Iran's government is embarking on a perilous strategy of economic concessions in a bid to quell nationwide protests now entering their ninth day. Demonstrations ignited by soaring inflation and a collapsing currency have escalated into calls for fundamental political change, an anti-corruption drive, and relief for the impoverished.
Nationwide Unrest and International Reaction
The scale of the unrest is significant, having spread to 26 of Iran's 31 provinces and more than 100 towns and cities. According to a US-based human rights group, the death toll has surpassed 20, with nearly 1,000 arrests reported. The protests, which began in Tehran's Grand Bazaar, have even reached university campuses, with security forces seen entering the University of Birjand in the southeast.
International figures have weighed in on the crisis. UN Secretary-General António Guterres has urged Iran to respect the right to "protest peacefully" and prevent further casualties. Conversely, former US President Donald Trump vowed that America would "come to their rescue" if protesters were violently attacked, a statement Tehran dismissed as "psychological warfare." Israeli Prime Minister Benjamin Netanyahu suggested the protests could represent a "defining moment" for the Iranian people.
Economic Reforms and Harsh Warnings
At the heart of the government's response are economic reforms announced by President Masoud Pezeshkian. He is abolishing a decade-old system of preferential foreign exchange rates, a scheme widely criticised for fuelling corruption and failing to aid the poor. Official inflation reached 52.6% in December, a key driver of public anger.
Pezeshkian's plan shifts subsidies from importers directly to consumers, though his spokesperson, Fatemeh Mohajerani, admitted this "will cause the prices of some items to rise" in the short term. Concurrent budget revisions propose:
- Pay rises of up to 43%, instead of the planned 20%.
- A cut in value-added tax from 12% to 10%.
- An allocation of $8.8bn in subsidised foreign exchange to control prices of basic goods.
These concessions come alongside a stark warning from judiciary head Gholamhossein Mohseni Ejei, who declared the period of "concessions and appeasement" over, blaming the US and Israel for supporting the "chaos."
Underlying Crises and Future Challenges
The protests highlight deep-seated issues beyond immediate economics. Reform Front leaders, aligned with Pezeshkian, have demanded action against security forces accused of firing on protesters inside a hospital in Ilam province. Activist Azar Mansouri labelled the incident "a disaster" and called for the perpetrators to be brought to justice.
Iran's future stability hinges on whether policymakers can navigate persistent US sanctions to tackle systemic corruption, stabilise the rial, reduce inflation, and address chronic issues like industrial shutdowns from electricity and water shortages. The government's gamble is that direct economic relief can placate public anger, but with security forces adopting a harsher posture and protest demands broadening, the path forward remains fraught with risk.
