Iran under siege: How internal unrest and external pressure have pushed Khamenei regime to the brink

After a stressful 2025, if Iran was hoping for a better start to 2026, it has been proven wrong as the country finds itself in the middle of yet another crisis. As has been the case—especially since the outbreak of the Gaza war in October 2023—every crisis carries a military threat and fears of regime change. This time, however, the crisis is not borne solely from external threats but is also the result of internal mismanagement and deep-seated economic woes. It comes at a time of serious economic downturn due to severe sanctions and the constant threat of another war being unleashed by Israel and the United States. Whether the Iranian regime will be able to overcome this crisis, or finally succumb to a convergence of internal and external pressures, is a key development to be watched over the coming weeks.

The Context

The current protests in Iran broke out on 28 December 2025, triggered by the sudden collapse of the value of the rial and soaring prices of basic commodities. The exchange value of the Iranian rial fell to nearly 1.4 million rials per US dollar, while domestic inflation surged past 52 per cent. This was despite the fact that Iran maintained an official exchange rate of 42,000 rials per US dollar. In protest, traders in Tehran’s Grand Bazaar, as well as the Lalehzar and Alaeddin markets, closed their shops and took to the streets.

Footage of these protests circulated on social media and soon spread into broader anti-government demonstrations across the country. By 31 December, various human rights groups and media outlets reported protests in almost 200 locations across 25 of Iran’s 31 provinces, including Fars, Hamadan, Isfahan, Khuzestan, Lorestan, Mashhad, Qom, Shiraz and Sistan-Baluchestan.

Unlike many previous instances of street protests—where the government moved swiftly to suppress unrest by shutting down the Internet, censoring domestic news coverage, and killing or jailing protesters—this time the authorities initially adopted a more cautious approach.

Iranian security forces displayed restraint in quelling the demonstrations. President Pezeshkian took the lead in shaping this narrative, asserting that “protesters do not need a permit to take to the streets under the Iranian Constitution”.

The regime also took steps to prevent protests from spreading to universities, as mobilisation of students could pose a serious threat to regime stability. Despite this, over the past 12 days approximately 45 people have been killed. Additionally, on two occasions—once in Tehran and once in the city of Ilam—hospitals were reportedly hit by security forces, drawing severe condemnation from human rights agencies and threats of military action from US President Trump.

Supreme Leader Ayatollah Ali Khamenei described the protests as a mix of legitimate economy-focused demonstrations and foreign-driven “rioting”, backing dialogue with some protesters while openly calling for a firm crackdown on others. Slogans voiced during the protests in support of Iran’s exiled Shah, Reza Shah Pahlavi II, are being seen as a direct challenge to the authority of the Supreme Leader.

The regime has attempted to pacify protesters by assuring them that their grievances will be heard and that steps are being taken to address economic unrest. It has also promised to initiate a ‘direct transfer’ of US$7 per month per person to alleviate hardship, while separately attempting to stabilise exchange rates and address broader economic mismanagement.

The sharp fall in the rial’s value also has its roots in snap-back sanctions imposed in October after Iran refused to negotiate a new nuclear deal. The re-imposition of the US “maximum pressure” policy further squeezed the Central Bank of Iran’s ability to regulate the economy.

Iran also suffered its worst drought in decades this year due to a lack of rainfall and the drying up of water reservoirs, prompting warnings that the government may even have to evacuate Tehran. Compounding the water crisis were widespread electricity blackouts during the summer, particularly affecting residents of Tehran, Pardis, Gorgan, Shiraz, Ahvaz and other cities. Estimates suggest Iran faced an electricity shortfall of nearly 20,000 megawatts (MW).

Another incident contributing to unrest occurred just weeks before the 28 December protests.

On 8 December, Mashhad-based human rights lawyer Dr Khosro Alikordi was found dead under mysterious circumstances in his office. Fearing foul play, a group of 81 Iranian lawyers signed a public statement demanding full transparency regarding his death. Alikordi was a prominent figure among Iran’s human rights defenders and had, over several years, challenged the regime’s violations, leading to repeated arrests, harassment and threats by security and judicial authorities.

Supreme Leader and the Leadership Question

In Iran’s complex political system, power is highly centralised and flows downward from the Supreme Leader. However, Supreme Leader Ali Khamenei is now over 86 years old and has been in frail health for some time. His succession and the continuity of the regime have therefore become recurring subjects of speculation.

During the ‘12-Day War’ in June 2025, media reports suggested that Khamenei nominated three clerics as potential successors while he remained in a bunker during Israeli strikes, amid assassination threats. This was reportedly intended not only to safeguard his legacy but also to prevent a chaotic succession battle. Under Iran’s constitution, succession would otherwise be determined through lengthy deliberations by the Assembly of Experts.

Despite earlier media speculation, officials within inner circles later disclosed that Khamenei’s son, Mojtaba, was not among the nominees. Mojtaba, who is considered close to the Islamic Revolutionary Guard Corps (IRGC), had previously been viewed as a frontrunner following the death of Khamenei’s former heir apparent, President Ebrahim Raisi, in a helicopter crash in May 2024.

At present, two names have emerged as leading contenders: former president Hassan Rouhani and Hassan Khomeini, the grandson of Islamic Republic founder Ayatollah Ruhollah Khomeini.

Rouhani brings significant experience and institutional backing. He has served as first deputy speaker of parliament, founding secretary of the Supreme National Security Council, a member of the Assembly of Experts, and twice as president. It was during his presidency that the Iran nuclear deal was concluded in July 2015. Importantly, he also enjoys acceptance within the Shiite seminaries of both Qom and Najaf.

Hassan Khomeini also possesses strong credentials. His close ties with the IRGC are particularly significant. His consistent public defence of the Islamic Revolution and his calls for stronger deterrence capabilities have resonated within the security establishment, which wields immense political influence.

Current media reports suggest that the Supreme Leader has also prepared a contingency plan to leave Tehran—potentially for Moscow—should unrest spread nationwide and security forces begin to defy orders. In any case, succession is no longer a question of ‘if’ but ‘when’, given Khamenei’s health and current developments.

External Dimension: Israel and the United States

The protests have a significant external dimension. Coincidentally, they erupted on 28 December, a day before Israeli Prime Minister Netanyahu met US President Trump at Mar-a-Lago in Florida to discuss, among other issues, the Gaza peace process and the threat posed by Iran. On Iran, Trump was categorical, warning of an attack should Tehran move to bolster its military capabilities.

On 2 January, as protests spread, Trump warned that if Iran “shoots and violently kills peaceful protesters”, the US would “come to their rescue”, adding that America was “locked and loaded and ready to go”.

Ali Larijani, secretary of Iran’s Supreme National Security Council (SNSC), responded by warning that US interference would “destabilise the entire region and destroy America’s interests”, urging Washington to be “mindful of their soldiers’ safety”.

On 5 January, Netanyahu told the Knesset: “We will not allow Iran to rebuild its ballistic missile industry, and of course, we will not allow it to resume its nuclear programme.” Referring to Iranian military drills, he warned that “if we are attacked, the implications for Iran will be very dire”.

External pressure on Iran extends beyond military threats. It combines the threat of force with economic pressure, diplomatic isolation and psychological signalling—designed to expose regime fragility and potentially trigger implosion without a full-scale war.

As part of the US “maximum pressure” strategy, the Central Bank of Iran was sanctioned on terrorism-financing grounds, severely restricting its engagement with the global financial system. Sanctions have also curtailed Iran’s oil exports, sharply reducing foreign-exchange revenues. The recent Venezuelan episode—where the president was toppled and the oil industry effectively taken over—has further hurt Iran, which had invested billions in Venezuela’s oil sector.

Is War a Possibility?

The possibility of Israel and the US exploiting unrest to launch military strikes on Iran cannot be ruled out. Several indicators point in this direction. Reports suggest US Navy P-8A Poseidon reconnaissance aircraft are actively patrolling Iran’s southern coastline and the Strait of Hormuz. Significant movements of fuel tankers, military cargo planes and fighter jets from the US to Europe and onwards to West Asia have also been reported, along with US naval deployments to the region.

In anticipation of possible conflict, countries including India, the UK, Canada and the US have issued travel advisories against visiting Iran. Meanwhile, Russia is reportedly evacuating embassy staff and their families from Israel.

Unlike in the past, Iran has signalled that it may not wait to be attacked, instead reserving the right to launch pre-emptive strikes. This shift was articulated by Iran’s Defence Council, a body established following the June 2025 conflict. In a statement, it declared that Iran “does not confine itself to responding only after an action has occurred” and may conduct pre-emptive strikes if tangible threats are detected.

Iran has activated air-defence systems over Tehran and around nuclear facilities, as well as along the Iraqi border, deploying air bases, missile launch pads and defences over critical oil fields. There are also reports that Russia may have supplied Iskander missiles capable of carrying nuclear warheads.

Looking Ahead

The timing of the protests could not be worse for Iran. Already under severe external pressure and economic distress, the country faces a dangerous convergence of crises. The fact that the protests were initiated by the bazaaris—the merchant class traditionally loyal to the regime—has deepened the challenge.

If unrest spreads to rural populations and becomes organised under cohesive leadership, it could pose a sustained threat to regime survival. The government appears aware of this risk, as reflected in promises of reform, direct cash transfers, dialogue initiatives and the resignation of the central bank governor.

On 8 January, responding to calls by exiled Crown Prince Reza Pahlavi, thousands of protesters reportedly took to the streets across 100 cities, chanting slogans such as “Death to the dictator!” and “This is the last battle!”. In response, authorities cut internet and international phone services and ordered a crackdown that reportedly resulted in further deaths. The situation appears to be spiralling out of control.

Regardless of the immediate outcome, accumulated anger over economic hardship, corruption, mismanagement and ideological alienation is unlikely to dissipate. The widening divide between Iranian society and the regime is increasingly evident through repeated waves of protest.

For the Iranian regime, the choices are stark. Urgent economic and social reforms are essential. Building credible military deterrence remains a priority. Above all, a smooth and timely leadership transition is critical. Failure on any of these fronts could pose an existential threat to the regime sooner rather than later.

(Col Rajeev Agarwal is a West Asia expert and a Senior Research Consultant at Chintan Research Foundation, New Delhi. His X Handle is @rajeev1421. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.)