Executive Summary
The internal security situation in the Islamic Republic of Iran has reached a critical threshold as localised economic grievances coalesce into broader political defiance.
The convergence of a failing national currency, critical resource shortages, and renewed international isolation has instigated strikes and demonstrations throughout the capital’s commercial centre and some of the major cities.
Although the executive branch favours a reconciliatory strategy to manage public discontent, the security apparatus is preparing for a period of extended internal strife.
Key Takeaways
- The shift in protests from trade-related complaints to collective political slogans suggests a decline in state legitimacy among the traditional merchant class.
- The Islamic Revolutionary Guard Corps (IRGC) blamed external pressures and the fluctuations in foreign-exchange markets.
- Persistent infrastructure failures, specifically regarding water and energy, serve as force multipliers that expand the protest demographic beyond economic activists.
Facts
Public demonstrations intensified in downtown Tehran on 28 and 29 December 2025, primarily concentrated around the Jomhouri tech hubs and the Grand Bazaar. In protest of the rial’s depreciation, which reached a historic low of 1.42 million per US dollar on Monday, business owners began closing their stores.
Anti-riot units employed tear gas and kinetic impact methods to disperse protesters who had chanted solidarity and defiance slogans. Official media outlets have sought to portray these occurrences as solely economic, emphasising the complaints of mobile phone retailers regarding currency fluctuations.
This unrest was a consequence of the 27 September 2025 activation of United Nations “snapback” sanctions, which reinstated an arms embargo and broad financial restrictions.
Simultaneously, the water crisis has reached a critical juncture, as internal renewable resources have decreased to 850 cubic metres per capita. President Masoud Pezeshkian has publicly acknowledged the possibility of evacuating Tehran if precipitation levels do not improve.
On December 30, 2025, Abdolnasser Hemmati was reappointed to the position of Governor of the Central Bank of Iran, succeeding Mohammadreza Farzin. In a separate statement, the IRGC cautions it remains vigilant against “cognitive warfare” and “sedition” associated with the anniversary of the 2009 pro-government rallies.
Analysis
The current morphology of urban unrest suggests a bridge is forming between the middle-class merchant sector and the wider disillusioned populace. The business community’s closure of establishments within the Grand Bazaar—a traditionally significant source of backing for the clerical establishment—signals a lack of confidence in the state’s fiscal management.
The quick transition from pricing grievances to slogans like “Don’t be afraid, we are together” reflects the rhetorical trends noted during the 2022 civil unrest. This suggests that the economic shock caused by the UN snapback sanctions and continued external pressures have acted as a catalyst for pre-existing socio-political frustrations.
Hemmati’s reappointment reflects a measure to convey technical competence to the markets, although his previous impeachment by parliament may diminish his political authority. The IRGC’s assertion concerning “sedition” suggests the military-security establishment is prioritising the quelling of dissent over the president’s proposed “dialogue” with protesters.
This internal divergence increases the risk of a miscalculated security response that could further inflame the streets.
The water crisis adds a layer of existential urgency. Unlike the government’s ability to mitigate economic inflation through policy, the lack of water in the capital creates a non-negotiable threat to social order. Rationing’s implementation could cause protests to move from commercial to residential zones, possibly surpassing existing anti-riot force capacities.
Implications
- If the strikes spread significantly to other major Iranian cities and economic centres, a countrywide general strike could happen, which would stop the government from collecting taxes or providing necessary supplies.
- Increased urban policing by the IRGC and Basij will probably lead to more people being killed, which might cause fresh protests during times of public mourning.
- The executive branch may face a terminal loss of authority if the security apparatus’s kinetic interventions undermine its attempts at dialogue.
- Resource-driven migration from the provinces toward Tehran will aggravate urban overcrowding, creating more volatile environments for anti-government mobilization.
- External actors, specifically Israel, might perceive this internal fragility as an opportune window for targeted strikes against nuclear or military infrastructure.
Conclusion
Iran’s government faces a combination of major problems that endanger its stability more than in the last ten years. The combination of currency insolvency and resource exhaustion weakens traditional state control.
The strategic forecast remains unfavourable, and the situation in Iran could affect not just that nation but also the whole Middle East, an area with considerable geopolitical instability.
Unless international sanctions change significantly or domestic resources become more accessible, civil unrest will likely increase in both frequency and severity. The current government’s continued existence hinges on managing the IRGC’s desire for control while also preventing a complete breakdown in relations with the Iranian people, as desired by the presidency.
* Last update: December 30, 2025 – Time 05.00 am CET
