In the past few days, Iran has experienced the biggest protests against the ruling Islamic Republic since it crushed the 2022 “Woman, Life, Freedom” uprising. The regime is the weakest it has ever been: Its proxies, from Hezbollah to the Assad regime in Syria, lie shattered across the Middle East, while its vaunted missile force was dealt a serious blow by Israel during their 12-day conflict in June 2025. Tehran and much of the rest of the country are running out of water; the economy is in sharp decline; and more Iranians are going hungry, especially members of what was once the middle and upper-middle classes.
The most recent protests were triggered by deteriorating economic conditions, but they are the most recent manifestation of deeper-rooted public anger against the regime. The immediate trigger for these protests appears to have been a budget bill, rejected by parliament, in which the government proposed removing the preferential exchange rate (285,000 rials to the U.S. dollar)—a mechanism widely viewed as a rent distribution channel. Regime-connected networks profit from the spread between official/preferential rates and the open market.
While the preferential rate is widely viewed as a corrupt insider deal for regime-connected networks, many households also feared that removing it—without a credible, transparent replacement—would immediately raise prices for basic goods. That mix of rage at corruption and anxiety about inflation turned the debate over the exchange rate into a trigger for protest.
In the days after the budget dispute, the fight over “reform” versus rent distribution morphed into a currency panic: President Masoud Pezeshkian’s administration and allied technocrats argued that the preferential rate fuels rent-seeking, whereas a conservative-led parliament leadership and the entrenched import and intermediary interests benefit from subsidized foreign exchange. In late December, the rial slid to around 1.39 million per $1 on the open market, with the shock first showing up in import-heavy businesses, especially in Tehran’s Grand Bazaar, where inventory is priced against the open-market dollar rate. That pushed many shopkeepers, especially in the mobile phone and computer markets, to close shop and go on strike.
Over the past few days, the sharp rise in the exchange rate has effectively broken normal price-setting. In these conditions, the first sector to feel the shift is the bazaar itself—the economy’s front line. When buying and selling is slow, inventories become challenging to manage, and pricing becomes unstable to the point that routine business becomes impossible, which caused the bazaaris—the bazaar merchants who remain a key part of the economy—to go on strike.
The bazaar strikes have raised the hopes of anti-regime activists, as the bazaar played a crucial role in the 1979 overthrow of the shah. Alarmingly for the regime, truck drivers, students, and everyday Iranians have also joined the strikes, expanding the coalition regime. Many Iran watchers are now anxiously expecting the collapse of a once seemingly mighty regime, in the same way that the Assadists suddenly crumbled in Syria in 2024.
But previous rounds of protests have spurred similar hopes that didn’t materialize. The regime’s security forces are stronger than many assume, the ruling economic elite fears instability, and the opposition remains divided and increasingly polarized. This may be the final straw for a weakened regime—or it may be only another step in the Iranian people’s long struggle.
There are other triggers than the currency collapse. The recent economic plunge among Iran’s middle—and even upper-middle—classes has been a major driver of the current revolt. According to one of our sources in Iran, financial conditions have deteriorated sharply for households once considered comfortably middle class. Many can no longer afford a whole chicken and are instead buying the cheapest, often barely edible parts. Our source, who—like others in country—asked for anonymity for their own protection, described seeing a man in a supermarket tear off the wings of a chicken and run out of the store.
Meanwhile, parts of Tehran are facing hourslong water rationing while other districts are hit by rolling electrical blackouts. For most people, the problem is no longer just that living is expensive—it’s that life is becoming increasingly precarious. By Jan. 8, protests and strikes had spread nationwide, with reports of demonstrations across all 31 provinces—many already battered by 2025 water shortages and years of poverty—alongside widening internet disruptions and periodic blackouts aimed at choking coordination and visibility.
The regime’s response to the protests has already been violent and sometimes lethal, but it has ample capacity to escalate rapidly if it decides that the moment requires it. The appointment of Ahmad Vahidi as the deputy commander of the Islamic Revolutionary Guard Corps (IRGC)—the regime’s most powerful security and paramilitary force—may be a warning to the public, as Vahidi is not a regular bureaucrat; he is a hard-line security figure and one of the system’s longtime architects of repression.
He is also reported to be close to Mojtaba Khamenei, Ayatollah Ali Khamenei’s son and assumed successor. As of the early days of 2026, according to one of our sources, the IRGC had declared a “yellow” state of emergency, stopping short of a full “red” posture that would likely signal a much bloodier crackdown.
The judiciary has signaled that the gloves can come off. On Monday, Judiciary Chief Gholamhossein Mohseni Ejei said there would be “no leniency” for those labeled “rioters,” and he urged prosecutors and judges to move fast and act “firmly”—a clear green light for harsher charges and a wider crackdown if the regime escalates.
The most important sectors of the bazaar have not joined the protests and are instead waiting and watching to see which side gains the upper hand. These senior bazaaris command much greater wealth than the more small- and medium-scale merchants that initiated the current unrest. They are less exposed to day-to-day currency volatility and, in many cases, are embedded in the system’s patronage networks. They have a lot to lose if the regime collapses, especially if the aftermath is filled with uncertainty and chaos.
Historically, the bazaar has generally not aligned with protests led by students, the middle class, or broader public sociopolitical movements such as the Green Revolution and the Woman, Life, Freedom movements. In some instances, powerful bazaaris have criticized protests as disruptive to public order and business continuity. One of the sources we spoke to also noted a persistent trust deficit: Surveys have placed bazaar merchants among groups viewed negatively by the public. Bazaaris are often seen as hoarders and price-gougers—and as people with insider access to scarce goods and hard currency when everyone else is squeezed.
Importantly, the regime still maintains the ability to calm the markets if it wanted to. A likely tool is restoring preferential exchange mechanisms—even at a higher rate—to calm import pricing and reopen the rent channels that stabilize insider coalitions. Additionally, the regime often prefers targeted arrests and quiet intimidation over mass violence, especially when it wants to avoid generating martyrs or broad solidarity.
The lack of unity among the opposition to the regime is another main factor in the regime’s ability to survive the unrest. The opposition has never been united, but it is now becoming even more split into two distinct and warring camps, one supporting the return of the Pahlavi monarchy to the country and the rest opposing the monarchists’ perceived attempts at monopolizing power in a future Iran.
The monarchist movement has the backing of elements of the Israeli government and is being unrelentingly promoted by well-funded Persian-language news stations such as Iran International. But the monarchists do not have the leadership, numbers, or skills to overpower the rest of the opposition.
A political analyst we spoke to said that the opposition’s fragmentation is being reinforced by what he described as “toxic internal behavior.” According to this analyst, “people share grievances,” but “without shared values and mutual commitment, there’s no movement.”
“Anger is abundant in Iran,” he said. “Coordination is scarce.”
He argued that romanticizing the Pahlavi era has become a divisive presence, and that aggressive online pile-ons and factional policing make coalition-building more difficult.
Many are also watching U.S. President Donald Trump’s reaction. He started on Truth Social, warning that if Tehran “shoots and violently kills peaceful protesters,” then the United States would “come to their rescue,” adding, “We are locked and loaded and ready to go.” He then repeated the threat on The Hugh Hewitt Show, saying that if the regime “start[s] killing people” then the United States would “hit them very hard” and Iran’s leaders would “pay hell.”
After the U.S. raid in Caracas that captured President Nicolás Maduro, Tehran has more reason to believe that he might actually act. But he also refused to “anoint” Reza Pahlavi—calling him “a nice person” but saying that a meeting may not be “appropriate” and that Iranians should “see who emerges.”
Iranians have a proverb: “Same donkey, different saddle.” Many don’t want “regime change” to mean a cosmetic swap at the top—they want a clean break from the same corrupt machinery running the country under a new label. Iran has seen several major, largely peaceful uprisings since 2017, and each time, the state has answered with brutality. If the current protests were to generate enough leverage to actually topple the regime, then a few things would have to change.
Senior bazaaris and regime-linked oligarchs must break ranks and join the movement; much of the economic elite fears upheaval even when it despises the regime. Protesters need to hold territory—staying in the streets at night, occupying sensitive public locations, and contesting control of key spaces.
Critically, protesters need a believable “day after” plan—fair rules, real accountability, and disciplined collective leadership—so that unity comes from shared commitments, not a mythical savior, and fence-sitters see an alternative to chaos.
Demonstrations must be paired with organized noncooperation—strikes; slowdowns; and closures in transport, public services, energy, and bazaars—so the system can’t function normally.
And finally, the revolutionary movement needs a unifying story built on dignity and regime failure—with water possibly being the proof—linking local grievances to one national pattern of misrule while signaling a responsible foreign policy that reassures neighbors and the world.
The Islamic Republic is the weakest that it has ever been. But that does not mean that regime change in Iran is imminent—at least, not the type of regime change that would improve the lives of ordinary Iranians and lead to a more stable and prosperous Middle East.