Street protests in Iran have largely subsided for now. Thousands of people have been detained, businesses accused of backing the unrest have seen their assets seized, and some individuals are facing charges under anti-terrorism laws. On the surface, it appears that the authorities have once again managed to reassert control.

Beneath this apparent calm, however, the grievances that ignited the protests remain unresolved. Analysts argue that Iran is now standing at a crossroads: either it makes difficult compromises to ease sanctions and reform its economy, or it risks facing an even larger wave of popular upheaval.

With a fragile economy, a weakening network of regional allies, and renewed threats of US military action, Iran finds itself at a critical juncture.

Ali Vaez, director of the Iran Project at the International Crisis Group, says the current situation cannot last indefinitely. “I’m not suggesting the system will collapse overnight,” he notes, “but without meaningful change, the trajectory is clearly downward.”

The unrest initially erupted late last December after the national currency hit a historic low, but it quickly evolved into a broader movement challenging the Islamic Republic itself. Iran has not witnessed turmoil on this scale since the 1979 revolution. State media report that 3,117 people, including security personnel, were killed in the violence, while US-based human rights groups estimate the death toll to be well above 5,000.

Economic pressure

In previous crises—such as protests over fuel price hikes in 2019 or women-led demonstrations in 2022—the state sought to restore calm by increasing subsidies or easing certain social restrictions. This time, those tools appear far more limited.

Years of international sanctions, coupled with mismanagement and corruption, have pushed the Iranian rial to record lows and reduced oil export revenues. According to the International Monetary Fund, inflation in Iran exceeded 42 percent last year. By contrast, in 2016—when sanctions were relaxed following the nuclear agreement— inflation stood at just 6.8 percent. The situation deteriorated sharply after the United States withdrew from the deal in 2018 during Donald Trump’s first term.

Severe shortages of electricity and water have further strained daily life. To gain relief from sanctions, Tehran would need to re-engage with Washington, but that would require concessions on issues central to Iran’s foreign policy: its nuclear programme, ballistic missile capabilities, and its network of regional allies.

Security doctrine and existential dilemma

Iran’s long-standing “forward defence” strategy was designed to keep conflict away from its own borders. Altering any part of that approach would amount to a fundamental shift in the security architecture built under Supreme Leader Ali Khamenei. While Iran has previously shown some flexibility on its nuclear programme, it has consistently refused to compromise on missiles or its armed regional partners, often referred to as the “axis of resistance.”

Iran analyst Mohammad Ali Shabani suggests that with renewed threats of US airstrikes, Khamenei appears unable to reach a decisive course of action.

At the same time, the fall of Bashar al-Assad’s government in Syria and losses suffered by Hezbollah’s senior leadership in Lebanon have weakened Iran’s regional position. For the first time, Iran itself has been directly targeted by Israeli strikes. These developments have fractured the country’s long-standing social contract.

For decades, Iranians accepted limited political freedoms in exchange for security. That bargain has been shaken, particularly after more than 600 people were killed during last year’s Iran–Israel conflict, undermining confidence in the state’s ability to protect its citizens.

Toward inevitable change

Political analyst Alireza Azizi argues that a transformation is already underway within Iran’s power structure. Authority, he says, is gradually shifting from the clerical establishment toward military leadership, with the Revolutionary Guards (IRGC) emerging as the dominant economic and political force.

According to Azizi, the Islamic Republic in its current form is unlikely to survive beyond Khamenei’s tenure. “Whether change comes through a mass popular movement or through a security-driven transition resembling the Soviet Union’s collapse remains uncertain,” he says. “What is clear is that change is no longer optional—it is inevitable.”