Iran is on the boil, with the masses across cities protesting an unprecedented 42% inflation. An average Iranian would need US$ 500 dollars a month to make both ends meet, but he has only US$ 125. Iran’s currency had lost more than half its value last year rendering imported goods out of reach for the common man.
There is now no support for the regime’s policy of financially supporting Islamic resistance groups abroad such as the Hamas, Hezbollah and the Houthis, all which have been more or less neutralized by Israeli and the US military action.
The government denies that domestic tax revenue is being spent on supporting its regional military allies such as the ones mentioned here.
But leaked reports of Iran’s financial assistance to regional groups such as Hezbollah in Lebanon indicate Iran’s largesse. Hezbollah has been expanding its network of interest-free loan funds, using Iranian support to provide financial relief to its followers.
Iran recently allocated over US$ 10,000 per family to Lebanese households affected by the most recent conflict with Israel. The funds were distributed among Shia families aligned with Hezbollah. Naim Qassem, Hezbollah’s newly appointed secretary-general, had described the payments as a “gift from the Islamic Republic (of Iran).”
True, the rule of the Ayotollahs had survived similar large-scale demonstrations several times in the past, as in 2017, 2018, 2019, 2022 and 2023, and had come out unscathed. But the million dollar question is- would it be able to repeat the success this time round?
The answer is no, according to Karim Sadjadpour of the Carnegie Endowment for International Peace. He is quoted as saying, ” The Islamic Republic is today a zombie regime. Its legitimacy, ideology, economy and leader are dead or dying. What keeps it alive is lethal force. It kills to live and lives to kill. Brutality can delay the regime’s funeral, but it can’t restore the pulse.”
Be that as it may, Ayatollah Ali Khamenei, the supreme leader, gave a defiant speech on Friday, claiming that the protesters were “a bunch of vandals” trying to please US President Donald Trump.
But this time round, he appears to be in deep trouble due to a combination of internal and external factors.
Stinging Sanctions
Iran is currently facing the open hostility of the UN and Europe, in addition to the US and Israel. In 2025, the UN Security Council (UNSC) reimposed harsh sanctions on Iran over its nuclear program after the failure of a diplomatic marathon on the sidelines of the General Assembly session.
UN sanctions are more sweeping than the American sanctions against Iran.
UN sanctions stem from a dispute over adherence to the 2015 Nuclear Accord between the world powers and Iran. Iran’s decision to bar international inspectors from its nuclear sites after strikes by Israel and the US in June 2025 was also a contributory factor.
European countries accused Tehran of violating the 2015 agreement by enriching uranium up to 60% from 3.5 % and accumulating a stockpile of 400 kilograms of highly enriched uranium, which could allow Iran to build several nuclear bombs if it chose to weaponize its program.
But Iranian officials maintained that their nuclear program was for peaceful purposes. They said that they accelerated uranium enrichment only because the US, under Donald Trump, unilaterally exited from the Nuclear Accord in 2018 calling it “a horrible one-sided deal,” even though Iran was in full compliance.
The UN froze Iranians assets and banned travel for a range of Iranian entities and individuals, and authorized countries to stop and inspect cargo traveling from Iran by air or sea on Iranian government vessels, including oil tankers. The sanctions prohibited Iran from enriching uranium “at any level”, launching ballistic missiles with nuclear warhead capability and transferring technical knowledge of its ballistic missiles. The sanctions also reinstated an arms embargo.
In June 2025 the US emphatically signalled its opposition to Iran’s nuclear weapons program by bombing three of its nuclear facilities.
The UNSC sanctions hit Iran at a particularly difficult time when it was grappling with an acute energy and water crisis, leading to mandatory cuts in power and water supplies in many cities. European countries complicated matters by stopping trade with Iran.
This week’s protests had spread to every Iranian region and ethnic group, but they have not reached the intensity of the 2022-2023 revolt. That spontaneous mass movement began with women taking to the streets to denounce the death in custody of Mahsa Amini, who was arrested for refusing to wear a hijab or headscarf. The ensuing crackdown resulted in 551 deaths and more than 22,000 arrests, according to human rights reports. Security forces killed 104 people on what was called “Bloody Friday” in September 2022.
Despite this violent suppression of the 2022-2023 rebellion, there is a rebellion in 2026. The 2026 rebellion is leaderless, and perhaps rudderless, too. But it is potent, commentators say.
As of Monday, protests were reported in more than 340 places in all 31 Iranian provinces, according to “Iran Wire””, an online news service. Through the week, the demonstrations become wider and more violent, as internet videos showed. Such shows were aired even though the regime had cut off internet and telephones.
This year’s revolt is driven more by anger over Iran’s economic failures than the mullah’s repressive Islamic rules. Another difference this year is that many protesters are supporting Reza Pahlavi, the son of the Shah of Iran who was toppled in the 1979 Islamic revolution.
The question is whether the regime’s hard-liners have lost their marbles. Like in the Soviet Union during its last years, the Iranian security agencies may have lost their ideological commitment and discipline. They too have suffered from inflation. They have also suffered attrition from US and Israeli intelligence.
There is also speculation that perhaps some members of the Supreme Council are thinking about making peaceful progress like the Gulf States and Saudi Arabia, abandoning war and the export of an Islamic revolution.
But President Masoud Pezeshkian has argued that Iran’s complex and deep-seated economic problems are too vast for his administration to resolve, implicitly pointing to the impact of sanctions. Adding to the constraints he has is Supreme Leader Ali Khamenei’s ban on any negotiations with the US.
Russia, China and US
Russia and China, Iran’s two main allies and permanent members of the Security Council, have not come to the aid of the hard-pressed Iranian regime.
At the UNSC they did try to delay sanctions by six months. But the measure was defeated, with nine countries opposed, including Britain, France and the US.
Russia and Iran have close military ties, with Iran selling Russia drones it uses in the war in Ukraine. China is the main client for Iran’s oil sales, helping the government stay economically afloat. But even friends like them, could take note of Iran’s tanking economy and reorient their Iran policy.
US President Donal Trump, who bombed Iran last June, warned Tehran on Friday, saying: “You better not start shooting because we’ll start shooting too.”
All in all, the regime of the Ayotollahs is at the crossroads. They could either reform and survive or perish.