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Iran’s Economic Collapse Is Fueled by the Regime’s Political Choices, Not Sanctions

Tabriz – Workers of the Motogen Company, a major producer of single- and three-phase electric motors used in pumps and industrial machinery, continued their strike for a fifth consecutive day on October 11, 2025
Tabriz – Workers of the Motogen Company, a major producer of single- and three-phase electric motors used in pumps and industrial machinery, continued their strike for a fifth consecutive day on October 11, 2025

Three-minute read

In recent decades, Iran’s economy has turned into a battlefield of chronic crises, undermining both the livelihood of millions and the very structure of its economic system. Official reports cite inflation at 45.3 percent, yet daily life in Iran—marked by skyrocketing food prices, soaring rents, and shrinking family budgets—reveals a reality far worse than statistics suggest.

Masoud Roghani Zanjani, former head of the Planning and Budget Organization, recently admitted that Iran’s economic disaster is rooted not in external factors but in the dominance of politics over economics. He noted that the country’s economy has reached a point where traditional solutions no longer work because the problems stem from political and ideological decisions. His remarks expose a fundamental truth: the regime’s priorities—regional expansionism and repression—have consistently taken precedence over the welfare of its citizens.

Inflation and Mismanagement: A Self-Inflicted Crisis

The main driver of Iran’s soaring inflation is uncontrolled liquidity growth caused by the government itself. Successive administrations, before and after 1979, have fueled inflation by ignoring basic economic principles. Today, the regime’s reckless borrowing and money printing have replaced sound fiscal management, pushing inflation from manageable levels into chaos.

Roghani Zanjani emphasized that the government continues to carry unsustainable burdens while lacking the resources to finance them. This vicious cycle—created by the regime’s populist and short-term policies—has rendered stopgap measures like food coupons meaningless. Temporary programs cannot offset the crushing costs of rent, transportation, healthcare, and education.

Corruption and Institutional Decay

The unchecked growth of unnecessary institutions since the early 2000s has created a web of inefficiency and corruption. These entities, serving as financial havens for regime insiders, block any meaningful reform. The government’s forced sale of bonds to state banks has further weakened the financial system, draining liquidity from the private sector.

Decades of failed policies—from price controls and public punishments to theatrical executions of so-called “economic criminals”—have only deepened public distrust. Today, the price of gold and currency has surpassed levels seen during previous “anti-corruption” campaigns, exposing the futility of the regime’s approach.

Sanctions: A Consequence, Not the Cause

While the regime tries to attribute the crisis to sanctions, the true origin lies in the regime’s own actions. The regime’s repeated violations of international agreements, its nuclear defiance, and its financing of proxy wars have all invited global isolation. As a result, sanctions are not the cause but a symptom of a deeper political disease.

The regime’s refusal to comply with international norms has provided other nations—such as Japan and Turkey—with legitimate grounds to restrict trade with Iran. Meanwhile, internal mismanagement by the Ministry of Economy and the Central Bank has allowed profiteers to exploit market volatility, further eroding public trust.

Collapse of the Rial and the Erosion of Public Confidence

Iran’s currency has now fallen to historic lows, with the dollar surpassing one million rials. Currency exchanges have turned off their signs, symbolizing the collapse of public confidence in the regime’s ability to govern. The rush to buy gold, foreign currency, and cryptocurrency reflects widespread distrust and fear of further collapse.

Economic instability has become both a psychological and social crisis. With unemployment above 20 percent, inflation near 35 percent, and over 18 percent of Iranians living in poverty, the country faces a dangerous convergence of economic and political breakdown.

A Regime Unwilling to Change

Iran’s crisis is not caused by a lack of economic tools, but by a lack of will. The ruling theocracy continues to prioritize repression and regional influence over domestic stability. The ongoing collapse is the product of decades of corruption, ideological extremism, and structural decay within the mullahs’ rule.

Without a fundamental change—which will only happen by overthrowing the regime and replacing it with a state that prioritizes the welfare of the people as opposed to maintaining its corrupt rule—Iran will remain trapped in a downward spiral.

NCRI
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