On August 28, 2026, President Masoud Pezeshkian of Iran spoke about the realities of economic hardship in Iran, adding that negotiations were the best way to fix the problems. Immediately, Supreme Leader Mojtaba Khamenei, or those speaking in his name, warned him against eroding “public solidarity.”
Khamenei’s message “banned” any statement that causes public pessimism. He also attacked “false dichotomizing” concepts, such as warmongering and compromise, consensus and extremism, and negotiation and war, “which in the past have caused qualified and unqualified harms to our dear people.” This was a jab at both Pezeshkian camp that wishes an end to the war for the sake of the economy and the Paydari camp that wishes to resume it until victory.
Vice President Mohammad-Reza Aref said that “neither war, nor peace” should be the policy for the next two years, a period that coincides with the rest of the Trump administration.
Khamenei’s rejection of false dichotomies suggests that the regime is confident that it can survive and does not wish to make any concession. On September 1, 2026, Vice President Mohammad-Reza Aref said that “neither war, nor peace” should be the policy for the next two years, a period that coincides with the rest of the Trump administration.
Speaker Mohammad-Bagher Ghalibaf, meanwhile, sent a letter to Pezeshkian to honor the government of the Islamic Republic. He uses the word “war” three times in the letter, once referring to the economic effects of the recent conflict and twice in the phrase “economic war” that the United States is imposing on Iran. The letter reinforces that the president has no security responsibility and is solely an economic manager. Now, however, the supreme leader’s demand that Pezeshkian remain silent on the economy raises questions about the president’s role entirely.
Iran’s economy is in a terrible condition. The war has caused a depression, with Iran having lost up to half of its prewar gross domestic product. Yet, inflation is rising too. Public data show that Iran’s inflation rate has reached its highest point since 2013, with last month’s annual rate at 69.9 percent. Basic household grocery basket cost has increased by 131 percent compared to last year, due to a lack of access to exchange currency, unrestrained currency printing, and deficit spending.
Yet the economy is not on the verge of collapse, and the government can still function. Central Bank President Abdol-Nasser Hemmati boasted on September 1, 2026, that Iran has accumulated $18 billion, and that he is inserting $2 billion into the economy to stabilize it. Nour News wrote that Iran’s economic indices are rapidly moving in the wrong direction, yet Iran “is not Venezuela” and far from economic disintegration. Stating that banking assistance has increased by 69 percent since last year, and that the government can still provide the people with basic economic needs, his essay suggests that economic pressure is not enough to bring regime change.
Nour News wrote that Iran’s economic indices are rapidly moving in the wrong direction, yet Iran “is not Venezuela” and far from economic disintegration.
U.S. Secretary of the Treasury Scott Bessent predicted on September 1 that Iran’s economy will collapse within weeks or months, and although that might be true, the Islamic Republic’s leadership suggests his optimism is misplaced.
The exchange between Khamenei and Pezeshkian suggests the economy is not the primary worry. Khamenei’s statement and supposed single meeting with the president suggests he does not believe Pezeshkian’s role as economic custodian to be important.
Two factors boost the regime’s confidence. First, the January crackdown killed a generation of revolutionary leaders and tamed the people. Second, the regime’s strategic victory and siege mentality have boosted the rank-and-file’s morale, making them likelier than in January to come to the defense of the regime. The Islamic Republic wishes to avoid other protests—hence Khamenei’s warning to Pezeshkian—but it also is confident that it can suppress them.
The Islamic Republic will worry when it no longer can pay its security forces. Ayatollah Ruhollah Khomeini said, “economy is for the jackass; it is the donkey for whom the economy is the foundation of everything,” to defend his promotion of ideology above all.
