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Iran Risks Severe Economic Downturn, Unrest as Renewed UN Sanctions Bite
People walk near a mural of Iran’s Supreme Leader, Ayatollah Ali Khamenei, amid the Iran-Israel conflict, in Tehran, Iran, June 23, 2025. Photo: Majid Asgaripour/WANA (West Asia News Agency) via REUTERS
Iran‘s economy is at risk of simultaneous hyperinflation and severe recession, officials and analysts say, as clerical rulers scramble to preserve stability with limited room to maneuver after a snapback of UN sanctions.
They followed a breakdown in talks to curb Iran‘s disputed nuclear activity and its ballistic missile program. Diplomacy to resolve the deadlock remains possible, both sides say, though Iranian Supreme Leader Ayatollah Ali Khamenei has rebuffed US President Donald Trump’s offer to forge a new deal.
Three senior Iranian officials, speaking on condition of anonymity, said Tehran believes the US, its Western allies, and Israel are intensifying sanctions to fuel unrest in Iran and jeopardize the very existence of the Islamic Republic.
Since the reimposition of UN sanctions on Sept. 28, multiple high-level meetings have been held in Tehran on how to avert economic collapse, circumvent sanctions, and manage simmering public anger, the officials told Reuters.
Deepening economic disparities between ordinary Iranians and a privileged clerical and security elite, economic mismanagement, galloping inflation, and state corruption – reported even by state media – have fanned discontent.
“The establishment knows protests are inevitable, it is only a matter of time … The problem is growing, while our options are shrinking,” said one of the officials.
Iran‘s leadership is leaning heavily on its “resistance economy” — a strategy of self-sufficiency and closer trade with China, Russia, and some regional states. Moscow and Beijing back Iran’s right to peaceful nuclear energy and condemned US and Israeli strikes on three Iranian nuclear sites in June.
But analysts warn that such workarounds may not be enough to shield the sprawling country of 92 million people from the renewed economic blow.
“The impact of the UN sanctions will be severe and multifaceted, deepening the country’s longstanding structural and financial vulnerabilities,” said Umud Shokri, an energy strategist and senior visiting fellow at George Mason University near Washington.
“The government is struggling to maintain economic stability as sanctions disrupt banking networks, restrict trade and constrain oil exports – the country’s main revenue source, resulting in escalating social and economic pressure.”
OIL LIFELINE UNDER THREAT AS UN SANCTIONS RETURN
Iran has avoided wholesale economic meltdown since 2018 when, during his first term, Trump withdrew the US from Tehran’s 2015 nuclear deal with six world powers and reimposed US sanctions.
But the revival of wider UN sanctions is inflicting shocks that will stymie economic growth, accelerate inflation, and the collapse of the rial currency, pushing the economy toward a recessionary spiral, one of the Iranian officials said.
Iran’s economy contracted sharply after 2018 due to renewed US sanctions. It rebounded in 2020 to grow modestly at times, largely due to oil trade with China.
But the World Bank this month forecast a shrinkage of 1.7 percent in 2025 and 2.8 percent in 2026 – sharply down from the 0.7 percent growth it had projected in April for next year.
While Tehran still relies heavily on oil exports to China – its biggest customer and one of the few countries still doing business with it despite Trump’s “maximum pressure” policy, doubts reign over the sustainability of that trade.
Although sold at a discount, crude remains a vital source of income for Tehran, with oil and petrochemicals making up about a quarter of GDP in 2024.
Despite public assurances that oil sales to China will continue, one Iranian official said the reimposed global sanctions could stifle that flow.
Shokri said that if China seeks to ease tensions with the Trump administration, it may tighten its stance on Iranian oil — demanding steeper discounts or cutting imports altogether.
For Tehran, the costs could be devastating. Every dollar shaved off the price of oil translates into roughly half a billion dollars in lost annual revenue, he said.
The rial has shriveled to 1,115,000 per dollar from 920,000 in August, stoking inflation to at least 40 percent and gutting purchasing power. Persistent currency depreciation and trade sanctions are driving up prices and sapping investor confidence.
HARDSHIP SPREADS, PUBLIC ANGER SIMMERS
Few Iranians can escape the attendant hardships. A sense of desperation is rippling through society, affecting urban professionals, bazaar traders and rural farmers alike.
“How much more pressure are we supposed to endure? Until when? I’m a government employee, and I earn just 34 million tomans (around $300) a month,” said Alireza, 43, speaking by phone from the capital Tehran. Like others, he asked not to be further identified for fear of retribution from authorities.
“My wife is jobless. The import-export company she worked for shut down last month. With just my salary and two kids, we’re struggling to even pay rent and school expenses. What are we supposed to do?” ”
Iran’s official inflation rate is around 40 percent though some estimates exceed 50 percent. Official data in September showed prices for 10 staple goods – including meat, rice and chicken – rose 51 percent in one year. Housing and utility costs have also surged. Beef now costs $12 a kilo – too expensive for many families.
The clerical elite increasingly worry that mounting public distress could reignite mass protests that have erupted periodically since 2017 among lower- and middle-income Iranians, the second Iranian official said.
Many Iranians like Sima, 32, a factory worker in the central city of Shiraz worn down by years of economic strain, worry that the expanded sanctions will push them past the breaking point.
“Now they say we’re facing new sanctions again, but we’re already struggling to provide for our three children. Prices go up every single day and we can’t even afford to buy meat for them once a month,” said Sima.
Many business owners fear deeper international isolation and further Israeli airstrikes if diplomacy fails to resolve the nuclear standoff.
“With the constant fear of a possible attack and not knowing whether I’ll even be able to export this month or next, how am I supposed to keep my business running?” said Mehdi, who ships fruit to neighboring countries.
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Hamas Expands European Reach, Posing ‘High Likelihood’ of Terror Attack in Next Six Months, Intel Report Warns
Palestinian Hamas terrorists stand guard at a site as Hamas says it continues to search for the bodies of deceased hostages, in Beit Lahiya in the northern Gaza Strip, Dec. 3, 2025. Photo: REUTERS/Stringer
Hamas operatives have pushed far beyond Gaza, embedding themselves across Europe — and now posing a growing threat inside the United Kingdom, where covert arms caches and active attack plots have put intelligence services on high alert, according to a new report.
Even though Hamas has traditionally focused its operations in Israel, Gaza, and the West Bank, the Palestinian terrorist group has been steadily cultivating foreign attack capabilities — a trend highlighted in a new report obtained by The Daily Mirror, which warns of a looming threat of Hamas-led attacks in Europe.
Intelligence assessments indicate that the terrorist group, backed for years by Iran, Qatar, and Turkey, has been gradually expanding its presence in Europe through a network of charities, NGOs, and criminal gangs, with Israeli diplomatic missions, Israel-linked businesses, and Jewish religious sites among its top targets.
The report also notes that the group has not only stockpiled weapons such as AK-47s and ammunition but is increasingly turning to drone warfare, bolstered by backing from Lebanon and Iran and supported by Eastern European crime networks that help it acquire advanced weaponry.
“The Oct. 7, 2023, assault fundamentally altered Israel’s threat perceptions, but also reshaped Hamas’s calculations,” the report says, referring to the Hamas-led invasion of and massacre across southern Israel.
“Following catastrophic damage to its infrastructure in Gaza and significant leadership attrition, the group’s remaining command nodes particularly those in Lebanon began activating contingency plans long under development,” it continues.
“The organization’s leadership now appears more willing to accept the strategic risks of external operations. If Hamas sustains further attrition, external operations may grow in relative importance within the group’s strategy,” the intelligence report adds.
According to the United Kingdom’s domestic counter-intelligence and security agency, MI5, and the Joint Terrorism Analysis Center, the current threat level of a terror attack in the UK is assessed to be “substantial.”
Over the next six months, the report warns, there is a “high likelihood of continued attempts at external operations, particularly in Europe, as Hamas seeks to demonstrate resilience.”
This assessment comes amid multiple intelligence findings showing that Hamas has expanded its terrorist operations beyond the Middle East, leveraging a long-established network of weapons caches, criminal alliances, and covert infrastructure quietly built across Europe over the years.
In October, West Point’s Combating Terrorism Center released a study detailing how Hamas leaders in Lebanon have directed operatives to establish “foreign operator” cells across Europe, collaborating with organized crime networks to acquire weapons and target Jewish communities abroad.
For example, a failed Hamas plot involved an alleged operative in Germany traveling to Lebanon to “receive orders from the Qassam Brigades [Hamas’s military wing] to set up an arms depot for Hamas in Bulgaria,” part of a broader, multi-year effort to cache weapons across Europe.
German authorities foiled the plan, detaining four Hamas members in late 2023 on suspicion of planning attacks.
Earlier this year, the four suspects went on trial in Berlin in what prosecutors described as Germany’s first-ever case against members of the Palestinian terrorist group.
During the investigation, German authorities also found evidence on a defendant’s USB device showing that the Hamas operatives were planning attacks on specific sites in Germany, including the Israeli embassy in Berlin.
Similar weapons depots were established in Denmark, Poland, and other European countries, with Hamas members repeatedly trying to retrieve them to support their operations and plan potential attacks.
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Jerusalem-Based Policy Center Seeks to Forge Inroads With US Lawmakers to Safeguard Israel’s Capital
Thousands of Jews gather for a mass prayer for the hostages in Gaza at the Western Wall in the Old City of Jerusalem, Jan. 10, 2024. Photo: Yaacov Cohen
Amid increasing uncertainty over the future of the US-Israel relationship, a Jerusalem-based organization committed to safeguarding Israel’s capital city has decamped to Washington, DC in an attempt to make inroads with federal lawmakers in the US.
The Jerusalem Center for Applied Policy (JCAP), a research and policy center, aims to help protect and bolster the security, sovereignty, economy, and international standing of “Israel’s indivisible capital” in the face of “existential challenges,” according to its website.
To expand its mission, JCAP has opened a new office in Washington, DC, where some its principals are currently touring to meet with lawmakers on Capitol Hill.
As part of its work, JCAP seeks to mitigate potential threats from terrorist groups and their sponsors and has adopted the goal of spreading awareness about Islamist propaganda campaigns targeting the West, arguing that malevolent entities are trying to undermine the legitimacy of Western democracies and corrode them from within.
Chaim Silverstein, founder and chairman of JCAP, told The Algemeiner in an interview in Washington, DC this week that protecting Jerusalem is critical to preserving the security and existence of Israel from terrorists. He described Jerusalem as “the heart of Israel,” arguing that adversarial entities understand that “if they harm the head” of the Jewish state, “the rest of the body will implode.”
Silverstein added that Jerusalem is particularly vulnerable because it is home to Israel’s largest Arab population, explaining that countries such as Turkey and Iran have been effectively radicalizing Arab citizens of Israel with the hope of turning them against their home and “Islamicizing” Jerusalem.
“Radical Islamic enemies are trying to destroy Jerusalem,” he said, stressing that they want to “liberate it for Islam.”
Thus, according to Silverstein, JCAP “formulates policy initiatives” to protect Jerusalem from looming threats. The organization maintains a “unique approach” to combatting Islamic extremism, he argued, touting its extensive efforts to monitor and track the Muslim Brotherhood’s global Islamist network. JCAP aims to share the organization’s findings and methodologies with US lawmakers, equipping them with the ability to thwart extremism in their own borders, Silverstein said.
JCAP aims to enhance “Jerusalem’s international standing through proactive diplomacy while countering the influence of hostile international agitators,” its website states, adding that the goal is “advancing strategic partnerships and advocacy to reinforce Jerusalem’s role as Israel’s united and sovereign capital.”
In addition to information about terrorist cells, JCAP also wants to spread awareness about the pervasive influence campaign waged by Qatar against Israel and Western countries. According to Silverstein, Qatar has attempted to soften its image through elevating its prominence in sports, entertainment, and academia while simultaneously spreading misinformation regarding Israel’s domestic policies and military campaign in Gaza. Moreover, he argued that this influence campaign aims to spark chaos within the borders of Western countries such as Canada, Australia, and the US.
US Director of National Intelligence Avril Haines warned in 2024 that actors tied to adversarial governments such as Iran have encouraged and provided financial support to rampant protests opposing Israel’s defensive military operations against the Palestinian terrorist group Hamas in Gaza.
Meanwhile, analysts have revealed in recent reports that Qatar, a longtime supporter of Hamas and the Muslim Brotherhood’s global network more broadly, has spent tens of billions of dollars to influence US policy making and public opinion in Doha’s favor. At the same time, the country has provided the Hamas-run government in Gaza with an estimated $1.8 billion and allows the terrorist group to host an office in Doha.
JCAP acknowledged that the popularity of Israel has declined precipitously in the US, complicating efforts to forge strong ties with certain American lawmakers. Nonetheless, the organization said it believes that US policymakers will understand that their national security interests are intertwined with Israel’s. The organization suggested that despite the souring reputation of the Jewish state among younger US voters, the American military and defense industry still recognize that Israel is a valuable asset. Moreover, the group claimed that their mission — focusing more on Jerusalem rather than Israel writ large — helps to emphasize the shared Christian-Jewish Biblical heritage of the land rather than politics.
Amid the Israel-Hamas war in Gaza, many recent polls have shown a precipitous decline in support of Israel among Democrats and, increasingly, even Republicans, especially younger voters.
Though JCAP claims to stay neutral on domestic US issues, it explicitly identifies as “pro-Trump,” praising US President Donald Trump’s policies toward Israel. The group hopes to form inroads with the Trump administration and Republicans to help guide policies on Israel.
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Irish Three-Time Eurovision Winner Backs Ireland’s Withdrawal From Song Contest Over Israel’s Participation
Irish-Australian singer Johnny Logan sings during a rehearsal for the first semi-final in the supporting program of the Eurovision Song Contest (ESC) 2024. Photo: Jens Büttner/dpa via Reuters Connect
Ireland’s three-time Eurovision winner Johnny Logan said he supports the country’s national broadcaster in its decision to pull out of the 2026 Eurovision Song Contest after organizers said Israel will be allowed to participate.
Johnny Logan said he was “proud” of RTÉ’s decision and thinks the European Broadcasting Union (EBU), which organizes the competition, should have Israel “removed” from next year’s Eurovision contest, set to take place in May in Vienna, Austria. “I really feel that in this case, RTÉ definitely made the right decision,” he said on RTÉ’s radio news program “This Week.”
“I don’t think that Israel should be allowed to hide under the umbrella of the Eurovision … make it look as though, everything’s OK, business as usual, because it’s not. I think most people in Ireland would agree with that,” Logan added. “I think that the EBU should have made a decision regarding Israel, a decision removing them from the show and taking that decision away from individual countries. But being as it is. I really think that what Ireland, what RTÉ, have done is exactly the right thing to do. I support them 100 percent.”
The EBU ruled last week that Israel can compete in next year’s contest, despite backlash over Israel’s participation because of its military campaign against Hamas terrorists in the Gaza Strip. Following the EBU’s decision, the national broadcasters of Spain, the Netherlands, Ireland, and Slovenia confirmed their withdrawal from the competition. Logan called on the national broadcasters of other countries to also boycott the 2026 Eurovision because of Israel’s involvement.
“And it’s not about the Israeli people, it’s about the people in charge of Israel, the governments that have been making these decisions,” he added. Logan said he believes Israel being allowed to participate “adds a kind of respectability to the way they’ve behaved.”
Logan noted that the Eurovision Song Contest has turned political in the past, and cited as an example Russia being removed from the competition following its invasion of Ukraine. “They did it with Russia in the Eurovision. They say that the Eurovision is nonpolitical but the reality of it is when it is necessary it becomes political,” Logan said. “The Eurovision has been really good to me, but I do feel very strongly about it.”