Iran’s New Year demonstrations come at the end of a year marked by war, economic tensions and political uncertainty.
In 2025, Israel launched a 12-day offensive against Iran, assassinating military leaders and targeting military and economic infrastructure. Following this attack, the United States attacked Iranian nuclear facilities in Fordow, Isfahan, and Natanz.
As the year ended, protests erupted in the capital Tehran and cities in central and southwestern Iran, starting in the last week of 2025 and continuing into the first days of 2026.
These protests were not unprecedented. Iranian society has witnessed thousands of demonstrations of varying sizes and levels of participation since the mid-1990s. Over the years, the drivers of these demonstrations have varied, ranging from restrictions on social and political freedoms to deteriorating economic conditions.
In Iran, recurring protests are shaped by the interplay of domestic politics, governance, foreign policy, and the impact of sanctions, influencing both the emergence of opposition and the state’s response to it, especially in the face of persistent sanctions and tensions between Israel and the United States.
The protests, which ended the year, followed strikes by shop and bazaar owners citing a sharp decline in purchasing power. This accelerated decline was caused by the decline in the value of the Iranian rial, which lost the equivalent of approximately 50 percent of its value, and the rise in inflation, reflected in the rise in the unemployment rate to 7.5 percent.
This was not the first time economic dissatisfaction caused anxiety. In 2008, a value-added tax increase sparked protests in the bazaar and forced President Mahmoud Ahmadinejad’s government to withdraw from implementing the measure.
More limited demonstrations followed in 2010 after Ahmadinejad’s government attempted to implement a law that would raise the income tax rate to 70 percent, but backed out again due to popular pressure.
Throughout Iran’s various periods of protest movements, economic concerns have consistently featured alongside demands for greater social freedoms, such as opposition to compulsory hijab laws. These issues fueled public outrage in 2022, when 22-year-old Mahsa Amini was killed while in custody over hijab laws, sparking mass demonstrations and attempts by authorities to blame her for what happened.
Despite this, successive governments have not undertaken fundamental reforms. President Mohammad Khatami (1997-2005) proposed an alternative economic strategy focused on reducing dependence on oil revenues and developing non-oil sectors to alleviate the effects of sanctions that often targeted Iran’s oil industry. However, these measures were unsuccessful as the nuclear crisis escalated after the first images of the Natanz facility were released in August 2002, and economic pressure from abroad increased.
From 2005 to 2013, Ahmadinejad pursued a populist approach centered on redistributing oil revenues through so-called oil-to-cash programs. This strategy failed in the face of the resistance of powerful domestic economic interests and the strengthening of the sanctions regime imposed by the United Nations Security Council under Resolutions 1696, 1737, 1747, 1803, and 1929. These measures build on years of unilateral U.S. sanctions dating back to 1980 that restricted trade, froze financial assets, and limited access to international finance.
Bad governance or sanctions?
As the scope of the demonstrations expands over time, persistent questions have resurfaced. To what extent do sanctions explain Iran’s economic crisis, and where does governance responsibility lie?
Iran’s economy has suffered from long-standing structural problems that have remained unaddressed since 1980, as priorities related to revolutionary ideology and its associated costs have taken precedence over building a resilient national economy. Economic and financial law has not been able to keep up with global developments. As a result, Iran has become increasingly isolated from international markets, exacerbating its domestic crisis and amplifying the impact of sanctions across nearly all sectors.
This raises deep questions for Iran’s political and economic elites. Why have successive governments failed to pursue economic policies and programs that counteract the effects of sanctions?
In this context, the economic partnership between Iran and China, especially the 25-year strategic cooperation agreement worth a total of $400 billion covering energy, communications, transportation, and infrastructure, has not brought economic stability. A strategic partnership with Russia, signed in early 2025 and aimed at increasing cooperation over a 20-year period, did not improve Iran’s economic situation.
Together, these partnerships have failed to alleviate the harsh consequences of sanctions imposed by the United States and the European Union.
As reflected in protest slogans, Iranian public opinion has long associated foreign policy, particularly Iran’s involvement in the Middle East, with the depletion of national income. Iran has long supported proxies and armed groups in Palestine, as well as Lebanon, Iraq and Yemen, as part of its regional strategy, drawing on funding, training and logistics from Tehran. As living conditions deteriorated, the slogan “No more Gaza, no Lebanon, let’s make my life a scapegoat for Iran” was heard repeatedly and emerged as a feature of the demonstrations in late 2024.
However, since early 2025, this link has become less convincing as an explanation for Iran’s economic crisis. Iran’s influence in Lebanon, Syria, Gaza, and Yemen has declined significantly, weakening the argument that regional involvement is a major drain on national resources. The changes have gone so far that some Iranian military officials are even demanding that Syria repay its roughly $50 billion debt to Iran. Members of Syria’s new transitional government are preparing a reparations bill for Tehran for the cost of supporting the regime during the civil war, rejecting the demands rather than accepting repayments.
For the first time, Supreme Leader Ali Khamenei and President Massoud Pezeshkian publicly acknowledged that sanctions cannot be solely responsible for Iran’s economic situation. The confession highlighted how governance failures remain central and sheds light on how the leadership is interpreting the protests following the attacks by Israel and the United States in the summer of 2025.
Diverging stories and future risks
Iranian leaders are currently deploying two competing narratives to explain the demonstrations. The first, expressed by the supreme leader and president, focuses on the failures of economic governance and recognizes that sanctions alone cannot explain the depth of the crisis. The second is promoted by security authorities, who continue to emphasize the role of external actors in stirring up unrest and targeting the regime.
This divergence creates confusion within state institutions, as security narratives implicitly frame demonstrations as an existential threat. This deepens social tensions and widens the gap between the government and society.
Historically, concerns about regime survival have strengthened the position of security authorities in responding to protests. Today, however, changing domestic and regional conditions are putting pressure on both political and security institutions to respond differently if the survival of the political system is to be ensured.
At the same time, Israel’s perceived confidence and military capabilities, combined with what Iranian leaders perceive as unrestricted support from the United States, have enabled Israeli decision-makers to seriously consider a new war against Iran. Israel effectively launched a second military operation with a clear narrative that it would not allow Iran to enrich any uranium and that Iran’s nuclear program should be abolished just as Libya’s nuclear program was abolished in 2003. Such a conflict would aim to weaken the regime from political, economic and security perspectives.
This prospect intensifies internal conflict with Iranian society and raises the possibility that a prolonged state of conflict will eventually lead to regime change, even if only over time, with the stated aim of completely neutralizing what Israel sees as the “Iranian threat.”
The views expressed in this article are the author’s own and do not necessarily reflect the editorial stance of Al Jazeera.
