If Iran hasn’t hit its economic “death spiral” yet, it’s not for lack of trying – by the US, and especially by Iran’s regime.
The war and the naval blockade have sent Iran’s economy into a collapse, the Wall Street Journal reported a couple of hours ago. Those factors alone have put more than a million people out of work as inflation rages and supplies can no longer meet demand. The IRGC has gone on a spending spree to contain the political damage, but as anyone could predict, that has made the situation even worse. Military dictator Ahmad Vahidi now has to hope he can outlast Donald Trump’s strategic patience … and that it’s not already too late:
Talks between the U.S. and Iran have stalled. American officials are betting that Iran will soon crack because of the deepening economic crisis. Iran is betting the U.S. will crack first and end its blockade of Iranian ports to calm global markets and bring down American gasoline prices.
To contain the economic fallout, the Iranian government has raised wages, subsidized basic goods and handed out cash to the poor. But authorities are confronting a level of hardship not seen in decades, according to residents.
“It is an authoritarian regime, and it can claim that resisting economic pressure is a question of national pride,” said Alex Vatanka, a senior fellow and Iran expert at the Middle East Institute. At the same time, “as the money dries up because of the blockade, we may find that more and more folks have no choice but to mobilize politically,” he said.
Ahem. The “national pride” issue only applies to governments with strong enough popular support. The Iranian regime has had to violently put down popular protests and uprisings against the mullahs and the IRGC ever since 2009. Nor has this crisis come entirely from the war. A collapse in the rial in December touched off a massive popular uprising, supported by the merchant class for the first time since the 1979 Islamic revolution, and the IRGC and Basij had to slaughter thousands of people in the streets and hospitals in January to maintain power.
By the way, the rial is still spiraling:
The Iranian rial hit an all-time low today, 1,810,000 to one U.S. dollar. Six weeks of war with the U.S. and Israel have flooded the open market with demand for foreign currency. Reuters. pic.twitter.com/aU9FwaYiz0
— Open Source Intel (@Osint613) April 29, 2026
Iran’s national rial currency hit a record low Wednesday of 1.8 million to the dollar as a shaky ceasefire with the U.S. and Israel holds.
The rial had remained stable in the early weeks of the war that began Feb. 28, in part because there was little trading or imports.
The rial began to slide two days ago. Experts warn that its fall is likely to further fuel inflation in a country where many imported goods, from food and medicine to electronics and raw materials, are affected by the dollar rate. …
The latest slide of Iran’s currency comes months after a currency shock helped fuel nationwide protests in January. At the time, the rial weakened from about 1.4 million to 1.6 million to the dollar in less than a week, deepening public anger over rising prices and fears about the country’s economic future.
National pride and about nine million rials will get you a café latté in Tehran at the moment. This isn’t about “national pride” for Vahidi. It’s about maintaining the IRGC’s iron grip on an outraged population, and it’s even more about Vahidi maintaining his grip on a potentially mutinous IRGC and Artesh. He’s been sticking his hand up the backside of the obviously dead Nepo Babytollah to prevent the latter, but that game’s almost up too. Even Reuters finally threw in the towel on the Cardboardatollah this morning – well, sorta:
Two months into a war with the U.S. and Israel, Iran no longer has a single, undisputed clerical arbiter at the pinnacle of power — an abrupt break with the past that may be hardening Tehran’s stance as it weighs renewed talks with Washington.
Since its creation in 1979, the Islamic Republic has revolved around a supreme leader with final authority on all key matters of state. But the killing of Ayatollah Ali Khamenei on the first day of the war, and the elevation of his wounded son, Mojtaba, have ushered in a different order dominated by commanders of the Islamic Revolutionary Guard Corps (IRGC) and marked by the absence of a decisive, authoritative referee.
Mojtaba Khamenei remains at the apex of the system, but three people familiar with internal deliberations say his role is largely to legitimize decisions made by his generals rather than issue directives himself.
Reuters still won’t publish the obvious conclusion that Mojtaba is dead, but they’re conceding that Mojtaba doesn’t matter. The more that impression gets around in Iran, especially with potential rivals for power, the closer Vahidi comes to a tipping point on legitimacy as well as an economic tipping point. Both appear to be approaching rapidly, too:
“Living is not affordable anymore,” said Mahdi Ghodsi of the Vienna Institute for International Economic Studies. “Iran is at its weakest point.”
Businesses across the country—from manufacturers to retailers—are closing, residents said. The lack of steel and other raw materials is hampering production in various industries. Electronic goods, which are mostly imported, are in short supply and expensive.
Iran’s economic meltdown predates the war, crippled by years of U.S. and international sanctions. The collapse in the value of the local currency and fast-rising prices triggered mass antigovernment protests at the turn of the year. The regime crushed the protests with lethal force. The economic woes that underpinned the protests have worsened since the start of the war, raising the possibility that the unrest could flare up again.
It’s this consequence cascade that likely has Trump standing pat on the blockade. Further strikes might galvanize Vahidi’s support in the short run, but the collapse in both the economy and the regime’s legitimacy will only accelerate as the blockade continues. Iran has no way to reverse it without getting oil revenues flowing back into the country, and they may be days away from doing permanent damage to that resource too.
The question is not whether Vahidi can outwait Trump. The question is whether Vahidi can outwait emerging rivals, an enraged populace, and/or the next decapitation strike when it comes. Vahidi can try sending Abbas Araghchi to sell the same carpet a third time without delivering on it, but Trump’s refusal to send anyone to meet Araghchi precludes the stall tactics that Iran has employed ever since Operation Midnight Hammer in June 2025. Vahidi’s runway is rapidly disappearing.
Editor’s Note: Thanks to President Trump and his administration’s bold leadership, we are respected on the world stage, and our enemies are being put on notice.
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