In brief
In Iran, widespread protests have erupted against the backdrop of soaring inflation and currency devaluation, prompting severe governmental crackdowns and warnings from U.S. President Trump. The ongoing unrest has escalated into calls for political reform, revealing deeper economic and systemic issues within the country. Amidst heightened tensions following a recent war with Israel and deteriorating regional alliances, Iran's leadership faces significant challenges as its authority and control come into scrutiny.
Iran is no stranger to street protests, but several factors surrounding the current unrest make it very serious.
Monday marks the ninth day since demonstrations broke out, yet even four or five days were enough for President Trump to issue a direct warning to Iranian leaders over the treatment of protesters, saying the US was locked and loaded. Then came the US special forces operation targeting Nicolás Maduro in Venezuela, followed by a second warning on Sunday.
Such direct and potential threats from a sitting US president, issued while protests are still ongoing, are highly unusual and could embolden demonstrators and encourage the unrest to spread further.
Iranian police and security forces have already responded violently almost from the outset, and reports by human rights groups claim that more than 20 people have already been killed. Now eyes are on Trump's possible move.
The protests, which began peacefully on Sunday 28 December, were initially driven by public anger over soaring inflation and the sharp devaluation of the local currency against the US dollar which now stands at about 80% higher than a year ago.
Iran's economy is in deep trouble, with little prospect for growth this year or next. Official annual inflation stands at around 42%, food inflation exceeds 70%, and some basic goods have reportedly risen in price by more than 110%.
Vulnerable position
International sanctions led by the United States have played a major role in worsening economic conditions, but they are not the full story.
High-profile corruption cases in Iranian courts involving senior officials and their families have reinforced public anger and the belief that parts of the ruling elite are exploiting the crisis.
Many ordinary Iranians believe that certain officials and their relatives benefit directly from sanctions through special arrangements that allow them to control imports and exports, move oil revenues abroad, and profit from money laundering networks.
Even government officials believe those who are locally called Sanctions Profiteers are to blame more than the sanctions themselves.
Series of setbacks
The 12-day war in the summer of 2025 between Iran and Israel marked a turning point. The conflict culminated in direct US involvement, including air strikes on Iranian nuclear facilities.
The war severely damaged Iran's defence capacity, nuclear infrastructure, and several military and industrial sites.
At the same time, Iran's broader regional position has deteriorated. The fall of Bashar al-Assad in Syria deprived Tehran of a key ally, while sustained Israeli attacks on Hezbollah in Lebanon eliminated much of the group's senior leadership.
More recently, US operations in Venezuela and the snatching of Nicolás Maduro and his wife, Cilia Flores, have further narrowed Iran's options abroad.
These developments have reshaped the regional and international environment for Tehran. Iran now has fewer allies to rely on in regional conflicts and fewer channels to move oil revenues overseas.
This is particularly significant given Iran's heavy involvement in Venezuela's oil sector alongside Russia, and its reliance on complex financial arrangements linked to markets believed to be in China.
The disruption of these networks has increased Iran's economic vulnerability at a time of mounting internal pressure.
Against this backdrop, Iran's aging supreme leader, Ali Khamenei, appears to be facing one of the most uncertain moments of his rule. More than three decades of careful planning to build regional proxy forces, sanction-evasion mechanisms, and nuclear infrastructure have been undermined or destroyed in a relatively short period of time.
With Trump back in the White House and Benjamin Netanyahu in power in Israel, there appears to be no clear diplomatic or strategic path out of the current crisis without a hefty price.
For years, Khamenei and his inner circle justified massive spending on regional allies and the nuclear program as necessary investments in Iran's long-term security and technological advancement. Today, that argument appears increasingly hollow. As pressure builds both inside and outside the country, security at home, once presented as the ultimate payoff of those policies, seems more distant than ever.
