The Iranian regime remains in power following the U.S.-Israeli war, but its economy is teetering on the brink of collapse. Decades of mismanagement and the recent conflict have exacerbated existing economic woes, leading to skyrocketing inflation and widespread unemployment. Basic food items have seen staggering price increases, with cooking oil up 430%, eggs up 345%, rice up 287%, and milk up 139% compared to last year.
Residents of Tehran describe a descent into poverty. One man, who once considered himself middle class, has sold his furniture and appliances to survive. Now unemployed, he sells sandwiches on the subway while struggling with utility bills that have quintupled. 'We have all become poor,' he told Radio Free Europe’s Radio Farda.
Economic Freefall
The war inflicted an estimated $270 billion in damage—nearly equal to Iran’s GDP. The International Monetary Fund predicts a 6.1% economic contraction this year, while the United Nations warns that 4.1 million more Iranians could fall below the poverty line. A U.S. naval blockade has further crippled Iran’s oil revenue, depleting foreign exchange reserves to just three months’ worth of imports at prewar levels, according to Capital Economics.
'The conditions for protests may not currently exist, but that should not lead us to think there is some kind of convergence between the state and the people,' said Iran-based economist Javad Rahimpour.
Mounting Discontent
Pro-regime supporters are increasingly frustrated. One government employee, who attends pro-regime rallies, told The New York Times he exhausts his salary by mid-month and must buy groceries on credit, only to face doubled prices when the bill comes due. 'Everybody is angry over the economy, and if the government doesn’t fix things, there will be trouble,' he said.
Former U.S. diplomat Dennis Ross noted that Iran’s leaders must address their failure to provide for the people without blaming the war. However, the regime’s focus on rebuilding its military and defense industrial base could divert resources from a civilian economy already burdened by shortages of water and electricity. 'The internal pressures will build,' Ross predicted.