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Iran entered the week with another historic economic shock: on Sunday, December 7, 2025, the free-market dollar pierced 124,000 tomans, the highest rate ever recorded. Gold prices continued their climb. Even the regime’s own lawmakers, usually constrained in public remarks, warned that the budget for 2025 is unworkable and that inflationary pressure is accelerating beyond the state’s ability to manage.
The currency spike is not occurring in a vacuum. It lands atop a deepening water crisis, a public-health emergency driven by toxic air and influenza, and increasingly visible fractures inside the state’s political institutions. Together, these signals sketch a government running out of both resources and levers of control.
Parliament Breaks Ranks Over A “Zombie Budget”
A combative parliamentary session on December 6 revealed how far the internal rifts have widened. Multiple MPs accused the government of delivering a budget so opaque and structurally unsound that “we do not know what we are voting on.” Others alleged that strategic decisions—on fuel pricing, the use of high-sulfur fuel oil (mazut), and even security classifications—were being made in extra-parliamentary “leaders’ councils” without legislative oversight.
One MP warned that for the first time in Iran’s modern budget history, the capital-expenditure balance had turned 60 trillion tomans negative in the first seven months of the fiscal year—a shift that forces the government toward heavier debt issuance and central-bank financing, the very mechanisms that fuel inflation. The warning now carries added weight: newly released Central Bank figures—data that the institution withheld for years—show that inflation exceeded 50% in 10 out of 12 months of 2023, with only two months falling below that threshold. With such levels now confirmed, even state-aligned lawmakers conceded that the administration’s proposal for 20% wage increases is essentially meaningless against a price environment that has been structurally hyper-inflationary for more than a year.
#Iran’s Winter of Smog and Shortages Deepens the Regime’s Crisishttps://t.co/fp8q5DEXbk
— NCRI-FAC (@iran_policy) November 30, 2025
Water Near “Point of No Return”
As economic pressures mount, Iran’s environmental systems are also buckling. A senior deputy at the Ministry of Energy warned on December 6 that the national water crisis is now “at the threshold of a point of no return.” Delaying consumption reform, he said, threatens “the life of the population and the foundations of the country’s civilization.”
In the same news cycle, Energy Minister Abbas-Ali Abadi claimed the state is now exploring water imports, both “virtual” (through agricultural trade) and “real,” via cross-border supply agreements—an extraordinary admission for a country that once marketed itself as regionally water-secure. Negotiations with neighbors have begun, though most countries in Iran’s climate zone are themselves water-stressed.
These warnings align with recent data showing critically low reservoir levels around Tehran and severe land subsidence in the capital and neighboring provinces. The regime’s president Masoud Pezeshkian himself admitted this month that the ground beneath major cities is “terrifyingly hollow,” a statement that would have been politically unthinkable a few years ago.
#Iran's Water Crisis, Currency Freefall and Toxic Air Expose a Regime at Breaking Pointhttps://t.co/7CNI8ZYVls
— NCRI-FAC (@iran_policy) December 6, 2025
Toxic Air, Closed Schools and a Flu Wave
The environmental emergency extends beyond water. On December 7, the international monitoring site IQAir recorded Tehran’s Air Quality Index at 165, deep in the red zone (“unhealthy”). Schools were closed in 15 provinces, including Tehran, Alborz, Isfahan, Khuzestan, Kurdistan, and Kermanshah.
The public-health system is absorbing the fallout. Yazd province reported seven influenza deaths amid a wave officials say has surpassed its “warning threshold.” Local authorities recorded over 1,100 confirmed flu cases this season. In Kurdistan, more than 12,000 people sought treatment for flu-like illness in a single week.
This comes after weeks of reports that major Iranian power plants have burned fuel with sulfur content hundreds of times above legal limits—an emergency workaround to electricity shortages that pushes pollution deeper into urban centers.
#Iran’s Ruling System Is Fracturing Under the Weight of Its Own Criseshttps://t.co/m58yalvjdr
— NCRI-FAC (@iran_policy) December 3, 2025
Pezeshkian’s Public Defensiveness Signals a Presidency Under Pressure
Facing simultaneous crises, Pezeshkian has grown unusually defensive in public. At a December 7 student event in Tehran, he said that the budget his administration drafted has only 2% growth, despite inflation “of 30–40–50%,” and acknowledged that Iran has 7 million billion tomans (7 quadrillion tomans) in unfinished state projects—an unmanageable backlog that predates his government but now constrains every major policy decision.
He also admitted that fuel subsidies are fiscally ruinous, stating: “When I spend $4 billion on gasoline, I create inflation because I have to print money.” The remark came days after Iran introduced a three-tier gasoline pricing system—one of the most politically sensitive economic steps since the deadly 2019 fuel protests.
Perhaps most telling, he described Iran’s land subsidence and water scarcity as crises that “will worsen if the rains do not come,” and warned that the capital’s water supply could reach a “severe” threshold. Such statements, while framed as calls for patience, reinforce the perception that the state is no longer in control of essential services.
Dry Skies, Dirty Air, And A Sliding Rial: #Iran’s Crises Collide in Early Winterhttps://t.co/Du8KzRDcDn
— NCRI-FAC (@iran_policy) December 1, 2025
A System Confronting Scarcity on Every Front
In Zanjan on December 6, judiciary chief Gholam-Hossein Eje’i admitted that enforcing Iran’s compulsory-hijab rules has become untenable. “This situation is not tolerable,” he said, adding that coercion by the judiciary alone “will not suffice” without alignment across institutions. For a system that has elevated hijab enforcement to a pillar of ideological legitimacy, this was an extraordinary acknowledgment of capacity limits—and of widespread social resistance.
Taken together—the currency spike, the parliamentary revolt, the water-import plans, the toxic-air shutdowns, and the judiciary’s rare confession—the picture is stark. Iran’s crises are no longer sectoral; they are systemic. Scarcity, inflation, and public-health stress are converging faster than the state can hide, while political elites trade accusations in full view.
The regime is not merely struggling to govern. It is struggling to maintain the appearance that governing is still possible.