The recent civic unrest in Iran has unfolded amid dense media noise and sharply polarised narratives, complicating any objective reading. Yet such an exercise is necessary. Iran’s geopolitical centrality, economic potential, and location in India’s extended neighbourhood make internal instability there far from a distant concern. The current turmoil is not a sudden eruption but the outcome of deepening economic distress interacting with long-standing political rigidities.
How the Current Protests Began
The immediate trigger was economic. On December 28, 2025, Tehran’s merchant community — the Bazaaris — shut down markets to protest the rapid devaluation of the Iranian rial. While the official exchange rate remained fixed at 42,000 rials to a dollar, the market rate had slid to around 1.45 million. This divergence made it impossible for traders to import essentials such as rice, sugar, and edible oil at market prices and sell them domestically at state-controlled rates. As inflation worsened and livelihoods collapsed, unemployed youth, low-paid workers, and urban poor joined the protests. What began as an economic agitation soon transformed into a nationwide anti-government movement marked by arson, vandalism, and violent clashes. By January 13, Iranian authorities claimed that over 2,000 people had died, attributing the violence to unnamed “terrorist” elements.
The State’s Recurrent Playbook for Dissent
Since the establishment of the Islamic Republic in 1979, Iran’s leadership has evolved a predictable strategy to deal with mass unrest, visible during the 2009 election protests, the 2019 fuel price agitation, and the 2022 hijab protests. The response typically unfolds in stages. Initial protests are met with force to restore order. If unrest persists, senior leaders alternate between blaming foreign conspiracies and acknowledging “legitimate grievances,” while imposing social media restrictions. This is followed by prolonged attrition — confusing protest leadership, mobilising pro-government rallies, and waiting for momentum to fade. Finally, prominent protesters are arrested and punished severely. The present unrest appears to have entered this third stage, with token cash transfers announced, large pro-establishment rallies organised, and funerals of security personnel used to reinforce regime legitimacy.
Why the System Has Held — For Now
Several factors have helped the Iranian establishment regain control. The Islamic Revolutionary Guards Corps (IRGC) and the army have remained loyal, portraying the agitation as a continuation of external aggression following the June 2025 Israel–U.S. military confrontation. The oil sector, the backbone of the economy, has not been disrupted. Crucially, the ruling elite has not fractured, and no alternative political leadership has emerged from within the protests.
The Bazaaris’ Break: A Structural Warning
Despite this apparent stabilisation, the unrest has exposed new vulnerabilities. The Bazaaris’ open strike against the clergy-led regime is historically significant. In modern Iranian history, they have functioned as a political bellwether; their withdrawal of support was instrumental in the fall of the Shah in 1979. Their long-standing informal compact with the clergy — preferential exchange rates and trading privileges — has eroded over the past two decades. U.S. “maximum pressure” sanctions, combined with the expanding commercial footprint of the IRGC and the Bonyads (state-linked charitable foundations), have squeezed traditional merchant interests. While President has claimed that merchant grievances are being addressed, details remain opaque, and it is unclear whether the IRGC is willing to retreat from lucrative economic sectors.
Economic Roots of Recurrent Social Convulsions
Iran’s leadership has demonstrated tactical skill in suppressing unrest but lacks the policy space to resolve its root causes. Persistent investment in nuclear and missile programmes and support for regional proxies diverts scarce resources and triggers sanctions that deepen economic pain. Demographics compound the problem. Over two-thirds of Iranians were born after the 1979 revolution. Their aspirations — shaped by global connectivity and visible prosperity in Gulf Arab states — clash with a gerontocratic politico-theocratic elite. Perceptions of elite corruption, combined with the marginalisation of women and non-Shia minorities, intensify alienation. The election of a moderate president in 2024 raised expectations, but regional turmoil has stalled meaningful reform.
Foreign Encouragement and Its Limits
External involvement has become more overt. U.S. President and Israeli Prime Minister have publicly encouraged protesters while threatening punitive action against Tehran. Yet history cautions against easy assumptions. Saddam Hussein’s 1980 invasion of Iran, intended to exploit revolutionary chaos, instead unified Iranians against foreign aggression. Iran retains significant retaliatory capacity. It can target U.S. interests in the region, unsettle Gulf energy routes, or threaten closure of the Strait of Hormuz, with global oil price consequences. Aware of these risks, Washington appears more inclined toward cyber operations and secondary sanctions rather than direct military intervention.
Sanctions, Evasion, and Diplomatic Manoeuvres
Iran has decades of experience in sanctions evasion, from cryptocurrency use to covert oil exports. Despite U.S. pressure, China and the United Arab Emirates remain Iran’s largest trading partners, together accounting for more than half of its foreign trade. Proposed secondary sanctions may complicate, rather than halt, these flows. Simultaneously, Tehran has signalled openness to renewed talks with Washington, using diplomacy as a pressure-release valve.
Why Iran’s Turmoil Matters to India
Instability in Iran is not inconsequential for India. Any escalation threatens security in the Gulf, where India’s interests span energy supplies, diaspora welfare, remittances, and trade. A weakened Iran could also allow Pakistan to project itself as a security intermediary between Tehran and Gulf Arab states. Strategically, India relies on Iran for access to Afghanistan and Central Asia. Societally, India hosts one of the world’s largest Shia populations outside Iran, creating natural sensitivities to developments there. Finally, the eventual lifting of long-standing Western sanctions would open significant economic opportunities for India, particularly in energy, infrastructure, and connectivity — areas aligned with Tehran’s own pursuit of economic self-reliance.
What to note for Prelims?
- Role of Bazaaris in Iranian political history
- Impact of sanctions on Iran’s economy and currency
- Institutional role of the IRGC and Bonyads
- Strategic importance of the Strait of Hormuz
What to note for Mains?
- Link between economic distress and political unrest in authoritarian systems
- Limits of external intervention in regime-change scenarios
- Implications of West Asia instability for India’s energy and security interests
- Iran’s internal dynamics and their impact on regional geopolitics
