Society / Migration
Economic Collapse and Protests in Iran
Track migration trends, cross-border population movement, demographic pressure and social responses through structured curated summaries.
Source material: How Iran’s Middle Class Got Wiped Out | AB Explained
Key insights
- On December 28th, 2025, Reza, an Iranian merchant, struggles to survive while running a small electronics shop in Tehran
- Due to US and international sanctions, Samsung cannot officially sell phones in Iran, leading to inflated prices through middlemen
- Reza faces a shocking price increase of 40% for a replacement phone, making it impossible for him to price his products affordably
- Merchants across Iran, including Reza, protest against the economic situation, chanting that they may die but wont accept humiliation
- As of December 2025, the currency collapse requires Iranians to pay around 1.4 million Riyals for one US dollar on the open market
- The protests that began with middle-class merchants have escalated into nationwide unrest, reminiscent of the 2019 protests triggered by a fuel price hike
Perspectives
Analysis of economic collapse and protests in Iran.
Economic Struggles of the Middle Class
- Highlights the severe impact of currency collapse on merchants like Reza
- Describes the protests as a response to economic grievances
- Argues that the middle class is being crushed by sanctions and mismanagement
- Explains how the dual exchange rate system initially benefited Bazaaris
- Details the marginalization of Bazaaris by state-backed Bonyads
- Describes the removal of the NEMA system as a devastating blow to the middle class
Government's Economic Policies
- Claims that the government aimed to stabilize the economy post-revolution
- Argues that sanctions were unforeseen consequences of international actions
- Describes the governments prioritization of Bonyads over Bazaaris as a necessity
- Justifies the removal of the NEMA system as a means to preserve state reserves
- Highlights the governments focus on essential imports to maintain stability
- Defends the dual exchange rate system as initially beneficial for the economy
Neutral / Shared
- Notes the historical context of Irans economic development
- Describes the role of the clergy in mobilizing opposition against the Shah
- Explains the relationship between Bazaaris and the clergy during the revolution
- Mentions the impact of international sanctions on Irans economy
- Highlights the irony of exiled figures in the current protests
Metrics
price_increase
40%
increase in price for a replacement phone
This significant price increase reflects the impact of sanctions and currency devaluation on everyday commerce.
the new price for the same model is not 210 million Riyals, roughly 150 US dollars at the market rate. Over just a few months, the replacement costs is jumped by about 40%.
currency_exchange_rate
1.4 million Riyals
cost of one US dollar on the open market
The collapse of the currency indicates severe economic distress, affecting purchasing power and living standards.
as of December 2025, Iranians need around 1.4 million Riyals to buy one US dollar on the open market.
oil_revenue
enormous revenues from oil exports USD
economic impact during the Shah's rule
High oil revenues enabled extensive state-led development but also exacerbated inequality.
During the 1960s and 1970s, oil money was pouring into Iran.
legal_requirements
legally required to wear hijab N/A
cultural restrictions in 2026
Reflects the ongoing cultural and legal constraints faced by women in Iran.
women are still legally required to wear hijab and face penalties if they don't.
development_projects
huge amounts of money on large-scale development projects USD
state spending during the Shah's rule
Highlights the focus on infrastructure at the expense of equitable wealth distribution.
the Shah's government spending huge amounts of money on large-scale development projects.
exchange_rate
multiple exchange rates
system introduced after the revolution
This system allowed for significant profit margins for connected traders.
The government created multiple exchange rates, each serving a different purpose.
sanctions_effect
a whole web of them from the U.S. Security Council and the European Union
impact of sanctions on Iran's economy
The extensive sanctions network severely restricts Iran's economic activities and international trade.
imagine Iran facing not just U.S. sanctions, but a whole web of them from the U.S. Security Council and the European Union
banking_access
losing access to normal international transfers
Iranian banks' international operations
Restricted banking access complicates Iran's ability to engage in global trade and manage oil revenues.
by the mid-2000s, Iranian banks were increasingly losing access to normal international transfers
Key entities
Timeline highlights
00:00–05:00
Reza, an Iranian merchant, faces a 40% price increase for a replacement phone due to US sanctions and currency collapse, making it impossible to price his products affordably. This situation has led to widespread protests among merchants in Iran, highlighting the economic struggles and erosion of the middle class.
- On December 28th, 2025, Reza, an Iranian merchant, struggles to survive while running a small electronics shop in Tehran
- Due to US and international sanctions, Samsung cannot officially sell phones in Iran, leading to inflated prices through middlemen
- Reza faces a shocking price increase of 40% for a replacement phone, making it impossible for him to price his products affordably
- Merchants across Iran, including Reza, protest against the economic situation, chanting that they may die but wont accept humiliation
- As of December 2025, the currency collapse requires Iranians to pay around 1.4 million Riyals for one US dollar on the open market
- The protests that began with middle-class merchants have escalated into nationwide unrest, reminiscent of the 2019 protests triggered by a fuel price hike
05:00–10:00
Iran was once a rising economic power and ally of the United States, characterized by significant modernization during the 1960s and 1970s. However, this modernization led to economic inequality and discontent among the traditional merchant class, the Bazaaris, who felt marginalized by the Shah's policies favoring large state-run companies.
- Iran was once a close ally of the United States and was seen as a rising economic power in the 1970s
- During the 1960s and 1970s, Iranian women could wear mini skirts in public, contrasting sharply with the legal requirement to wear hijab in 2026
- Before the 1979 revolution, Iran was ruled by Shah Muhammad Reza Palavi, a pro-Western authoritarian monarch with centralized political power
- The Shahs government spent enormous revenues from oil exports on large-scale development projects, leading to rapid modernization
- Despite modernization, wealth was unevenly distributed, and many ordinary Iranians felt excluded from decision-making
- The Bazaaris, a traditional merchant class, were negatively impacted by the Shahs policies favoring large state-run companies and western-style corporations
10:00–15:00
The clergy and Bazaaris in Iran formed a strategic alliance that played a crucial role in mobilizing opposition against the Shah, culminating in the 1979 revolution. After the revolution, the new government initially favored the Bazaaris through a dual exchange rate system that allowed them to profit from importing goods at a subsidized rate.
- The clergy in Iran held moral authority and were seen as trustworthy figures by ordinary Iranians, especially outside elite circles
- The relationship between the Bazaaris and the clergy was long-standing, with Bazaar merchants funding mosques and clerics legitimizing commercial dealings
- As dissatisfaction with the Shah grew, the political relationship between the Bazaaris and clergy intensified, with Bazaaris financing strikes and using their networks to spread information
- Closing the Bazaar in protest sent a powerful signal, freezing a significant part of the urban economy
- The clergy provided a unifying narrative against the Shah, framing opposition in terms of justice and resistance to corruption
- Mosques became organizing hubs, and sermons mobilized diverse groups, contributing to the 1979 revolution that overthrew the monarchy
15:00–20:00
The Iranian government established semi-public foundations called Boniads after the revolution, which evolved into powerful business empires that marginalized the traditional merchant class, the Bazaaris. This shift, compounded by escalating international sanctions, significantly weakened the economic position of the Bazaaris and the middle class in Iran.
- After the revolution, the new government took over Shas assets and royal-linked families wealth, bundling them into semi-public foundations called Boniads
- Boniads, intended to function like religious charities, evolved into massive business empires with political backing, controlling key industries and enjoying tax exemptions
- The Bazaaris, once central to Irans commercial life, found themselves marginalized as they competed against these state-backed foundations with cheaper access to dollars
- By the 1990s, the economic landscape had shifted, weakening the Bazaaris and the middle class
- The Iranian government claimed their system was designed to stabilize the economy post-revolution, not to undermine the Bazaaris
- International sanctions escalated in the 2000s due to concerns over Irans nuclear program, pushing Iran out of the global financial system
20:00–25:00
Iran's economic situation has deteriorated due to constant pressure on foreign currency reserves, leading to a currency crisis. The government has shifted its focus from supporting the Bazaaris to favoring Baniads, exacerbating the challenges faced by the traditional merchant class and ordinary citizens.
- Irans foreign currency reserves faced constant pressure, leading the government to deplete them for imports and subsidies
- The Iranian regime, under Ayatollah Ali Hamine, shifted focus from partnership with Bazaaris to control, favoring Baniads for scarce resources
- Bazaaris, reliant on imported goods, were severely impacted by dollar scarcity and forced into a volatile open market for currency exchange
- The devaluation of the Iranian real eroded public trust in the currency, causing ordinary people to suffer alongside Bazaaris as prices soared
- Years of inflation and economic pressure culminated in a tipping point for the population, driven by survival needs beyond just political issues
- By late 2025, the Iranian real had lost half its value in a year, with a dramatic decline in the final six months, leading to the use of the term Tomon for easier pricing
25:00–30:00
As of January 2026, the Iranian government removed the NEMA system, leading to a significant increase in prices for goods and devastating the middle class and small Bazaaris. The shift in economic support from Bazaaris to Bonyads has exacerbated the challenges faced by ordinary Iranians.
- As of January 2026, the iPhone 17 Pro Max costs around 300 to 400 million Tomons (approximately 2,500 US dollars), making it over 10 months of income for a typical Iranian salary worker
- Elon Musk announced Starlink activation to help Iranians stay connected during protests, but as of January 2026, its direct-to-phone service was still in limited testing
- Only about 50,000 to 100,000 smuggled Starlink terminals exist in Iran, serving well under 1% of the population, and regulatory approvals are needed for broader service
- In late 2025, the Iranian government removed the NEMA systems protective cushion, pushing trade into the harsh open market rate, devastating the middle class
- The government faced a choice between protecting a semi-official exchange rate or allowing it to align with the street rate, ultimately choosing to preserve its dwindling reserves
- The removal of the NEMA safety net led to immediate price increases for goods, forcing small Bazaaris to absorb losses or close their shops, while larger conglomerates managed to survive