Iran president says government will stop subsidized dollar handouts

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.

• 

  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.

“I have seen no indication that the ruling system wants to change its paradigm,” Alaei said in a video interview with the news site Entekhab, published on Monday. “The current situation shows that previous policies and strategies have not worked.”

Alaei said sanctions had left Iran unable to export freely or access the global banking system, while the domestic economy remained dominated by the state, despite what he described as historical evidence that state-led economic models do not succeed.

“We cannot export normally and we have no access to the world’s banking system,” he said. “At the same time, the economy is still run by the state, even though human experience shows such models fail.”

He said Iran could still pursue a change in direction but argued that parts of the ruling establishment viewed any paradigm shift as a retreat from core values. Others, he added, believed revising failed strategies was itself a way of safeguarding the country’s fundamental principles.

Alaei also warned that the United States and Israel were moving toward what he described as a “Plan B,” centered on intensifying sanctions to worsen economic conditions, trigger unrest and potentially justify military intervention – unless Iran addressed domestic economic mismanagement and recalibrated its foreign policy.

He said a diplomatic opening could still be possible if the United States were to lift all sanctions, even under current political conditions.

Protests spread across Iran on Tuesday, with universities and commercial districts emerging as key hubs amid a widening strike by shopkeepers in Tehran and other cities.

Human rights and student groups said at least 11 protesters were arrested near Tehran’s Shoush Square.

Five students were also detained at universities in the capital, four of whom were later released.

Student outlets reported that one student at Tehran’s Amirkabir University was severely injured during a campus crackdown after members of the Basij militia of the Islamic Revolutionary Guard Corps attacked their gathering.

Videos circulating on social media showed students chanting anti-government slogans, dismantling signs linked to the office of the Supreme Leader’s representatives and confronting security forces at campus gates.

In some clips, officers appeared to retreat as crowds advanced; in others, security forces were seen firing tear gas and, in several locations, shooting toward demonstrators.

The protests coincided with the government’s announcement that public offices would close in nearly 25 provinces, including the capital on Wednesday - a move officials said was necessary to conserve energy amid a severe cold snap. However, online weather data showed no significant drop in temperatures.

The unrest began Sunday after shopkeepers in several Tehran malls and later the Grand Bazaar launched a strike in response to the rial hitting a record low against the US dollar.

Since then, videos verified by Iran International have documented protests in Tehran, Karaj, Qeshm Island, Isfahan, Kermanshah, Shiraz, Yazd, Kerman and several other cities.

Government spokeswoman Fatemeh Mohajerani acknowledged widespread frustration, saying the protests reflected “intense economic pressure” and that peaceful assembly is recognized under Iran’s constitution.

President Masoud Pezeshkian said he instructed the interior minister to engage in dialogue with representatives of the demonstrators to hear their “legitimate” demands. He later attended a meeting with a handpicked group of trade officials on Tuesday.

Heavy security deployments were reported in Tehran, Mashhad, and Kermanshah, with residents describing checkpoints, constant patrols, and the presence of both uniformed and plainclothes officers.

In Hamadan, footage appeared to show security forces opening fire toward protesters, while riot police in Tehran and the nearby city of Malard used tear gas to disperse crowds.

Demonstrations were held on Tuesday night in several parts of Iran, and are expected to continue into a fourth day, with more Iranian businesses announcing on social media that they will close in solidarity with the movement.

Historically, in Iran, religious institutions and conservative merchants—the Bazaaris—were inseparable allies. It was the Bazaaris who bankrolled the anti-state revolution of 1979, famously chartering the plane that carried Ayatollah Khomeini back to Tehran.

Yet, 46 years later, the Islamic Republic has managed to alienate its oldest and most critical constituency. For the Iranian merchant today, that alliance is dead, and commerce has become a losing game.

Despite having no hand in inflation, merchants are often blamed as price gougers. If they reject state-mandated pricing, they are accused of hoarding and tampering with the market; if they comply, they may not be able to afford to restock their inventory, selling their way into bankruptcy.

Simultaneously, the centralized allocation of foreign currency for imports drags on for months, while exporters are forced to sell their hard-earned foreign currency at losses due to state pressure.

• 

  Stealth austerity: Tehran seeks fuel price hike without a reckoning

The atmosphere grew more volatile last week with the announcement of a new gasoline pricing policy, which exacerbated existing anxieties about the economy.

The release of the next year’s budget was the last straw. With oil revenues projected to cover a mere 5% of administrative costs, the government wants the public to foot the bill through deficit spending and significant tax increases.

The trade-off is stark: while every subsidy has been stripped from the ledger, the budget for security and defense has increased. By prioritizing the military and security over public welfare, the state has effectively transferred the entire burden onto the people’s dinner tables.

The market is rejecting this pressure. Merchants argue that they are being suffocated to fund the state's regional ambitions. Facing chronic 60% inflation and the weight of sanctions, business owners can no longer survive, let alone profit.

The message from the bazaar is clear: the economy cannot sustain the vows to rebuild the missile arsenal.

The state’s response to the protests has been predictable: a photo-op meeting with a handpicked group of supportive businessmen and the scapegoating of the Central Bank Governor.

The dismissal of Mohammad-Reza Farzin had been on the table for months, held in reserve as a sacrificial offering. Now, with protests spreading throughout the country, the administration offers his firing as a promise of change.

But the Iranian people see through this theater. They know the Central Bank Governor is not an independent policymaker, but a mere functionary. Replacing him with Abdolnaser Hemmati—a recycled official previously fired from the same post over rial's devaluation—signals continuity, not reform.

Public slogans reveal that the bazaar and the street are now speaking with one voice. The grievances have moved beyond daily economics; they challenge the specific governing priorities that drive this decline. The public understands that their economic distress is not an accident of mismanagement, but the calculated cost of the state's strategic choices.

This leaves the Islamic Republic with a binary choice: abandon regional ambitions and missile proliferation to return to the negotiating table, or double down on repression.

As evidenced by the direct fire opened on protesters yesterday, the regime has chosen the path of force. The market’s message is unmistakable: the people want fundamental change. The government’s answer is not reform, but bullets.