Iran continues to face a series of mounting internal challenges as its conflict with the United States enters its fifth month. The war’s fallout is deepening economic difficulties, exacerbating social tensions, and heightening political divisions across the country.
Economic pressures are intensifying, with food inflation surging to 134% year-on-year last month. Prices for staples such as fruit, eggs, and chicken have risen sharply, forcing many Iranians to alter their usual diets. Overall inflation currently stands at 84%, contributing to rising concerns over potential food rationing in the coming months. Majid-Reza Hariri, head of the Iran-China chamber of commerce, recently warned that rationing could become necessary within six months. Gholamhossein Mohammadi, deputy labor minister, reported that the war has already resulted in the loss of more than one million jobs.
The economic impact extends beyond food prices, affecting a wide range of sectors including internet services and tourism. A significant development was the public disclosure of large-scale foreign-exchange corruption linked to government trusts—secretive bodies established to transfer Iranian oil revenue beyond U.S. sanctions. Zabihullah Khodayian, head of the General Inspection Organisation, revealed on state television that one trust received $200 million, failed to return the funds, and the responsible individuals had left the country. Overall, he stated, 229 individuals owe the state approximately $27 billion, with legal cases ongoing against nearly 50 people. Details regarding the governance and accountability of these trusts remain unclear, but the revelations point to potentially extensive corruption involving elements of the political elite.
Iranian President Masoud Pezeshkian has repeatedly cautioned that the underlying conditions which sparked large-scale protests in January persist. At a recent Supreme Judicial Council meeting, he stressed that Iran is engaged in a comprehensive war that transcends conventional military conflict. Pezeshkian warned that continued economic hardship could erode the social support that the public has maintained for the government. Azar Mansouri, previously a close associate of Pezeshkian within the reformist movement, expressed concern about factions casting negotiations with the United States as signs of defeat. She emphasized that war poses a broader threat to the nation’s future, beyond military confrontations.
Domestic opposition to the war has also gained formal expression. Last month, a statement signed by 268 political activists called for a public referendum, asserting that the majority of Iranians oppose the conflict. In a separate letter, approximately 1,000 activists linked to former president Mohammad Khatami warned against vilifying advocates of diplomatic engagement, recalling that “war has no winners” in Iran’s recent history.
Meanwhile, tensions between the United States and Iran show little sign of abating. Some within the Trump administration and Iranian opposition figures, including Reza Pahlavi, son of the former Shah, argue that the Iranian government could be approaching collapse. Both sides appear locked in mutual distrust, complicating efforts at diplomatic resolution and raising the prospect of a protracted conflict that some fear might be reframed as an Iranian-Arab war, a development viewed as advantageous to Israel.
As Iran grapples with war-related economic hardship, internal corruption scandals, and fractures within its political landscape, the country faces the ongoing challenge of navigating a complex and volatile regional conflict with significant domestic consequences.