The unchecked inflation and mass layoffs currently endured by ordinary Iranians are only the most obvious economic effects of the war with the US and Israel, which amplified the corrosion caused by years of governmental mismanagement. The most pressing second-order effect is that basic groceries are turning into luxuries for millions of Iranians. The urban consumer price index marked an increase in May of 77 percent year-on-year, close to the highest recorded in the Islamic Republic era, according to Central Bank data. The result is a sharp decline in household purchasing power and worsening food insecurity nationwide.

Just over a year ago, in the spring of 2025, one million tomans (then roughly $10 USD) could purchase a kilogram’s worth of veal shank, two kilos of chicken meat, one liter of cooking oil, one liter each of whole and low-fat milk, 400 grams of cheese, and a half kilo of sugar. As spring 2026 comes to a close, “you can barely buy anything,” Nasrin, a mother of two from Tehran, told Resanegar, Tehran Bureau’s economic unit. One million tomans is now just “enough for two cartons of milk and a pack of cheese.” (Iran’s monthly minimum base wage, as set in March, is 16.6 million tomans. With state-mandated housing, food, and other allowances, the minimum compensation package for private-sector workers is 21.8 million tomans per month—currently $140 at free-market currency exchanges, per Bonbast.com.)

The government has sought to contain public anger by distributing food vouchers while making assurances that, despite the cutoff of most imports due to the war, domestic supply chains remain intact. Regardless, the surge in prices is pushing nutritious foods beyond the reach of many households and amplifying concerns about hidden hunger.

Since internet access was restored after a regime-imposed blackout that lasted almost 90 days, social media has been filled with videos documenting the rapid rise in food prices and the growing strain on household budgets.

In 2019, a five-kilogram household tin of cooking oil cost about 36,000 tomans. Earlier this week, according to one instagram user, the same size tin cost 2.35 million tomans, more than 65 times higher than seven years ago. A commenter reported recently paying 2.7 million tomans for the same item.

Ten years ago, an eight-kilogram of oranges cost 10,000 tomans at wholesale. Today, a single kilo sells for between 95,000 and 148,000 tomans, putting the wholesale price of eight kilos at between 760,000 and 1.18 million tomans.

In a video posted on April 29, one Iranian user told his followers that instead of investing in foreign currency or gold, they should invest in food. He noted that the price of a can of tuna had risen from 200,000 tomans in Farvardin (March–April) to 235,000 tomans in Ordibehesht (April–May).

Ultraprocessed foods are hardly immune. A supermarket worker on the night shift, who has documented rising prices for months on Instagram, in a May 31 post expressed outrage that a Magnum ice cream bar, “not even as long as one of my fingers,” now cost 200,000 tomans.

On June 1, a shop owner reported on Instagram that the price of a liter of Pepsi had jumped from 65,000 tomans to 115,000 tomans in just two months. He said a company representative had warned him that prices would likely rise again with the next delivery.

“The war is over, but missiles are still targeting people’s dinner tables. People are being crushed under economic pressure. Whatever you buy today costs double tomorrow. You can’t blame this on other countries,” he said, gesturing toward rows of soda bottles. “This is your mismanagement.”

Iranians were suffering runaway grocery inflation even before the war. A typical tray of 30 eggs that cost 70,000 tomans last September reached 300,000 tomans in December and passed 500,000 tomans in January.

Soaring food prices are increasingly becoming a public health concern. Dairy consumption has fallen from approximately 55–60 kilograms per person per year to just 40 kilograms, around one-quarter of the global average, according to Ali Ehsan Zafari, head of the Dairy Cooperatives Union. He cites inflation as the unequivocal cause, with dairy products becoming roughly 90 percent more expensive over the past year after the government raised the price of raw milk from 46,000 tomans per kilogram to 61,000 tomans.

If prices continue to rise, Zafari warned, purchasing dairy products will “no longer make economic sense” for a large segment of the population. Beyond deepening the economic crisis and threatening small and medium-sized producers, there are concerns that the decline in dairy consumption could lead to increases in malnutrition, osteoporosis, and developmental problems.

Choosing what to cut out next

To contain growing economic discontent, the Islamic Republic has rolled out an electronic food voucher program targeting lower-income households and the families of military personnel. The scheme was first announced on January 5, one week after nationwide protests erupted over the cost of living and a day before security forces launched a deadly crackdown on demonstrators.

The Ministry of Welfare said four million tomans each had been deposited into the accounts of 80 million Iranians to cover the final three months of the Persian year 1404 and the first month of 1405 (which began on March 21). Rather than continuing subsidies for importers and producers of essential goods, the Pezeshkian administration and parliament agreed to provide direct monthly support of one million tomans per person, according to state news media.

Officials said the vouchers could be used to purchase staple foods including chicken, eggs, red meat, legumes, sugar, cooking oil, pasta, rice, milk, yogurt, and cheese from 260,000 participating stores. Alternatively, recipients could choose a fixed package of basic food items.

But as inflation accelerates, the value of the vouchers has rapidly eroded. Conflicting reports continue to circulate over whether the monthly allocation will be increased. On June 3, Welfare Minister Ahmad Meydari said June vouchers would be distributed “in the same manner as previous months,” indicating that there would be no immediate increase. Two days later, the government announced that the upcoming round of vouchers would include a 10 percent discount on dairy products from one leading producer. On June 8, government spokeswoman Fatemeh Mohajerani acknowledged that while “the government would like to increase the value of the vouchers,” doing so was “not currently feasible.”

For many families, the support no longer covers even a fraction of their monthly food needs.

“With two million tomans, which is the subsidy for two people, you can buy maybe 750 grams of meat, and part of that is fat and scraps you have to throw away. That’s enough for maybe two meals,” Nasrin told Resanegar. “And food isn’t just meat. You still need herbs, vegetables, eggplants, and everything else.”

“We’re constantly thinking about what we can cut out next,” she added. “A lot of people have practically eliminated meat because they genuinely can’t afford it anymore. Even if they manage to buy one kilo with their subsidies, that has to last them the entire month. A tray of eggs costs 850,000 tomans. Yesterday I bought two cartons of milk for 400,000 tomans.”

The Great Depression Cookbook

As prices continue to rise and wages fail to keep pace, more households are being pushed into a permanent state of economic survival. Life under the Islamic Republic has become an endless cycle of adaptation, hardship, sacrifice, and decline. For many households, non-essential goods and services such as travel, restaurant meals, new clothes, and cultural activities are gradually disappearing from family budgets. Major life decisions, from buying a car or upgrading a home to getting married or having children, are being postponed indefinitely. As food, housing, and utility costs consume an ever-larger share of household income, little remains for discretionary spending. 

On social media, the growing appetite for “depression-era” recipes is a sign of how strained household finances have become. Influencers and ordinary users share recipes that eliminate or drastically reduce costly ingredients such as oil, meat, eggs, and butter. Videos for oil-free cookies, “economic” eggless biscuits, “10,000-to-20,000”-toman homemade cheese puffs, kids’ snacks made with a few tablespoons of flour and a pea-sized amount of cooking oil, and meatless stews regularly attract large audiences. The trend reflects a society searching for ways to maintain daily routines while spending as little as possible on food.

To preserve a semblance of normalcy amid crushing postwar inflation, many people now share a single drink or snack at cafés as a cost-cutting measure so they can still afford to go out, Resanegar recently reported. Life goes on, but with great difficulty. 

According to the latest data from the Statistical Center of Iran, lower-income households are bearing the brunt of economic pressure. The data show that year-on-year direct cost-of-living inflation for the second decile of income earners reached 96 percent in April–May (Ordibehesht), while it stood at 81.6 percent for the tenth decile, the highest-earning income bracket.

Many families were already struggling to keep up with expenses before the recent price hikes. A recent investigative report by Shargh newspaper found that even two-income households, who previously used one income for bills, rent, and loan repayments and the other for daily expenses, now use up their money within two weeks of the end-of-month payday. 

“I’m constantly worried about running out of money,” Nasrin, the mother of two, told Resanegar. “I keep asking myself, ‘What if the money runs out before the end of the month?’ I’m genuinely terrified of not making it to the end of the month financially. God knows what people who have to pay rent are doing.”

More people are drawing down their savings or selling their gold coins and jewelry, assets they had counted on for a measure of financial security, simply to cover daily expenses. Many Iranians who, under normal circumstances, might have taken out loans to buy a house, pay for a child’s education, or invest in a business are now relying on loans to finance their day-to-day survival.

Ice cream on credit

As household buffers disappear, attention is turning to income. But with layoffs in almost every line of work across the country, many workers say they are afraid to ask for raises even as inflation steadily erodes the value of their wages.

“We have to constantly worry about what will become more expensive tomorrow. Our incomes are fixed, and we may not even be able to afford what we have today tomorrow,” Farideh, a bank teller, told Resanegar. Food that a year ago might have constituted a single meal, Tehranis now “stretch into two or three meals. The situation is really very difficult.”

The cost of some medications has also become prohibitively expensive, forcing people to go without them, Farideh added. “People are cutting costs everywhere they can.”

Arvand, an office worker from Tehran, said his two eczema creams have increased from 220,000 and 250,000 tomans before the war to 447,000 and 780,000 tomans, respectively. “One of my friends had a serious condition; he had to pay seven million tomans for his medication.” For context, in his peer group, he explained, monthly “salaries are generally around 30 million tomans.” For his family of three, ”basic food and everyday household expenses alone come to about 50 million tomans per month.”

Nasrin said that when she had guests over recently, she could buy only a half kilo each of cherries and apricots, “and it still came to 950,000 tomans. Even the transport to the market and back costs nearly 120,000 tomans. I have not yet turned to buying on credit, but I feel I may soon have no choice.”

Buying food on credit has become increasingly common, while reports of petty theft and the gradual disappearance of even basic items from household shopping lists point to a broader deterioration in living standards.

One young woman said she was forced, for the first time since moving to Tehran, to buy cooking oil on credit. She and her roommates now divide grocery purchases between them, each putting a different item on their tab to avoid drawing attention from the local shopkeeper.

“I understand people’s situation. When I see someone who is truly in need taking bread or canned food, I don’t react and let it go. But the number of these incidents increased so much that it was no longer financially viable for me either,” a shopkeeper in eastern Tehran told Shargh. “I had to collect all the canned tuna and move them behind the counter, out of customers’ reach. But I still keep bread outside the shop so that if someone is truly hungry and has no money, they can take it.”

A baker, meanwhile, said even some office workers have started asking for “half a bread” because they can no longer afford a whole sangak. A fruit vendor told the paper that customers increasingly ask for a single apple or orange instead of buying fruit by the kilo.

Arvand, the office worker, observed that “installment payments have become common across almost every business. Shoes, clothes, gold…even healthcare services. You can now buy ice cream on credit.”

The post Bank Loans for Groceries: Iranians Strain for Daily Needs appeared first on Tehran Bureau.

A grand, three-day funeral ceremony for the former Supreme Leader of the Islamic Republic is planned for the middle of Muharram, first month of the Islamic lunar calendar (beginning June 16 this year), with foreign dignitaries joining domestic devotees in attendance. Additional ceremonies will follow in the holy city of Qom and finally in Mashhad, where the late Ayatollah Ali Khamenei will be buried at the Imam Reza Shrine.

Preparations for the events are being led by the Islamic Revolutionary Guard Corps (IRGC), sending a clear message to both the Iranian people and the world at large. “It is not just about planning a funeral,” an economist affiliated with the University of Tehran’s Institute for Economic Studies and Research told Resanegar, Tehran Bureau’s economic unit. “This ceremony provides a mechanism for reinforcing the IRGC’s position of power.”

After engineering Mojtaba Khamanei’s succession to the post of Supreme Leader, demonstrating its readiness to extract fees from ships transiting the Strait of Hormuz, and solidifying its control over foreign policy, the IRGC is emerging from the war with the United States and Israel possessed of greater capacity than ever to direct Iran’s fortunes. 

A few months ago, the corps was facing open criticism for its opaque, yet immense role in Iran’s economy, fueled by years of discontent—not least among its rivals within the regime. Emboldened by the war and Ali Khamenei’s sudden demise, the IRGC has altered the equation and positioned itself to play a more visible role in both business and political decision-making. Alongside its assertion of control over the Khamenei commemorations, another clear sign is the shift in the leadership of Iran’s international negotiating team. Before the war, such delegations were headed by Foreign Minister Abbas Araghchi; the current negotiations with the Trump administration, however, are being led by Mohammad Bagher Ghalibaf. His position as Majles speaker is less relevant than the fact that he served for two decades in the Guards, ascending to the position of commander of the IRGC Air Force.

Complementing its accumulation of political power and vast network of companies and often cloaked holdings, the IRGC also enjoys special dispensation to feast from the nation’s coffers. While 20 percent of oil revenues are allocated directly to the armed forces, the Guards also have privileged access to the National Development Fund, a sovereign wealth fund created by order of Ali Khamenei and financed by Iran’s oil revenues—likewise 20 percent of the total under the 2026–27 Majles budget. This arrangement has further entrenched the security establishment’s ability to exploit the country’s most important source of wealth.

The IRGC’s 47-year rise to dominance has not gone unchallenged. During the 2010s, in particular, as the Guards’ control over national security policy tightened and its sprawling business and financial structures encompassed an ever larger part of the Iranian economy, multiple figures in the regime sought to check its power—including more than one who had played important parts in its expansion.

“Neither sound economics nor privatization”

When Mahmoud Ahmadinejad took office as the Islamic Republic’s sixth president in August 2005, he was known to have long been closely aligned with the IRGC—to the extent that there were widespread, though erroneous, reports that he had been a member. He launched a sweeping, so-called privatization campaign among whose greatest beneficiaries was Khatam al-Anbiya Construction Headquarters, the Guards’ massive engineering firm. In 2006 alone, Khatam al-Anbiya landed over $7 billion in contracts across sectors from transportation to oil and gas. As a rift grew between the Supreme Leader and Ahmadinejad during his second term as president, he also began to rebuke the IRGC, in particular for its shadowy economic activities. At a government conference in July 2011, he referred to powerful actors surreptitiously moving goods through ports while avoiding customs supervision as the regime’s “smuggler brothers“—a reference to the Guards so thinly veiled that IRGC commander-in-chief Mohammad Ali Jafari felt compelled to reject the allegations. 

Not unlike Ahmadinejad, Akbar Hashemi Rafsanjani, who served as president for eight years in the aftermath of the war with Iraq and first opened the door for the Guards’ involvement in economic activities, reportedly came to regret it. When he took office in August 1989, the IRGC was still a relatively new institution. Many of its members were young, highly motivated cadres who, during the war, had been involved not only in combat operations but also in extensive engineering, logistical, and reconstruction work, developing impressive operational capabilities. Rafsanjani thus gave the Guards a lead position in rebuilding the country’s war-damaged infrastructure. As a result of this decision, the IRGC would gradually transform into a massive state-backed contractor and, over time, a formidable competitor—and obstacle—to the private sector. According to an account published by the Saham News website, in an April 2013 meeting with a group of associates encouraging him to run again for the presidency, he rued how the Guards had gone far beyond the rebuilding mission he gave them and said that “now the IRGC has the economy, foreign and domestic policy in its grip and is not satisfied with anything less than the entire country.”

The following year, in December 2014, Ahmadinejad’s successor, Hassan Rouhani, then in office for four months, implicitly criticized the transfer of state-owned companies to the IRGC while addressing an anti-corruption conference attended by the heads of all three branches of government, saying, “If you gather intelligence, guns, money, capital, websites, newspapers, and news agencies all in one place, it would even corrupt Abu Dharr and Salman” (companions of the Prophet Muhammad renowned for their probity). While many observers regarded this as an obvious reference to the corps, IRGC chief Jafari insisted that “the president’s relationship with the Revolutionary Guards is very good” and that Rouhani’s remarks were not directed at them.

In October 2015, the Islamic Republic agreed to a nuclear deal (the Joint Comprehensive Plan of Action, JCPOA) that left in place broad US sanctions against the IRGC and many of its affiliated business entities—suggesting that the larger the Guards’ role in the national economy, the more vulnerable that economy would continue to be. Rouhani, having won a second term in office in the May 2017 elections, now launched a concerted political effort to rein in the Guards’ economic sway. This campaign culminated in a widely reported speech referencing Ahmadinejad’s privatization campaign to an iftar banquet on June 22, 2017, that drew an explosive reaction. “We handed part of the economy from a civilian government to a government with guns; this is neither sound economics nor privatization,” the president declared. This time the Guards’ response was fierce. Jafari publicly castigated Rouhani, charging that “a government without a gun is humiliated and ultimately forced to surrender.” In a meeting the following month, Jafari, Qasem Soleimani, and other senior IRGC leaders directly excoriated the president. Aerospace Force commander Amir Ali Hajizadeh reported that they told Rouhani, “If you say these things, it will not be tolerated. You object every day. Defending the revolution, and the nation, and the system, and the Leadership, is our red line. Do not assume you’ll always be able to say these things, and we’ll be silent.”

Rouhani evidently continued his campaign more quietly. In January 2018, just a few weeks after massive protests had shaken the Islamic Republic, his defense minister, Amir Hatami, announced that the Supreme Leader had issued a directive to the General Staff of the Armed Forces ordering the divestiture of non-military business enterprises. IRGC commanders dismissed the announcement, asserting that all of their business dealings were military related, and Trump’s withdrawal from the JCPOA in May 2018 weakened Rouhani’s position to the point that he was effectively sidelined for most of his second term. Nonetheless, in October 2018 the IRGC’s Sepah Cooperative Foundation divested its shares in the Telecommunication Company of Iran (TCI) and Mobile Communications Company of Iran (MCI; also known as Hamrah-e Aval). Since then, there has been little to indicate that anyone in the regime cared to expend political capital trying to reel back the Guards’ economic activities—until early this year, when an old idea was revived and repurposed with exactly that aim.

The merger idea

On the afternoon of March 22, 1989, Tehran’s northern Jamaran neighborhood received a frequent visitor, one who arrived this time with a particularly important agenda. Akbar Hashemi Rafsanjani, who had served as commander-in-chief during the final months of the Iran-Iraq War, arrived at the residence of Ayatollah Ruhollah Khomeini, the founder of the Islamic Republic, carrying a folder of documents laying out a consequential proposal.

Few enjoyed the trust of the leader of the Islamic Republic as Rafsanjani did. As he later described in his memoirs, he raised the issue of the dual structure of Iran’s armed forces and the high costs associated with maintaining parallel organizations and overlapping military units, arguing for the merger of the IRGC and the Artesh, Iran’s regular military. The Guards had been officially founded on May 5, 1979, per a Khomeini decree, to “fulfill the momentous task of the Islamic revolution”—an ideological enforcement mission he did not trust to the Artesh, whose officer corps was a legacy of the Shah. Iraq invaded a year and a half later, and the IRGC became essential to Iran’s defense.

Khomeini accepted the proposal in principle but was concerned that merging the Guards and the Artesh would provoke resentment among their personnel and trigger clashes between the two forces. He stated that while he did not object to the idea of the merger, the timing was not right.

Khomeini’s lack of opposition to the concept was enough for Rafsanjani to pursue it by establishing a merger committee headed by Abdollah Nouri, who would later serve as interior minister under both Rafsanjani and Mohammad Khatami. Khomeini did not live long enough to see its outcome. He died on June 4, 1989, just two months after the meeting in Jamaran, and—thanks to a selection process manipulated by Rafsanjani—was succeeded by Ali Khamenei, then in his eighth year as Iran’s president.

Unlike Ayatollah Khomeini, who had no military background and largely entrusted national security affairs to Rafsanjani, Khamenei began his career in the newly established Islamic Republic as deputy minister of defense and went on to serve as acting commander of the IRGC. He resigned from that position in February 1980 to run in the first parliamentary elections under the new regime, ultimately winning a seat and becoming chairman of the Majles’s Defense Committee.

His military background and maintenance of close ties with IRGC commanders led the new Supreme Leader to take a continued personal interest in national security matters. In his first days after taking office, he ordered the dissolution of the IRGC-Artesh merger committee and declared the anticipated union unnecessary, tasking the General Staff of the Armed Forces with establishing a clear division of everyday responsibilities and strategic missions between the two institutions.

During Ali Khamenei’s tenure as Supreme Leader, the IRGC’s authority and scope of responsibilities steadily grew—first on now President Rafsanjani’s initiative, later owing to the Supreme Leader himself, who saw the Guards as his essential power base against the reform movement after Khatami became president. Among the earliest examples was the Guards’ consolidation and expansion of the Basij militia, and then its internal deployment against Iranian citizens during the Mashhad riots of 1992 and Qazvin unrest of 1994. The IRGC’s political presence grew as well. As the share of Majles seats won by clerics dwindled from a high of 55 percent in 1984 to less than 15 percent in the early 2000s, former Guards began to enter the legislature in growing numbers—first slowly, then with a rush in 2004 when many reformist incumbents were disqualified. With greater numbers came greater influence: by 2020, former IRGC or Basij members comprised a majority of the parliament’s presidium and held at least 16 committee chairs or similarly powerful positions. The wall between Guard and government service is thin at best, and many of these legislators will return to active duty as soon as they exit the formal political scene.

Under Khamenei and Rafsanjani, the IRGC was also granted a much broader role in economic affairs. Its budget expanded significantly, and it inaugurated a vast network of subsidiary businesses, including the Khatam al-Anbiya conglomerate—which itself owns at least a half-dozen engineering subsidiaries and a controlling stake in the country’s largest shipbuilding company, among many other interests—and an array of financial and credit institutions. Through Khamenei and Rafsanjani’s support of the Guards’ economic activities, the IRGC grew into a pillar of Iran’s shadow economy.

“Costs borne by the public” 

After Rafsanjani’s failed bid in 1989, there is no evidence that an Artesh-IRGC merger received serious consideration in regime circles for the next three-and-a-half decades. That changed—though for reasons much different than organizational efficiency—after January 28, 2026, when the European Union placed the IRGC on its terror list, significantly expanding a global sanctions program that targets the corps’ assets and revenue streams. Due to the IRGC’s outsized role in the shadow economy, the international pressure threatened Iran’s economic system as a whole.

Just nine days after the EU decision, Jomhouri-e Eslami newspaper—founded as the mouthpiece for the Islamic Republic Party, Iran’s sole ruling party under Khomeini, and whose views generally echo those of the regime’s conservative clerical core—published a front-page editorial championing “cohesion” and “unity, efficiency, and strength in the country’s defense structure.” Merging the IRGC and the Artesh was the only solution to save Iran’s economy, according to the editorial—an argument with special significance given that Ali Khamenei had been the paper’s license holder since its founding in 1979, according to the current managing editor.

Explicitly invoking Rafsanjani’s decades-old effort to merge the Guards and Artesh and Khomeini’s lack of objection to the idea, the newspaper blamed a systemic “misalignment of institutional roles“ for a “significant part of our problems today, from the economy to foreign policy.” It described the IRGC as entering “fields for which it was neither designed, nor equipped to handle the consequences,” and in response advocated “a rational consolidation of power and the return of each institution to its defined legal mandate.” 

“Such a return to the logic of law and institutional division of labor could both facilitate the containment of a formidable enemy and reduce the accumulated costs borne by the public,” the editorial stated.

Jomhouri-e Eslami’s advocacy of an Artesh-IRGC merger might have served as a prelude to consequential deliberation over the prospect in policy-making circles. Then the war changed almost everything.

An unchallenged protagonist

The United States and Israel attacked Iran on February 28, 2026. Regardless of their stated objectives, the ensuing war has so far had one unmistakable effect on the power dynamics within the Islamic Republic. The IRGC, which had been sanctioned by the EU as a terrorist organization for the first time a month before the war and whose economic activities and institutional autonomy were being called into question by a regime mouthpiece very close to the Supreme Leader, has now become the main actor on the Iranian stage.

“Current political and military conditions suggest that everything is effectively in the hands of the IRGC. The Guards appear to be making the key decisions,” the University of Tehran economist, who spoke on condition of anonymity due to safety concerns, told Resanegar. “The most likely scenario is that the Islamic Republic will remain, with the difference that the IRGC’s presence in the economy will be strengthened as a result of the two recent wars.”

After Trump withdrew from the JCPOA in 2018, there was still popular sentiment in favor of curtailing the Guards’ power. They were able to deflect it with significant support from Ali Khamenei, who never made a single public statement about the divestiture directive announced in his name. While the Guards’ institutional position was strengthened, the Supreme Leader retained ultimate authority, with “both oversight of the decision-making process and the ability to control and contain the IRGC,” a veteran security analyst, political scientist, and former University of Tehran faculty member told Resanegar.  

Khamenei’s assassination meant the elimination of that oversight, said the analyst, as the succession of his son, Mojtaba Khamenei, to the post of Supreme Leader was entirely orchestrated by the IRGC. “The succession crisis in the Islamic Republic could not have been resolved so easily without IRGC involvement,” explained the security analyst, who also spoke on condition of anonymity. “It can therefore be said that, in the new configuration of the Islamic Republic, the IRGC has gained a far more important, prominent, and influential role.”

In the absence of any restraint Ali Khamenei might have imposed, the war also freed the corps to flex its muscle in the Strait of Hormuz. While the US blockade has temporarily thwarted the IRGC’s profitable protection racket in the strait, Majles representatives closely aligned with the Guards have introduced a bill under a fast-track, “triple-urgency” mechanism that envisions permanent transit tolls and a new legal framework for the waterway that would make the IRGC the strait’s de facto gatekeeper, dramatically expanding both its revenues and geopolitical influence. “Who would actually collect those fees?” the economist asked rhetorically. “Customs authorities? No—everything would have to be coordinated through the IRGC.”

The conflict has reinforced the Guards’ primacy in foreign policy more broadly. When President Masoud Pezeshkian attempted to reassure Arab neighbors early in the war, military officials swiftly overrode his message with threats of regional escalation. The incident highlighted how, in the new order brought on by the conflict, the IRGC has become the ultimate arbiter of Iran’s external messaging, relegating civilian leaders to a largely symbolic role.

“On the third day of the war, President Pezeshkian apologized to the Gulf states. Five minutes later, Khatam al-Anbiya issued a statement effectively retracting his remarks,” the economist said. “This means that the decision-maker is none other than the Islamic Revolutionary Guard Corps.”

He described one of the war’s first major consequences as the normalization of the Guards’ economic role. “If yesterday the IRGC was the emperor of Iran’s hidden economy, today it is becoming the central authority within the formal and visible economy,” he said, foreseeing “that no major protocol or policy will be written from this point forward without the IRGC playing a role. Everything will require its approval and coordination.”

Many hopeful observers expected the 2026 war to debilitate the Islamic Republic or even precipitate its collapse. Instead, the conflict appears to have facilitated a large-scale transfer of power from the Supreme Leader’s office and broader clerical establishment to the security apparatus. If the current trajectory continues, the war may be remembered as the event that, far from bringing down the Islamic Republic, consolidated the IRGC’s dominance over it.

The post Not Satisfied With Less Than the Entire Country: The IRGC’s Rise appeared first on Tehran Bureau.

Doctors lining up for food handouts at hospitals, well-heeled office workers buying groceries on credit, university students begging for bread at the bakery. These are just some of the examples of the daily struggles of Iran’s middle classes. After years of economic mismanagement, only compounded by the current international conflict, an entire social stratum is in danger of becoming structurally poor—or already there.

A highly educated generation raised on middle-class consumerism is facing economic deprivation, and knows it. As a result, Iran is confronting a redefinition of class and the rise of a new kind of political subject, one that the regime can neither placate with cash handouts nor silence without consequence. 

As state-controlled media attempted to make sense of the gruesome massacres that followed January’s nationwide anti-government protests, an op-ed in Eghtesad News by entrepreneur and digital rights activist Nima Namdari pointed to an increasingly visible reality: Iran is no longer a society featuring a fairly clear and fixed division between the poor and middle classes. A liminal category of over 12 million people—what sociologist Asef Bayat has called the “poor middle class”—has become central to understanding the breadth and intensity of social unrest.

Around 8 million people have dropped below the poverty line since 2023, according to data from the World Bank and the Statistical Center of Iran. Add the country’s 4.5 million university students with precarious economic prospects to this group, and nearly one in every seven Iranians may be seen as falling into the poor middle class, even under a relatively narrow understanding of the term. In fact, many more people who might once have felt secure from economic hardship now routinely face it.

At the beginning of the 2010s, the middle class accounted for roughly 65 to 70 percent of the population. Over the past 15 years, however, its share has steadily declined due to economic sanctions, the lack of wealth redistribution, and the resulting persistence of high inflation and stagflation, falling to around 50 percent—about 47 million people—in recent years, according to state media. Interviews, media analyses, and reviews of social media accounts conducted by Resanegar, Tehran Bureau’s economic unit, suggest that the majority of this group is struggling to pay for daily basics.

In total, roughly 37 percent of Iranians now live below the poverty line, including 2.5 million people whom the World Bank projects have fallen into this bracket just in the past year. The regime’s own experts acknowledge that the chronic stagnation of the past decade and a half has failed an entire generation. “There are about 12 million young people living in our country who are neither studying nor employed,” economist Masoud Nili wrote for the Islamic Republic News Agency in February. “That approximately 14 percent of the country’s population is inactive for exactly 24 hours” every day is contributing to the risk of “an uncontrollable explosion at any moment” in Iranian society. The number of employed Iranians has essentially been flat since 2019, he observed, “while more than 4.4 million people have been added to the population of the country aged 15 and over.” 

Meanwhile, inflation and corruption are visibly exacerbating socioeconomic inequalities. Plunging oil revenues and tightened sanctions have led to the loss of welfare subsidies, while state funding for bonyads, opaque kleptocratic conglomerates posing as large charities, continues to flow. As a result, middle-class precarity, borderline poverty, and deep poverty all expand even as the wealth of the rich increases at a pace that not only matches but surpasses the extreme inflation rate, according to Nili. 

More voices join chorus of economic grievance

The number of people living in poverty has increased in several stages since 2018, according to the Statistical Center of Iran. About 10.5 million people fell into poverty in 1397–1398 (March 2018–March 2020), and around 5.5 million more in 1402–1403 (2023–2025), bringing the total population below the poverty line to approximately 32 million people. By the end of 1403 (March 2025), net per capita income was 20 percent lower than in 1390 (2011) and 12 percent lower than in 1396 (2017).

The tangible result is a drastic decline in the quality of life, turning food items such as meat, dairy, and fruit into luxuries while imposing “serious limitations in access to medication and medical care for conditions that some people require urgently,” according to Nili.

And the lived contradictions go beyond the difficulty in meeting basic needs. Echoing Bayat’s analysis of the eruption of mass protests in December 2017, contentious politics in Iran are being redrawn by young Iranians who move fluently through Tehran’s cafés, universities, and online spaces, yet remain economically marginal. They access global culture digitally and know what life outside the Islamic Republic looks like, but they cannot access it. They aspire to have successful careers, stable homes and families, and the ability to travel, yet instead face violent repression and downward mobility.

“We are literally suffocating,” Mani, a Tehran-based film editor, told Resanegar, Tehran Bureau’s economic unit. “[The regime] deliberately keeps people poor so their only concern is earning their daily bread, and they have no time to think about protesting or anything else … Refrigerators are empty, people don’t have enough money to afford their daily food, rents are unpaid … Leisure, travel, everything has been cancelled.”

Despite their marginalization in an increasingly dysfunctional economy, the poor middle class wields the tools to reshape sociocultural boundaries. Scholars of contemporary Iran have often distinguished between protest movements led primarily by urban middle-class demands for political and cultural reform and those driven by lower-income groups mobilized around economic grievances. That distinction is now breaking down. 

“When we were young, less educated people would become day laborers and construction workers, while educated people held important positions in the country. That is why parents used to place so much emphasis on education,” says Roya, a retiree from Tehran whose son earned a master’s degree in Canada. He now works as a delivery driver, Roya says, because he was “unable to work within the framework of this regime.”

Fault lines among the dispossessed

The poor middle class has helped reshape collective action, broadening participation across social strata while also intensifying the stakes. As Namdari’s op-ed suggests, recent demonstrations brought together millions of Iranians from across the lower, middle, and poor middle classes, only to be brutally suppressed. Yet the underlying pressures—economic malaise, political frustration, and social descent—remain unresolved. 

“There was a time when you walked down Valiasr Street, the street vendors had a certain look about them, and you could tell they had come from small towns. Now you go there and see an artist painting right on the sidewalk, displaying their work for sale. Many of the vendors are well-dressed, respectable people. You can tell they are there simply to support their families,” says Roya. “It is like a capsized boat: people are drowning at the bottom, struggling to stay alive, while the scum rises to the surface.”

A common perception among the poor middle class is that the regime is exploiting the country’s woeful situation to co-opt people from the lowest social classes into the security apparatus, rewarding them with access to the few available employment opportunities. 

“[Regime officials] think these people will become…mercenaries. They think [the traditionally poor] will fight for [them], report on others to [them],” says Roya. “All the mediocre, uneducated people who were willing to sell themselves for cheap have moved up, while educated people have ended up in low-level jobs.” 

The resulting sense of injustice, amplified by the poor middle class group’s sense of superiority to the traditionally poor class, is likely to cause further political friction in Iran’s streets.

“The Islamic Republic will repeat its cycle,” Mani, the film editor, predicts. “Every ten years, it carries out a large-scale massacre, each time with a higher death toll. Every few years, someone from Iran wins the Nobel Peace Prize as a so-called opposition figure, but only the scale of killings grows larger, and people become poorer and more desperate.”

The post Iran’s “Poor Middle Class” Swells, Seethes appeared first on Tehran Bureau.

According to rumors circulating in Tehran in recent weeks, Mehdi Khamoushi, head of Iran’s Endowments and Charity Affairs Organization, is set to be named as chief of staff to Mojtaba Khamenei, Iran’s newly installed Supreme Leader. Already a member of the board of trustees of the Islamic Revolution Cultural Research Institute, responsible for preserving and publishing the works of the late Ayatollah Ali Khamenei, Khamoushi also has a close familial connection with one of Iran’s oldest surviving political organizations.

Taghi Khamoushi, Mehdi’s father, was for decades one of the leading figures of Motalefeh (the Islamic Coalition Party). Founded in 1963 with roots in the traditional bazaar merchant class, Motalefeh was closely aligned with the clerical establishment that helped bring the Islamic Republic to power in 1979. In the Iranian political context, Motalefeh is a foundational coalition of principlists (osoolgarayan)—ultraconservative supporters of whoever holds the office of Supreme Leader and the doctrine of Velaayat-e Faghih by which he exercises absolute authority.

The party’s religious, traditionalist, and bazaar-based members played a significant role in Iran’s economy from the outset of the 1979 Revolution and controlled a substantial share of the country’s non-oil exports during the Islamic Republic’s early decades. Under the reformist government of Mohammad Khatami, these figures were pushed to the political margins.

As the economic and political power of the Islamic Revolutionary Guard Corps (IRGC) grew during the Ahmadinejad era, Motalefeh was sidelined even further, and it ceased to be a major player in the economy. Mehdi Khamoushi’s rumoured appointment as chief of the Supreme Leader’s Office raised the question of whether he might restore Motalefeh to a position of political influence and economic strength.

This past week, Tehran Bureau’s economic unit, Resanegar, put this question to a veteran Iranian economist affiliated with the Institute for Economic Studies and Research of the University of Tehran. With extensive connections across Iran’s business circles (which overlap considerably with its political circles) and a deep understanding of the country’s markets and commerce, he offers an unusually well-informed perspective on the issue.

In analyzing possible shifts in Iran’s power dynamics over the coming months, he downplays the prospect of Motalefeh having the new Supreme Leader’s ear. Instead, he argues that the IRGC—whose economic grip had become less certain in the years before Donald Trump regained the US presidency—is now positioned to be Iran’s true locus of power. The war that began in late February, he argues, has expanded the Guards’ influence in Iran’s economy and politics alike.

Recently, unofficial reports have circulated suggesting that Mehdi Khamoushi may be appointed head of the Supreme Leader’s Office. While the news has not been confirmed, the decision would not be entirely unexpected. His appointment could be significant for Motalefeh, potentially providing it a bridge back from political marginalization. How much could Khamoushi’s arrival at the Leader’s Office affect Iran’s economy? Meysam Khamenei [Mojtaba Khamenei’s youngest brother] is married into the Lolachian family, another prominent Motalefeh-linked family. Even if power is not distributed among [Ali] Khamenei’s [four] sons, it seems unlikely that Mojtaba Khamenei’s brothers would be left without influence. Could some share of power also return to Motalefeh?

Current political and military conditions suggest that everything is effectively in the hands of the IRGC. The Guards appear to be making the key decisions. Yesterday, I watched footage of President Masoud Pezeshkian meeting with managers from the state broadcaster. It seems they are still holding meetings in secure locations. During the meeting, Pezeshkian said that “we do nothing without the Leader’s permission,” yet he had recently stated that he only met with Mojtaba Khamenei two months after [the Supreme Leader’s appointment]. This suggests that affairs have not necessarily been managed directly through the Leader’s authorization.

Whether power will be distributed among the Leader’s sons, or whether Khamoushi becoming chief of staff would alter economic policy, are questions that remain speculative. If we assume for the sake of argument that Seyyed Mehdi Khamoushi does become head of the office—though there is no confirmed information yet—the real question is how much influence he could have over the economy.

In my view, the Leader’s Office exerts its greatest influence by engineering elections in ways that bring to power individuals who will pursue its preferred economic policies. Until we know their electoral plans and what political strategy they intend to implement, we cannot know what economic program or structure they intend to pursue.

Based on Mehdi Khamoushi’s background, it is difficult to determine whether Motalefeh itself would return. If his thinking resembles that of his father, Seyyed Taqi Khamoushi, then his focus would be on the bazaar—not in the liberal economic sense, but in the traditional jurisprudential sense.

This is a conception of the market that is largely insulated from competition. Motalefeh was among the first groups to oppose the establishment of the Refah chain stores. If they truly supported free markets and limited state intervention, they would not have reacted that way. In reality, they have generally opposed modern market structures unless they themselves are incorporated into them.

Ali Naqi Khamoushi [Mehdi Khamoushi’s uncle] chaired Iran’s Chamber of Commerce for nearly thirty years. If you look at the people around him—for example, one of his close associates, who was known as the “father of Iran’s plaster industry” and owned the Semnan plaster business—you find individuals who never worked to modernize the Chamber of Commerce or attempted to integrate Iran into the global trading system.

They made no meaningful effort to bring Iran into the World Trade Organization. In many cases, they showed little interest in or understanding of such institutions. Their primary concern was practical self-interest: if they were importers, they wanted a lower exchange rate to increase profits; if they were exporters—even of raw materials—they sought higher returns. They were not interested in serious competitors or partners.

Given this, does it seem that whether Motalefeh returns or figures like Babak Zanjani remain influential, Iran will continue to follow the same closed, rent-seeking economic model?

Iran’s economy is fundamentally rent-based. It has never operated on meritocracy. Those connected to power receive a share of economic opportunities.

Everyone seeks access to political power because that is how economic benefits are obtained. This differs from developed countries such as Britain or the United States, where individuals generally become economically successful first and then enter politics in an effort to influence policymaking.

Babak Zanjani himself emerged from this system of rent-seeking. Could figures like him become even more influential?

If the Wall Street Journal report is correct and Babak helped transfer roughly $850 million into Iran through cryptocurrencies, then yes, people like him could gain greater influence.

Their expertise lies in sanctions evasion. As long as sanctions remain in place, such individuals continue to serve a practical function for the system.

Returning to Motalefeh: is it fair to say that the party has been marginalized in recent years, and that Mehdi Khamoushi and a new leadership arrangement could bring it back to prominence?

Motalefeh began losing influence when Mahmoud Ahmadinejad came to power, although the process actually started during Mohammad Khatami’s presidency through efforts to take control of the Chamber of Commerce away from them.

Their supporters fought hard to retain influence. At one point, the election of the Tehran Chamber of Commerce chairman was invalidated and he was removed so that Motalefeh could maintain control. They succeeded temporarily, but eventually lost their position as Chamber elections progressed.

During Ahmadinejad’s administration, they were pushed almost entirely to the margins. Even in the petrochemical sector, cases were opened against some of them and they faced considerable pressure.

Even if Khamoushi became chief of staff, that would not necessarily mean Motalefeh’s return. The traditional bazaar economy no longer exists in the form it once did. There is no old-style economic order to restore, nor can they simply oppose modern distribution networks as they once did.

These individuals are deeply embedded within Iran’s economic system and would likely return with a new image. They have tried to adapt to changing circumstances. Their children are now entering positions of influence, and some of them are even frustrated with Iran’s current economic policies. One of them, whom I know personally, openly supports reconciliation with the United States.

The internet and social media have changed too much. This is no longer the era of Motalefeh.

But doesn’t this network still control a significant portion of Iran’s exports?

Iranian exports have changed dramatically. Traditional exports such as carpets, pistachios, and agricultural products no longer play a meaningful role in the country’s trade balance.

At one time, these products accounted for more than 60 percent of Iran’s non-oil exports. Today they represent less than one percent. Carpets, pistachios, legumes—none of them have the importance they once did.

Today, roughly 70 percent of Iran’s non-oil exports consist of petrochemical products and steel.

Doesn’t that still make them influential in the petrochemical sector?

Not particularly. They have interests in companies such as Amir Kabir Petrochemical and Sadaf, but these do not represent a major share of exports.

The Persian Gulf Petrochemical Industries Holding Company alone accounts for roughly half of Iran’s petrochemical exports. Therefore, it would be inaccurate to say that Motalefeh controls the pulse of petrochemical exports.

Assuming the current political system remains in place, what do you think will be the most important economic change in the coming years?

If the system survives, the most significant change will be continuity in the direction established by the recent conflicts. Iran’s economy will increasingly become an economy dominated by military institutions.

The IRGC and Khatam al-Anbiya Headquarters will expand their influence. Any meaningful change in economic policy would require a change in the IRGC’s outlook.

The Guards will likely gain even greater freedom of action. More state contracts will be awarded to them.

There was an interesting article in Foreign Affairs written by one of the American negotiators involved in the Obama-era nuclear talks. He argued that the nuclear agreement had been structured in a way that effectively discouraged the IRGC from economic involvement. According to him, the Iranian government itself had shown an interest in reducing the IRGC’s role because sanctions targeting the Guards also harmed the broader economy.

But what Trump did effectively reversed that trend and made the IRGC central to the economy once again.

The IRGC will likely gain even more authority. Consider the idea of asserting control over the Strait of Hormuz and collecting transit fees. Who would actually collect those fees? Customs authorities? No—everything would have to be coordinated through the IRGC.

On the third day of the war, President Pezeshkian apologized to the Gulf states. Five minutes later, Khatam al-Anbiya issued a statement effectively retracting his remarks.

Trump ended up giving the IRGC everything it wanted. What he did ultimately strengthened the organization. From now on, the IRGC will operate openly in the economy.

If yesterday the IRGC was the emperor of Iran’s hidden economy, today it is becoming the central authority within the formal and visible economy. I am confident that no major protocol or policy will be written from this point forward without the IRGC playing a role. Everything will require its approval and coordination.

So a return of Motalefeh to power is unlikely?

In this new political landscape, neither Motalefeh nor any other political party is likely to play a decisive role.

Trump made what I would describe as a strategic mistake. The IRGC now sees the situation as a blessing in disguise. A ripe fruit has fallen into its lap, and it has no intention of sharing that fruit with anyone else.

The post “Trump Ended Up Giving the IRGC Everything It Wanted” appeared first on Tehran Bureau.

A paper takeout cup is what closed the café down. In late March, as war with the United States and Israel escalated, authorities in Iran turned off the lights at over forty Lamiz Coffee outlets across the country. Posters of Ali Khamenei were taped over the cafés’ dark windows. The chain was shuttered for featuring a coffee cup with an image that officials claimed mocked the assassination of the Supreme Leader in a February 28 air strike. The illustration, based on a 1975 poster created by graphic designer Farshid Mesghali, depicts an empty chair beneath a volley of large raindrops, which authorities said resembles the chair used by the late leader in his public appearances. Referencing the Persian New Year, which took place on March 20, the cup’s back reads “Nowruz 1405—Spring Will Come.” 

Representatives of Lamiz, established in 2004 by Iranian-Canadian Armin Lamei, have denied the allegation, explaining that the cups were ordered for Nowruz long before the war began. Subsequently, other coffee shops in Tehran such as the popular Sam Café were closed or had their Instagram pages taken down by the authorities, most of them after the April 8 ceasefire went into effect. These spaces have been crucial gathering spots for Iranians to see and hear from one another during the extended internet shutdowns that began in early January amid mass protests against the regime, and they have served as social and emotional refuges since the war began.

Despite the crackdowns, many cafés have remained open for business (Lamiz and Sam were allowed to reopen in early May). Every day, they come to life during long business hours between 8 a.m and 11 p.m. Young Iranians in Western-style clothing—many without any regard for Islamic dress codes—move between the city center and posh District 1. Inside, espresso machines grind and hiss, milk is frothed and shaped into foamy compositions, and playlists vary from upbeat Coldplay in the north to moody Tom Waits downtown. Lively conversation fills the air.

Bahram, a young visitor at one café, put it simply: “We have no internet, so we have to go to the café every day just to see our friends. The streets were empty during the war but inside these cafés the tables were full.” While the streets are busy again as the ceasefire enters its sixth week, many café windows are still prepared for bombardment, covered with colorful tape in creative patterns to prevent glass from shattering into dangerous, flying shards.

Within these popular, politically fraught destinations, what kind of public life remains possible and how much does it cost? To address that question it helps to understand cafés in Iran as establishments serving multiple purposes, part of a history of layered spaces whose functions have continually shifted over time.

1. Sleepovers at the Qahveh-Khaneh

A café in Iran is never simply a coffee shop. It can resemble a Western pub or bar without alcohol, even a muted nightclub—defined less by what it sells than by atmosphere, personal proximity, and social visibility. It is a place for being seen as much as for consuming coffee and light meals. What sustains it is the gathering itself. And the contemporary café is only the latest in a long history of Iranian social-commercial interiors, shaped by changing relations between coffee and tea, private and public life, and formal and informal assembly.

This structure has deep roots. In the Safavid era (1501–1736), during which a unified Persian state was established with Twelver Shiism as the official religion, coffee arrived as an imported commodity tied to long-distance trade networks. In the 16th century, the qahveh-khaneh (literally, “coffeehouse”) emerged in cities such as Qazvin and Isfahan. These urban establishments served both locals and travelers, with an economic model that extended well beyond coffee. Patrons paid not only for beverages but for access to a shared environment where poetry recitations, games, political discussion, and informal business took place. Information circulated through conversation rather than institutions, making the space itself a form of value. Even at this stage, the coffeehouse depended on imported supply chains and on the ability to convert social gathering into sustained economic activity, while remaining subject to the oversight drawn to spaces where people met, spoke, and exchanged ideas.

Coffeehouses were never separate from structures of power. Under Shah Abbas I (r. 1588–1629), they were drawn into the economic and political orbit of the court, at times serving as informal venues for receiving foreign envoys. This use reinforced their role as spaces where commerce, sociability, and political exchange overlapped, even as that multivalent role made them subject to scrutiny. As political discussion took place within them, efforts were made to regulate such activity; religious figures visited coffeehouses to monitor conversations and steer them toward acceptable themes. Under Shah Abbas II (r. 1642–66), coffeehouses were briefly closed before being allowed to reopen under stricter oversight, indicating that while they were economically and socially necessary, they remained closely scrutinized as part of a broader system of control.

An Economy of Storytellers and Trade

From its beginnings, the coffeehouse operated as a structured urban enterprise with multiple sources of income. Divans allowed for daytime eating and nighttime rest; to increase foot traffic, proprietors invited preachers and naqqals (storytellers) who worked within informal payment systems based on audience contributions. A naqqal might recite tales from a classic such as Ferdowsi’s epic Shahnameh, the Khamseh of Nizami, or the medieval romance Samak-e Ayyar. Evenings might be devoted to the reading of the ghazals of Hafez or fortune-telling based on his verse (fal-e Hafez). A small labor economy developed in such venues, with workers employed to prepare drinks, serve customers, and maintain supplies. Rather than relying exclusively or even primarily on coffee, the business depended on layering services—beverages, entertainment, food, and lodging.

At the same time, these activities remained subject to ideological oversight. Unlike in parts of the Ottoman world and Mecca, where coffee was prohibited at times due to fears that coffeehouses fostered radical thinking and political dissent, coffee was never banned in Iran. Yet it existed within a framework where social practices could be restricted according to their impact on order. As Rudi Matthee notes, patterns of consumption were shaped by trade, geography, and hierarchy as much as by taste, and by the relationship between state and religious authority. (Matthee’s The Pursuit of Pleasure: Drugs and Stimulants in Iranian History, 1500–1900 is an invaluable historical resource.) Shia clerics often allowed certain practices to continue so long as they remained contained, reflecting a pragmatic approach to regulation that extended to spaces of gathering. Within this framework, the decline of coffee did not eliminate the coffeehouse; its functions evolved as tea replaced coffee as the dominant drink.

By the early Qajar period (1789–1925), this transition was driven by trade and cost. Tea entered northern Iran through Russian and Central Asian routes, while coffee remained tied to southern import networks via the Persian Gulf. As tea imports expanded and prices fell, it transformed from an elite commodity to a widely consumed good, gradually displacing coffee. State involvement in this shift became explicit in the late 19th century through efforts to reduce dependence on imports. At a time when roughly 83 percent of tea was imported from India, diplomat Mohammad Mirza Kashef al-Saltaneh introduced domestic cultivation after disguising himself as a French merchant to study production methods in British India. With state backing, including a production monopoly granted by Mozaffar al-Din Shah, plantations were established in regions such as Lahijan and Tonekabon, expanding to 300,000 tea plants by 1903.

The spread of tea altered the economic structure of consumption. Unlike coffee, it did not depend on specialized public venues. With the introduction of the samovar, tea moved into domestic settings, becoming part of everyday hospitality and reducing reliance on the coffeehouse as the primary site of consumption. It was cheaper, locally produced, and less exposed to fluctuations in global trade. Coffeehouses adapted rather than disappeared, replacing coffee with tea while maintaining their role as revenue-generating social spaces.

During the Qajar period, their economic function expanded further. Coffeehouses operated as informal labor exchanges, where employers recruited workers and tradesmen gathered according to occupation. They remained key points for the spread of news and information, which brought increased state attention. Reform proposals in 1879 called for closing existing coffeehouses and replacing them with regulated establishments with restrictions on such activities as newspaper reading. During the Constitutional Revolution (1905–11), coffeehouses in fact became pivotal as venues for people in a still largely illiterate society to come and listen to newspapers being read out loud.

Urban Expansion, Social Function, and Class Structure

By the early 20th century, coffeehouses had become embedded in the urban economy at scale. In Tehran, their numbers rose from 711 in 1929 to around 1,500 by 1960 and roughly 3,500 by 1979, before falling sharply to just over 900 by 1990. The pattern was similar in Isfahan, where numbers increased from about 19 in the late 19th century to around 70 by the 1920s. This expansion reflected the range of economic functions these establishments performed at a time when few other urban institutions attracted a comparable range of activity.

During the Pahlavi period, rapid urbanization brought an influx of working-class men, migrants, and tradesmen into cities. Coffeehouses operated as low-cost, accessible businesses within neighborhood economies and bazaar networks. Their income was built on multiple streams: tea, shisha, and simple meals such as omelettes and meat stews, combined with the monetization of space. They continued to function as informal labor exchanges and sites for the circulation of information about everything from national politics to local affairs, sustaining a steady flow of customers interested in more than just food and beverages.

The business model reflected the economic position of their clientele. These were high-turnover, low-margin establishments, concentrated in older districts and serving primarily lower- and middle-income patrons. Interiors were modest and durable. Almost universally on display were portraits of the first Shia Imam, Ali, and the ill-fated wrestler Gholamreza Takhti, whose death by suicide became the subject of lasting conspiracy theories. Together, these figures represented ideals of honorable masculinity and chivalry among working-class patrons. The viability of coffeehouses depended on regular customers, inexpensive offerings, and continuous occupation of space. Today, the remaining coffeehouses—largely located in older, religious, or economically disadvantaged neighborhoods—continue to operate as small, service-based businesses built on sustained patronage.

Coffeehouse to Café

The emergence of modern cafés in early 20th-century Tehran marked a shift in both urban consumption and the organization of social space. Establishments such as Café Naderi, Cafe Orient, and Café Loghanteh—now reopened at the Qasr Prison Museum—introduced a different commercial model tied to urban modernity. Among them, Café Naderi, founded in 1927 by Armenian immigrant Khachik Madikians, became the most prominent. It operated not only as a coffeehouse but as a restaurant and meeting place, drawing a more affluent and educated clientele, including writers and intellectuals such as Sadegh Hedayat, Forough Farrokhzad, and Ahmad Shamlou, and generating income through extended patronage rather than quick turnover.

Compared to the classic qahveh-khaneh, where revenue depended in large part on patrons attracted by storytelling, other forms of entertainment, and lodging, the modern café reorganized its economic base around print culture and longer sitting times. Newspapers and journals replaced oral narration as the primary draw, encouraging customers to remain for extended periods, order repeatedly, and return regularly. 

As Rudi Matthee’s work shows, changes in these spaces were shaped by trade, urban development, and consumption habits. Just as Safavid coffeehouses had depended on imported coffee and supplementary services, and Qajar-era venues had adapted to tea and labor exchange, modern cafés aligned themselves with new economic conditions. Whereas traditional coffeehouses were entirely male preserves, the expansion of female social possibilities after Reza Shah Pahlavi’s 1936 decree prohibiting women from wearing the veil in public widened cafés’ customer base. They became the first commercial “third places” accessible to women, and mixed-gender patronage made them natural venues for dating.

At the same time, cafés remained subject to regulation and oversight as public gathering spaces. Their role in hosting discussion, intellectual exchange, and social interaction placed them within the same framework of monitoring and control that had shaped earlier coffeehouses. 

2. Rise of the Baristas

Tehran’s postrevolutionary and postwar cafés represent a later stage in a longer economic history of Iranian social interiors, extending from the Safavid coffeehouse to the modern café. Across these periods, the structure persisted even as the form changed: spaces of gathering moved between coffee and tea, public and domestic settings, and regulated and informal environments, while continuing to operate as businesses shaped by shifting political and economic conditions.

Over the years, Café Naderi’s identity gradually shifted from dynamic gathering place to something more symbolic, valued for its cultural association with earlier generations. Efforts to prevent its demolition secured its designation as a protected heritage site, preserving it not simply as a business but as part of Tehran’s urban and economic history.

Meanwhile, new establishments opened that aimed to replicate the ambience of the era in which Naderi first opened its doors. These “nostalgia cafés” staged the atmosphere of the first half of the 20th century through retro furniture, archival photographs, and historical objects. What was being sold was not only food and drink but a constructed sense of the past—memory turned into an economic asset. With warm lighting, restrained noise volume, and durable furnishings, their interiors were carefully managed to encourage customers to remain for extended periods and to return time and again.

Cafe Shouka, opened by Yareli Pourmoghadam in September 1981 in Gandhi Mall, illustrates this model. Its location within what became a concentration of cafés tied its business to foot traffic and neighborhood demand. It combined service with production by roasting its own coffee beans daily, reducing dependence on external suppliers while adding value through control over quality. Its unchanged décor—tables, wooden benches, and an old television—functioned as a stable visual identity, reinforcing customer loyalty. The café’s viability depended on regular patrons who treated the space as part of their routine, sustaining income through continued use rather than one-time transactions. Other cafés, such as Aram on Qaem Maqam Street and Santo in the Tehran Bazaar, operated within similar, locally embedded economies.

From the 1990s onward, cafés increasingly diversified their revenue streams. Cafe Aks, located beneath the Eskan Residential Towers on Mirdamad Boulevard, represents a shift toward hybrid models. It combined coffee service with exhibition space, integrating photography shows directly into its daily operation. Exhibitions attracted visitors, while café sales provided a steady financial base. Additional income came from the sale of CDs and art magazines. Its position within a commercial complex linked its business to a wider retail environment, where cultural programming and hospitality reinforced each other economically.

The Commercialization of Coffee Culture

By the early 2000s, cafés in Tehran increasingly adopted Western-style formats while coming under closer and more systematic state scrutiny. Although many remained small neighborhood businesses, they were incorporated into expanding systems of surveillance through licensing requirements, municipal directives, and security and moral enforcement policies. By the mid-2010s, CCTV installation had effectively become a de facto condition of operation across much of the urban commercial sector. Enforcement intensified during moments of political unrest, including after the 2009 protests and again following the Mahsa Amini protests, when surveillance footage from businesses was used for identification and enforcement. Today, all businesses are required to maintain surveillance systems as part of licensing, with noncompliance risking fines, closure, or loss of permits. Some cafés resisted and were shut down, but most complied, acquiescing to conditions of oversight like those that have long shaped Iranian coffeehouses and cafés.

Despite these constraints, café-going continued to expand. Young Iranians remained frequent customers, sustaining a dense network of small cafés alongside larger branded chains. Many establishments adopted international models in menu design and visual presentation, while adapting to local economic conditions. One early example of expansion through branding and retail was Raees Coffee, founded in 2000, which developed into a multibranch business while also selling packaged coffee. A similar trajectory was followed by Bonmano, which built nationwide distribution of packaged items aimed at broader markets. Positioned as a more affordable brand, Bonmano entered supermarkets with products such as self-brew disposable sachets before opening its first café in Iran Mall, the world’s largest shopping mall, in 2022.

Alongside these retail-driven models, a roastery-café format emerged in which production, branding, and service were integrated within a single business structure. Lamiz became the most prominent example, expanding to dozens of locations across multiple cities. Selling its own packaged beans, it positioned itself in the mid-market segment, combining affordability with standardization to reach a wide urban customer base. A different model developed with Sam Café in Sam Center on Fereshteh Street in northern Tehran. Originally designed to generate foot traffic for a luxury retail complex, the café itself became the primary attraction. Alongside conscientious sourcing and specialty roasting, it incorporated art displays, exhibitions, and a highly developed visual identity. Its success led to it opening branches across the city.

The original café in Sam Center became known for drawing customers from across different segments of Tehran’s urban population. Business meetings, student gatherings, informal artistic encounters, celebrity visits, and affluent arrivals in luxury cars all take place within the same space. Amid shops selling high-end goods such as opulent Swiss watches and wildly expensive designer T-shirts, the flagship outlet has often been the most active commercial and social space in the complex, generating revenue through prolonged stays and the desire for social visibility in a curated, on-trend environment.

The broader rise of roastery cafés marked a structural shift in Tehran’s café economy. These businesses functioned simultaneously as coffee shops, retail outlets, and production sites. Coffee beans were roasted in-house or through tightly controlled supply chains, while packaged products extended the brand into domestic and workplace settings. Freshness and traceable sourcing became central to marketing, turning coffee into a branded lifestyle product tied to design, consumption patterns, and social display.

The geography of café development, meanwhile, reflected Tehran’s wider economic inequalities across a pronounced north–south divide. Northern districts such as affluent Fereshteh were characterized by larger, more expensive, more design-forward cafés, where revenue was closely linked to atmosphere, branding, and extended stays. In contrast, cafés in central and southern areas remained smaller, denser, and more functional, closer to older patterns of everyday social use rooted in neighborhood economies.

A Parallel Coffee Economy

The growth of specialty coffee in Tehran has reshaped both café culture and the organization of labor. The barista, once peripheral to the café economy, has become a central figure occupying a hybrid technical and performative role. Espresso extraction, milk texturing, customer interaction, and visual presentation are integrated into a single form of work in which coffee preparation is inseparable from the production of atmosphere and experience. This transformation has been accompanied by the emergence of formal professional structures. Institutions such as the Iranian Barista Guild, along with competitions modeled on the World Barista Championship, have contributed to the formation of a recognizable coffee labor market. Figures such as Morteza Bagherpanah, who overcame dozens of competitors to win the crown of 2018 Iran Barista Champion, and initiatives led by Mahsa Niyayesh, founder and CEO of the Iranian Women Coffee Association, became associated with this development, while the work itself remained economically unstable due to rising input costs and fluctuations in consumer spending.

International sanctions and financial restrictions have also significantly shaped the structure of Iran’s specialty coffee sector. Limits on banking, travel, and certification access have constrained participation in global training systems, competitions, and professional networks. As a result, domestic institutions developed in partial substitution for international frameworks, producing a parallel coffee economy that is simultaneously isolated and internally structured.

Over the past decade, this parallel system has expanded through the rapid growth of coffee academies and training programs. Institutions such as the Iran Coffee Academy and Iran Coffee School introduced structured curricula covering brewing methods, sensory evaluation, café management, and service standards, contributing to the formalization of café labor. While access to official Specialty Coffee Association certification remained limited, selective international integration continued. In 2023, the introduction of the Italian Barista Certificate through Espresso Academy marked a partial reopening of training channels. Competitions, workshops, festivals, online courses, and informal networks further accelerated the circulation of technical knowledge. By 2025, the expansion of training infrastructures and a younger workforce increasingly fluent in specialty coffee terminology was clearly transforming the scene, with barista training becoming more central to the functioning of the café economy.

Media and publishing have also played a key role in structuring these developments. Safa Haratian, founder and editor of iCoff.ee—the leading Persian-language media outlet in the field—has contributed to the professionalization of coffee discourse through reporting, industry analysis, and coverage of cafés, roasting practices, competitions, and global trends. Through iCoff.ee and his international writing, Haratian has helped connect Iran’s expanding coffee sector to broader developments in the global specialty coffee industry while reinforcing domestic training and consumer knowledge systems.

3. The Red Lipstick Effect

By the 2020s, cafés in Tehran increasingly developed into hybrid interiors combining coffee service with bookstores, retail, galleries, performance spaces, and work environments. New venues such as Luvo and Roostar (already with four locations)—opened during the recent Ramadan War with the United States and Israel—and café spaces linked to Saless Publishing House on Karimkhan Street reflect this shift. In these settings, the café functions simultaneously as leisure space, workplace, commercial site, and cultural venue.

This hybridization also extends into event- and exhibition-based business models. Daa House operates as a café-performance venue where live theater, jazz, and experimental music events are staged within a hospitality setting rather than a formal cultural institution. Performances frequently sell out, indicating sustained demand for small-scale cultural programming within Tehran’s independent arts economy. In this model, attendance becomes a purchasable commodity, and the café operates as a hybrid cultural enterprise combining hospitality, performance, and urban sociability within a single commercial structure. Ticket prices generally range from around 200,000 to 350,000 tomans (2 to 3.5 million rials), depending on the program. (A year ago, that amount would have fetched about $2.40 to $4.20 USD from a Tehran currency trader; today, $1.10 to $1.95. From March 2024 to March 2026, the official minimum monthly wage was 110 million rials, though many jobs fell short of that in practice. In response to runaway inflation, the government recently raised the minimum wage to 166 million rials per month—$92 USD as of May 15, per Bonbast.com.) 

A parallel development is visible in hybrid gallery-cafés, where exhibition space is sustained through café revenue and event programming rather than institutional funding or direct art sales. Spaces such as Iranshahr House, Ariana Art Cafe, and Kajeh Art Cafe combine café service with rotating exhibitions, talks, and informal cultural gatherings. Café operations function as the primary financial base, subsidizing exhibitions, which in turn generate footfall and repeat consumption, linking cultural visibility directly to commercial sustainability. Iranshahr House, founded by Majid Mollanorouzi, former director of the Tehran Museum of Contemporary Art, exemplifies this model. It integrates a bookstore, café, private art consulting and sales office, and gallery space, translating institutional cultural experience into a flexible, market-oriented business structure.

Across business models both conventional and cutting-edge, Tehran café prices are relatively high, restricting regular use largely to middle and upper-middle income groups. One patron, Amir, noted: “I go to cafés almost every day, either to socialize or to spend time alone … I spend between five million and ten million tomans on each visit.” When the average pre-tax monthly salary in Iran sits at around 40 million tomans (per wage.is), even if the figure in the capital is perhaps double that, daily indulgence like Amir’s is available to few.

At the broader level, a single café meal can cost from 3 to 5 percent of the average monthly wage and up to ten times more than a home-cooked meal, making frequent patronage next to impossible for most working-class Iranians. Access is also shaped by nonmonetary factors, including familiarity with the behavioral and aesthetic codes of café culture—language, dress, and modes of interaction. As a result, cafés function as sites where class distinctions are both reflected and reproduced.

Visible Consumption 

Despite the rapid expansion of cafés and specialty coffee culture in recent decades, tea remains structurally dominant in Iranian homes, workplaces, and everyday hospitality. For many Iranians—particularly older and lower-income groups—tea continues to signify affordability, continuity, and domestic routine, while coffee is more closely associated with younger urban populations, public consumption, mobility, and discretionary spending. Rather than displacing tea, coffee has largely been added alongside it, creating an additional recurring expense within everyday household and leisure budgets.

Under conditions of economic pressure, this pattern has become visible through what has been described as the “red lipstick effect,” in which major expenditures are reduced while smaller, visible forms of consumption are maintained to preserve status and normality. Even during periods of financial strain, including the recent war, many young consumers in Tehran continued visiting higher-end cafés, where the cost of entry remained relatively modest compared to housing, transport, and other major expenses. Cost management often takes the form of shared consumption—a coffee accompanied by a shared pastry or dish—allowing group participation while reducing per-person spending. At the same time, cafés function as sites where class status is performed through the display of branded clothing, luxury accessories, and the latest smartphones.

These dynamics are also reflected in everyday interactions. At a Fereshteh Street establishment, one patron, Maryam, responded to a question about whether going out to cafés on a regular basis is getting too expensive: “Maybe for some people. But for us it is still manageable.” Her friend added, “We share the food anyway because we have to watch our figures.” Such exchanges sit alongside visible markers of consumption, where fashion, accessory, and cosmetic choices signal belonging to specific urban social groups.

Economic pressures have begun to reshape patterns of coffee consumption more broadly. Rising café prices have encouraged some consumers to shift from café-based consumption toward the purchase of coffee beans for home brewing. This shift reflects structural vulnerability in the sector: coffee in Iran remains entirely import dependent, making retail prices highly sensitive to inflation, currency volatility, and broader, macroeconomic instability.

Declining Imports vs. Growing Demand

There are no official published figures specifically for Iran’s coffee imports in 2026, but available trade data indicates mounting pressure on the market.

During the first eight months of the Persian calendar year 1404 (March 21–November 21, 2025), Iran imported approximately 26,493 tons of coffee valued at about $156.6 million USD. This represents a 29.4 percent decline in import volume compared with the same period in 1403, while the average unit value rose from roughly $4.65 USD per kilogram in 1403 to $5.91 USD per kilogram in 1404, reflecting rising global coffee prices.

This data, compiled by Mehran Mehdizadeh, commercial consultant to the Northern Tea Factories Syndicate, points to a broader pattern: declining volumes alongside increasing prices. Import flows remain highly concentrated, with around 70.7 percent of coffee entering through the United Arab Emirates before the war, while India, Indonesia, and Vietnam supply most of the remainder. Together, these four countries account for approximately 96.2 percent of total imports. The contraction has been attributed to the higher international prices (exacerbated by Iranian currency depreciation), stock accumulation from earlier overimporting, and constraints in foreign exchange availability.

These economic pressures intersect with broader political and regulatory uncertainty. As coffee consumption became embedded in urban lifestyles, open warfare and a fragile ceasefire have introduced additional constraints around the import of nonessential goods. Foreign currency allocation prioritized essential imports, increasing expectations of further price rises and reinforcing the volatility of supply.

At retail level, these pressures are visible in consumption shifts. A coffee seller in central Tehran reported sustained demand despite worsening household conditions, alongside a gradual move from café consumption toward home and workplace preparation. Periods of conflict have produced sharp short-term declines in sales, followed by concerns that sustained price increases could suppress demand.

Price differences across cafés can reflect everything from differences in quality and wholesale cost to rent, location, branding, and design overheads. As of April 25, the local delivery app Snappfood indicated that Lamiz Coffee (still closed at the time) was charging approximately 35 million rials per kilogram for Arabica beans, with a cup of espresso around 1.5 million rials. At Sam Café, beans were priced similarly, while espresso was close to 3 million rials. At Roostar Cafe, espresso was priced at around 2.6 million rials. (By the time this article is published, all of these prices will almost certainly have risen due to the ongoing crash of Iran’s currency.)

The broader trajectory indicates continued growth in demand, even as supply remains exposed to exchange-rate volatility, spikes in shipping costs, and state-managed foreign currency allocation. Supply chains are extended and often routed through intermediary countries, with prices shaped by external shocks rather than domestic production capacity.

Cafés, meanwhile, remain subject to periodic inspection, licensing reviews, and closures, reflecting the persistent, intensive regulation of public gathering spaces in the Islamic Republic.

Café Culture, “Clean” and Real

Across centuries, Iranian café culture has shifted in form—qahveh-khaneh, tea house, literary café, nostalgia café, roastery café, gallery café, and performance café—each shaped by changing political pressures, cultural formations, and economic conditions. Two continuities run through these transformations.

The first is financial improvisation. From Safavid coffeehouses sustained by storytellers, other performers, and lodging, to Qajar-era labor-exchange venues, to contemporary cafés dependent on retail bean sales, exhibitions, ticketed events, and branded merchandise, these spaces have rarely been viable on beverage sales alone. Supplementary economies have remained central throughout.

The second is suspicion. From their earliest appearance, cafés and coffeehouses have been treated as sites where strangers gather, information circulates, and dissent can form—and thus been monitored, inspected, regulated, surveilled, and even closed by nearly every government. Across regimes, cafés have remained subject to scrutiny not for what they serve, but for the forms of community they enable.

Within these conditions, cafés continue to operate as both economic and social infrastructure. In Tehran and other large cities, rising prices have not halted patronage; young Iranians continue to frequent cafés, sustaining both consumption and the practices of meeting, pausing, and lingering. The café functions simultaneously as commercial experiment, temporary refuge, and staged social space—its viability resting on continued assembly under constraint. This persistence is evident in the cycle of closure and return, including the reopening of Lamiz Coffee and the immediate resumption of its online presence in an Instagram post.

In mid-May, several weeks into the ceasefire, a Tehran resident was asked by a friend abroad what he had been up to recently. “Not much—cafés” was the response. He continued, “There is no point in investing anything or starting a business. We don’t know if we’ll be alive tomorrow. So at least we can come to a café and enjoy ourselves.”

Yet cafés also remain sites of political contention. Following the Lamiz chain’s reopening, a makeshift café was established outside its Farmanieh branch by diehard government supporters. Under the banner “We are Tamiz [clean] Coffee and extremely in love with our homeland,” a chador-clad woman explained: “We began gathering outside this café to show our disdain for what these people had done. But when our numbers increased, the management of Lamiz asked us to leave because they said we were interfering with their business. So we thought—why not serve ourselves coffee where we have gathered? We are not coffee sellers, but we are doing this to object to them.” Another woman holding a Mojtaba Khamenei poster said she rejected Lamiz’s “dirty coffee” while affirming “clean coffee” as honoring the memory of the war’s martyrs.

Across such episodes, cafés continue to function as contested commercial spaces in which consumption, labor, and political expression intersect. The opposing interpretations attached to a not-so-simple cup of coffee ultimately return to the same structural condition—a social life organized through café spaces that persist, adapt, and sometimes vanish in the face of economic or governmental pressure only to reappear.

The post Qahveh Society: Iran’s Essential “Third Places” appeared first on Tehran Bureau.

For over two months, Iran’s streets and squares have routinely been occupied by members of the new jan-fada movement, ordinary citizens who have pledged themselves as the regime’s “devotees unto death.” Crowds of these ardent supporters of the Islamic Republic erect mokeb encampments, modeled after pilgrimage way stations, where they offer free tea and food while asserting ideological control over public space. Staging demonstrations of loyalty to the regime and parading through neighborhoods as they chant slogans, often PA amplified and meant to intimidate, such as “Heydar, Heydar” and “Commander, give the order—whatever you command, we will carry out,” these jan-fada groups do not mobilize spontaneously. They are the product of an entrenched financial architecture designed to manufacture and sustain political allegiance. 

As the destructive effects of the 40-day war sink into the Iranian economy, effects that grow more severe each day due to the US blockade, the state has slashed spending in almost every sphere. Funding for many state-owned companies, such as those in the electricity and water sectors, has been almost completely eliminated. Yet money still flows unabated to a sector with an already outsized budget allocation—propaganda. 

Iran’s latest budget—which was proposed to the Majles in early January and received parliamentary approval on February 17—suggests that the Islamic Republic continues to treat control over ideology not as an accessory to government, but as one of its core functions. According to the 2026–27 national budget (which follows the Persian calendar, extending from March 21, 2026, to March 20, 2027) at least 188 trillion tomans (approximately $1.43 billion USD) in official public spending is directed toward media institutions, religious organizations, ideological outreach, and security-linked cultural bodies. This amount alone is comparable to the combined budgets of the Ministries of Communications, Justice, Culture, and Cultural Heritage, and it omits entirely opaque funding streams underwritten by quasi-governmental “charitable” institutions, or bonyads, that are overseen by officials at the very heart of the regime.

This budget allocation breaks down roughly as follows:

• Media and content production (state broadcasting, news agencies): ~45%
• Religious and ideological institutions: ~20%
• Military-security ideological sectors: ~20%
• Educational and cultural-engineering bodies: ~10%
• International ideological outreach organizations: ~5%

The use of these funds goes far beyond the production of media content. They support the recruitment and training of Iranians for careers of service to the regime, as well the organization and deployment of broad-based operations like the faux-grassroots, “astroturfed” jan-fada campaign and the coordination and promotion, both domestic and international, of political, religious, and military messaging.

The amount of spending on propaganda is notable not only for its volume, but for its durability. Even amid an unresolved war and a financially crushing blockade, there is no indication that disbursements in the propaganda realm have been curtailed. While the regime has made drastic cuts elsewhere, it has left belief-making largely untouched. Islamic Republic of Iran Broadcasting (IRIB), long one of the regime’s central ideological instruments, has even seen a marked increase in its already substantial allocation. Having received 29 trillion tomans under the 2025–26 national budget, IRIB’s allotment has ballooned to 80 trillion tomans in the current fiscal year.

Rather than flowing through a single ministry, propaganda funding is dispersed across a sprawling ecosystem of broadcasters, seminaries, cultural foundations, military organizations, and religious institutions. The largest share goes to state media and content production, including Iran’s broadcasting apparatus and affiliated press services, such as the Islamic Republic News Agency (506 billion tomans). A large portion also goes to numerous religious and ideological entities, ranging from the Islamic Development Organization (6.8 trillion tomans, up from 5 trillion last year) to the Imam Khomeini Educational and Research Institute (193 billion tomans for “discourse-building, explanation, and promotion of religious teachings”). Military-security cultural organs closely linked to the Islamic Revolution Guard Corps (IRGC) such as the Foundation for the Preservation of Sacred Defense and Resistance Values (724 billion tomans for “promotion of the Iranian-Islamic lifestyle“) take another sizable chunk.

Aside from domestic messaging, state budget funds also support international ideological outreach through IRIB’s Press TV subsidiary, institutions such as the Islamic Culture and Relations Organization (2.2 trillion tomans), and various bodies dedicated to exporting revolutionary ideology abroad, including Qom’s Al-Mustafa International University. The school has been sanctioned by the United States Treasury as “a recruiting ground for the IRGC-QF” (Quds Force, the Guards’ elite foreign arm). In the 2021–22 fiscal year, it received 487 billion tomans (about $115 million at the time), according to previous reporting by Tehran Bureau. Its allocation this year is almost 1.9 trillion tomans.

This extravagantly endowed structure reveals something deeper than the political importance of a censorship apparatus or messaging discipline. Propaganda functions as an economic sector, employing hundreds of thousands of Iranians, from journalists and filmmakers to clerics and educators. Some are ideologically committed. Many are financially dependent. Either way, the system reproduces itself through material incentives as much as political conviction.

Elite clans and ethereal audits

The propaganda industry is essential to the survival of the political business empires that effectively run the Islamic Republic. Connected through marriage and shared business interests, each of these elite clans fosters connections to high politics, state-funded media, and lucrative industries, placing friends and family members in central positions whenever possible. State-run media is an especially powerful tool. The clans own major news agencies like Tabnak (Mohsen Rezaei) and Fars News (Seyyed Nezalmodin Mousavi) and newspapers such as Hamshahri (Mohammad Baqer Ghalibaf), Khorasan (Mohammad Saeed Ahdian), and Iran (the Khameneis). They use these media outlets, which are mostly funded by taxpayers, to attack their political and business rivals and to dispel reports of corruption. Those with business activities in the media sphere often also run the institutions that control censorship boards and limit press freedom, empowering them to undermine and eliminate critics.

Behind many of these media ventures is the aforementioned Islamic Development Organization (IDO), a propaganda-focused umbrella charity that falls under the purview of the Office of the Supreme Leader (Beyt-e Rahbari). IDO is linked to a vast network of media organizations, including widely read news outlets such as Nasim Online and 90 Eqtesadi. Their ownership structures are intentionally complicated to hide the outlets’ affiliations with the IRGC, Tehran Bureau’s reporting has shown.

IDO’s finances are vetted by Mofid Rahbar, an auditing firm that exclusively services the companies that fall under the Beyt’s purview, along with the bonyads the Beyt also oversees, including EIKO, Astan-e Qods Razavi, and Bonyad Mostazafan (BM). The aegis of the Beyt-e Rahbari means these organizations—designed to enrich the IRGC and other regime insiders—are exempt from tax obligations, anti-corruption codes, and financial reporting rules. 

The propaganda pyramid

As the main funding vehicle of the Islamic Republic’s propaganda machine, IDO sits at the top of a pyramid of subsidiaries that serve as cash cows for the ruling elite. Beneficiaries include the new (nominal) Supreme Leader, Mojtaba Khamenei, who played a major role at Beyt-e Rahbari long before his father’s death and whose family controls a network of influential media outlets, prominent book publishers, and media industry regulators. 

Another clan leader with business ties to IDO is pasta tycoon Reza Motallebi-Kashani, who has common business interests with IDO trustee Seyyed Mehdi Khamoushi. An influential clerical ally of the late Ayatollah Ali Khamenei, Khamoushi has close ties to Ghalibaf and heads the board of trustees of Amir Kabir Publishing House (yet another Mofid Rahbar auditing client). Other former and current Amir Kabir trustees include the late Ali Larijani (former former secretary of the Supreme National Security Council), Mohsen Rafiqdoust (former IRGC minister and BM director), and Mohammad Saeedikia (former BM director and current head of the BM board of trustees).

IDO is one of the organizations instrumental in online censorship and facilitating internet shutdowns, Tehran Bureau’s reporting has shown. Its director—currently Hojatoleslam Mohammad Qomi—sits on the powerful Committee to Determine Instances of Criminal Content. This group, headed by Iran’s attorney general, Mohammad Movahedi-Azad, is in charge of monitoring internet content and blacklisting websites that are deemed inappropriate. 

Aside from controlling internet censorship, IDO has overseen the launch of multiple e-propaganda operations, as well as a start-up that appears well-positioned to thrive in the increasingly repressive digital space that has emerged in Iran amid the current web blackout. In 2020, IDO founded a subsidiary, the Bina Institute, whose articles of incorporation describe its aim to produce “quantitative and qualitative analyses” on a broad range of issues, supported by creating “video clips [and] digital texts,” undertaking “social media activities,” and providing related “services to institutions and organizations.” In the Islamic Republic’s recondite language, this phrasing suggests that Bina was established, in part, to coordinate pro-regime social media accounts. Among its unambiguous remits is to “monitor and evaluate” the regime’s propaganda efforts. 

A notable member of the Bina Institute’s founding board is Seyyed Meysam Seyyed Salehi, who manages Soroush, a domestic messaging app created to replace Telegram, which officials banned during the protests of 2017–18. As the crackdown on international social media usage intensifies, Soroush stands to benefit enormously. Between 2018 and 2020, Salehi was the CEO of Jam-e Jam Institute, which publishes Jam-e Jam newspaper and operates its website. Fariduddin Haddad Adel, brother-in-law to Mojtaba Khamenei, has long been a member of the institute’s board. 

The intricate business connections between Iran’s power brokers and the country’s propaganda-producing organizations help explain why wartime stresses have not fundamentally altered their financial dispensations. The regime can tolerate runaway inflation and crippled industry. But weakening the propaganda apparatus would impact the networks that maintain ideological discipline, rationalize repression, and coordinate regional proxies.

The result is a system in which propaganda is treated less as a tool of persuasion than as infrastructure.

In most countries, propaganda is episodic, activated during elections or major crises. In Iran, it is a permanent, massive state expenditure. Even as its economy crumbles and prospects for a swift recovery dim, the Islamic Republic still maintains that controlling the narrative for a weary audience is worth hundreds of trillions of tomans. And perhaps the chants of the “devotees unto death” that resound within its ideological echo chamber are even loud enough to convince it.

The post Bankrolling Belief appeared first on Tehran Bureau.

At its narrowest point, the Strait of Hormuz is just 21 nautical miles across—so narrow that the sovereign territorial waters of Iran and Oman overlap. The oil that routinely passes through this chokepoint accounts for one-fifth of global consumption; the portions of the world’s liquified natural gas, petrochemicals, and internationally traded fertilizer that make the transit are similar or even greater. The law of the sea must strike a balance here between the rights of the two nations that adjoin the strait and the global community’s need to keep a vital shipping artery open for navigation. Hormuz, as a result, is neither part of the “high seas” nor the exclusive preserve of Tehran and Muscat. This maritime bottleneck—youthful in oceanic terms, about 6,000 years old—thus also presents newly salient challenges to international law.

From the first hours of the war pitting Iranian against US and Israeli forces, images of oil tankers and cargo vessels stalled on either side of the strait have become familiar. As US bombers and Iranian missiles flew over the Persian Gulf to the west of the strait and the Sea of Oman to its east, shipping insurance premiums skyrocketed, making transit of the strait financially infeasible for many. The Islamic Revolution Guard Corps’ declaration in early March that the strait was closed to all but Iran’s own ships brought foreign navigation through the waterway to a near-complete halt. Compared to the prewar daily average of 138 vessels, roughly two ships a day took advantage of the Guards’ subsequent offer to allow passage in return for payment of a toll, before the US blockade shut down the strait almost entirely. All of these developments lead back to one question: Who actually has the right to decide who passes through Hormuz?

Under the 1958 Geneva Convention on the Territorial Sea, which Iran signed but never ratified and whose language it continues to reference, the division of such narrow waterways with different nations on either side is governed by the principle of the median line. According to this rule, unless the two countries agree otherwise, the boundary is a line where every point is equidistant from the nearest points on the baselines of each coast. This effectively splits the strait into two sectors of national sovereignty—every ship transiting Hormuz is always navigating within the sovereign territorial sea of either Iran or Oman.

A maritime highway

For decades, management of passage through the strait has followed this dual logic. The current routing system for vessels in Hormuz is the result of the Traffic Separation Scheme (TSS), which was jointly proposed by Iran and Oman and adopted by the International Maritime Organization (IMO) in 1968. The system was designed specifically to facilitate the safe, rapid transit of goods by establishing organized corridors for the heavy volume of traffic passing through the chokepoint.

Under the TSS, the strait functions like a strictly regulated maritime highway. To speed up transport and minimize the risk of accidents, Iran and Oman agreed on specific directions of travel: ships heading west and entering the Persian Gulf from the ocean would use an inbound lane that passes through Iranian territorial waters, while ships heading east and exiting the Gulf would follow an outbound lane through Omani waters.

Because the tankers and container ships that traverse the strait are so massive—often exceeding 1,000 feet in length—they cannot simply choose alternate routes through the narrow gap. As on a divided land highway, a driver cannot suddenly decide to veer into the opposite lane or drive across the median whenever they please without risking a catastrophic collision. The TSS thus functionally locks ships into a system of designated lanes that relies on the cooperation of the two coastal states.

This technical reality is crucial because it demonstrates that the management of Hormuz is based not on claims of exclusive (or semiexclusive) ownership, but rather on navigation rules, regional coordination, and international recognition. While Tehran and Muscat have been the stewards of this system for decades, its approval by the IMO was never intended to grant them authority to close the waterway, impose arbitrary pricing, or selectively decide which ships are allowed to pass. Indeed, the IMO and the statutes of international law—such as Article 16(4) of the 1958 Territorial Sea Convention and Article 44 of the 1982 United Nations Convention on the Law of the Sea—consistently maintain that the right of transit through such a vital channel between international waters is a shared global necessity that cannot be suspended.

Exploiting the “gray zone”

To manage its confrontation with stronger adversaries in the strait, Tehran has developed what the analyst Michael Eisenstadt describes as a “gray zone” strategy—deploying legal ambiguity and strategic indirection to manufacture crises while controlling the pace of escalation and maintaining a veneer of statutory legitimacy. This is not a state navigating a genuine legal dispute in good faith. It is a government using the language of international law as a tool of coercion, selectively invoking whichever framework expands its leverage while discarding the obligations that would constrain it.

The clearest expression of this strategy is terminological. Iranian officials rarely cite the 1958 Geneva Convention by name, yet they reach consistently for its specific legal vocabulary when justifying their actions in the strait. In March 2026, Foreign Minister Abbas Araghchi stated directly that “Iran currently applies the innocent passage regime in the Strait of Hormuz.” The choice of “innocent passage” over the “transit passage” standard enshrined in the 1982 Convention is not casual. It is a deliberate reversion to a pre-1982 legal order that grants coastal states significantly broader authority to regulate, supervise, and, in certain circumstances, prohibit traffic through their territorial waters.

This preference for older statutory language has been codified in domestic law. Iran’s 1993 Act on Marine Areas is the formal architecture of its position, legislation designed to give statutory grounding to its physical control of the strait while sidestepping the obligations of international treaty. The Act selectively borrows from the international frameworks Iran finds useful while discarding those it does not. It adopts the UNCLOS standard of a 12-nautical-mile territorial sea—which, given the strait’s width of 21 miles, allows Iran to claim the entire northern half of the waterway as sovereign territory—while simultaneously omitting the transit passage rights that were the essential global bargain for accepting that broader limit in the first place. Article 5 of the Act formally endorses the 1958 “innocent passage” language. Article 8 grants Tehran the power to suspend passage for national security reasons, a power flatly prohibited under modern international law in straits used for international navigation. Articles 9 and 16 go further still, requiring prior authorization for all foreign warships and purporting to prohibit foreign military activity throughout Iran’s entire exclusive economic zone.

That selectivity is not incidental—it is the strategy. The 1993 Act is its domestic expression; the decision to sign the 1982 Convention without ratifying it is its international one. Signing alongside 88 other states allowed Iran to claim sovereign rights over the natural resources of a maritime area extending 200 nautical miles from its coast. By withholding ratification, Tehran preserved its status as a “persistent objector”—a recognized if contested principle in international law under which a state that consistently and openly rejects a norm during its formation cannot later be held bound by it. In its 1982 interpretive declaration, Iran argued that transit passage is merely a “contractual right” born of a package deal, binding only on states that have fully joined the treaty. This framing carries an additional tactical advantage: since the United States also never ratified UNCLOS, Iran can argue that Washington has no standing to invoke transit passage rights in Hormuz at all.

This strategy is widely regarded by international legal observers as a form of lawfare—the weaponization of legal language to achieve ends that the law itself would prohibit. The critique is pointed: Iran’s position is built on the 1958 framework it claims as its authority, yet Article 16(4) of that same convention explicitly prohibits the suspension of innocent passage through straits used for international navigation. In closing the strait to commerce it has designated hostile and conducting naval mining in one of the world’s most critical waterways, the Islamic Republic is not merely bending the rules—it is gutting the very framework it invokes for cover.

The United States, though it participated in drafting the navigational rules, declined to become a party to the treaty, rejecting its restrictions on deep seabed mining. Nonetheless, it argues that the transit passage regime has become so entrenched in international practice that it has crystallized into “customary international law”—binding on all states, including non-signatories like the US itself. (That Washington demands adherence to a treaty it has never joined is fodder for easy criticism. That it has now responded to Iran’s actions by imposing a blockade which violates recognized maritime law under any formula sets what some legal observers view as a dangerous precedent.)

Oman formally maintains a position somewhere in the middle of this statutory tug-of-war. While Muscat, unlike Tehran, both signed and ratified the 1982 Convention, it hardly adopted a maximalist reading of transit passage. In its “declarations made upon ratification,” Oman expressed concerns much like Iran’s regarding coastal sovereignty and the sensitivity of military vessels’ passage, asserting that foreign warships—along with all ships powered by or “carrying nuclear or other substances that are inherently dangerous or harmful to health or the environment”—must secure advance permission to traverse its territorial waters. There is no record, though, of Oman having even once impeded a vessel’s passage through the strait on this basis.

The law and the reality

Ultimately, Hormuz is neither entirely within nor beyond its two coastal states’ statutory control. The legal rights of Iran and Oman in the strait are real—and restricted. The restrictions stem directly from the unique role Hormuz plays in the global economy. If the strait were an entirely local body of water, the international community could afford its rules to be more localized. However, when a significant portion of the world’s oil, gas, and petroleum derivatives must pass through it, the waterway cannot be governed by the national security logic of a littoral state.

So who does have the right to decide who passes through Hormuz? Iran and Oman exercise sovereignty over their respective territorial seas, but this sovereignty is legally subject to international passage rights. These rights were established to ensure that a chokepoint of global importance could not be transformed into a single government’s lever of political pressure or weapon of war. This much is true: According to well-established, long-observed, explicitly articulated maritime law, any civilian vessel from anywhere on Earth has the right to pass through Hormuz under any circumstance. The current conflict, however, has demonstrated that this legal regime is not nearly robust enough to withstand the combined pressure of bombing, mining, drones, blockades, seaside arms, and the assertion of raw power, whether that of would-be regional heavyweight or planetary hegemon.

In 2026, the Strait of Hormuz is an arena neither for the realization of absolute Iranian sovereignty, nor for the cost-free triumph of the American-endorsed (if still unratified) principle of “freedom of navigation.” What has become clear is that the legal architecture intended to create a balance between coastal states, global commerce, and the rights of passing ships is more fragile than had been widely imagined. With the strait, as with so many other flashpoints of the international order, the law still commands rhetorical respect, but it no longer rules the waves.

The post Pick Your Own Sea Law: Iran’s Creative Hormuz Claims appeared first on Tehran Bureau.

January’s uprising that saw mass protests across Iran was sparked by people from little-known cities, from neighborhoods with power outages, water scarcity, and overcrowded housing. In the old 1979 revolutionary playbook, they would have been “the oppressed” (mostazafan), the underprivileged masses the clerical regime promised to elevate from poverty and social marginalization. In recent years, as the economy crumbled and destitute Iranians grew increasingly angry at the government for their economic woes, the regime began referring to them as arazel obash. 

Translatable—loosely—as “thuggish rabble,” arazel obash is a term state-aligned media frequently use to describe citizens detained for crimes ranging from drug and alcohol consumption to insurgency. Originally used as a pejorative for alleged perpetrators from poorer areas, arazel obash is now being used to justify the extrajudicial arrest of any dissident, including those from upper-class backgrounds.

Recent media reports show a consistent pattern of officials applying the label to protesters and those accused of unrest-related activity in the January massacres. On January 23, Jahan News reported the arrest of 16 “arazel obash” in connection with “terrorist incidents” in Tehran, alleging involvement in arson attacks on vehicles and assaults on law enforcement. Similar framing appeared across multiple outlets: Mehr News on February 18 described the arrest of 34 “rioters, [arazel] obash and street terrorists,” while Khabaronline reported on February 6 that a mixed group of detainees—including “arazel obash,” alleged members of the MKO cult, monarchists, and others—were arrested in East Azerbaijan province. On February 26, Fars News similarly referred to individuals accused of throwing Molotov cocktails during protests as “arazel obash.” 

This language is reinforced by a broader state narrative that recasts protests as organized terrorism. An IRIB report on January 25 described detainees in Semnan as “terrorist agents” seeking to turn Iran into Syria, while Mehr News three days later video labeled protest activity “street terrorism.” Officials have echoed this framing: On February 18, the IRGC intelligence chief characterized the January protests as the largest terrorist operation against the Islamic Republic since 1979, alleging coordination between foreign-backed groups, social media networks, and domestic “arazel obash,” whom he compared to organized crime enforcers from the 1953 coup era. 

Commentary in pro-government outlets has amplified this line. In a January 31 article for the state-affiliated Iran Diplomacy website, Seyyed Hojjat Seyyed Esmaili, a former MKO member who is now prominent in the security apparatus, asserted that “arazel obash terrorists” were being used as proxies by the United States and Israel following their “defeat in the recent 12-day military conflict” (of June 2025). Less than two weeks later, a February 13 ANA News column claimed that “terrorists and mercenaries” had hijacked popular protests.

At the same time, the arazel obash label has been leveraged in well entrenched policing strategies. A June 8, 2024, report by Donyay-e Eqtesad noted proposals to use ankle monitors to track arazel obash, while police reported a 120 percent increase in firearm use against them last January. Under the rubric of “Tarh-e Eqtedar” (Operation Authority), launched in March 2023, security forces have carried out mass raids across Tehran neighborhoods—dozens of locations at a time—detaining hundreds of individuals. While arazel obash were the declared target of the operation, Tarh-e Eqtedar has aimed to neutralize protesters from a wide range of backgrounds. Raids have taken place not only in poor and working-class areas such as Nazi-Abad, Nezamabad, Yaftabad, and Fallah, but also middle-class neighborhoods like Tehranpars.

Inventing and expanding the arazel obash

Unpacking the arazel obash trope is key to understanding the trajectory of civil unrest in Iran and the official response to it. In the gruesome massacres perpetrated by the regime a month before the current international conflict, “thugs” appeared on both sides of the barricade: They were the drug dealers administering backstreet pain relief to wounded protesters, as well as the head-cracking thugs dealing the fatal blows. Tracking the official use of the term arazel obash helps show how the Islamic government’s policies squeezed the life out of the urban poor, whose downtrodden image was once used to rally support for revolutionary ideology.

The correlation between the regime’s use of “arazel obash” and the diminishing status of working-class men in post-revolutionary Iran was observed by scholar Shahram Khosravi, who in a 2017 paper examined the “shift in the symbolic position of working-class men” in the Islamic Republic “from veneration in the first decade of the revolution to condemnation three decades later.”

Khosravi described the regime’s rhetorical shift from its early claims that it was establishing the “rule of the mostazafan“ to the use of arazel obash in describing the working-class poor. In the years following the 1988 end of the Iran-Iraq War, the regime’s economic interests became increasingly aligned with the middle and, particularly, upper classes.

Early official usage framed arazel obash narrowly as violent street offenders. A January 15, 2000, directive by judiciary chief Seyyed Mahmoud Hashemi Shahroudi demanded “violent and swift action against arazel obash” by the courts, instructing them to refrain “from any leniency or delay in sentence enforcement” toward such “violent and hooligan elements,” who disturbed public order through alcohol consumption, knife attacks, and street fights.

Reporting throughout the 2000s reflects this framing, with arazel obash commonly associated with drug dealing, mugging, and public disorder.

It is no accident that the term arazel obash gained traction during the Ahmadinejad era. Faced with a crisis of legitimacy following the disputed 2009 presidential election, the regime attempted to deflect the ire of the Green Movement, whose supporters were mostly middle and upper class, by casting itself as a protector of property owners’ interests against crime and disorder. 

The regime found useful scapegoats among poor urban men, labeling them in propaganda as thieves, extortionists, drug dealers, and rapists. In a society increasingly driven by profit and neoliberalism, working-class men were now seen as failures and a burden, according to Khosravi. While their economic deprivation once dovetailed with the image of a downtrodden, self-sacrificing hero of the 1979 revolution, poor working-class men now exist outside a system that venerates consumerist entrepreneurs and thus pose a risk that warrants repression. “The masculine ‘other’ is not only poor,” Khosravi wrote. “He is often an immigrant from the provinces, belongs to an ethnic minority, and is regarded as uncultured.”

The effect of the working class’s marginalization is amplified by an economy in which millions of Iranians have fallen into poverty in recent years, Khosravi added. “The policing and punishment of the urban poor has escalated in tandem with increasing economic precarity among Iranians, particularly young people,” he wrote. “Every year more Iranians are classified as poor.”

In the years immediately preceding the 2026 uprising, law enforcement intensified surveillance and arrests under the arazel obash label. Last October, Borna News quoted Baharestan’s municipal police chief reporting a 140 percent increase in arazel obash detentions thanks to constant monitoring and preemptive arrests, while an official in the city of Quds cited a 19 percent rise days later.

Following the January 2026 protests, the term reached its most expansive—and politicized—usage, with state media and security agencies routinely casting detained protesters and dissidents as arazel obash. Across the past two-and-a-half decades, the term has shifted from a descriptor of street-level criminality to a flexible category encompassing both informal, violent enforcers of the interests of the state and, crucially, almost any of its political opponents.

Hooligan history

The nebulous use of arazel obash has allowed the regime to apply it to anyone it finds threatening or expendable. However, the vivid descriptions of tattooed, machete-wielding legbreakers that regularly appear in government statements allude to a figure from a widely recognizable underclass.

At its core, the arazel obash is an updated, vilified version of a gangster-like persona with deep roots in Iranian culture. Dating back to the looti wrestling culture of the Qajar era, a subculture of men who lived outside the law was closely tied to pahlavani traditions associated with the traditional zoorkhaneh (house of strength) gymnasium, and was often rooted in the “south of the city” (jonoob-e shahr)—the working-class areas of south Tehran. During the Constitutional Revolution and into the reign of Reza Shah, this subculture was also associated with the javanmard—a figure defined by chivalry, loyalty, and the protection of the weak, though this ideal often coexisted with more ambiguous or coercive forms of local power.

With the expansion of centralized law enforcement and a modern judicial system in the 20th century, this social group—whose authority had partly depended on informal systems of protection and physical force—became increasingly marginalized. The pahlavani culture was succeeded, in part, by the lati¹ and jaheli² subcultures. Participants in these subcultures sometimes acted as freelance extortionists (demanding money from people and businesses in exchange for protection), sometimes operated in concert with criminal groups, sometimes supported clerical networks against the state, and sometimes aligned with the state against its opponents. Their identity became tied less to a fixed moral code and more to shifting loyalties and patronage. Still, the machismo and “Godfather-style” code of honor associated with lats and jahels inspired a 1970s genre of Iranian popular cinema (filmfarsi) in which they were portrayed as morally complex antiheroes or “champions of the people.”

The lats’ relationship with the state has often been ambivalent. Their role in neighborhood control largely disappeared with the organization of formal security forces in the 20th century, while the 1979 revolution dismantled whole swaths of the urban economy—such as nightlife and various informal markets—on which many depended. Their lifestyles were further crushed by the economic policies of the Islamic Republic, which flip-flopped on key policies around land redistribution and infrastructure support in the poor neighborhoods where they lived. 

Meanwhile, elements of this subculture were periodically co-opted by power structures, whether by clerical networks, local authorities, or security forces. Their position has thus oscillated between marginalization and instrumentalization, depending on the needs of the state.

Both sides of the barricade

Even as the regime tracks down dissidents under the guise of protecting the public against arazel obash, it enlists members of the same underclass to do its dirty work. During the massacres, social media users widely circulated the image of a young man with neck tattoos at a Sharif University protest in Tehran. He appears to have a metal rod tucked under his arm and is playing the senj (hand cymbals) to stir up the Basij as they prepare to confront demonstrating students. The photograph gained attention precisely because the man’s presence among the paramilitary force is an eyesore. Regime-aligned fundamentalist groups like the Basij view tattoos as unholy, suggesting the young man is hired muscle rather than a card-carrying militia member. 

The co-optation of members of the urban lower socioeconomic classes into the security apparatus is a practice dating back to the foundations of the Islamic Republic. In this period, many young men who a couple decades later would be labeled arazel obash were recruited into the early “revolutionary committees” and eventually merged into the police force. Many others joined the IRGC and other state security organizations. 

In the aftermath of the 2009 Green Movement, IRGC figures acknowledged recruiting individuals labeled as arazel obash into the Basij to suppress protests. In a 2016 interview cited by Ensaf News, Quds Force commander Hossein Hamadani described identifying and monitoring thousands of such individuals and later incorporating them into operational units, arguing that those “accustomed to knives and machetes” were effective in confronting demonstrators. 

There were also efforts by other arms of the regime to absorb or redirect this population: Jahan News reported on June 25, 2011, that cleric Mohammad Reza Shams-Abadi was recruiting arazel obash in Qom through state-supported religious programs, including subsidized trips intended to attract and retain them.

By the mid-2010s, the label had also been operationalized in municipal governance. A June 18, 2016, report by ISNA indicated that Tehran municipality units were recruiting arazel obash into enforcement bodies such as the Obstruction Removal Unit (Shahrban) to clear street vendors—and sometimes to act as muscle for broader, extralegal crackdowns. 

At the same time, public understanding of the term appeared increasingly shaky. Field reporting by Ensaf News on June 2, 2020, found that residents in Tehran neighborhoods such as Abdolabad and Shademan could not clearly define arazel obash, with many questioning whether such a group meaningfully existed.

As the middle classes spiral into poverty after years of economic mismanagement, a descent only hastened by the current conflict, entire social strata are at risk of being recast as arazel obash—and thus becoming that much more vulnerable to the regime’s war on its own people.

Writing in 2017, Khosravi cited police statistics suggesting that 95 percent of all arrested arazel obash are younger than 25 and many are from south Tehran, yet “it is not clear on what specific charges these men are being arrested.” 

“In the absence of a clear legal definition,” Khosravi warned, “anyone can be arazel obash.” 

The post Naming the Enemy Within appeared first on Tehran Bureau.

The Iranian regime’s rollout of a new “tiered internet” system threatens to leave the World Wide Web inaccessible to millions of Iranians who are unable to afford it, transforming internet access from a fundamental (if often impaired) utility into a restricted privilege.

As Iran’s internet blackout reaches its 56th day April 24—a blackout from which thousands of regime members and their cronies have been exempted—the government is reintroducing limited online access to a wider pool of whitelisted institutions and individuals. Basic access to the global web is no longer assumed, but reserved for approved users. The new framework rations internet access according to security priorities, political compliance, and wealth. It leaves most Iranians confined to a tightly surveilled domestic network, while maintaining global access involves paying far higher prices for approved service or for the circumnavigation tools needed to bypass government restrictions. 

Iran’s previous approach was to keep the public connected to the “filternet,” the global internet with heavy censorship, involving an ever-expanding blacklist of websites blocked to almost everyone in the country. Ordinary Iranians accessed the internet through broadband and mobile phone contracts, bypassing censorship using VPNs, whose costs have risen astronomically since January. 

As for the country’s elites, a limited number of “white SIM” cards are issued to approved individuals, giving them unfettered internet access. To acquire such SIM cards, government officials and other pro-regime figures including journalists and company owners must provide their business licenses and identity details for processing through an opaque vetting system before gaining approval. Unlike standard users, those with white SIMs—numbering somewhere in the tens of thousands—may freely access platforms such as X and Instagram on their mobile phones. 

Meanwhile, the regime has been quietly building out its own domestic intranet, the National Information Network (NIN). During the shutdown, this infrastructure replaced the “filternet” as the default connection for the public, effectively blocking access to the World Wide Web. This censored-internet model is a new, “discriminatory architecture,” according to Filterbaan, an internet freedom watchdog group, “with the majority of users being kept solely within Iran’s restricted, highly surveilled, and tightly controlled NIN.” 

Multiplying classes of privilege and control

After nearly two months of blackout, in which only the small number of Iranians with white SIM cards were able to access the internet, the regime is now rolling out a secondary form of privileged access. Known as “Internet Pro” or “Stable Internet,” the service was described by Information and Communications Technology Minister Sattar Hashemi in a Shargh Daily op-ed on April 14. 

The “tiered” system of Internet Pro allows approved individuals and institutions varied access to censored websites based on their level of vetting. YouTube, for example, may be available to a regime-affiliated business with a high level of clearance, while a student accessing the platform through their university account might only be able to access Google and Google Scholar. 

Behind the scenes, a lucrative market has emerged. Those with the right connections are able to sell global internet access at high margins. Though they are referred to as “VPNs,” the products are actually Internet Pro packages that come with a data cap, at a cost of around $2.50 per gigabyte, according to sources inside the country. The types of global internet websites accessible through these blackmarket data packages vary, so buyers still require a second, classic VPN to fully bypass censorship. Since January, the cost of a classic VPN had been as high as 800,000 toman per GB, an IT expert said.

“They are making a killing, selling internet by the gigabyte,” an Iran-based information technology expert told Resanegar, Tehran Bureau’s economic unit, describing a system dependent on privileged infrastructure and insider access. 

Over time, the market “has matured and is starting to resemble an established business” as more suppliers join in and prices gradually converge, they added. But, as access to Internet Pro becomes available to a wider group of privileged users, there is growing concern about the prohibitive cost of access, which can easily surpass the average day laborer’s monthly wage. 

“If you were to use 10–15 GB per month, the cost would equal the base salary of a government job,” said the IT expert, who reported spending the equivalent of around $200 on less than 50 GB of usage over the past two months.

An additional hurdle to access is the payment system. As the value of the rial plummets, internet service providers require payments in US dollars through cryptocurrency wallets. Due to sanctions and exchange restrictions, these transactions are unattainable for a majority of the public. “That’s where this market is now. If you don’t have crypto, you simply can’t connect,” the IT expert said. “A small number of people get internet; the rest essentially do not have access.” In other words, as the source put it, “an ideal model for the regime.”

As a consequence, much of the population has effectively vanished from the digital sphere. “There is a very large group that is completely cut off … they have disappeared,” said the IT expert, arguing that those unable to afford the cost of access are simply no longer heard. In contrast, those with privileged access remain visible. “You can easily spot [the white SIM users] on X and they are all aligned with the government.”

Exorbitant costs for access

In practice, Internet Pro represents a controlled expansion of access—but only for specific professional sectors. According to the IT expert, eligibility is limited to:

• Registered companies and businesses
• Startups and technology professionals
• Traders and transportation companies
• Academic and research institutions

Physicians may also be included, with some already receiving activation messages, according to ShayaNews, an Iran-based news website. Freelancers and individuals without formally recognized employment in approved sectors are excluded from applying, said the IT expert.

The InternetPro service is available exclusively via SIM cards and does not extend to home internet connections. Its price is roughly three times what Iranians were used to paying for home internet, portending another significant barrier to access. While standard domestic internet access is priced at approximately 8,000 tomans per gigabyte and largely restricted to local websites, Internet Pro packages are considerably more expensive.

• Irancell offers a one-year, 50GB international package for around 2 million tomans.
• Rightel provides a similar package priced at 2,176,000 tomans, available to registered businesses upon formal request.
• Hamrah-e Aval (MCI) charges approximately 40,000 tomans per gigabyte, amounting to roughly 2 million tomans for 50GB, targeting business owners and university faculty.

Access also requires identity verification and administrative approval through telecom operators, further limiting availability. According to ShayaNews, the new system has significantly reduced or entirely blocked ordinary users’ access to the broader internet. Instead, NIN users are largely confined to a limited set of “whitelisted” websites approved by authorities.

Even these restricted services, however, appear unreliable. Social media users and local reports indicate that access to whitelisted sites is inconsistent, with frequent outages, slow speeds, and disrupted connections. In addition, users of the Internet Pro package are only allowed to use 5 GB of data per 24 hours, the IT expert said. 

Domestic social’s “worn-out coat”

Meanwhile, businesses whose marketing strategies depend on major social media platforms are being pushed onto domestic alternatives as global services become inaccessible. Many have migrated from WhatsApp to local apps like Bale or Eitaa out of fear that, without any social media capacity, they would lose their customers entirely. “It is like a worn-out coat in winter,” the IT expert said. “It is better than nothing.”

Despite the visible economic damage, the system shows little sign of reversal, the source said. “Unfortunately, I think they can keep going like this, because they simply don’t care.”

The post Tiers Upon Tiers: Iran’s New Internet Paradigm Further Stratifies Web Access appeared first on Tehran Bureau.

Spanning mass protests and multiple armed conflicts, three waves of internet blackouts mandated by the Islamic Republic since June 2025 have likely caused deeper, more sustained damage to ordinary Iranians’ livelihoods than the wars themselves.

A large number of Iranians—up to 20 million according to expert estimates, over a fifth of the population—rely directly or indirectly on online platforms for income. Despite accounting for a relatively small share of GDP, Iran’s digital economy is thus a vital source of jobs and an often essential means to address the daily effects of sanctions and surging inflation. The series of government-ordered internet shutdowns are now pushing that digital economy toward systemic failure. 

“The internet was the only space left for ordinary Iranians to make money, to run small businesses. It’s really the only part of the economy where you can find a meaningful private sector. And they’ve completely shut that down,” said Miad Maleki, a former Treasury sanctions official and now a senior fellow at the Foundation for Defense of Democracies, speaking on the group’s podcast.

In the 101 days from the start of 2026 through April 12, Iranians have only had 38 days of access to the internet while enduring 63 days of blackout, according to state-affiliated news sources. The first of the recent series of shutdowns came during last year’s 12-day war with Israel (and, ultimately, the US) when connectivity was initially throttled before a full blackout began on the conflict’s fifth day, June 17, and lasted until June 25. A second disruption followed early this year during the mass protests against the regime (January 9–28). The third, and longest, has accompanied the current war with the US and Israel, stretching to roughly 44 days. Across each of these periods, entire sectors—from Instagram-based microbusinesses to logistics, tourism, and ride-hailing—have been intermittently switched off.

Crucial workarounds disappearing

“A lot of people have already lost their jobs,” Ramin, an IT specialist in Tehran, told Resanegar,  Tehran Bureau’s economic unit.

SEO specialists, digital marketers, IT professionals, essentially anyone working in Instagram-based roles. Even large companies like Snapp are planning major layoffs in May if this continues. We’re on a knife’s edge right now, and I doubt the shutdown will end anytime soon.

The government has estimated that each day of internet blackout directly costs the economy about 5 trillion tomans (approximately $31.5 million USD, at the current exchange rate), prompting layoffs that cascade into the offline economy. Iranian e-commerce associations warn that more than 95 percent of online businesses have been affected by recent disruptions, with many reporting revenue losses exceeding 80 percent. Meanwhile, sector representatives caution that prolonged outages—now compounded by disruptions to SMS services—risk triggering mass layoffs and broader labor market instability.

Nilofar, a content creation specialist, told Shargh daily that she works on a contract basis and is not entitled to a year-end bonus. “They gave me one last year, but now the business is completely shut down,” she said. “We’ve also lost access to social media—advertising and content creation are essentially pointless under these circumstances. The content writers, video creators, and even the bloggers who worked with our company are now all unemployed.”

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E-commerce transactions reached roughly 55 trillion tomans (approximately $55 million) in 2025. Social media has been central to this ecosystem, with international platforms historically outperforming local alternatives. Instagram and WhatsApp are far more popular than the domestically controlled options such as Bale, Eitaa, and Rubika, according to the technology news site Zommit. The two California-based platforms, both owned by Meta (Facebook), help power a broad range of micro-retail and service businesses, often with low startup costs and high participation from women and informal workers. However, e-commerce still accounts for barely 7 percent of the country’s official GDP. 

Over the past decade, Iranians have developed a range of workarounds to participate in e-commerce despite sanctions, relying on VPNs, cryptocurrency wallets, and foreign-based digital bank accounts to access global platforms and move money across borders. 

Alongside this informal ecosystem, around 200,000 of the country’s e-commerce providers depend on e-Namad, a government-approved certification required for domestic transactions, Majid Khakpour, head of the Tehran Province E-Commerce Trade Association, told Iranian media In January. These authorized e-commerce businesses “have certainly created jobs for millions of people, and it is estimated that around ten million people are directly or indirectly employed or have the possibility of employment through them,” Khakpour stated. “Over 95 percent of these online businesses have been affected due to internet conditions.”

From YouTubers to small brick-and-mortars, major losses

The fallout from repeated shutdowns has extended well beyond formal e-commerce providers, degrading the broader digital infrastructure that businesses and workers in many sectors rely on. Even basic communication tools have proven fragile. The SMS network, often a last-resort channel for small businesses to reach customers, has also faced disruptions, which industry representatives warned would be “detrimental to the economy and lead to massive layoffs and recession,” according to an April 4 letter from the Tehran E-Commerce Association published by Eqtesad Online.

At the same time, income streams tied to global platforms have steadily eroded. Since December, Iranian YouTubers who had long relied on VPNs to mask their IP addresses and monetize their channels as if their audiences were abroad have reported a collapse in ad revenue. The sharp decline appears to stem from YouTube’s increasing use of network behavior signals, device fingerprinting, and traffic pattern analysis to identify users as being in Iran regardless of VPN usage. Because of US sanctions and Google’s compliance policies, ads are not effectively served to Iranian audiences; traffic from inside Iran either receives no ads or only very low-value placements. The result has been widespread de facto demonetization: videos that once generated several thousand dollars per million views now earn little to nothing.

While limited access to Iran’s domestic intranet remains, businesses say it is largely ineffective as a substitute for the global internet. “Even though people can still use domestic websites and apps, we’re only able to carry out about 5 percent of our operations on the national intranet,” an HR representative at a ride-hailing company told Shargh. “This not only leads to financial losses but also results in layoffs. Support services and many technical functions become impossible…. Many of the content creation and tourism companies we worked with have already been forced to shut down, which will inevitably lead to serious layoffs—and will affect our operations as well.”

These disruptions are also spilling into the offline economy. Traditional businesses such as bookstores, many of which had come to depend on digital tools, are no longer able to contact clients, place orders, manage workflows on platforms like Slack or Teams, or access data stored in the cloud.

Mehdi, a bookseller in Tehran whose workplace was severely damaged by a nearby missile blast, told Shargh News that he lost his job in the first days of the war.

Even the store’s online sales, which I managed with a colleague, shut down immediately because of the internet outage. My income is completely gone. My contract was supposed to run until the end of Esfand [March 20], and we expected to renew it, but when I asked about my holiday bonus, the manager said there was no money. I lost that too. I’ve applied for jobs since then, but everyone is laying off—no one is hiring.

The government’s response to this crisis of its own making has been meager and opaque, signaling little intention to reverse course. In a meeting with e-commerce representatives on April 6, Information Minister Sattar Hashemi promised “targeted and coordinated support” for online businesses, but offered no timeline or concrete measures to mitigate the effects of the shutdown. Decisions about such steps probably lie outside official government channels. Principlist journalist Mohammad Mohajeri told state-affiliated media on April 8 that, while not privy to the details of intelligence community exchanges, he had heard that “high-level” discussions about reconnecting the internet were taking place. 

As of press time, internet services remained inaccessible to roughly 99 percent of the Iranian population, with national connectivity measured at around 1 percent of normal levels, according to NetBlocks, the global internet monitoring group.

The post Regime-Ordered Web Blackouts Jeopardize Iranians’ Incomes appeared first on Tehran Bureau.

A staggering rise in Iranian food prices during Ramadan had already intensified concerns about access to adequate nutrition in the weeks before the war with the US and Israel began. According to estimates by the World Food Programme, “high food inflation in Iran had already reduced households’ capacity to absorb new shocks … rising fuel and transport costs and supply chain disruptions could increase the pressure further.”

Wars typically drive up energy and fertilizer costs, disrupt supply chains, reduce production and imports, and ultimately shrink people’s food baskets. During the 40 days of open conflict, prior to the tenuous ceasefire, experts identified three major pressures on Iranian households:

• Shortages and rising prices of fertilizers, including urea
• Scarcity and rising costs of animal feed
• A sharp drop in purchasing power due to sudden unemployment and inflation

According to Samira, a marketing analyst living in eastern Tehran:

When the bombing began, the local supermarket’s delivery rider had nothing to deliver—but the shop itself was full of goods. If you stepped inside, there was no visible shortage of food. It was the prices that made it impossible to fill a basket. And all this while we didn’t even know if we’d receive a salary at the end of the month. Work was half-shut down, and there was no clear horizon for returning after the Nowruz holidays.

She continued:

With the outbreak of war and the complete shutdown of the internet, our company—entirely built around online operations—effectively stopped functioning. Our first concern was when we would return to work and whether salaries would go back to pre-war levels. Would we fall behind on rent and loan payments? Or even lose the ability to cover daily expenses?

A recent letter from Iran’s minister of agriculture to Qu Dongyu, director-general of the UN Food and Agriculture Organization (FAO), warns that attacks on infrastructure could disrupt production, supply, and distribution networks that sustain not only Iran’s 90 million people but also parts of West Asia reliant on Iranian trade.

An Iran-based economic researcher, speaking anonymously, said:

My assessment is that Iran’s food security will likely worsen in the coming months—not necessarily as widespread famine, but as reduced access to sufficient and quality food. The short-term issue is less about absolute scarcity and more about rising prices, declining purchasing power, distribution disruptions, and higher costs for inputs and transportation.

Stockpiling, export bans prop up food supply in short term

Geopolitical shocks raise energy prices, transportation and insurance costs, and—through infrastructure damage—disrupt production and imports. During the 40-day conflict, all these risks materialized. The World Bank also reports that global urea prices rose by up to 46 percent, limiting farmers’ ability to use fertilizer efficiently and reducing agricultural output.

For several reasons, however, the direct impact of the war on food availability in Iran has so far been limited:

• Maritime transport disruptions, including constraints in the Strait of Hormuz, have had only a limited effect on Iran, as the country’s merchant vessels continue to operate
• About 85 percent of Iran’s food security relies on domestic production; only 15 percent depends on imports, mainly from Russia, Turkey, and the UAE
• Iran appears to have stockpiled essential imports over the past six months

An analyst from Kpler told BBC Persian that, despite supply chain disruptions, Iran has sufficient reserves for several months, with shipments still arriving in the Persian Gulf.

Still, vulnerabilities remain. While Iran is relatively self-sufficient in basic calories, it depends heavily on imports for animal feed, oils, and key inputs. Any disruption there could expose structural weaknesses.

Government measures—such as banning exports of certain agricultural goods, supporting domestic production, and expediting customs clearance—may cushion the immediate impact. But the deeper threat lies elsewhere.

The primary threat to food security is not supply, but affordability. As Tehran’s Donya-ye Eqtesad newspaper notes, postwar inflationary pressures may well intensify with the surge in fertilizer and transport prices and the billions the state will need to expend on reconstruction. An economic analyst warns:

If the government cannot secure sanctions relief and increase foreign currency revenues, it will resort to printing money—fueling inflation, eroding purchasing power, and further endangering food security.

Reports indicate rising unemployment driven by wartime shutdowns and the internet blackout. If inflation is the engine of the crisis, unemployment is its accelerant.

“Hidden hunger” crisis looms

To mitigate the war’s impact, the government may expand subsidies and food voucher programs. But these measures are unlikely to outpace inflation.

The immediate danger is hidden hunger—malnutrition caused not by lack of calories, but by declining diet quality. Households cut back on protein, dairy, fruits, and dietary diversity, turning instead to cheaper calories like bread and potatoes.

This pattern is well documented in past economic shocks and typically affects:

• Urban lower-income groups
• Day laborers
• Low-income retirees
• Female-headed households
• Children
• Residents of peripheral areas

In the coming months, the real threat to Iran’s food security is not the availability of food, but the quality of diets eroded by inflation.

If the ceasefire holds, Iran may avoid widespread shortages. But declining purchasing power will still amplify the risks of hidden hunger.

If the war escalates, the situation could deteriorate further: budget deficits, unpaid salaries, and supply disruptions could push households into skipping meals, buying on credit, selling assets, and sharply reducing protein intake.

In both scenarios, the most pressing question is not whether there will be food in the market—but how many people will be able to afford it.

The post War and Inflation’s Dual Blows Amplify Food Access Fears appeared first on Tehran Bureau.

“We don’t know how long we can hold on.” That’s how Yashar, who works at a Tehran-based internet service company, characterizes the economic situation in Iran’s capital. Yashar, whose employer both maintains communications infrastructure and delivers direct services to customers, says:

The company’s economy has been collapsing for a long time. Staff salaries were already five months overdue before the war, and now with this war, it’s not even clear why we come to work. There’s no internet access, and no ability to maintain or develop infrastructure. As for wages and payments, everything is completely uncertain. 

In economic terms, a crisis reaches the threshold of collapse when, in addition to high inflation, disruptions emerge in the banking system, salary and pension payments, and the distribution of essential goods and services. That is the point Iran now approaches.

The war with the United States and Israel has entered its sixth week, and its outcome remains uncertain. What is already unavoidable is the impact of inflation, which accelerates by the day. 

For years, Iran’s economy has faced annual inflation in the 30–40 percent range. Over the past year, it leapt beyond that: official estimates put 12-month average inflation at 50.6 percent in Esfand 1404 (March 2026). And that understates the recent surge. According to the Statistical Center of Iran, point-to-point inflation, which compares prices in a single month to the same month a year earlier, reached 71.8 percent in March.

Meanwhile, daily bank withdrawal limits—which had been set at 150 million rials (15 million tomans) before the war—have dropped to 3 million tomans or less since the beginning of the armed conflict, and even that little, the equivalent of approximately 18 US dollars, is difficult to access. People can still transfer money digitally, but cash withdrawals are now severely restricted.

“Inflation above 50 percent is a clear sign of a chronic economic crisis and one of the preconditions for collapse—and this is now openly acknowledged even by official statistics,” says an economist based in Tehran, who requested anonymity for safety reasons.

But the reality is that other signs of collapse are also beginning to emerge. The government is still paying salaries and supplying basic goods, but it cannot conceal all crises. Banks have entered a serious crisis, withdrawals are heavily restricted, and production had already been facing major challenges for months. The war has effectively brought production to a halt.

Ongoing social instability—another hallmark of economic collapse—has intensified as the war has exacerbated political polarization, the economist says. For now, daily essentials remain available and crucial services are still operational. In the economist’s view, however, as the war lengthens, the government will need considerable luck to save the economy from falling apart.

Destroying factories matters—destroying market trust matters more

In a wartime economy, what disrupts production chains is not just physical shortages, but the shattering of expectations and the rise of hoarding.

Bahram, a Tehran property developer and construction manager, says the immediate violence of the war, the missile strikes and bombardment of the city, has not brought his projects to a halt. “Just yesterday, a building 300 meters from one of my sites was completely destroyed—but we keep working.”

On the other hand, he says, construction materials are becoming scarce, and vendors are unwilling to sell because they expect prices to rise sharply. Even goods already paid for are not being delivered. 

Referring to a strike on Mobarakeh Steel’s massive complex in Isfahan—one of multiple US and Israeli attacks on industrial facilities—he says:

Yesterday the news said the plant had been hit. Today, you can’t find rebar in the market. No one is willing to sell something they know will soon become completely unavailable.

Attacks on infrastructure are not just about destroying factories—they destroy market trust, and this is where the real damage is unfolding.

According to Bahram, what is currently happening in the housing market is a sectoral shock, one that could factor into triggering a macroeconomic tailspin. As materials become scarce, construction costs rise, in turn increasing pressure on housing prices. Bahram says that those prices have risen by about 70 percent since September, a figure close to that calculated in a detailed report by Capital House on the “war freeze” in the housing market.

Now there is the looming threat of widespread infrastructure destruction and long-term power outages, a threat that itself undermines market trust. Even more than the physical damage inflicted by Israeli and American airstrikes, the crumbling of market trust fuels inflationary expectations, hoarding, and extreme stockpiling—ultimately creating a broader crisis of distrust with tangible effects on daily life.

One related, perhaps surprising, development is that in contrast to the prewar period, when the national currency was rapidly depreciating, exchange rates have shown little fluctuation over the past month.

A source within the banking network describes this as a result of a steep drop in effective demand:

When demand goes to zero, prices stabilize. But as soon as the war ends and the first demand returns to the currency market, prices will spike sharply. This is a normal and unavoidable post-suppression effect.

He explains that the drop in demand may stem from multiple factors such as reduced imports, the restrictions on individuals’ access to money, and other new government controls—but that, in any case, the stability is temporary.

A perilous outlook

Iran’s economy, already on a fragile foundation before the war, has so far managed to hold together amid the current crisis. However, a combination of simultaneous shocks—infrastructure degradation, supply disruptions, and declining market trust—has pushed the economy to a point where continued deterioration could lead to functional collapse in multiple sectors.

According to the economist who spoke with Resanegar, Tehran Bureau’s economic unit:

If the war continues, Iran must try to contain its intensity, keep export and import channels open, preserve access to oil revenues, and maintain the functioning of banks, payments, and essential supplies—food, medicine, fuel.

In the short term, he believes, Iran is unlikely to experience a sudden, explosive fracture. Instead, the wartime economy will make the country poorer, more closed, and more unstable, with sharply reduced liquidity. The more the current strains are prolonged, though, the more the outlook changes.

What is happening in Iran today is not yet collapse. But if present economic trends continue, let alone deepen, that grim threshold may well be crossed.

The post Tehran Under Fire: As War Rages, an Economy Threatens to Collapse appeared first on Tehran Bureau.

The targeting of major Iranian steel plants by Israeli and US forces is threatening the future of Mobarakeh Steel, one of the largest producers in the MENA region and responsible for as much as 50 percent of Iran’s total steel production. By government estimates, Mobarakeh’s revenues in recent years have been equivalent to almost one-sixth of the national budget. 

A crucial source of income for the Iranian industrial-military complex that controls it, Mobarakeh Steel facilities were struck in attacks days apart over the past week. Company representatives have reported extensive damage and a near-total shutdown of the massive operation. Mobarakeh’s bombing—and the risk of additional strikes—may have a significant economic impact on ordinary Iranians, already under severe duress.

On the night of March 31, according to Iranian state-controlled news sources, Israel and the United States launched a joint attack on the sprawling Mobarakeh Steel complex in Isfahan, as well as the smaller, affiliated Sefid-Dasht plant in Chaharmahal.

Four days earlier, Mobarakeh was hit by strikes, similarly attributed to both Israel and the US, that reportedly led to partial shutdowns at the Isfahan facility. Structures suffering damage included a substation, alloy steel production line, and power plants key to the steel facilities’ electrical supply. In southwest Iran, Israeli planes also targeted Khuzestan Steel, the country’s second-largest producer, where the damage was reportedly limited to two storage silos.

Steel has been a pillar of Iran’s non-oil industry since the 1970s. Given Mobarakeh’s central position, as well as the role it plays in the web of semi-private conglomerates that finance the regime, the threat of its destruction was already sending ripples through the domestic market after the first wave of strikes. 

“Bombing doesn’t stop our work,” Bahram, a Tehran resident employed in construction, told Resanegar, Tehran Bureau’s economic unit. “What stops us is the absence of materials in the market.”

While supplies of construction materials held up during the first weeks of the war, they tightened considerably following the March 27 steel-plant attacks. Bahram remarked that even prepurchased materials were not being delivered as vendors pull back stock in anticipation of price rises. “No one is willing to sell something they know will soon become completely unavailable,” he said.

Ownership and ties to Sepah Cooperative Foundation

Mobarakeh Steel is partially owned by the Sepah Cooperative Foundation (Bonyad Taavon Sepah, or BTS), among the largest of the many quasi-governmental “charitable” institutions, or bonyads, whose economic activities enrich the Islamic Revolution Guard Corps (IRGC) and the country’s ruling elite. 

A 2022 Iranian parliamentary report found that, between 2018 and 2021, the company generated revenue equivalent to roughly 15 percent of the country’s national budget. The US government, in 2020, assessed that Mobarakeh was responsible for one percent of Iranian GDP.

Though Mobarakeh’s owners have changed over the years amid various opaque privatization schemes, documents suggest that BTS has maintained beneficial ownership of the steel complex since its privatization in the 2000s. Tehran Bureau’s reporting has shown that even a relatively low percentage of ownership by BTS or another bonyad allows regime-linked actors to exercise effective control over a company’s finances and operations. Among the other entities that have had a stake in Mobarakeh Steel is Omid Investment Management Company, a subsidiary of the IRGC’s Bank Sepah.

According to publicly available business registry documents analyzed by Tehran Bureau in 2020, Mobarakeh was connected to two companies related to the bonyads via its board members: Andishe Mehvaran Investment Company and Sadr Tamin Investment.

Andishe Mehvaran Investment Company, in turn, had Iran Zinc Mines Development among its board members. (It is common for regime-linked companies to be listed as “members” of each other’s boards in business registry documents to obscure the identities of the individuals who control them.) Iran Zinc Mines Development was partially owned by Mehr Eqtesad Iranian Investment Company and Ofoq Nili Khalij Fars, subsidiaries of Bank Mehr Eqtesad, co-owned by BTS and the Basij militia.

Mobarakeh Steel is also tied to the Tamin Investment Fund (Shasta) via its subsidiary Sadr Tamin Investments. Shasta, aka Social Security Investment Co. (SSIC), has a stake in 36 of Iran’s top 100 companies, as well as 27 of Iran’s top 59 oil companies. Government-owned, Shasta in turn co-owns companies along with the armed forces, BTS, and EIKO, among other bonyads. As such, it is a vehicle for corruption in its own right—a significant link in the chain of complex ownership structures that keeps money flowing from public coffers into the private hands of the IRI aristocracy. 

Endemic corruption

As one of the most profitable businesses in Iran’s slow-moving economy, Mobarakeh has long been a cash cow for its owners and managers. 

In May 2020, the value of Mobarakeh Steel’s shares on the Tehran Stock Exchange (TSE) surged to record highs on the back of a rushed sell-off of state-owned consortia after COVID-19. The TSE’s main index surpassed one million points for the first time in its 32-year history, driven largely by industrial, petrochemical, and mining stocks. The firms involved in the transactions were linked to Shasta, the IRGC, the armed forces, and major bonyads, with these largely unaccountable entities capturing much of the profits.

In 2022, the Tehran Stock Exchange suspended Mobarakeh Steel trading following a 297-page Majles report claiming the company’s managers had abused their positions to defraud the government and shareholders of billions of dollars. A government investigation into the company uncovered widespread fraud and cronyism causing losses of hundreds of billions to trillions of rials. The investigation’s findings included mismanaged and fraudulent contracts, below-market deals with automakers, and profiteering from steel surpluses. Executives also inflated payrolls by hiring relatives and even concocting fictitious employees while awarding themselves exorbitant salaries.

The IRITEC connection and US sanctions

The industry know-how that led to the creation of Mobarakeh Steel dates back to before the Islamic Revolution. In 1975, several state-owned Iranian industrial concerns entered a joint venture with an Italian company to found the Iran International Engineering Company (IRITEC). The firm introduced direct reduction technology, a leap forward in Iran’s industrial development, leveraging natural gas rather than the emissions-heavy coke traditionally used in steel production. Following the 1979 revolution, IRITEC was instrumental in the founding of Mobarakeh Steel and the later construction of its massive Isfahan complex. With more than two dozen plants spread out across 35 square kilometers, the complex became operational in 1992.

In the early 2000s, privatization led by President Hashemi Rafsanjani transferred the ownership of the country’s largest companies to conglomerates controlled by the IRGC and the bonyads, which are formally accountable to the Office of the Supreme Leader (Beyt-e Rahbari). While Mobarakeh came under the effective control of BTS, IRITEC was taken over by the government-controlled privatization organization, which claimed IRITEC was unable to sustain itself financially. This is a tactic frequently used by regime actors to gain control of profitable companies. 

IRITEC subsequently featured in sanctions litigation involving the Italian bank Intesa Sanpaolo. In 2013, the bank agreed to a $2.95 million settlement with US authorities for processing transactions linked to Irasco S.r.l., a Genoa-based company co-owned by IRITEC, in violation of sanctions. The case highlighted compliance failures involving dealings with Iran, Tehran Bureau’s reporting has shown.

Five years later, in October 2018, Mobarakeh was sanctioned by the US Treasury Department’s Office of Foreign Assets Control (OFAC) for funneling millions of dollars annually to Mehr Eqtesad Iranian Investment Company, which helps finance the Basij militia—and collaborates on multiple projects with IRITEC. In January 2020, OFAC announced further sanctions on Mobarakeh as part of sweeping penalties on Iran’s “steel, aluminum, copper, and iron manufacturers” for funding and enabling the nation’s regime. That June, five Mobarakeh subsidiaries—one wholly owned, the others majority-controlled—were also designated for sanctions by OFAC.

The post Iran’s Top Steelmaker, Nexus of Graft, Shut Down by Air Strikes appeared first on Tehran Bureau.

Oozing cement has dried around the ancient inscriptions in the rock-cut tombs of Kharg Island, the strategic Persian Gulf outpost that could take center stage in Iran’s war with the United States and Israel. With a maritime history dating back to the region’s earliest civilizations, the island was once a burial site for Palmyrene merchants, who used it as a hub for trade with the various polities that thrived in the Gulf region in the second century BC. These days, the island displays a different type of wealth, exhibiting the Iranian regime’s energy infrastructure and security reach. Ordinary citizens are prohibited from visiting Kharg, and it appears that all of its tiny civilian population has been evacuated. 

“Pointed stake” or “fortified enclosure” are both possible meanings of Kharg’s ancient name by scholarly accounts. Under the direction of the Islamic Revolution Guard Corps (IRGC), the island has been reduced to both of these: a heavily guarded garrison seen as holding the key to the Islamic Republic’s oil revenues as well as a strategic focal point of its military sway over the Persian Gulf. 

The island is also a microcosm of Iran under the current regime: Five decades ago, the Islamic Republic took over an industry built by an American oil company under the Pahlavi monarchy, damaged its architectural heritage, displaced most of its native population, and interred its rich cultural identity within a fortified shell. 

For the Islamic Republic, Kharg plays a poignant part in postrevolutionary lore. During the “Tanker War” toward the end of the Iran-Iraq War in 1987–88, the island withstood months of Iraqi bombardment, but the threat of a US takeover of the island ultimately led Ayatollah Ruhollah Khomeini to accept the “poisoned chalice” of a ceasefire. 

Since then, the IRGC has prohibited access to the island to anyone other than its few civilian residents, military personnel, and oil workers. Realizing Kharg’s strategic vulnerability, the IRGC has been restructuring the undersea pipelines and slowly diverting oil exports away from the island for decades, a former oil ministry employee who once lived on Kharg told Resanegar, Tehran Bureau’s economic unit. In his view, a US attack on the island at this point would not have a significant impact on Iran’s energy exports. He added that the IRGC has relocated Kharg’s entire civilian population to the mainland.

By other accounts, the regime continues to treat Kharg Island’s residents as hostages to its oil revenue. Iran’s oil workers earn roughly $85–115 per month in base wages, while the government’s own economists say a family needs at least $650 per month to survive. Since the US military’s bombardment of the island earlier this month, Kharg oil workers and engineers repeatedly requested evacuation, according to media reports, but were rebuffed by administrators, who have threatened disciplinary action against anyone who tries to leave. (Tehran Bureau could not independently verify these reports.) As one observer commented on X, “Workers serve the terminal, the terminal funds the IRGC, and the people are expendable.” 

Prisons and rock-cut tombs

The IRGC apparently views not only human capital, but also Kharg’s cultural heritage, as collateral damage. A 2020 analysis by Tehran University scholar Ahmad Heidari points to long-term deterioration of the archaeological sites that dot the island and a lack of sustained conservation efforts. The poor state of preservation and gaps in documentation suggest decades of limited oversight. 

These observations are echoed in a video recently circulated on X, in which the speaker visits archaeological sites on Kharg Island and describes their severe neglect. The video takes us to one of the rock-cut tombs dating back to the Parthian dynasty. The site is littered with trash, apparently left by campers and drug users. Layers of cement have recently been slathered over the original masonry forming the roof of the tomb, obscuring the inscriptions on the outer wall. In the west of the island, the video shows Kharg’s best-known archeological site: the remnants of a Sasanid-era Nestorian church and necropolis. Here, too, the tops of the masonry have been crudely smoothed over by cement. Across the azure water in the background, an offshore oil pumping station towers against the horizon. 

Like most of its oil infrastructure, Kharg’s modern role as a garrison island was established by the Islamic Republic’s predecessors. In the mid-1950s, as described by the academic reference Encyclopaedia Iranica, the island housed 120 political prisoners along with a population of common criminals. The inmates were “transferred to Kharg from points on the Iranian mainland and other islands such as Qeshm and Hangām, each group living in a separate barrack under the watchful eyes of a military base.”

Much of Kharg Island’s oil infrastructure was originally built under the Pahlavi monarchy with significant American technical and financial support, transforming it into Iran’s primary export terminal, according to Encyclopaedia Iranica. During the Iran-Iraq War, the island was heavily bombed, severely damaging these facilities. After each wave of bombing, the IRGC and state authorities scrambled to rebuild and restore operations, underscoring the island’s strategic importance.

“The poisoned chalice”

The Iran-Iraq War also brought the realization that Kharg Island contained the seeds of the Islamic Republic’s potential undoing. In the recollection of Ali Hashemi Bahramani—nephew of Akbar Hashemi Rafsanjani, then one of the central figures directing Iran’s war effort—this realization centered on the credible threat that Kharg, through which the vast majority of Iran’s oil flowed, could be taken out of the equation altogether. The United States, having entered the Gulf to secure shipping lanes, had made clear that it could, if it chose, strike or even occupy Kharg.

That possibility changed the war. It exposed a structural truth: Iran’s part in the conflict, for all its ideological fervor and seemingly limitless human cost, was tethered to a narrow economic lifeline. If Kharg were disabled, Iran’s oil revenues would collapse. If those revenues collapsed, the country’s capacity to fight would crumble within days.

In Ali Hashemi’s account, this understanding was central to Khomeini’s decision to accept the ceasefire. “The US military,” Hashemi later recalled, “not only shot down an Iranian passenger plane, but by threatening military attack and occupation of Kharg Island, placed Ayatollah Khomeini in a position where he accepted the ‘poisoned chalice’ and agreed to Resolution 598.” 

The threat to Kharg did not immediately end the Iran-Iraq War, but it made clear that the war could not be sustained.

The post Kharg Island: The Islamic Republic in Miniature appeared first on Tehran Bureau.

In another era, Mohammad Baqer Ghalibaf might have been remembered as a mayor-turned-Parliament speaker who liked big projects, inflatable budgets, and was not opposed to cracking the heads of anti-government protestors. 

In the current turmoil, his knowledge of Iran’s internal security structure, business interests and leadership hierarchy lend him operational relevance in a state fighting for its survival.

Iran’s leadership is no longer governing in any conventional sense. It is absorbing assassinations, airstrikes, internal disruption, and trying to maintain continuity under pressure. In that environment, the Islamic Republic has defaulted to a familiar type: the manager who is also a commander. Ghalibaf, a former Revolutionary Guards air force chief, national police head, and long-time political operator, sits at the intersection of those roles.

Ghalibaf is reportedly becoming increasingly central in Tehran after the killing of the supreme leader and the decapitation of much of Iran’s senior command structure. 

He is rumored to have replaced Ali Larijani, killed in an air strike March 17, as the Islamic Republic’s de-facto leader, and is reportedly in talks with the United States, according to Israeli news sources. Ghalibaf’s chief characteristic is ambition. He climbed the Islamic Republic’s political ladder presenting himself as a man of execution rather than ideology. He secured his role as Majles speaker during the 2019 election year, when turnout was at an all-time low due to Covid restrictions and general public disillusionment. Cementing his clout in the lower house with only 1.3 million votes, Ghalibaf immediately began appointing friends and confederates to prominent positions in parliament. One of these appointees, Mohammad Saeed Ahadian, is related by marriage to the late Ali Khamenei. Ahadian benefited from the forced takeover of the formerly reformist Khorasan newspaper, where he served as editor-in-chief for two decades.

A History of Violence

Ghalibaf’s self-image of the technocrat who gets things done played well in Tehran. But Ghalibaf’s idea of “management” has always included coercion, patronage, and control. The polished mayor in tailored suits coexisted with the security official who, by his own account, helped suppress protests in 1999 and 2009. Ghalibaf was also a vocal supporter of the hejab and chastity bill, an internationally criticized legislation which introduced harsher penalties for violations of Islamic dress code despite broad-based public opposition to hejab restrictions following the nationwide, violently suppressed Mahsa Amini protests of 2022. The Majles passed the bill in 2024, while Ghalibaf was the body’s speaker.

Ghalibaf also notoriously took credit for a series of violent acts of repression. In an audio file circulated during the 2015 presidential campaign, he described himself “beating [protesters] with wooden sticks” on the back of a motorbike during the student protests of 1999.

Elsewhere in the recording, he boasted of ordering police to fire gunshots at protesters during on-campus student demonstrations in 2003. He also commended himself for an effective response to the unrest following the disputed 2009 presidential election, which saw widespread killings and abuse of demonstrators.

Increasingly, Ghalibaf is projecting hard power publicly. In recent days, Iran has pushed the outer limits of its missile doctrine, claiming responsibility for a long-range strike toward the U.S.-U.K. base on Diego Garcia. This target was over 2,500 miles away, well beyond Iran’s previously acknowledged range. The missiles failed to hit, but that was almost beside the point. The message was received.

Ghalibaf has leaned into that message with something approaching visible enthusiasm. His public statements reject ceasefire logic outright, telling state media Iran “must strike the aggressor in the mouth,” framing escalation as both necessary and inevitable. Even before the current war, he was praising long-range missile tests as a “source of national pride” in state media reports, positioning himself rhetorically alongside the systems he now helps direct.

That instinct runs through his entire career. As mayor, Ghalibaf’s power rested not only on visible infrastructure but on invisible networks: contracts, quasi-state foundations, IRGC-linked conglomerates, and a web of associates who turned municipal spending into political capital. Crucially, those networks did not stop at Tehran’s city limits.

Investigations into his tenure describe a sprawling ecosystem of business interests tied to family members, close allies, and Revolutionary Guards-linked institutions, extending into real estate, construction, banking, and charity structures that operate with both domestic and international reach. At the center of this was his relationship with Khatam al-Anbia, the IRGC’s engineering and construction arm, which was awarded multibillion-dollar development contracts without competitive bidding. This embedded a military-economic complex into the fabric of Tehran’s urban expansion.

From there, the network radiated outward. Entities linked to Ghalibaf and his associates were involved in large-scale real estate ventures, including projects tied to pilgrimage economies in cities like Mashhad, where capital, land, and religious infrastructure intersect. Financial channels ran through institutions such as Ansar Bank, itself tied to the IRGC cooperative foundation (BTS), creating pathways for capital movement that blurred the lines between public funds, private gain, and strategic financing. 

Most of Ghalibafs business network is linked to family members and friends who founded companies that benefited from contracts made possible through Ghalibaf’s various political positions. Ghalibaf’s brother-in-law, Reza Moshkir, reportedly has business ties to Algeria, Senegal, Turkey and Australia, and has been investigated for money laundering. Public business registry documents also show that Ghalibaf himself is on board of directors of three entities: Iran Association of Geopolitics, Khorasan, a private university, and Sepad Khorasan Co., a real estate development company involved in shopping malls, recreational centers and other tourism-related industries. 

What makes Ghalibaf’s network particularly relevant now is not simply its scale, but its structure. It was never just about enrichment. It was about building parallel channels of procurement, logistics, and capital allocation. These systems could operate with flexibility, opacity, and resilience, including across borders where necessary.

This is what makes Ghalibaf valuable now. Iran is no longer a coherent hierarchy; it is a stressed system trying to avoid cascading failure. Ghalibaf is one of the few figures who understands how its parts fit together, and how to keep them moving when they start to break. His business networks are not separate from his political role; they are an extension of it, providing alternative routes for resources, influence, and coordination at a moment when formal channels are under strain.

The post Ghalibaf: From Grifter to Power Broker appeared first on Tehran Bureau.