting Israel. In a statement, the army said the projectile was fired by the “Iranian regime” and landed inside Lebanon.

Diplomats from several Persian Gulf states told Iran International on Tuesday that Tehran was acting like a “runaway horse,” warning that attacking another Arab country crossed a new red line and would not be tolerated.

According to Iran International sources, since the start of the current conflict following US and Israeli strikes in early March, Iran has targeted at least 12 countries in the region. Lebanon is now the 13th.

Reactions to Lebanon’s move were swift. Israel’s President Isaac Herzog called the expulsion a “very courageous decision,” according to Israeli media. Foreign Minister Gideon Sa'ar welcomed the move, describing it as “justified and necessary” in response to Iran’s actions in Lebanon, including its backing of Hezbollah.

Israeli Defense Minister Israel Katz said Israel would continue its attacks against Iranian positions “with full force.”

Hezbollah condemned the decision, warning it could undermine national unity and deepen internal divisions.

Meanwhile, Bloomberg reported on Tuesday that Saudi Arabia and United Arab Emirates are growing increasingly impatient after attacks on energy infrastructure and airports, and could join US- and Israeli-led strikes if Iran targets critical facilities.