Iran Faces Unprecedented Unrest Amidst Economic Crisis and U.S. Warnings

Iran is no stranger to street protests, but several factors surrounding the current unrest make it very serious.

Monday marks the ninth day since demonstrations broke out, yet even four or five days were enough for President Trump to issue a direct warning to Iranian leaders over the treatment of protesters, saying the US was locked and loaded. Then came the US special forces operation targeting Nicolás Maduro in Venezuela, followed by a second warning on Sunday.

Such direct and potential threats from a sitting US president, issued while protests are still ongoing, are highly unusual and could embolden demonstrators and encourage the unrest to spread further.

Iranian police and security forces have already responded violently almost from the outset, and reports by human rights groups claim that more than 20 people have already been killed. Now eyes are on Trump's possible move.

The protests, which began peacefully on Sunday 28 December, were initially driven by public anger over soaring inflation and the sharp devaluation of the local currency against the US dollar which now stands at about 80% higher than a year ago.

Iran's economy is in deep trouble, with little prospect for growth this year or next. Official annual inflation stands at around 42%, food inflation exceeds 70%, and some basic goods have reportedly risen in price by more than 110%.

International sanctions led by the United States have played a major role in worsening economic conditions, but they are not the full story.

High-profile corruption cases in Iranian courts involving senior officials and their families have reinforced public anger and the belief that parts of the ruling elite are exploiting the crisis.

Many ordinary Iranians believe that certain officials and their relatives benefit directly from sanctions through special arrangements that allow them to control imports and exports, move oil revenues abroad, and profit from money laundering networks.

Even the government officials believe those who are locally called Sanctions Profiteers are to blame more than the sanctions themselves.

Merchants in Tehran's Grand Bazaar were among the first groups to openly protest, closing their shops in response to daily currency fluctuations and taking to the streets to demand government intervention to stabilize the markets.

Demonstrations soon spread beyond the bazaar to other segments of society. Economic slogans quickly turned political, with calls for the removal of the entire Islamic Republic itself.

Students joined the protests, followed by small businesses in other cities and towns and other ordinary Iranians. Within days, chants against Iran's supreme leader once again became a central feature of the demonstrations.

Those demonstrations, which later became known as the Mahsa Movement or Woman, Life, Freedom, shook the foundations of the state but were eventually suppressed through force and mass arrests.

Although the current protests have spread rapidly and persisted for days, they have not yet reached the scale or intensity of the 2022 demonstrations. Journalists in Iran are under immense pressure, and independent international news organizations are either not allowed to report from inside the country or, if granted permission, face severe restrictions on their movements.

This makes verification increasingly difficult, especially as social media can also provide fertile ground for fabrications, unfounded claims, and distorted realities, a challenge further intensified by the rise of AI.

Against this backdrop, many observers believe the present situation could have more serious consequences than 2022. Iran's government is widely seen as being at its weakest point in decades, facing simultaneous pressure from domestic unrest and a dramatically altered regional environment.

The 12-day war in the summer of 2025 between Iran and Israel marked a turning point. The conflict culminated in direct US involvement, including air strikes on Iranian nuclear facilities. The war severely damaged Iran's defense capacity, nuclear infrastructure, and several military and industrial sites.

At the same time, Iran's broader regional position has deteriorated. The fall of Bashar al-Assad in Syria deprived Tehran of a key ally, while sustained Israeli attacks on Hezbollah in Lebanon eliminated much of the group's senior leadership.

More recently, US operations in Venezuela and the snatching of Nicolás Maduro and his wife, Cilia Flores, have further narrowed Iran's options abroad. These developments have reshaped the regional and international environment for Tehran. Iran now has fewer allies to rely on in regional conflicts and fewer channels to move oil revenues overseas.

This is particularly significant given Iran's heavy involvement in Venezuela's oil sector alongside Russia, and its reliance on complex financial arrangements linked to markets believed to be in China.

The disruption of these networks has increased Iran's economic vulnerability at a time of mounting internal pressure. Against this backdrop, Iran's aging supreme leader, Ali Khamenei, appears to be facing one of the most uncertain moments of his rule.

More than three decades of careful planning to build regional proxy forces, sanction-evasion mechanisms, and nuclear infrastructure have been undermined or destroyed in a relatively short period of time. With Trump back in the White House and Benjamin Netanyahu in power in Israel, there appears to be no clear diplomatic or strategic path out of the current crisis without a hefty price.

For years, Khamenei and his inner circle justified massive spending on regional allies and the nuclear program as necessary investments in Iran's long-term security and technological advancement. Today, that argument appears increasingly hollow. As pressure builds both inside and outside the country, security at home, once presented as the ultimate payoff of those policies, seems more distant than ever.