Iranians celebrate Nowruz, a moment of renewal

At the start of the year in March 2024, Iran was already grappling with a broken economy and the looming threat of political unrest. Regionally, however, it still appeared strong and could plausibly project itself as a serious challenge to US and Israeli interests.

Conflict with Israel

As the year began, Israel was deeply engaged in its war with Iran-backed Hamas in Gaza. Tehran confidently claimed that its regional adversary was stuck in an unwinnable conflict, boasting about its so-called Resistance Front and threatening to escalate against both Israel and US interests. Yemen's Houthis were already disrupting shipping in the Red Sea and launching missiles at Israel.

Houthi attacks on maritime trade which began in November 2023 following a declaration by Iran’s Supreme Leader Ali Khamenei inflicted an estimated $200 billion in losses on the global economy.

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Less than a month into the Iranian year, Tehran launched a large-scale missile and drone strike on Israel In April 2024 in response to Israeli attacks on Iranian targets in Syria.

While most projectiles were intercepted with minimal damage, the Islamic Republic framed it as a significant blow against the "Zionist entity." At the time, Tehran appeared strong, seemingly capable of deterring its most determined adversary.

However, the tide began to turn in late July when Hamas leader Ismail Haniyeh was killed in an explosion while staying at a government guesthouse in Tehran.

It remains unclear whether the incident was caused by a planted explosive or an Israeli missile strike, but the ability of Tehran's arch-foe to strike seemingly anywhere was lost on no one.

The assassination would be just one of many, crescendoing with the killing of Hezbollah leaders via their bomb-laden communication devices and culminating in the assassination of its storied leader Hassan Nasrallah.

Political crisis

Before these epochal blow, Iran suffered another major shock in May when hardline President Ebrahim Raisi and his foreign minister died in a mysterious helicopter crash in northwestern Iran.

Many doubted the official explanation of bad weather, which was never conclusively proven, fueling speculation about a high-level internal plot or an Israeli operation.

Raisi had been widely regarded as ineffective, presiding over a rapidly deteriorating economy since taking office in 2021.

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In June, Iran held presidential elections, with several key candidates disqualified through a vetting process controlled by Khamenei. Ultimately, Masoud Pezeshkian, a politician with no executive experience, faced hardliner Saeed Jalili in a low-turnout runoff and won.

During his campaign, Pezeshkian made it clear that he had no plans beyond executing Khamenei’s directives.

Some Iranians still hoped for limited reforms and a diplomatic breakthrough to ease US sanctions. However, when Khamenei formally banned negotiations in early February 2025, Pezeshkian pledged loyalty to his decision, disappointing even his Reformist supporters.

Economic crisis

By mid-2024, with Hezbollah and Hamas weakened and Israel growing more confident in striking Iranian military targets, Iran’s economic woes deepened. The rial, which had been around 550,000 per dollar in September, plunged to 900,000 by February and even hit one million by March 18.

The worsening economic picture underscored a government unable to halt a downward spiral. Severe energy shortages crippled both households and industries throughout fall and winter, with the government regularly announcing power shutdowns across the country due to heating and electricity failures.

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Iran’s oil exports to China continued through intermediaries and at deep discounts, but the Trump administration escalated sanctions on oil tankers and trading entities following Biden’s late-term crackdown on exports.

Revenues from these limited exports fell far short of meeting the government’s foreign currency needs, especially given Tehran’s ongoing financial commitments to regional proxy groups.

Bleak outlook

Many political insiders in Tehran now say Pezeshkian’s administration may be incapable of addressing the worsening economic crisis. The only potential relief would come from easing US sanctions, but Khamenei has so far resisted Trump’s pressure to make concessions.

It remains unclear whether Washington seeks only a binding agreement to prevent Iran from enriching uranium to weapons-grade levels or whether it also aims to curb Tehran’s ballistic missile program and regional activities.

Khamenei appears to be employing delaying tactics, hoping circumstances shift in his favor or that he can stall until the next US elections. Meanwhile, Trump continues to tighten sanctions and increase military threats, either directly or through Israel.

Another critical challenge is the risk of public unrest due to soaring prices and a growing sense of political instability.

While the Islamic Republic has repeatedly demonstrated its willingness to use deadly force against protesters, its ability to quash mass uprisings is not guaranteed.

If essential goods approach hyperinflation levels, even the security forces and loyalist cadres—who rely on fixed incomes—could begin to waver.

"They keep saying Iran is at a crossroads. Is it really a crossroads if it drags on for years? Because we’ve been here as far as I can remember.” This is Zahra, 36, a legal consultant, almost snapping at me for bringing up this conversation.

"Trump has apparently told Khamenei to make a deal or get ready for war,” she carries on venting. “But I think he’ll dodge this one too, selling out even more to China and Russia, buying time, hanging in there at the so-called crossroads while we sink deeper in the swamp that he’s made.”

Zahra has stopped waiting for a turning point. And she’s not alone. Utter the words breakthrough in a Tehran taxi and you’ll get a bitter smile, if not a scornful look. Why talk or even think about it. As Zahra puts it, "it'll come when it comes."

For years, the government has pinned almost everything on sanctions—runaway inflation, energy shortages, environmental disasters, a failing healthcare system, you name it.

But many have long stopped buying that narrative. They’ve watched billions vanish in case after case of corruption, most involving officials and cronies that somehow always avoid justice.

"I cannot care less about sanctions,” says Mehdi, a salesman turned Snapp driver. “My children suffer with or without sanctions. And the officials’ children thrive with or without sanctions.”

Mehdi is 45, a father of two. His apathy may not help his country’s situation, he says, but at least it helps keep him sane. “I have to have my hands on this fifteen hours a day, six days a week, to make ends meet,” he says, bashing the steering wheel, “so I have no time for love-hate letters between Trump and Khamenei.”

Khamenei’s famous line—neither war nor negotiations—has defined Iran’s foreign policy for years. His recent remarks follow the same logic.

Many in Tehran believe this anti-talks position is why the face of Iranian diplomacy abroad, former foreign minister Javad Zarif, had to resign his role as vice president.

Zarif and his boss, president Masoud Pezeshkian, are clearly in favor of dialogue with the Trump administration, which puts them at odds with Khamenei even if they express their full allegiance at every turn.

Despite widespread apathy, many voted for Pezeshkian because they felt his moderate politics would increase the likelihood of a thaw with the West and potentially less sanctions that could improve their dire economic fortunes.

“If sanctions are lifted, foreign investment will return, and jobs will be created,” says Milad, a 20-year-old undergraduate and a first-time voter for Pezeshkian who sees himself in the minority.

“Most people I know prefer no talks, not because they back Khamenei, but because they hate his guts and think a thaw would help him last longer,” Milad adds. “I think they’re wrong though. Khamenei & co. would do just fine. It’s us who’ll shoulder Trump's maximum pressure.”

Milad thinks talks could potentially lead to less sanctions and improved life. But not many share his view, as he said. That flicker of hope that drove some people to polling stations last year is well and truly dead now.

Majid, a 28-year old street vendor, sums it up succinctly.

"My family was poor when oil money was pouring in, and we’re poor now with the harshest sanctions. We all work 50-60 hours a week just to survive. I can’t see how we’d get out of this."

The Islamic Republic has tied its survival to our destruction. Moderates or hardliners in government, during talks or at war, our suffering is constant," he added.

Majid’s grandfather, Akbar, interjects. He’s sitting on a stool next to his grandson to kill time, in his words.

“We’re screwed either way. So better not to have talks, I say. Any money would just fatten the bandits and thugs that rule us.” And Trump’s letter and ultimatum? “I don’t like bullies,” Akbar says smiling. “But we’re where we are because of Khamenei, not Trump.”

The grandfather may also be in the minority—of those who still follow the news religiously despite grudges. For a majority, as far as I can tell, Trump’s letter, Khamenei’s speeches, the latest threats and ultimatums barely register anymore.

People are exhausted. The news of war or negotiation causes only a brief ripple in the economic mire in which most people are trapped.

And the real question for most is, how much longer can we endure this?

Trump warned on Monday that he would hold Iran and its leadership responsible if its Houthi allies retaliated for dozens of US air strikes on the Tehran-backed group.

The ultimatum followed a demand by the hawkish president the week before that Iran agree to a new nuclear deal or face attack.

Official media zealously swatted away apparently baseless reports circulating on social media on Monday evening that the US military had sunk Iran’s reconnaissance ship Zagros in the Red Sea.

Saberin News, a Telegram channel with nearly a million followers reportedly linked to the Revolutionary Guards, denied on Tuesday the presence of any Iranian navy ships in the Red Sea, Bab al-Mandab Strait and the Indian Ocean.

Iran's national currency plummeted to an unprecedented low on Trump's ominous remarks, with the rial falling past the 1,000,000-per-dollar threshold in the open market.

“The reason for the spike in foreign exchange rates is the US attack on Houthis and the expectation that Iran will be the next target,” Morteza, a businessman in Tehran, told Iran International on Tuesday.

“Interestingly, people are not afraid of war although they think it is inevitable this time. They believe it will only be the government who will bear the brunt of an attack, should it materialize, and that they will come to no harm themselves,” he added.

According to Iranian-Canadian political analyst Shahir Shahidsaless, Trump may be laying the groundwork for military action against Iran if negotiations fail, either due to Iran’s refusal to engage, a lack of flexibility in talks, or if IAEA chief Rafael Grossi’s June report confirms that Tehran is rapidly advancing its nuclear program.

In a post on X on Tuesday, Shahidsaless suggested that the US operation against the Houthis could be a prelude to an attack on the Islamic Republic.

Meanwhile, Nour News, a media outlet close to Iran's Supreme National Security Council suggested on Tuesday that Tehran could withdraw from the Nuclear Non-Proliferation Treaty (NPT) if Trump acts on what it called his "delusion" that Iran seeks nuclear weapons.

A pro-government Iranian Middle East analyst and university lecturer, Mostafa Najafi, claimed in a post on X Monday that the United States has sent a backchannel message to Iran demanding the removal of its military and intelligence ships from the Red Sea and set a deadline.

According to Najafi, Iran has also warned “through its UN mission and at the military level against any American adventurism against its positions, interests, and assets.”

At the UN Security Council Monday evening, Iran's ambassador Amir-Saeid Iravani called Trump’s statements reckless and provocative and warned that any act of aggression against Iran could have severe consequences for international peace and security.

"Iran strongly and categorically rejects any accusation on the violation of relevant Security Council resolutions on arms embargoes in Yemen or involvement in any destabilizing activities in the region," Iravani said on Monday.

Iran and the Houthis have denied close military coordination, but weapons experts have linked the Yemeni fighters' advanced arsenal of anti-ship and ballistic missiles to Iranian technology. Iran has long presented the Houthis as an important part of its so-called "Axis of Resistance" against Israel and the United States.

President Donald Trump’s recent letter to Supreme Leader Ali Khamenei was delivered by former UAE Minister of State Anwar Gargash last week. Tehran, however, has not responded to the letter yet and seems unlikely to use the same diplomatic channel.

At a press briefing on Monday morning, Foreign Ministry Spokesman Esmaeil Baghaei dismissed a connection between Araghchi’s visit to Muscat and Trump’s letter and said the response to the letter “will be made through the appropriate channels after scrutiny is completed.” According to Baghaei, the contents of Trump’s letter will not be disclosed to the media.

Oman’s role in US-Iran diplomacy

In an interview with the government-run Iran newspaper after Khamenei’s public rejection of direct talks with Washington last week, Foreign Minister Abbas Araghchi signaled Tehran's willingness to engage in indirect negotiations through Oman.

For over two decades, Iran has relied on Oman as an intermediary for indirect communications with Washington, despite the existence of a formal diplomatic channel through Switzerland.

However, some observers link Araghchi's visit to Oman to US air strikes on Iran-aligned Houthis in Yemen. Referring to the US airstrikes on Saturday, conservative political analyst Asghar Zarei in Iran told Quds daily that the threat of further escalation has necessitated “consultations and the exchange of messages through Oman.”

But at the same time, citing Abu Dhabi’s close political and military cooperation with Israel and the West, Zarei further argued that Iran would not entrust the delivery of its response to Trump's letter to the UAE.

“Oman … has always shown its willingness to play an active role in regional issues, including the Syrian issue, and mediation between Iran and other powers,” the same daily quoted West Asia analyst Reza Sadrolhosseini as saying.

Some analysts also consider Baghdad and Doha as potential but much less likely alternatives for diplomatic exchanges between Tehran and Washington.

Iran's response to Trump

Trump sent another letter to Khamenei in 2019, after unilaterally withdrawing from the 2015 nuclear deal but Khamenei refused to accept the letter, delivered by then-Japanese Prime Minister Shinzo Abe, and insisted that Trump was untrustworthy.

The Iranian foreign minister’s meeting with his Omani counterpart, according to both sides, focused on bilateral relations and the latest regional and international developments. In a statement, Oman’s foreign ministry also emphasized the country's commitment to facilitating diplomatic solutions and easing regional tensions through dialogue and peaceful means.

Former President Barack Obama reportedly sent multiple letters to Khamenei between 2009 and 2015, discussing topics such as diplomacy, the nuclear deal (JCPOA), and potential cooperation against ISIS. There are no reports that Khamenei ever responded in writing to any of these letters. This time, however, as indicated by the foreign ministry's spokesman, a written response, possibly through Muscat, seems to be very likely.

Araghchi’s visit and the Yemeni situation

Some Iranian media and analysts have highlighted a possible connection between Trump’s most recent threats against Iran, the US airstrikes on Yemen, and Araghchi’s visit to Oman.

A commentary published on Monday by the reformist Ham-Mihan daily referred to Trump’s warning that supporting Houthis will not be tolerated and argued that by these airstrikes he aimed to demonstrate to Iran that there are only two options on the table: negotiation or military action, as in Yemen's case. Iran denies control over Houthis and has condemned the US strikes.

“The only thing that Iran does not need now is a new crisis,” the commentary said while suggesting that Iran should stay fully focused on the resolution of its nuclear program.

The decision of the Supreme National Security Council (SNSC) not to enforce the controversial law could not have been made without the approval of Supreme Leader Ali Khamenei, who has avoided discussing the issue in his speeches for months.

Enforcing the morality legislation—which imposes severe penalties, including heavy fines and prison sentences on women who violate strict hijab rules, as well as businesses that fail to comply—could be highly provocative under current conditions, potentially sparking widespread anti-government protests.

Internal clash over the enforcement of the hijab law

Mahmoud Nabavian, a senior member of the hardline Paydari (Steadfastness) Party and the Parliament’s National Security and Foreign Policy Committee, is facing backlash from his allies after condemning recent protests led by radical elements. His remarks have surprised many within his faction, where he was long regarded as a key figure and a strict enforcer of their agenda.

Despite playing a key role in drafting the hijab legislation, Nabavian now argues that preserving the Islamic Republic must take precedence over enforcing the law—implicitly acknowledging the risk of unrest. “If implementing the hijab law creates tensions and weakens the system, it should automatically be set aside,” he said last week.

According to the Islamic Republic’s founder, Ruhollah Khomeini, preserving the system must take “utmost priority,” even if it requires temporarily setting aside religious obligations like prayer and fasting. By that logic, hijab would be no exception—a stance authorities now seem compelled to accept, much to the frustration of the hardline political and religious establishment.

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Concerns over national stability

Nabavian justified the security council’s suspension of the hijab law by pointing to major geopolitical developments—the fall of Bashar al-Assad in Syria and Israel’s assassination of Hezbollah chief Hassan Nasrallah. He argued that enforcing the law at this time could provide foreign adversaries with an opportunity to destabilize Iran.

“Given the country’s and the region’s current conditions, especially the situation in Yemen, and the need for national unity, we must all support the implementation of the law but polarizing the society, calling for illegal gatherings, and staging street protests—no matter the faction—are against the country’s interests,” Nabavian warned in an X post on Sunday. His remarks came after the US military launched massive airstrikes against Iran-aligned Houthi rebels in Yemen on Saturday.

Hasan Soleimani, editor-in-chief of the hardline Mashregh News, a publication believed to be linked to the Revolutionary Guards Intelligence Organization (SAS), defended Nabavian’s position. In an X post, he accused radical hardliners of using the hijab issue as a pretext to disrupt the country’s stability. He went further, comparing them to the Forqan group—an Islamist faction that carried out assassinations against officials of the newly established Islamic Republic, including a failed attempt on Khamenei’s life in 1981.

Highlighting defiance of Khamenei’s decisions

Nabavian also accused ultra-hardliners—whom he refers to as “super-revolutionaries” or “radicals”—of openly defying Khamenei, citing their opposition to Covid vaccination. “I won’t even mention the disgraceful remarks they made [about Khamenei’s own vaccination],” he said last week. He also linked their defiance to more recent criticism over Iran’s two-month delay in 2024 before retaliating against Israel’s attack on Iranian military facilities—a decision ultimately made by Khamenei.

Similarly, if Khamenei decides to permit direct talks with the Trump administration in the coming weeks or months, ultra-hardliners’ reaction could pose a significant challenge. He ruled out the possibility of such talks in a recent speech and has so far not acknowledged the US President’s letter to him. Former President Hassan Rouhani suggested a few days ago that Khamenei’s stance could change depending on circumstances, as it did in 2013 when he allowed secret talks with the US.

Warnings of a fragile political climate

Citing the hardliners' protests in Mashhad against moderate conservative Hassan Rouhani’s government on December 28, 2017, some media outlets and analysts have warned that demonstrations organized by “super-revolutionaries” could similarly spiral out of control.

The Mashhad protests quickly spread nationwide, with demonstrators in several cities chanting against Khamenei. The weeklong unrest resulted in at least 25 deaths and thousands of arrests.

However, the current situation is fundamentally different from 2017, an article in the reformist Etemad daily warned on Sunday. It pointed to Trump's presence in the White House and heightened regional tensions, citing a statement from the Supreme National Security Council Secretariat that cautioned any provocation or political polarization could cause irreparable damage to the country.