“When the bazaar shuts, then the system is already in trouble. This proverb which has been a part of the Iranian political tradition has taken on a new urgency as retailers and traders close down their businesses in protest against a failing currency. This issue started as an economic complaint in the Grand Bazaar of Tehran but has now expanded to a multi city problem over the stability of the Islamic Republic.
It is not ideology or electoral issues that have led to this most recent eruption, but a more primal fuel, money that has become ineffective. The fall of the Iranian rial, inflation of over 42 percent, and food prices that have gone from 70 percent have all been mixed with post-war exhaustion and pressure of sanctions to produce a volatile situation. To foreign policy observers, the protests provide a glimpse of the weakness of the regime, including its more diminished legitimacy to its geopolitical vulnerability.
1. The Activation of Bazaar Mobilisation is an Indication of Systemic Strain
In the Grand Bazaar in Tehran, which has long been a conservative mainstay of regime support, merchants started the protests on December 28, shutting down their stores and shouting against economic mismanagement. In 48 hours, other strikes were spread in Isfahan, Shiraz, Mashhad, and Yazd. In the past, the mobilisation of bazaaris has hallmarked crisis in regimes, such as the 1906 Constitutional Revolution and the 1979 toppling of Shah. In contrast with movements organized by students, bazaars exist on the border of trade, credit, and social stability. Their involvement does not only mean political opposition but also a failure in trust in contracts and price signals. This mixed-class trait that brings together merchants and students as well as laborers makes coordination more difficult, yet more resilient.
2. Currency Collapse and Inflation Shock
The currency of the country has fallen to approximately 1.42 million per US dollar, approximately 20 percent in December alone, and this has made day-to-day business incoherent. Inflation is high and headline inflation is at over 42 percent and food prices have risen by 72 percent per year. Salaries become worth less than they can be used in spending and this is a reality to many Iranians.This downfall is the fruit of sanctions, dwindled oil payments, and the economic effect of the war of June 2025 with Israel still affecting the budget. The rent capture of multi-tiered exchange rates has institutionalized exploitation of ordinary trade participants by giving state-linked companies special privileges of access to cheaper dollars at the expense of the ordinary traders who now face the brutal market pricing. Poverty has therefore been combined with a sense of injustice, which is a powerful source of conflicts.
3. The Fatigue of Post War and Geopolitical Pressure
It is not till months after a 12-day conflict with Israel that Iran has assumed a weaker position in the region than at any time in the last decade. Senior commanders and nuclear scientists were killed by Israeli attacks and enrichment facilities were attacked by the US. In September, sanctions were increased through the UN snapback mechanism. Analyst Hamidreza Azizi observed that these protests are unique by their timing: domestic unrest might enhance the pressure exerted by the outside world and the risk of a new war, and divert attention and open up vulnerabilities of senior authorities. Leaders in the vicinity of the government caution that the domestic unrest would make it easy to do more Israeli attacks.
4. Calibrated Response of Government
President Masoud Pezeshkian has publicly recognized the existence of legitimate demands and he has ordered the interior minister to reach out to the representatives of the protests. Security forces have deployed tear gas and there have been arrests but the initial cracks have been less aggressive as compared to the previous crackdowns. Such a strategy can be strategic. As Azizi noted, major geographical or violence wide protests may pave way to foreign intervention. Tehran is possibly trying to avoid that situation by not causing it to deteriorate at the moment and buy time to contain dissent.
5. Central Bank of Leadership Change
In the mess, the Central Bank Governor Mohammad Reza Farzin stepped down and was succeeded by Abdolnasser Hemmati who served as a former economy minister. Hemmati also led the monetary policy in the US campaign of maximum pressure in 20192021 when inflation increased by 40 to 45 percent, and the rial had lost half its value. The staff turnover is an indication of responsiveness but an emphasis on narrow policy room. Oil incomes were just 16 percent of projected yearly incomes in 2025, and any 62-percent income tax increase is resulting in additional upheaval among the populace.
6. Symbolic Resonance of Imagery of Protest
One of the viral pictures on the first day depicts a man sitting bare with no weapon over asphalt with the officers on motorcycles dressed in black. The image has been compared to the solitary protestor before tanks at the Tiananmen square and has been used to denote desperation and humiliating.The failure to support the family is very emotionally loaded in the Iranian culture. This kind of imagery can help rally around an entire society of differing social classes, which further confirms the idea that economic downfall is depriving citizens not only of their means of living but also of their dignity.
7. Foreign Agents and Advertisement
Mossad Israel published in Farsi asking Iranians to take to the streets jointly and stating they were on the ground with them. The account of the US State Department written in Persian language lauded the bravery of the protesters. These cues are contributing to the Tehran discourse of foreign-orchestrated sedition.The communications of the state media and IRGC present the unrest as an element of US/Israeli cognitive warfare. Although this kind of propaganda could animate hardliners, their domestic appeal is curtailed by people becoming weary of these assertions. Still, blatant foreign support can provide the regime with the excuse to increase its repression.
8. Lack of Directional Leadership of Opposition
Although there were shouts in favour of the exiled Crown Prince Reza Pahlavi, the movement did not have the organisational depth of the clerical networks of 1979 or even of the reformist leadership of 2009. The figures of Diaspora are dependent on media amplification but are hindered in their capacity on the grounds. This devolution enables the process of continuing to move through encrypted applications and VPNs, but it also limits the possibility of turning unrest into structural change. The regime still has an upper hand in containment without a cohesive leadership and a unity of purpose security apparatus.
9. Political Triggers of Economic Grievances
The protests are instigated by inflation and currency collapse, but the causes of protest are more entrenched: a lack of water and energy, corruption, and the fact that the resources are redirected to militias operating in the region. These problems have destroyed legitimacy overtime.The sanctions, bad policy and the uncertainty caused by war have created a perfect storm over the Iranian economy as economist Djavad Salehi-Isfahani observed. Should strikes extend to strategic services like refineries and ports, the economy may pressure into making concessions or reveal weaknesses in the security forces.
The present unrest in Iran is not a revolution yet, it is systemic. The mobilisation facilitated by the bazaar, currency devaluation and post war vulnerability have all come together to challenge the strength of the regime. The measured reaction of the government can help to postpone the escalation, but unless structural economic reform is adopted the pressures will be still present.”
