Iran faces an annual inflation rate of 75 percent and a gross domestic product decline of 3 percent, according to a report by the Iranian Chamber of Commerce leaked to the local press. The cause is the looming re-imposition of United Nations sanctions later this month. In recent weeks, many government insiders have sounded the alarm, urging the regime’s core leadership to do whatever is necessary to prevent the sanctions from taking effect.
Since 2018, when President Donald Trump withdrew from the Joint Comprehensive Plan of Action nuclear deal, the Islamic Republic has endured crippling U.S. sanctions. But the impact of Trump’s “maximum pressure” campaign could intensify once United Nations sanctions return. Many Asian companies that have cautiously engaged with Iran may withdraw entirely, even if their governments—such as China—turn a blind eye. The greatest damage could hit the financial sector, where entities and individuals in countries like the United Arab Emirates and China were, until now, willing to facilitate Iran’s banned banking transactions.
In multiple rounds of talks, Tehran has offered piecemeal compromises with conditions attached—an approach the West no longer tolerates.
Nevertheless, the regime’s core, led by Supreme Leader Ali Khamenei, continues to resist the concessions demanded by European powers and the United States. In multiple rounds of talks, Tehran has offered piecemeal compromises with conditions attached—an approach the West no longer tolerates. Western governments now insist on full International Atomic Energy Agency (IAEA) oversight of Iran’s nuclear facilities and a complete halt to uranium enrichment.
Hardliners in Tehran dismiss the warnings about United Nations sanctions, claiming they will add little to the economic damage already caused by U.S. measures. They threaten to withdraw from the Nuclear Non-Proliferation Treaty and issue warnings about Iran’s capacity to retaliate.
On September 20, Fada Hossein Maleki, a hardline member of the parliament’s National Security Commission, declared, “The Islamic Republic is prepared for every scenario, including withdrawal from the agreement with the IAEA and even seriously considering withdrawal from the NPT.” Hours later, the Supreme National Security Council announced that Iran would suspend cooperation with the IAEA on inspections.
Iranian dissidents, and even some insiders, view this stonewalling as a strategy that will push the country toward catastrophe, with soaring inflation and worsening shortages. One dissident account on X wrote, “Unrestrained inflation and a higher dollar; shortage and high cost of medicine; banking transactions frozen; soaring prices for car parts and vehicles; unemployment and livelihood pressures; greater difficulty in foreign travel and money transfers—people must bear all these costs, while the regime ruins Iranians’ lives to preserve its own survival.”
Azar Mansouri, chairwoman of the Reformist coalition, warned in a post, “Under these conditions, the immediate and maximum use of diplomatic capacity to prevent a #global_consensus against Iran is an unavoidable necessity. The window of opportunity is limited.”
Several newspapers in Tehran also warned that renewed sanctions would further restrict access to advanced technology and foreign investment. Yet not only hardline politicians but also some Foreign Ministry officials insist that countries like China will continue doing business with Iran.
Without protests, the government believes it can muddle through, disregarding the worsening plight of its citizens.
Why, then, does Khamenei refuse to make major concessions? Does he believe he can contain the economic crisis, and widespread protests will not erupt? Why gamble on the survival of the Islamic Republic while Israel threatens new strikes in addition to the looming sanctions? A familiar explanation, repeated for two decades, is that Khamenei fears any major concession to the West will trigger a domino effect, ultimately destroying the ideological system by opening the economy to the world and unleashing demands for democratic reform.
Thus, he prefers to ride out consecutive storms, betting that pressure will ease once Trump’s term nears its end in a few years. If a Democrat returns to the White House, he hopes to once again enter open-ended negotiations. He also draws reassurance from the fact that during and after Israel’s June air campaign, Iranians did not pour into the streets to challenge the regime. Without protests, the government believes it can muddle through, disregarding the worsening plight of its citizens.
But as a Persian proverb warns, what one calculates at home does not always work in the bazaar. Khamenei’s strategy is nothing less than a gamble. He is not waiting for a slightly better deal; he already missed the chance for a reasonable agreement during the Biden administration, based on the now-defunct 2015 nuclear deal.
At 86, Khamenei may not outlive the Trump presidency, and popular unrest could erupt at any moment. Such events in authoritarian systems are inherently unpredictable. Under heavier sanctions, the regime may gradually lose its grip on the country, with dissent spreading steadily even without a single major uprising.
