Facing protests at home and threats abroad, the Iranian regime looks rattled

On December 28th electronics vendors in Tehran went on strike. Most of their wares are imported, and it is hard to buy and sell such goods with the currency in freefall. Other businesses joined the walkout, including shops in Tehran’s grand bazaar, a weathervane of politics. Protests spread outside the capital and are continuing. This is the widest unrest since 2022—but still far smaller, and not yet a nationwide uprising. Most demonstrations draw just a few hundred people, concentrated in provincial cities so obscure that Tehranis might need a map to locate them. Across the country factories, shops and government offices remain open.

Yet the regime looks more rattled than one might expect. Riot police and water cannons have been deployed on the backstreets of central Tehran. Plain-clothes goons disperse people before they can gather at intersections. Schools and universities have been closed on the pretext of air pollution, a tactic to forestall mass action.

The latest protests diverge from the old pattern in two ways. One is that the bankruptcy of the regime (both literal and figurative) is in full view. Iran has endured a year of economic collapse, war and environmental crisis; its leaders have no solutions for these woes. The other difference is the prospect of foreign intervention, either by Israel or America. After the American raid to seize Nicolás Maduro from Venezuela on January 3rd, many Iranians wondered if their country might be next in Donald Trump’s cross-hairs.

The protests have drawn on anger within a constituency the regime long regarded as its own: jobless young men. The state has no answer to their demands. In 2022 it defused months of unrest over social restrictions by loosening enforcement of the mandatory veil for women, withdrawing the morality police from the streets and letting musicians and performers take over public spaces. Iran’s economic and environmental crises offer no such quick fixes. “I can’t do anything,” admitted the president, Masoud Pezeshkian, on the eve of the protests.

The rial is crashing, trading at an all-time low near 1.5m to the dollar. It has lost 45% of its value in the past year and 98% in the past decade. Prices of staples have soared beyond reach. Mr Pezeshkian’s main attempt at economic reform, which began earlier this month, is to scrap a preferential exchange rate for imports of essential goods and use the money to send monthly cash transfers to Iranians worth 10m rials per person.

In principle this is a fine idea: direct payments to the poor are preferable to supply-side subsidies, which are prone to corruption. But the sum in question is worth less than $8, barely enough for a bag of rice or a jug of cooking oil. Unifying the exchange rates will also fuel inflation, already above 40%. Fatemeh Mohajerani, a government spokeswoman, acknowledged that it will lead to “significant” price increases for chicken, eggs and other staples.

If the government cannot reform its way out of trouble, repression is backfiring too. Footage of security forces raiding hospitals to arrest wounded protesters has enraged the public. Some demonstrators have torched police stations in attempts to free prisoners. The religious ideology that once underpinned the system looks spent.

Meanwhile, a fractured opposition seems to be coalescing around an unlikely figure: the exiled son of the shah overthrown in 1979. Monarchism still repels many. But Iranians who dismissed Reza Pahlavi as a joke are suddenly taking the 65-year-old more seriously.

Looming in the background is the threat of another war. Israel carried out 12 days of air strikes in Iran last summer. Binyamin Netanyahu, its prime minister, seems keen on a second round, in part because the Iranian regime is trying to rebuild its ballistic-missile programme. A possible war was on the agenda when Mr Netanyahu visited Mr Trump at Mar-a-Lago on December 29th.

On January 2nd Mr Trump made his own threats, warning Iran not to kill peaceful protesters. “America will come to their rescue,” he wrote on social media. “We are locked and loaded and ready to go.” It was unclear what he had in mind: a symbolic show of force? Or a more sustained campaign against Iran’s security forces?

The next day another possibility arose, when American commandos swooped into Venezuela. That is not to say America is about to try a similar raid to nab Ayatollah Ali Khamenei, the 86-year-old supreme leader. The last time it attempted an incursion into the Iranian capital was in 1980, during the hostage crisis; it ended ignominiously, with helicopters wrecked in the desert and eight American soldiers dead.

But Mr Maduro’s swift downfall has fuelled a running debate within Iran’s regime. Many officials who were waiting for Mr Khamenei’s death to bring change now want it to come sooner. “Things are bad enough for the regime to be looking for scapegoats,” says an Iranian commentator in exile. Some are considering a Venezuelan-style solution: sacrificing the supreme leader to save the system and stave off chaos. Saeed Laylaz, an economist favoured by the regime, urged the ayatollah to step aside in favour of a “Bonaparte”.

He even discussed one: Mohammad Bagher Qalibaf, the parliamentary speaker and former commander of the Islamic Revolutionary Guard Corps (IRGC), who observers say briefly took charge when Mr Khamenei went into hiding during the war. Mr Pahlavi’s name has also been floated, perhaps to be installed with the IRGC’s blessing.

Mr Khamenei may yet choose a different end. Vast billboards looming over central Tehran show coffins draped with American and Israeli flags. Advisers threaten regional escalation, with strikes on American bases and Israeli cities if foreign attacks resume. Leaders in the Arab Gulf states are nervous that they may be targeted too. Perhaps Mr Khamenei’s aides hope to again rally the home front, as they briefly did during the June war. Either way, his 37th year as supreme leader could yet prove as climactic as that of the last shah—toppled after 37 years on the throne.