Iran's economic woes expose regime's tight grip

"When the Islamic Revolution toppled the Shah of Iran in 1979, one US dollar (0.86) was worth just 70 Iranian rials. By early 2026, that figure had soared to an astonishing 1.4 million rials for a single dollar. The collapse of Iran's national currency has become a defining symbol of Iran's economic decline, with growing numbers of Iranians bearing the brunt."

"In December 2025, influential bazaar merchants in Tehran were among the first to publicly demonstrate against the deepening economic crisis, galloping inflation of nearly 50%, and the rial's dramatic loss of value. "We are struggling. We cannot import goods because of US sanctions and because only the Revolutionary Guards or those linked to them control the economy. They only think of their own benefit," one bazaar merchant, who asked to remain anonymous, recently told news agency Reuters."

"Iran's economic malaise is compounded by decaying infrastructure, says Andreas Goldthau, an Iran expert at the University of Erfurt in Germany, with its energy infrastructure in particular being in "poor condition." "Iran is therefore struggling to uphold its social contract [with the population]. Despite its energy wealth, power outages are a daily occurrence. As energy subsidies consume an ever larger share of the state budget, gasoline prices have been raised, hitting families and businesses," he told DW."

The rial's collapse from 70 per dollar in 1979 to roughly 1.4 million per dollar by early 2026 has driven severe inflation and economic hardship. Inflation reached nearly 50%, eroding purchasing power and prompting mass protests that include former regime supporters and Tehran bazaar merchants. Restricted imports, US sanctions, and economic control by the Revolutionary Guards and affiliated entities have concentrated resources and opportunities. Decaying infrastructure, especially in the energy sector, has produced daily power outages and heavier subsidy burdens. Gasoline price increases and growing subsidy costs strain state finances and weaken the government's ability to meet citizens' needs.

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