Iran International
Officials in Tehran are scrambling to blunt the impact of impending UN sanctions later this month and avert another popular flare-up that even insiders warn is near.
Among the proposals floated by politicians and economists are issuing coupons or smart ration cards to placate the public—especially the younger generation.
Efforts to introduce coupons began nearly a decade ago but stalled as rival factions in parliament and the cabinet fought over control of lucrative contracts.
In recent weeks, however, the idea has regained traction, with President Masoud Pezeshkian publicly backing it.
“We have no choice but to raise prices as subsidies on fuel and other goods are cut,” Pezeshkian said last week. “Issuing coupons will help low-income workers afford essential items.”
The system was used successfully during the 1980s war with Iraq, and many Iranians still credit then-prime minister Mir Hossein Mousavi, who is now under house arrest for nearly 15 years for leading protests against the disputed 2009 election.
‘A silent crisis’
Analysts in Tehran predict another spike in exchange rates once sanctions return on September 27. The government is expected to face a severe shortage of hard currency as oil sales become increasingly difficult.
Tehran’s priority appears to be containing unrest.
On September 18, Vice President Mohammad Reza Aref instructed the Tax Office to ease pressure on businesses and “avoid making people feel oppressed by the government.”
Many firms have already shuttered in recent months due to prolonged power outages and water shortages.
Just hours before the UN vote to reinstate sanctions last week, the reformist website Rouydad24 ran a headline warning of “A Silent Crisis in Iran.”
“Persistent economic problems … and limited access to basic services like electricity and water have severely impacted daily life, fostered a sense of despair and eroded public trust in the government,” the editorial said.
‘Bread riots’
Several academics, including political scientist Ahmad Naghibzadeh and sociologist Taghi Azad Armaki, have warned of “blind protests” and “bread riots” as public dissatisfaction reaches a boiling point.
Yet as economic warnings mount, officials have leaned on cultural gestures many see as unserious.
One initiative was a proposed free-for-all concert by renowned vocalist Homayoun Shajarian at Tehran’s iconic Azadi Square. Hardliners blocked the event, citing security concerns, and also vetoed a proposed indoor venue.
Wooing exiled artists
Once the resolution to extend Iran’s sanctions relief was voted down, government officials floated another gesture: inviting Iranian expatriate singers in Los Angeles to return to Tehran.
“I know that some of them in Los Angeles are struggling financially,” Vice President Aref said. “I invite them to come back freely.”
The administration’s spokeswoman Fatemeh Mohajerani insisted groundwork was being laid for such a move: “God forbid we end up only seeing their bodies brought back to Iran,” she told reporters on Tuesday. “They should be able to come home while they’re alive.”
Since 1979, Los Angeles has been a hub for Iranian musicians, many banned from working in Iran, stripped of homes and assets, and still censored despite their music being widely played in cars, weddings,and parties. Most are now elderly, many no longer able to perform.
No artist has yet responded. Some young users have—wryly.
“You can’t fool the new generation,” one commented on the vice president’s remark. “Even if you brought Lady Gaga to Tehran, she couldn’t make people forget their financial hardships.”
“Economic growth requires prerequisites such as a favorable business environment, sound economic governance, access to technology and adequate financing. Each of these can be likened to an engine powering growth. The problem is that none of these engines are running,” wrote the paper, which covers industry, mining and trade.
According to the report, the government’s latest decree estimates Iran would need nearly 80 quadrillion rials (about $80 billion) in combined private, public and cooperative investment in the current Iranian year (started on March 21) to hit the 8% target, factoring in capital depreciation, labor contributions and productivity gains. Current financing plans leave a shortfall of about 27.9 quadrillion rials (about $28 billion).
The report listed funding sources ranging from banks and capital markets to foreign investment, the sovereign wealth fund and private savings. But it warned that reliance on public budgets and banks alone is insufficient.
Economist Vahid Shaghaghi-Shahri told the paper: “At present all our engines of economic growth have not only stalled but are working in reverse. In this context, even preventing negative growth should be considered an achievement.”
He cited housing, oil revenues and productivity as sectors in decline, while financial channels needed to supply about $200 billion annually are blocked by sanctions, low investor confidence and structural weaknesses.
Another economist, Mehdi Pazouki, argued that “without economic health no rational investor will commit to Iran.”
He said previous development programs had all set 8% growth targets that were never achieved. “When energy shortages restrict production and the business climate is hostile, such a goal is at best rhetorical,” he told the paper.
Both experts stressed the need for international engagement and domestic reforms. Pazouki said: “For meaningful growth we must first restore international relations and improve the business environment. Otherwise, capital will continue to flow abroad instead of into domestic industry.”
The report comes amid starkly different official data. Iran’s Central Bank recently announced growth of more than 3% in 2024, comparing Iran favorably to the US and eurozone, while the IMF in May projected growth of just 0.3% this year with inflation topping 43%.
Independent analysts say power shortages, a plunging rial and tighter US sanctions have pushed the economy toward stagnation.
Shaghaghi warned that unless Iran activates its “engines of growth,” negative GDP growth could emerge as early as 2026. “It is better to set realistic goals in line with our economic conditions and avoid rhetorical targets,” he said.