The protests that erupted across Iran in late December 2025, sparked by a collapsing currency and soaring cost of living, are rooted in decades of economic policy and a recent escalation of austerity measures, according to a latest analysis by sociologist Ida Nikou. Her report, “Governing Crisis–Sanctions, Austerity and Social Unrest in Iran”, details how the Islamic Republic has absorbed international sanctions into its domestic economic policies, disproportionately impacting ordinary Iranians.
The immediate trigger for the demonstrations was the government’s decision to remove preferential foreign exchange rates for essential goods and key production inputs, a move framed as anti-corruption reform. However, Nikou argues this was, in practice, another austerity measure that accelerated inflation and eroded purchasing power. Official inflation in December 2025 reached 42.2 percent, even as the cost of basic groceries rose even faster, at 72 percent year-over-year, making staples unaffordable for many working-class families.
This latest crisis isn’t isolated. Nikou’s research highlights a pattern of Iranian governments implementing similar “shock politics” – sudden, regressive economic measures – under the guise of reform. The 2010 subsidy reforms and the 2019 fuel price hike, both of which led to widespread protests and violent repression, serve as stark precedents. The current unrest, she contends, follows a similar trajectory, but with heightened intensity.
A History of Economic Pressure and Control
The roots of the current economic hardship extend beyond domestic policy, encompassing the impact of international sanctions. While the report doesn’t explicitly detail the specifics of the sanctions regime, it emphasizes that the Islamic Republic has integrated these external pressures into its internal governance, using them to justify austerity and maintain control. This has resulted in a system where scarcity is governed, and the costs of economic crisis are disproportionately borne by workers and households.
Nikou’s analysis points to a shift in welfare programs, transforming service-based support into cash handouts that quickly lose value due to chronic inflation. This, coupled with wage arrears, subcontracting, selective recall of workers, and coercive enforcement in the workplace, creates a precarious economic situation for a large segment of the Iranian population. The removal of preferential exchange rates, while presented as a solution to corruption, further exacerbated these existing vulnerabilities.
Escalating Protests and Government Response
The protests that began in late December quickly spread across multiple cities, with demonstrations in Tehran’s Grand Bazaar and commercial centers. As prices spiraled, trade became increasingly difficult, fueling public anger. By mid-January, the government’s response had been severe. Amnesty International estimated that thousands had been killed, and the government imposed an indefinite communication blackout, restricting access to the internet and phone services – a move reminiscent of the purges of political dissent in the 1980s.
The government’s actions echo a pattern of repression seen in previous uprisings, including the 2019 protests triggered by fuel price increases. The current situation, however, appears to be more intense, with a broader scope of economic grievances and a more forceful response from the authorities.
The Role of External Factors
Nikou stresses that a comprehensive understanding of the crisis requires acknowledging both the external sanctions regime and the internal mechanisms used to manage the crisis. She argues that the Islamic Republic has effectively used sanctions as justification for its own austerity policies, shifting blame and consolidating power. This dynamic creates a complex interplay between external pressures and internal governance, contributing to the escalating unrest.
Her research, informed by digital ethnography, content and event analysis, and quantitative data from sources like the IMF and the World Bank, offers a nuanced perspective on the political economy of Iran. Nikou, who holds a Ph.D. In Sociology from Stony Brook University, focuses on how financialized accumulation and scarcity governance operate through procurement constraints, foreign-exchange volatility, and privileged access to resources.
As the situation in Iran remains volatile, the coming weeks will be critical. The government is expected to continue implementing its austerity measures, while the economic pressures on ordinary Iranians are likely to persist. Further protests and potential escalation of violence remain a significant concern. Updates on the situation can be found through international news organizations and human rights groups monitoring the events on the ground.
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