Tehran adjusts its public tone as protests return

Speaking at a meeting with political and social activists in Chaharmahal and Bakhtiari province, Pezeshkian said the 28,500-toman dollar – one of several preferential exchange rates used in Iran – would no longer be allocated.

“Anyone who received the 28,500-toman dollar pocketed it, so we will not give it out anymore,” Pezeshkian said, arguing that multiple exchange rates had benefited intermediaries rather than consumers.

Iran has long used subsidized exchange rates to support imports of basic goods and curb inflation, but critics say the system has encouraged corruption and widened inequality, particularly as sanctions and high inflation have strained the economy.

Pezeshkian said the government had spent about $18 billion on subsidies, adding that the funds could be used more effectively to improve living standards.

“We have given $18 billion in subsidies, when with this amount we could plan so that everyone’s table is the same,” he said.

Late last month, Hossein Samsami, a member of parliament’s economic committee, said more than $116 billion in export earnings had not been repatriated since 2018, citing official non-oil export data.

The president added that subsidies would not be eliminated but redirected to end consumers rather than producers or intermediaries. He said foreign currency allocations for sectors such as livestock feed would be moved to the final stage of the production chain.

“We are not removing subsidies; we are giving them to the final consumer,” Pezeshkian said.

Iran operates several exchange rates, including a market rate that trades far weaker than official or subsidized levels, creating price gaps that economists say incentivize arbitrage.

The preferential exchange rate system was introduced in April 2018 under former president Hassan Rouhani, when the dollar was fixed at 42,000 rials in an effort to stabilize prices amid mounting sanctions.

Iran’s economy has been under sustained pressure from US sanctions, high inflation and currency depreciation, complicating repeated efforts by successive governments to reform subsidies and unify exchange rates.

Demonstrators took to the streets in cities including Esfahan, Hamadan, Babol, Dehloran, Baghmalek and Pian, chanting slogans against Supreme Leader Ali Khamenei, backing exiled prince Reza Pahlavi, and commemorating slain protesters from previous uprisings such as teenager Artin Rahmani from Izeh.

In Esfahan, nighttime protesters were filmed chanting “Don’t be afraid, we are all together” and “Death to the dictator,” while in Dehloran and Baghmalek demonstrators shouted pro‑monarchy slogans including “This is the national slogan: Reza Pahlavi,” “Javid Shah” (“Long live the Shah”) and calls for Khamenei to be overthrown.

Acts of defiance

Security forces responded with force in several locations, with reports and footage of gunfire and tear gas in cities such as Nahavand, Asadabad and Hamadan, where residents were seen standing their ground, including one protester who faced down a water cannon.

In Babol, crowds intervened to stop security forces from arresting a demonstrator, while in Tehran a student leader at the University of Tehran, Sarira Karimi, was detained after a raid on her home, with her whereabouts unknown.

Voices of support

Prominent cultural and religious figures also weighed in, with top Sunni cleric Molavi Abdolhamid saying crushing living conditions and a political dead-end are driving the revolt, and acclaimed filmmaker Jafar Panahi describing the unrest as an uprising to “push history forward” now that “shared pain has turned into a cry in the streets.”

Western politicians continued to line up behind the protesters. US Senator Rick Scott said he was encouraged to see Iranians “calling for an end to the abusive Iranian dictatorship” and urged them to keep standing up to the “evil regime," while fellow Republican Senator Pete Ricketts called for more pressure on Tehran as people risk their lives in the streets.

Swedish MEP Charlie Weimers urged the EU to “stand on the right side of history” by cutting diplomatic ties with Tehran’s rulers, backing internet access for Iranians and engaging with opposition leaders about a “post‑Islamist Iran."

Unlike previous waves of unrest, the government has so far refrained from cutting nationwide internet access. Officials also appear keen to avoid an immediate crackdown that could further inflame public anger and broaden demonstrations.

Authorities have instead announced a series of closures under the pretext of “cold weather and energy saving.” Government offices were shut down in 26 of Iran’s 31 provinces on Wednesday, and several major universities in Tehran moved classes online until further notice under the same pretext.

Recognition of the right to protest, in words

On the third day of protests, President Masoud Pezeshkian said his government recognizes the public’s right to protest and has tasked the interior minister with holding talks with representatives of Tehran’s bazaar merchants.

Ali Ahmadnia, head of the government’s information office, also said on Wednesday that the administration had formally accepted the protests and would listen to criticism. The government, he said, “will sit down and listen to all critics and will not engage in any violent behavior—indeed, it strongly opposes it.”

The comments were met with skepticism on social media. One X user wrote: “If the government respected the people and had heard their protests, it would have resigned on the first day and stood with the public. Instead, despite all its inefficiency, it keeps making empty promises—showing it still doesn’t understand what is happening.”

Warnings from other power centers

Conciliatory language from the government was accompanied by firm warnings from other power centers.

Iran’s prosecutor general, Mohammad Movahedi-Azad, described “peaceful livelihood protests” as part of social realities but warned that “any attempt to turn economic protests into tools of insecurity, destruction of public property, or the execution of externally designed scenarios” would be met with a response from authorities.

The Islamic Revolutionary Guard Corps (IRGC) also issued a statement on Monday marking the anniversary of the 2009 protest crackdown. It warned it would confront “any sedition, unrest, cognitive warfare, or security threat,” accusing what it called the enemies of the Islamic Revolution of attempting to recreate unrest through “psychological operations and narrative warfare.”

Hossein Shariatmadari, editor of the hardline Kayhan newspaper, claimed protesters were few in number and accused them of exploiting economic grievances to create unrest. He also alleged that shopkeepers had distanced themselves from protesters because of slogans he described as “dictated by the Zionist regime.”

Partial retreat toward bazaar merchants, cash aid promises

Meeting with representatives of trade guilds, President Pezeshkian said the government and parliament had agreed to suspend certain tax requirements, including penalties, for up to one year.

The move may not be sufficient to calm unrest among merchants, whose survival depends less on tax relief than on consumers’ rapidly shrinking purchasing power amid high inflation. At the same time, such concessions risk angering salaried workers who cannot avoid paying taxes.

One user wrote on X: “That’s not even the issue. When sales are close to zero, making taxes zero changes nothing. When income doesn’t cover high rent, even cash handouts don’t help.”

The government has also sought to ease public pressure by reiterating its promise to pay a monthly cash subsidy of 7,000,000,000 rials (about $5.17) per person.

Officials present the measure as targeted support for households struggling with rising prices, but critics say the amount has been eroded by inflation and is unlikely to offset the sharp decline in purchasing power or calm growing public anger.

Limited use of force—so far

Social media reports indicate that an unspecified number of protesters have been detained in recent days, though arrests appear more limited than in comparable protests in past years.

In Tehran—where demonstrations quickly spread across markets, streets, and universities on Monday and Tuesday—there have so far been no confirmed reports of security forces firing on protesters, unlike previous unrest. However, on Wednesday, security forces opened fire in the towns of Fasa, in southern Fars province, and Kouhdasht, in Lorestan province, as protesters attempted to enter governorate buildings.

Online reports initially claimed that an 18-year-old had been killed in Fasa, but a video later surfaced showing the young man alive and saying he was unharmed.

Campus controls and university shake-ups

Protests reached several universities on Tuesday, where students chanted anti-government slogans.

Following confrontations, the heads of campus security at Alzahra, Sharif, and Iran University of Science and Technology were dismissed for “a record of misconduct and failure to properly handle recent student protests.”

Also, six of at least seven detained students in Tehran were later released.

Reformist figures welcomed the unprecedented dismissals. Azar Mansouri, head of Iran’s Reformist Front, called the move “a rational response,” saying it signaled recognition that security and stability cannot be achieved by ignoring protesters’ concerns.

President Masoud Pezeshkian’s administration says it recognizes the public’s right to protest, but it has neither the financial resources to placate the deepening public anger nor the political leverage to confront hardliners who place the blame squarely on the government.

Pezeshkian addressed the situation on social media on Tuesday, writing that people’s livelihoods are his daily concern and that fundamental reforms of the monetary and banking system are on the agenda to protect purchasing power. He also said he had tasked the interior minister with speaking to representatives of the protesters.

The message failed to convince most Iranians, including many of Pezeshkian’s own supporters.

Morteza Nemati Zargaran, a university professor, reminded Pezeshkian in a post on X that recognizing public protests carries no practical guarantees as long as he lacks the necessary authority.

“What action can you take if the protesters’ representatives challenge the country’s overarching policies – policies to which you have repeatedly declared your loyalty? And what will you do if … they are arrested by power centers beyond your government?”

'Closed is cheaper than open'

The economic strain has been especially visible in Tehran’s Grand Bazaar.

Morteza, a 45-year-old former wholesale shoe merchant who recently closed his shop after failing to pay rent, told Iran International that nearly all his fellow traders have joined the ongoing bazaar strike.

“They tell me I’m lucky I shut my shop and left,” he said. “They say they lose less money if they keep their shops closed now than if sell their goods – because it’s impossible to replace the stock at the same price.”

The stagnation has become so severe that some shops have recently advertised installment plans for clothing and shoes – an unprecedented practice in Iran and a sign of sharply declining purchasing power.

Morteza added: “The economic situation is so dire that the government no longer dares to deny it. When someone earning 400 million rials a month (around $280) – still a dream salary for many – is below the poverty line in Tehran, it means almost no worker or employee can endure the pressure anymore. Everyone has reached their limit, in every sense.”

Cautious nod from state media

Concerns over further escalation appear to be growing within official circles.

On Monday, state television – controlled by hardliners opposed to President Masoud Pezeshkian – briefly covered the bazaar protests for the first time.

Cameras were taken into shops, airing interviews in which merchants emphasized that their protests were economic in nature and driven by currency volatility rather than politics.

At the same time, videos circulating on social media showed protesters chanting anti-government slogans in several locations.

According to Morteza, while the protests so far have had a strong economic dimension, they cannot be reduced to bread-and-butter issues alone.

“Livelihood is not the only reason for people’s anger. This time, the government cannot calm society with small handouts, superficial concessions or a crackdown.”

Fear at the bottom, strain in the middle

Iran’s deteriorating economy has devastated low-income households while also eroding the lives of salaried middle-class families who once enjoyed relative stability.

Even by official figures, inflation surpassed 50 percent last month. Yet the government’s proposed budget for next year includes only a 20 percent increase in salaries for civil servants and retirees, deepening concerns over an unbridgeable gap between incomes and living costs.

Middle-class families may still live in reasonably maintained homes, but a burst pipe, a broken car, or a medical emergency can wipe out most of a month’s income, according to widespread accounts on social media.

Downsizing, once a coping strategy, now offers little relief. Iran’s housing market – particularly in Tehran – is experiencing an unprecedented slump, limiting families’ ability to sell or relocate to offset rising costs of food and utilities.

Journalist Mohammad Parsi wrote on X: “In this country… first buying a home became a dream, then a car, a phone, travel – and now even essential goods are disappearing from daily life, just like that, in one of the richest countries in the world.”

Another user, Arian Bahmani, described even buying basic snacks as a financial calculation, calling it “a frightening collapse of living standards.”

“The disaster is not that we can’t buy a house or a car – they’ve been dreams for years,” he wrote. “The disaster is that ‘500,000-rial (about 35 cents) treats are luxury purchases. When buying snacks becomes a financial risk, we are no longer citizens – we are hostages.”

The decree, issued in Vahidi’s former name Vahid Shahcheraghi and read out at a handover ceremony, said the appointment was made following a proposal by the IRGC commander. Senior Guards commanders and military officials attended the event.

Vahidi has been implicated by Argentine prosecutors in the 1994 bombing of the AMIA Jewish community center in Buenos Aires, which killed 85 people.

At the time, Vahidi was the head of the Quds Force, the external operations branch of Iran's sprawling paramilitary organization the Islamic Revolutionary Guard Corps.

Interpol said in a 2009 statement that a red notice for Vahidi was issued in November 2007 at Argentina’s request, adding that a red notice is not an international arrest warrant and that any decision to detain an individual rests with national authorities.

Argentina’s foreign ministry said in April 2024 that it wanted Vahidi arrested in connection with the AMIA case when he traveled abroad as part of an Iranian delegation. Iran has repeatedly rejected allegations of involvement in the attack.

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  Iran appoints official accused of Argentina bombing as deputy military chief

The United States has sanctioned Vahidi for his role in Iran’s suppression of protests, including the use of lethal force by security services during demonstrations sparked by the 2022 death of Mahsa Amini.

The Treasury Department said Vahidi oversaw law enforcement agencies involved in serious human rights abuses and had earlier been sanctioned over alleged links to Iran’s nuclear and weapons programs.

Iranian media have described Vahidi as a veteran Guards commander who held senior posts spanning the IRGC’s intelligence and overseas operations and later served in cabinet roles, including as defense minister and interior minister.