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Is the Islamic Republic at the end of the road?

30 Jan 2025
By Sirous Amerian
Protests in Iran, 2022. Source: Taymaz Valley / https://t.ly/GwsgG

As a long-time observer of Iran, I have never seen the regime in such a precarious position. Perhaps there was a similarly dire moment at the end of the Iran-Iraq war, but even that pales in comparison to the current crisis. The effects of mismanagement, corruption, religion/faith over expertise and knowledge has rarely been so troublesome.

Iran holds the second-largest gas and fourth-largest crude reserves in the world, but Iranians have to endure with daily power cuts. Universities, offices, and industry have been closed due to worsening fuel and power shortages. This has been credited to a lack of fuel and a lack of investment in maintaining and building of new powerplants, with a current 20-gigawatt electricity shortfall plaguing the system. There seems to be no easy fix for this.

Water is also another major issue. Many, including myself, have previously written about the country’s water crisis and inefficient agricultural development. Aside from electricity cuts, water is also another amenity that gets cut regularly in the summer. Water rights and transfers from one area to another are major challenges that often causes protests.

The price of petrol is another destabilising factor. Estimates suggest that up to 50 million liters of fuel are smuggled to neighboring countries. The price of petrol in Iran is currently around 0.01-0.02 USD per litre (Calculated at Toman/Dollar price of 800,000 Rial), while in Pakistan prices hover around  0.91 USD per litre, making it an extremely profitable business—one that Iran’s military and para-military organisations might be benefiting from too, considering the amount being smuggled.

The current price of petrol is heavily subsidised, and the government cannot maintain current supply at such prices. In previous attempts to raise the price, Iranians have responded with protests, leaving the issue unresolved.

Inflation and the everyday worsening of the currency crisis is also nothing new. In a new low, the US Dollar is now evaluated at around 830,000 Rial. When I left Iran in 2016, this was hovering at 33,000 Rial. In Iran everything has been tied to the Dollar, and such fluctuations and rises are making the people poorer. According to studies, Iran’s middle class shrank by a staggering 8 million between 2011 and 2021. I believe this has become even worse in the last few years.

On the societal front, after the Women, Life, and Freedom movement in September 2022, which erupted after the death of Mahsa Amini in custody of Iran’s Morality Police, people’s rightful grievances were never responded too. Rather, the government doubled down, passing the stringent “Hijab and Chastity Act” to enforce stricter dress codes and further suppress women’s basic human rights. The act has not gone into force yet, but this defiance highlights the regime’s determination to maintain control at all costs, despite growing discontent, and its no-compromise attitude.

Strategically, Iran is in a very weak position, with two prongs of its deterrence strategy weakened. Iran’s crown jewels, its proxies, have been heavily hit, depleted, and close to being made irrelevant during the past few years. Hamas and Hezbollah have suffered under successful Israeli attacks. Bashar al Assad, Syria’s former dictator, which Iran spent billions sustaining, is gone as well. Syria was an important access route to supply Iran’s proxies, and its loss is a major setback for the regime. Tehran has also suffered successive intelligence failures. And more recently, their man Haniyeh was killed in Tehran. Meanwhile, the exploding pagers saga should be enough to cause Iran’s intelligence community a major loss of confidence.

Iran has also been heavily impacted in Israel’s last and perhaps largest attack on Iranian soil. Strategic targets, such as Iran’s ballistic missile production infrastructure, were hit, as well as their revered and advertised-as-impeccable air defenses and radar sites. The low accuracy of Iran’s ballistic missiles, used in attacking Israel, has also showcased that the nation’s ballistic missiles aren’t the super weapon Iran had presented them as.

Diplomatically, Iran finds itself increasingly isolated. The return of Donald Trump to the White House makes the revival of the nuclear agreement (JCPOA) unlikely. Without a resolution to its issues with Israel and the United States, the sanctions strangling Iran’s economy will persist. Moreover, any short-term agreements without broader changes in Iran’s foreign policy would likely unravel, as regional rivals and US allies push for renewed boycotts.

The Path Forward

To address its mounting crises, Iran must undertake two monumental shifts. First, it must resolve its disputes with Israel and the US to secure sanctions relief. Drawing lessons from Vietnam’s foreign policy, Iran needs to become “normal” to advance and develop. Bringing enduring peace and calm to the country, and reducing investment risks and attracting foreign capital in oil, energy, and infrastructure, would be vital steps toward economic recovery.

Of course, the first shift could also go in another direction. With its proxies weakened, and the nation under attack, the regime could decide to cross the nuclear proliferation line and attain nuclear weapons. I believe a nuclear deterrent would give the regime a psychological sense of immunity and boost of confidence to continue doing heinous things internally and within the region. Iran should not be allowed to have nuclear weapons.

Second, Iran requires sweeping internal reforms. Corruption must be eradicated, and a merit-based system should replace the current patronage networks. Civil liberties and media freedoms must be restored, and resources currently spent on proxies and “soft power” projects such as financing and managing Shiite mosques and religious centres across the globe should be redirected to domestic priorities, just to name a few.

Is Change Possible?

The prospects for such transformative and positive change seem dim. Resolving the Israel-US issue would require a fundamental shift in Iran’s (and Ayatollah Ali Khamenei’s, the current supreme leader) ideological stance—a prospect the regime appears unwilling to entertain. Similarly, internal reforms are hindered by entrenched corruption and the regime’s resistance to meaningful change.

Even minor progress, such as the recent lifting of bans on WhatsApp and Google Play or women finally being allowed into football stadiums (under international pressure), is too slow and insufficient to address the scale of the crisis the country currently faces.

Where does that leave Iran?

The cumulative weight of these challenges—economic collapse, societal discontent, diplomatic isolation, and military setbacks— and Iran’s unwillingness to resolve them signals the potential fall of the Islamic Republic.

The scale, length, and spread of the protests during the Women, Life, Freedom movement offers a glimpse of how this fall may occur. The unprecedented protests were able to wear down the security forces, occurring not across one week or month, but across many months and all across the country. In another example, the regime only managed to silence the green movement of 2009—a political movement that arose after the 12 June 2009 Iranian presidential election—because it was limited to Tehran and a few big cities, allowing them to bus security forces from smaller towns to suppress the protests. It can’t do that for large scale, nationwide protests.

With Assad’s fall, it was discovered that Syria’s last prime minister was only being paid a monthly salary of US$140. This is no different for many of Iran’s security/defence agencies. There are many members of the police and officers in the army working two or three jobs to survive. Many of them deal with water/electricity/gas shortages, inflation, and devaluation of their assets and could change sides any moment if things heat up.

I believe another wave of nationwide protests could start organically at any moment, as they did in 2019 following a hike in the petrol price, or in 2018 when the price of eggs went up. Any of the problems mentioned in the above or the culmination of them could light the cauldron of people’s anger and this time burn the regime down.

Whether this collapse happens imminently or unfolds over the next few years, remains uncertain. What follows such a fall, however, will shape Iran’s future and the region’s stability.

Sirous Amerian has an MPhil with Distinction in International Relations and Security and worked as a lecturer and tutor at the Centre for Defence and Security Studies at Massey University in New Zealand. He received his MA in South Asian Studies from the University of Tehran. He has written widely on MENA security and affairs.

This article is published under a Creative Commons Licence and may be republished with attribution.