More than 75 days after Iran imposed sweeping internet restrictions, tens of millions of Iranians remain cut off from the outside world. The blackout has severed ordinary communications, disrupted online businesses and deepened the sense of isolation inside a country already battered by war, sanctions, inflation and a growing shortage of hard currency.
Holly Dagres, a senior fellow at the Washington Institute, says she found in a 2022 report that around 11 million Iranians had online businesses, including many women seeking financial independence through handicrafts, catering, Instagram sales or influencer work.
“This internet shutdown has gravely impacted people,” she told the Eye for Iran podcast, adding that Iranian officials themselves have said 20% of the country’s 30 million-strong workforce has been affected.
Iranian e-commerce platforms, ride-hailing services, streaming platforms and online retailers have all been hit, she said, with hundreds of jobs lost as a result of the blackout.
Dagres said the shutdown also reflects Tehran’s effort to control the information space, not only its stated security concerns. “It’s really not about national security. It’s about who you decide gets control of the internet,” she said.
A self-inflicted economic wound
Siamak Javadi, an Associate Professor of Finance at the University of Texas, said the blackout is not just a political tool but an economic shock inflicted by the state on an already fragile economy.
“The Iranian economy was already in shambles, and you’re inflicting even more damage to the economy by shutting down the internet,” he told the podcast.
Javadi put the economic damage in starker terms. Citing Iranian estimates, he said each minute of internet shutdown costs the economy around $1.5 million in direct losses, or about $80 million a day.
But he said the indirect costs are even more damaging.
“It kills jobs. It kills opportunities. It kills planning,” he said. “If there was any project that they were thinking about undertaking, those projects are going to basically shut down.”
For a developing economy, Javadi said, small and medium-sized enterprises are the backbone of economic life. Shutting down the internet in the middle of a currency crisis and wartime economic shock, he said, amounts to “deliberately killing the economy.”
“It’s like a deliberate, sober decision to kill the economy and basically keep people to fight for their basic necessities,” he said.
The blockade clock
While the internet blackout is damaging the economy from within, Javadi said the US blockade is squeezing the Islamic Republic from the outside by limiting access to oil revenue and foreign currency.
He said Iran’s economy was already weakened before the war by structural problems including corruption, fiscal deficits, capital flight, money-printing and a long-running depreciation of the rial.
The war, he said, added a major supply-side shock and sharply reduced Tehran’s ability to rely on oil income to defend its currency or finance the state.
“What happened during the war, on top of all of these preexisting conditions, is that basically overnight, Iran’s access to oil revenue kind of evaporated,” Javadi said.
He said the blockade is costing Iran an estimated $450 million a day, which he rounded to roughly $12 billion to $15 billion a month.
“That’s substantial for an economy that is like between $350 billion to $400 billion GDP,” he said.
Javadi argued that the Islamic Republic is “definitely on the clock,” especially as oil exports become more limited, more costly and less efficient. With reduced access to oil revenue, limited tax income and small businesses crippled by the blackout, he said the government may eventually struggle to finance even its security apparatus.
“They may not be able to even pay their own security forces and their institution of suppression,” he said.
Still, he warned that the regime does not operate like a normal government. It may allow ordinary economic life to collapse so long as it can preserve the core institutions needed to stay in power.
“They may run out of money to run a business in a normal way. But it doesn’t matter to them,” Javadi said. “As long as they can finance their security forces, they will hold on to power.”
He said that could mean cutting back pensions or leaving ordinary people unable to afford basic necessities while the state prioritizes its coercive machinery.
But the question is not only how long Tehran can keep funding the state under blockade. It is also what kind of economy Iranians are being forced into: one more isolated, more monitored and increasingly cut off from the outside world.
Permanent isolation
Dagres warned that the internet shutdown may be moving Iran toward a more permanent model of isolation.
She said Iran’s domestic internet infrastructure is already functioning in parts of daily life, including banking, ride-hailing and local messaging apps. But those services are monitored, she said, and cannot replace access to the outside world.
“It’s not really hyperbolic anymore” for Iranians to compare the situation to North Korea, Dagres said.
“This seems like this might become the new normal, where only an elite few will have access to the outside world, and everybody else will be living behind this digital wall,” she said.
That wall, she added, is devastating not only psychologically but economically.
For both experts, the crisis facing Iran is therefore not simply the result of outside pressure. The US blockade may be choking off state revenue, but Tehran’s own blackout is choking the businesses, workers and families the state claims to protect.
