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The New Year demonstrations in Iran came at the end of a year marked by war, economic strain, and political uncertainty.
In 2025, Israel launched a 12-day attack on Iran, assassinating senior military leaders and targeting military and economic infrastructure. The assault was followed by US strikes on Iranian nuclear facilities in Fordow, Isfahan, and Natanz.
As the year closed, protests erupted in the capital, Tehran, and in cities across central and southwestern Iran, beginning in the final week of 2025 and continuing into the first days of 2026.
These protests were not unprecedented. Iranian society has witnessed thousands of demonstrations since the mid-1990s, varying in scale and levels of participation. Over the years, the drivers of these demonstrations have differed, ranging from restrictions on social and political freedoms to the deterioration of economic conditions.
In Iran, recurring protests are shaped by the interaction between domestic politics, governance, foreign policy, and the impact of sanctions, which together influence both the emergence of dissent and the state’s response to it, particularly amid sustained sanctions and ongoing tensions with Israel and the United States.
The protests that closed the year followed a strike by merchants and bazaar owners over a sharp decline in purchasing power. This accelerated decline was driven by rising inflation, reflected in the falling value of the Iranian rial, which lost the equivalent of about 50 percent of its value, and by an increase in unemployment to 7.5 percent.
This was not the first time economic grievances had sparked unrest. In 2008, following an increase in the rate of value-added tax, the bazaar erupted in protest, forcing the government of President Mahmoud Ahmadinejad to retreat from implementing the measure.
More limited demonstrations followed in 2010, after the Ahmadinejad government attempted to impose a law raising the income tax rate to 70 percent, before retreating again under popular pressure.
Across Iran’s protest movements over different periods, economic concerns have consistently featured alongside demands for greater social freedom, including opposition to compulsory hijab laws. These issues prompted widespread demonstrations in 2022, after the killing of 22-year-old Mahsa Amini while in custody over the hijab law, and the authorities’ attempts to blame her for what happened, which fuelled public anger.
Nevertheless, no fundamental reforms have been undertaken by successive governments. President Mohammad Khatami (1997–2005) proposed an alternative economic strategy focused on reducing reliance on oil revenues and developing non-oil sectors to mitigate the impact of sanctions, which often target Iran’s oil industry. These measures did not succeed, however, as the nuclear crisis escalated after the publication of the first images of the Natanz facility in August 2002, increasing economic pressure from abroad.
From 2005 to 2013, Ahmadinejad pursued a populist approach, centred on redistributing oil revenues through the so-called oil-to-cash programme. This strategy failed, encountering resistance from powerful domestic economic interests and the tightening sanctions regime imposed by the United Nations Security Council, under resolutions 1696, 1737, 1747, 1803, and 1929. These measures restricted trade, froze financial assets, and curtailed access to international finance, building on years of unilateral US sanctions dating back to 1980.
Bad governance, or sanctions?
As demonstrations have expanded in scope over time, an enduring question has resurfaced: To what extent do sanctions explain Iran’s economic crisis, and where does governance bear responsibility?
Iran’s economy has suffered from longstanding structural problems that have not been addressed since 1980, as priorities linked to revolutionary ideology and its associated costs have taken precedence over building a resilient state economy. Economic and financial legislation failed to keep pace with global developments. As a result, Iran became increasingly isolated from international markets, compounding internal crises and amplifying the impact of sanctions across nearly all sectors.
This raises a persistent question for Iran’s political and economic elite: Why have successive governments failed to advance economic policies and programmes capable of countering the effects of sanctions?
In this context, Iran’s economic partnerships with China, most notably the 25-year strategic cooperation agreement – valued at $400bn and covering energy, telecommunications, transport, and infrastructure – have not delivered economic stability. Nor has the strategic partnership with Russia, signed in early 2025 and intended to strengthen cooperation over two decades, improved Iran’s economic situation.
Together, these partnerships have failed to mitigate the harsh consequences of sanctions imposed by the US and the European Union.
Iranian public opinion, as reflected in protest slogans, has long linked foreign policy, particularly Iran’s involvement in the Middle East to the depletion of national income. Iran’s support for proxies and armed groups — including in Lebanon, Iraq and Yemen, as well as Palestine — has long been part of its regional strategy, drawing on funding, training, and logistical aid from Tehran. As living conditions deteriorated, the slogan “No Gaza or Lebanon, let my life be a scapegoat for Iran” was heard repeatedly, emerging as a defining feature of demonstrations at the end of 2024.
Since early 2025, however, this linkage has become less convincing as an explanation for Iran’s economic crisis. Iranian influence has declined significantly in Lebanon, Syria, Gaza, and Yemen, weakening the argument that regional engagements are the primary drain on state resources. This shift has gone so far that some Iranian military officials have even demanded that Syria repay around $50bn in debt to Iran — a claim rejected by members of Syria’s new interim government as they prepare a compensation bill against Tehran for the costs of its support for the regime during the civil war rather than accept repayment.
For the first time, Supreme Leader Ali Khamenei and President Masoud Pezeshkian have publicly acknowledged that responsibility for Iran’s economic situation cannot be placed solely on sanctions. This admission underscored the continuing centrality of governance failures and clarified how the leadership interprets the protests that followed the Israeli and US attacks in the summer of 2025.
Diverging narratives and the risks ahead
Iran’s leadership now advances two competing narratives to explain the demonstrations. The first, articulated by the supreme leader and the president, centres on failures in economic governance and recognises that sanctions alone cannot account for the depth of the crisis. The second, promoted by the security establishment, continues to emphasise the role of external actors in inciting unrest and targeting the regime.
This divergence creates confusion within state institutions, as the security narrative implicitly frames the demonstrations as an existential threat. In doing so, it deepens social tensions and widens the gap between the regime and society.
Historically, concerns over regime survival have strengthened the position of the security establishment in responding to protests. Today, however, a changed internal and regional context places 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, the confidence and military capability felt by Israel, combined with what Iranian leaders perceive as unlimited US support, has enabled Israeli decision-makers to seriously contemplate a new war on Iran. Israel has effectively begun a second military operation through a clear narrative that it will not allow Iran to enrich uranium at all, and that the Iranian nuclear program should be dismantled just as the Libyan nuclear program was dismantled in 2003. Such a conflict would aim to render the regime fragile, politically, economically, and in security terms.
This prospect has intensified Iran’s internal confrontation with its society, raising the possibility that a prolonged state of conflict could eventually lead to regime change, even if only over time, with the declared aim of neutralising what Israel regards as the “Iranian threat” once and for all.
The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance.
