Iran’s Economic Crisis Fuels Protests Amidst Sanctions and Austerity
Recent protests across Iran, sparked by a collapsing currency and soaring living costs, highlight the deepening economic crisis gripping the nation. These demonstrations are not isolated incidents but rather the latest manifestation of a long-standing pattern of unrest triggered by austerity measures implemented by the Iranian government, exacerbated by the impact of international sanctions. Sociologist Ida Nikou’s analysis underscores how the sanctions regime has been integrated into the Islamic Republic’s austerity policies, disproportionately impacting ordinary Iranians while benefiting the ruling classes.
The Roots of the Current Unrest
Protests erupted on December 28, 2025, as the Iranian currency plummeted and the cost of living spiraled out of control. The volatility of the exchange rate disrupted trade and made imports increasingly difficult. In response, the government implemented an emergency measure within its 2025–2026 fiscal budget: the removal of preferential foreign exchange rates for essential goods and key production inputs.
While officials framed this move as anti-corruption reform, promising compensation through cash transfers and targeted support, the reality was a rapid acceleration of inflation. Official inflation reached 42 percent in December, but the price of basic groceries surged even higher, rising 72 percent compared to the previous year. This pushed essential items like bread and dairy out of reach for many working-class families. By early January, the protests had escalated into widespread demonstrations lasting for weeks.
A History of Austerity and Repression
The current crisis is not unprecedented. Over the past decade, successive Iranian governments have implemented price liberalization and currency adjustments, often presented as necessary steps to stabilize markets and combat corruption. But, these policies have consistently functioned as austerity measures, replacing service-based welfare programs with cash handouts that quickly lose value due to chronic inflation.
The 2010 and 2019 fuel price hikes serve as earlier examples of this “shock politics,” both of which triggered mass protests that were met with lethal repression. The current wave of unrest follows a similar pattern, but with heightened intensity. Reports indicate the government has killed thousands and imposed an indefinite communication blackout – including internet and phone access – in what is considered one of the deadliest episodes in the Islamic Republic’s history since the purges of the 1980s.
The Interplay of Sanctions and Domestic Policies
Ida Nikou’s research, detailed in “Governing Crisis–Sanctions, Austerity and Social Unrest in Iran,” emphasizes the crucial connection between external sanctions and internal governance. She argues that any comprehensive understanding of Iran’s crisis must consider both the external pressures of the sanctions regime and the internal mechanisms that manage crisis through austerity and repression. [MERIP]
Nikou’s work focuses on how labor regimes are reshaped under geopolitical pressure, examining how these pressures reorganize governance, capital accumulation, and class relations within Iran. She uses Iran as a case study to understand how external restrictions develop into domestic modes of rule, how scarcity is governed, and how the costs of crisis are disproportionately borne by workers and households. [Ida Nikou]
Looking Ahead
The ongoing protests in Iran represent a critical juncture. The government’s response, characterized by violence and censorship, underscores the deep-seated tensions within the country. Understanding the interplay between external sanctions, internal austerity measures, and the resulting social unrest is crucial for navigating the complex challenges facing Iran and its people. Continued monitoring of developments in Iran, as highlighted by organizations like MERIP, will be essential in the coming weeks and months.