US and Iran seek a new equilibrium neither trusts

The shift has left lawmakers arguing over soaring inflation, corruption and economic policy while increasingly questioning what authority the Majles still retains.

Two interviews published Tuesday by moderate Khabar Online and pro-reform Rouydad24 offered sharply different diagnoses of Iran's economic crisis, but together painted a picture of a legislature struggling to remain relevant.

The interviews came after months of complaints from MPs that parliament has been sidelined, with Speaker Mohammad Bagher Ghalibaf limiting its work to sporadic online sessions while assuming an increasingly prominent role in high-level diplomacy.

"If you ask lawmakers at the parliament door how much a kilo of chicken, meat or bread costs, I swear to God most of them cannot tell you," outspoken former MP Gholamali Jafarzadeh Imenabadi told Khabar Online.

"This is because a massive gap has formed between our officials and the people."

Citing Parliamentary Research Center data, Imanabadi said less than seven percent of the Majles' resolutions over the past two years had addressed economic issues despite soaring inflation and the rising cost of basic goods.

‘Don’t weep, resign!’

Responding to a current MP who publicly wept over women's non-compliance with compulsory hijab laws, Jafarzadeh said officials should instead feel shame—or resign—over inflation, unemployment and empty stomachs.

"For the empty stomachs of the people, officials should ask for death, not just weep. For the state of inflation, they should resign," he said.

He also criticized what he described as parliament's misplaced priorities, questioning why Ghalibaf had become one of Iran's chief negotiators while lawmakers neglected their core duty of overseeing the government and tackling corruption and inflation.

Former conservative MP Hamidreza Taraghi offered a sharply different assessment in an interview with Rouydad24, blaming President Masoud Pezeshkian's administration rather than parliament for the country's economic turmoil.

"Regarding inflation and rising prices, the government follows methods that lack the necessary efficiency to control inflation," he said, arguing that weak oversight by the administration and the Central Bank lay behind many of the country's economic problems.

Taraghi also rejected suggestions that hardline MPs represented parliament as a whole: "The positions of 10 to 15 MPs should not be generalized to the entire parliament.”

He further defended the Majles against accusations of economic inaction, arguing that under Iran's constitution parliament could not introduce spending measures without identifying funding sources, leaving many economic decisions in the government's hands.

Elected bodies sidelined

The competing accounts reflect a broader debate over who bears responsibility for Iran's economic crisis. Moderates portray parliament as increasingly detached from both public concerns and the country's most pressing challenges, while hardliners argue its powers are constrained and responsibility rests primarily with the executive.

Yet the interviews also point to a deeper shift in Iran's political system.

Under former Supreme Leader Ali Khamenei, institutions including parliament, the Expediency Discernment Council, the Assembly of Experts and even the presidency steadily lost influence as authority became concentrated in the leader's office.

Since the five-month war with Israel and the United States, critics say that trend has accelerated, with the Revolutionary Guards and the power center surrounding Mojtaba Khamenei increasingly eclipsing the Islamic Republic's formal institutions.

Whether lawmakers blame the government, Ghalibaf or one another, the interviews suggest they are debating problems in a parliament many believe no longer has a role in decision-making..

Average annual inflation has climbed to a record 62%, while year-on-year inflation has surged to 82%, rapidly eroding household purchasing power.

Food prices remain the principal driver of overall inflation, with annual food inflation staying in triple digits for a sixth consecutive month. In July, food inflation reached 134% nationwide and 140% in rural areas. More than two-thirds of the food items monitored by the statistical agency now exceed what economists describe as crisis-level inflation.

Prices have risen sharply across other sectors as well. Household appliances are estimated to cost 114% more than a year ago, while transportation costs have climbed 103%. Economists warn that a possible gasoline price increase could push food inflation even higher by raising distribution and delivery costs.

War or government policy?

Critics of President Masoud Pezeshkian’s government, many of whom also oppose an agreement with the United States, argue that the inflation surge is rooted entirely in domestic economic policy rather than the recent conflict.

Hojjat Abdolmaleki, labor minister under former president Ebrahim Raisi, dismissed any connection between the war and rising prices.

“The war has had no effect whatsoever on inflation. Inflation has risen steadily throughout the Pezeshkian Administration, and the war’s contribution to these price increases is zero,” he said.

“Virtually all of this inflation is the direct result of misguided policies and government incompetence. Even without the war, the situation would have been the same, perhaps even worse.”

Other economists reject that assessment, arguing that both domestic policy and the conflict have driven prices higher.

Mohammad Sadegh-Alhosseini told the Iranian Students News Agency (ISNA) that domestic policies could account for inflation of between 30% and 50%, but that the increase beyond that range was linked to international tensions and the war.

Mojtaba Yousefi, a member of parliament, also said it was inaccurate to claim that the war had no effect on prices. “But it is equally wrong to attribute all inflation to the war,” he said.

Economists also caution that even an agreement between Tehran and Washington, potentially unlocking frozen assets, easing sanctions, increasing oil revenue and reducing inflation expectations, would be unlikely to bring prices down quickly.

They say chronic budget deficits, entrenched corruption and structural inefficiencies are so deeply embedded that reversing them could take years.

Even if the fighting ends, the cost of rebuilding damaged infrastructure and industry would continue to strain public finances. Conservative politician Mohammad-Reza Bahonar recently estimated reconstruction costs at $200 billion.

Purchasing power continues to collapse

The inflation surge has increasingly affected ordinary Iranians. According to a report by the Iranian Labour News Agency (ILNA), during recent months even basic staples such as chicken, eggs and bread have become unaffordable for many working-class households. Bread prices alone have risen by between 100% and 140% on average.

Official data show that prices of at least eight food items have more than doubled over the past year. Cooking oil has risen 261%, while meat prices have increased 145%.

By comparison, ILNA wrote, the minimum wage has increased by only 60%, while salaries for civil servants, pensioners, nurses and teachers have risen by between 20% and 43%, averaging roughly 30%. As a result, many of these households no longer fit the conventional definition of the middle class, the report argued.

Government food vouchers introduced in January have also lost much of their purchasing power, as authorities have left their value unchanged despite soaring food prices.

Ahmad, a retired civil servant in Tehran, said the vouchers initially allowed him to buy around ten food items. "Now I can only afford three or four."

Social media has also reflected the growing financial strain. Users report increasing numbers of people selling, or even renting out, personal belongings such as electronic devices to cover daily expenses.

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  Economic crisis drives Iranians to sell hair, rent laptops

Journalist Azadeh Mokhtari wrote: "When advertisements for selling hair, or even renting laptops for online classes, become more common, it means the middle class is being worn away, and the lower-income class is being pushed out of the economy."

Misery index reaches new peak

The deteriorating economic environment is also reflected in Iran's misery index, the combined rate of annual inflation and unemployment.

With annual inflation at 62% and unemployment at 9.1% in the quarter ending in June, the misery index climbed to a record 71.1%, up from 64.2% in the previous quarter. The index stood at 56.6% during the same period in 2021.

The economic burden is not evenly distributed across the country. Several provinces have recorded misery index readings above 100%, with Lorestan registering the highest level at 121.5%.

Economists say the figures reflect not only declining purchasing power and weaker job security but also rising uncertainty that makes long-term financial planning increasingly difficult for households.

At the center of the negotiations is a proposed arrangement under which ships would enter the Persian Gulf through an Iranian-controlled route and leave through a route controlled by Oman.

Whether Iran could collect service or transit fees remains a key point of dispute, with Washington opposing any charges.

Iran is also seeking a role in monitoring vessels leaving the Persian Gulf. A senior Iranian source involved in the negotiations told Reuters that Tehran wanted control over inbound traffic and oversight of outbound ships, including the ability to intervene if necessary. Oman would clear departing vessels after notifying Iran, the source said.

The Wall Street Journal, citing regional mediators, said Iranian diplomats initially welcomed the proposed division of the routes because it preserved some authority for Tehran.

Iran has also demanded the right to collect transit fees, potentially shared with Oman, alongside guarantees against renewed attacks, relief from oil sanctions and an end to the US blockade.

The United States and regional governments rejected the proposed fees and sought assurances that Iran and its proxy groups would not threaten their territories, according to the report. The dispute leaves the sides divided over whether the strait should reopen before Washington offers concessions or only after Tehran’s wider conditions are met.

The latest proposal has yet to receive a formal response from the Revolutionary Guards, the Wall Street Journal reported. Some IRGC officials told mediators they would reject any agreement that did not recognize Iran’s claim to control the strait, while mediators have questioned whether Iranian diplomats have sufficient authority to finalize a deal.

Separately, Tehran indicated that an Iran-Oman shipping arrangement would not by itself restore normal traffic.

The IRGC-affiliated Fars News reported, citing a source close to Iran’s negotiating team, that the waterway would not fully reopen unless the United States halted its attacks and fulfilled Iran’s conditions.

Despite those differences, US Treasury Secretary Scott Bessent said an agreement could be reached as early as Wednesday. Secretary of State Marco Rubio also said discussions with Iran and Oman had made progress but had not yet produced a final deal.

The diplomatic push continued despite a fresh maritime incident Tuesday, when a cargo vessel was hit by an unknown projectile off Oman. The United Kingdom Maritime Trade Operations did not identify those responsible, but the attack underscored the continuing risks to commercial shipping while negotiations remained unresolved.

Mohammad-Ali Dehghan Dehnavi, head of Iran’s Trade Promotion Organization, said Karachi and Gwadar could serve as hubs for re-exporting Iranian goods to third countries. He said Pakistan could also supply Iran with essential goods and industrial raw materials.

The comments came during a visit to Islamabad alongside Iranian Industry, Mine and Trade Minister Mohammad Atabak for bilateral trade talks.

Pakistan and Iran said they would work toward increasing trade to $10 billion, advancing a free trade agreement and removing barriers involving customs, border logistics and cargo movement.

100%

Pakistan emerged as a key mediator after US-Israeli strikes on Feb. 28 triggered the Iran war and Tehran largely closed the Strait of Hormuz. When Pakistan-hosted US-Iran talks ended without a breakthrough on April 13, President Donald Trump ordered a blockade of maritime traffic entering and leaving Iranian ports.

The blockade ended on June 18 under an interim agreement mediated by Pakistan but was reinstated on July 14 after the deal began to unravel and fighting resumed.

Traffic through the Strait of Hormuz remains severely restricted. Kpler data showed only six vessels — three tankers and three bulk carriers — passed through the waterway on Monday, down from seven on Sunday, with all six using the route through Iranian waters.

On April 22, the US president said the naval blockade was costing Iran $500 million a day, while the War Department estimated that Tehran had lost $4.8 billion in oil revenue by May 1.

A Friday report by The Telegraph said the United States and Israel are weighing a possible land blockade of Iran to deepen its economic isolation, as President Trump reportedly believes the naval blockade in the Strait of Hormuz has achieved all it can.

Trump discussed the proposal with Israeli Prime Minister Benjamin Netanyahu during their meeting in Washington last Tuesday, alongside several other military and non-military options, according to the report.

A senior Israeli official suggested sealing Iran’s land routes to prevent goods from entering or leaving the country, saying such pressure could produce unpredictable consequences.

Iran shares extensive land borders with Iraq, Turkey, Afghanistan, Pakistan, Turkmenistan, Azerbaijan and Armenia.

"Pray for me. Mother, I'm dying," he said, pleading with his loved ones to look after his sons, especially Habib.

Hayatullah was among 14 Afghan migrants who died attempting to reach Iran, Afghan officials said, weeks after the vehicle carrying them broke down and they continued the journey on foot.

Why would anyone risk one of the world's deadliest migration routes to reach Iran?

The country is grappling with economic crisis and widespread repression. It has carried out one of the region's largest deportation campaigns against Afghan migrants and offers little prospect of permanent legal status.

"It's not about a choice between safety and danger," Yasin Samim, an Afghan governance and development analyst, told Iran International. "It's about what type of danger."

Samim said conditions inside Afghanistan had become so severe that many people continued to flee despite knowing the risks awaiting them in Iran.

"The fact that they come to Iran shows the severity of the situation and conditions in Afghanistan," he said. "The reasons they leave Afghanistan have not changed."

With the Taliban's return to power, legal pathways to Iran have become increasingly restricted, forcing many low-income Afghans into the hands of smugglers.

"Granting a visa has become a deal of the black market," Samim said, adding that visas can reportedly cost between $1,000 and $1,200—far beyond the reach of many Afghan families.

"The combination of poverty, unemployment and repression leaves people with no alternative," he said. "That is the only choice they have."

Those who cannot afford legal routes often attempt the crossing through Nimruz, one of the main transit corridors into Iran for irregular migration.

The route has become synonymous with one of the deadliest migration paths into the country. Migrants cross vast stretches of unforgiving desert where temperatures regularly exceed 45°C (113°F).

If smugglers abandon them or their vehicle breaks down—as happened in this case—survival quickly becomes a race against dehydration. Many die before reaching help. Others face robbery, exploitation or detention before ever reaching Iran.

Iran has long hosted one of the world's largest Afghan populations despite offering few permanent rights to those who settle there. Before its mass deportation campaign in 2025, an estimated four million Afghans lived in the country, including registered refugees, documented migrants and undocumented workers.

Yet many remained in legal limbo despite spending years—or even decades—in Iran. Children born in Iran to Afghan parents are not automatically granted Iranian citizenship, and for most there is no realistic pathway to becoming Iranian citizens.

"Iran has shut down legal pathways for Afghans in recent years," Omid Memarian, senior Iran analyst at DAWN told Iran International. "Because so many pathways have been blocked, they have to take much riskier ways to be smuggled from Afghanistan to Iran.”

That means the chance of being exploited is higher, Memarian added, and their rights are more likely to be violated.

Tighter restrictions appear to have little bearing on Afghans' calculations. It has only pushed them onto more perilous routes across deserts such as Nimruz, where extreme heat could quickly turn a journey into a death sentence.

"For them, the question is not, 'Let's go to the best ideal country.' The question is, 'Let us get out of here.' ... It's about survival," Memarian told Iran International.

Iran International reached out to the United Nations High Commissioner for Refugees (UNHCR) for comment.

A spokesperson referred us to a statement issued last month warning that Afghanistan is ill-equipped to absorb the growing number of returnees.

The agency said more than six million Afghans have returned since 2023, while nearly half the country's population already depends on humanitarian aid.

It called for returns to be safe, voluntary and dignified, warning that mass deportations risk deepening one of the world's worst humanitarian crises.