Key facts
- Iranian leaders fear that threatened U.S. economic sanctions could increase hardships and reignite unrest.
- President Trump vowed to impose severe economic measures on Iran.
- Iran's annual inflation rate reached 66% in July, with food inflation at 128% year-on-year.
- The ongoing conflict has damaged critical infrastructure, including factories and power plants.
- The appointment of Hossein Taeb to lead the Basij militia is seen as a sign of concern over potential unrest.
Iranian leaders are increasingly concerned about the potential for renewed domestic unrest and further economic hardship if the United States, under President Donald Trump, tightens its economic pressure. Trump vowed to impose severe economic measures on Iran, with Treasury Secretary Scott Bessent indicating that unprecedented actions could be taken as early as the following week.
Despite projecting resilience amid the ongoing conflict, Iran faces significant challenges. The war has damaged critical infrastructure, including factories, power plants, and transport networks, leading to project standstills, job losses, and soaring costs. Inflation remains extremely high, with annual inflation at 66% and food inflation at 128% year-on-year. The rial's depreciation has further eroded purchasing power, with the minimum wage's dollar value falling significantly.
Officials and insiders suggest that the greater threat to the clerical rulers is not just economic pain, but the risk of it reigniting mass protests, which have occurred repeatedly in recent years due to economic grievances. The recent appointment of Hossein Taeb, known for past crackdowns, to lead the Basij militia is seen as a clear indicator of the regime's concern over potential unrest. In response to fears of renewed protests, authorities have reportedly increased arrests, executions, and lengthy prison sentences for journalists, activists, and others.
The economic strain is palpable for ordinary Iranians. Families are cutting back on essential goods, and individuals like a civil engineer and a small business owner described struggling to find work and support their families. The disruption to trade routes and reduced oil sales, coupled with a blockade effectively cutting off gasoline imports, are exacerbating the economic squeeze. President Masoud Pezeshkian acknowledged the difficulties, stating that problems have multiplied while income has fallen.