As the wave of protests that erupted in Iran on December 28 nears its second week, it remains unclear whether they will wax or wane.
In analyzing the situation, it is necessary to refrain from drawing dichotomous conclusions or from wishful thinking. The situation in Iran is complex and does not allow for simplistic extrapolations. Iran has never been North Korea or Stalin’s USSR in terms of oppression. The Iranian regime’s politically sophisticated tyranny has allowed it to survive intact since its foundation in 1979, despite countless challenges at home and abroad. Thus, in principle, public protests and strikes are permitted in Iran.
Usually, it takes an organized political movement to overthrow an incumbent regime One exception to this rule in the recent era is Tunisia. Those involved in such a movement must be determined, willing to put their lives at risk, and prepared to take up arms. Any group or ad hoc organization aspiring to depose the tyranny at the helm can never act legally. Clandestine action is necessary but dangerous and has disadvantages. Popular protest and sloganeering are only public outpourings of emotion or expressions of demands; yet they are not political action. Given that the demise of a regime is a political act, it must be achieved through political means. Someone should lead, guideand command the masses to channel their emotions and motivation toward a concrete political goal.
The Iranian regime is far from a passive observer of the protests. This regime has fully adopted and even further refined the KGB methods of “active measures” and propaganda. It employs these old techniques, such as agent provocateurs and “bad cop, good cop,” to divide the protestors, pitting one opposition group against the other. For example, a regime supporter, who is also a relative of Supreme Leader Ayatollah Ali Khamenei, praised a ‘smart measure” taken in this “legitimate protest”: “security forces dressed in plain clothes move among the protesters and chant slogans, and at the same time, ensure that disruptive elements do not infiltrate the crowd of protesters.”
Iranian protesters can access online all the necessary information on how to counter police and security forces. For instance, there is even a dedicated Telegram channel for studying bomb-making (amouzesh-e bombsazi). Here, one can find techniques for manufacturing cherry bombs or Molotov cocktail bottles. Itis more than possible, however, that the IRGC could have established this channel to spot protesters searching for such disruptive means.
Social media is a double-edged sword: it enables mass communication unheard of forty years ago, yet at the same time, any regime can use it to more easily monitor and control the spread of protests.
Loss of Computational Trust
The uprising of December 2025-January 2026 distinguishes itself from previous waves of unrest—such as the 2009 Green Movement, the 2019 fuel protests, or the 2022 “Woman, Life, Freedom” movement—by its fundamental trigger. While earlier movements were sparked by electoral fraud, fuel subsidies, or social repression, the current revolt is driven by the total collapse of the “computational horizon” required for economic survival.
A new analytical Telegram channel, Chashmeh, coined the concept of “Bi-Ghabliyat-e Mohasebeh,” or the “inability to calculate,” which serves as the critical theoretical lens for understanding this shift. In any functioning economy, market participants—from major importers to street vendors—operate within a predictable horizon. Prices, taxes, and currency values may fluctuate, but they do so within calculable bounds that allow for risk management and future planning.
By December 2025, the Iranian Rial’s plunge to approximately 1.45 million per USD had destroyed this horizon. For the bazaar—the historical and economic nerve center of Iranian society—this meant that prices for goods could not be set. Selling of goods becomes a mathematically irrational act as the replacement cost of inventory inevitably exceeds the sale price within hours. The strike, therefore, was not merely a protest against higher prices; it was a structural necessity. The “message” of the shuttered shops was that the mechanisms of trade had ceased to exist. Although the Tehran Bazaar no longer plays the decisive economic and socio-political role it used to before the 1979 revolution, it remains highly indicative of significant economic fluctuations.
This loss of “computational trust” extends beyond the merchant class to the general populace. With official inflation at 42.2% (likely understated) and food prices rising by 72% year-on-year, the average Iranian household faces a similar inability to calculate its survival. The regime’s proposed 2026/27 budget, which includes a threatened 62% tax increase to cover oil revenue shortfalls, indicates to the public that the state intended to extract liquidity from a bankrupt society to fund its survival, further severing the link between governance and accountability.
Anatomy of Collapse: Economic Indicators
The economic landscape in December 2025 is defined by a “polycrisis” in which fiscal, monetary, and external pressures have converged.
| Indicator | Status (Dec 2025) | Impact on “Calculation” | Source |
| Exchange Rate | ~1,450,000 IRR / USD | Pricing mechanism destroyed; imports paralyzed. | |
| Inflation (Official) | 42.2% | Erosion of purchasing power; wage irrelevance. | |
| Food Inflation | 72% (Year-on-Year) | Subsistence crisis for the working class. | |
| Tax Policy | Proposed 62% increase | Hostile extraction of capital from a recessionary market. | |
| Oil Revenue | ~16% of Budget Targets | Fiscal bankruptcy; inability to defend currency. |
The data indicate that the regime entered December with effectively zero fiscal maneuverability. The “snapback” of UN sanctions in September 2025 froze assets and halted arms transactions, exacerbating the liquidity crunch. The government’s attempt to introduce a “multi-tier” fuel pricing system earlier in the month had already primed the population for unrest, acting as a force multiplier when the currency finally crashed.
From Economic Grievance to Political Rupture
The trajectory of the protests followed a rapid escalation ladder, transitioning from economic complaints to systemic rejection within 48 hours.
Phase 1: The Defensive Strike (December 28). The unrest began in Tehran’s specialized commercial districts. Shopkeepers at the Alaeddin and Charsoo shopping centers—hubs for mobile phones and technology—shuttered their stores. This sector is susceptible to currency fluctuations due to its reliance on imported goods. Initial slogans focused on the exchange rate and the Central Bank’s incompetence. The bazaaris demanded “support” from law enforcement to stabilize the market, viewing the police initially as a potential ally against chaos.
Phase 2: The Political Turn (December 29) As security forces attempted to force shops open and used tear gas in Lalezar and Jomhuri streets, the narrative shifted. The protest spread to the Grand Bazaar (Bazaar-e Bozorg), the traditional stronghold of the conservative merchant class. The slogans transformed into direct attacks on the political legitimacy of the system:
- Economic: “Business is impossible with a 150,000-Toman dollar.”
- Political: “Pezeshkian, shame on you, let go of the country.”
- Systemic: “Death to the Dictator” and “Seyyed Ali [Khamenei] will be overthrown this year.”
This shift is critical. It indicates that the bazaari class has concluded that economic stability is unattainable under the current political configuration. The resurfacing of slogans like “Neither Gaza nor Lebanon, My Life for Iran” explicitly link Iran’s economic destitution to the regime’s foreign policy adventures, specifically the fallout from the June 2025 war.
Phase 3: Nationwide Diffusion (December 29-30) The uprising displayed a sophisticated geographical spread designed to stretch the security apparatus. While centered in Tehran, protests erupted simultaneously in:
- Isfahan and Shiraz: Industrial and tourism hubs where the service sector has collapsed.
- Mashhad: A religious center where protests in Shohada Square signal the erosion of the regime’s ideological base.
- Peripheral Regions: Protests in Kurdistan (Sanandaj), Hamadan, and Ahvaz highlight the intersection of economic grievances with ethnic and resource-based discrimination. In Ahvaz, the crisis has been compounded by strikes in the oil and healthcare sectors.
How the Unaccountability Mechanism Became a Trigger
The core driver of the current rage is “unaccountability,” because in the past one could think about raising demands of the regime, but today it seems that the regime is by definition unaccountable for anything. The regime’s response to the crisis is characterized by a refusal to accept responsibility. Moreover, the tactics of shrinking responsibility range from scapegoating (accusing “currency smugglers” and “Mossad plots and psychological warfare”) to messaging false normalcy (the authorities claimed that “all university exams are proceeding” despite the chaos, attempting to gaslight the population into believing order prevails).
President Masoud Pezeshkian appointed Abdolnasser Hemmati as the Central Bank Governor, replacing Mohammad Reza Farzin. Yet this step has appeared inefficient, given that the Iranian public dismissed it as a game of musical chairs within a bankrupt system.
The “inability to calculate” thus became a political indictment: the population could not calculate a future because the government operated without accountability to economic reality or to public welfare.
The Regime Acts Under Pressure from Worsening Circumstances
The regime is being forced to act amid mounting pressure from worsening circumstances domestically and abroad. The 12-day war with Israel continues to cast a wide shadow across all spheres. Iran has lost the most powerful pillars of its asymmetric might, namely, Hezbollah and the nuclear program. It has also lost its most crucial foothold: Syria. The ballistic arsenal remains, yet the Iranian leadership recognizes that nothing can prevent Israel or the United States from launching another round of strikes if needed.
The costs of rebuilding and reconstructing these lost military assets are exorbitant, and, in any event, reconstruction cannot be carried out overnight. Iran has never had strong state allies. The current situation confirms yet again the evidence the regime has been trying to conceal ever since: absent its asymmetric capacities, Iran is a very weak country in terms of conventional military might.
The situation at home is no better: all the above-mentioned processes continue to erode the regime’s erosion very legitimacy. If in the past socio-economic protest was not necessarily targeted at the regime itself, today it is overwhelmingly so.
The regime has managed thus far to contain all previous waves of protests. The security apparatus of the Islamic Republic is much more sophisticated and professionalized than that of the Shah in 1979. Yet it seems that a new factor has now appeared: desperation. It is no longer a protest over an issue that may be non-consensual.
Khamenei: Business as Usual
On January 3, Khamenei reacted for the first time, claiming that the currency crisis that sparked protests across the country was not “natural” but the work of “enemies. “He made a distinction between shopkeepers’ protests, which he said were legitimate, and the unrest from what he called “rioters,” who he said needed to be “put in their place.” Khamenei blamed unnamed enemies for the sharp devaluation of the Iranian currency.
The Fall of Maduro is Another Blow to Khamenei
The capture by the United States of Venezuela’s dictator Nicolas Maduro was unexpected for the Iranian regime. It dissipated the remnants of the hope that perhaps Iran could “do business with Trump”-as some Iranian pragmatists were hoping. For senior Iranian officials, seeing American special forces who carried out the raid in Caracas undoubtedly raises the troubling specter of similar actions against Iran.
Yet the reaction of Iranian officials and media reveals that the importance of Venezuela and its demised dictator is far more than symbolic for Iran. Seday-e Iran, a daily published on Khamenei’s personal website accused the U.S, of “kidnapping Venezuela’s legitimate president” and “violating international law to secure its petrol interests”.
Iran’s Foreign Minister Abbas Araqchi has accused President Donald Trump of adopting the “law of the jungle” and “undermining eight decades of progress in internationall law”
Iranian Foreign Ministry Spokesman Esmail Baqai has said that Tehran is “seriously pursuing” the return of its financial demands in Venezuela, stressing that countries’ financial liabilities do not vanish with a change of government.
According to media reports Caracas owes over $2bn dollars to Tehran, mainly from oil transactions, oil product exports and energy-related cooperation, including the National Oil Company’s $1bn in claims.
The Venezuelan regime of Nicolas Maduro, and before that Hugo Chavez, has been a key ally of Iran, allowing Hezbollah and the IRGC to operate freely in the country. This alliance has provided Iran and Hezbollah with a strategic base in Latin America, enabling them to evade sanctions, plot terror attacks, and engage in illicit activities. Iran supplied Venezuela with weapons including drones. In exchange, the Quds force received leeway to work on Venezuelan soil. In November 2025, Mexico foiled an Iranian plan to assassinate Israel’s ambassador to Mexico. Quds Force officer Hassan Izadi, an Iranian diplomate serving in Venezuela, organized that plot.
The IRGC and Hezbollah have actively participated in illicit activities, namely drug trafficking and ties with various South American drug cartels.
Venezuela has not only been the pivot for the Iranian axis on the American continent but also a safe haven for high-ranking IRGC officers who transferred their fortunes to the South American country.
With Venezuela’s future now uncertain, Iran’s regional influence has been dealt a significant setback.
The Islamic regime is an evil, antisemitic regime that seeks the destruction of the state of Israel and has targeted Jews worldwide because they are Jews. The Islamic Revolution has suffered total moral and financial bankruptcy and has lost its legitimacy in the eyes of most Iranians. While the responsibility for its demise lies on the shoulders of Iran’s people, Israel, of course, will not object to that, while it will do all it can to counter the Islamic Republic’s aggression and evildoing.
No one should buy the narrative that Iran’s agents of influence are trying to inject into the Western media: that “Iran’s chaos that would jeopardize regional security.” “
Although no one can predict the outcome of the current protest in Iran, one thing is sure: if the regime falls, no chaos is expected in Iran, meaning no repetition of the Syrian, Libyan, or Iraqi scenario. The chaos in those countries stems from the tribal structure of many Arab societies and the lack of functioning state institutions. None of the above is relevant to Iran, which is a highly institutionalized nation-state.
JISS Policy Papers are published through the generosity of the Greg Rosshandler Family.
