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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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Ossoff vs. Collins: The choices facing Jewish voters in the Georgia Senate race

(JTA) — Georgia Jews will choose between a Democratic politician who wants to limit arms sales to Israel and a Republican with ties to white nationalists when they head to vote Tuesday in a Senate race that will help determine which party controls the chamber.

The race pits incumbent Jewish Sen. Jon Ossoff – widely expected to be a 2028 presidential contender – against GOP Rep. Mike Collins. The Republican challenger has received a good deal of media attention, as well as attacks by his opponent, over family members’ and former employees’ far-right political views. Ossoff, meanwhile, sparked outrage among some in the Jewish community when he became one of the earliest Senate Democrats to vote to halt certain arms sales to Israel.

Collins’ son-in-law, David Alan Scheer II, has invoked the Jewish Bolsheviks conspiracy theory propagated by Nazi Germany that blamed Jews for atrocities committed by the Soviet Union. He has also complained about Holocaust education and media on the subject.

“They don’t tell us the history of Germany before World War II,” Scheer said in a YouTube video last year, titled “I’m NOT a Judeo Christian.”

He continued, “All we’re told is Germany bad, Hitler evil, don’t ask questions. Holocaust, Holocaust, Holocaust. Here’s 50 movies every year about the Holocaust and why it’s so bad.”

In the same video, Scheer also said that “Jewish executives run the entire mainstream media complex” as well as “homosexual propaganda, they run all of the fraudulent banking systems and insurance scams. They are behind this orchestrated downfall of what was once the most prosperous nation in the world.” Israeli newspaper Haaretz has reported that Scheer apparently lives in a house built on property owned by Collins.

The Collins campaign did not return the Jewish Telegraphic Agency’s request for comment. But elsewhere Collins has addressed Scheer’s statements by saying, “I don’t believe or support those views.”

Scheer did not respond to a request for comment.

Meanwhile, a former Collins staffer had posted Nazi imagery and an image of what appeared to be himself in KKK robes, The Washington Post reported in August. Collins replaced another staffer — his chief of staff Kip Talley — in 2024 after Slate reported that he was in a group chat with streamer Nick Fuentes, widely accused of being one of the internet’s foremost antisemites, and white supremacist Richard Spencer. Slate reported that the chat was dedicated to trying to help Charles Johnson, who has been accused of promoting Holocaust denial and was in jail at the time.

In a statement, Talley told Slate that he acted “solely in my personal capacity after hearing concerns that an acquaintance I have known for years was being mistreated in custody and denied basic medical care.”

The Georgia congressman also appeared at last year’s New York Young Republican Club gala, which drew controversy as it hosted white nationalists and a number of officials from Germany’s far-right AfD party. Fuentes said that he received an invitation that was later rescinded, and Jewish New York City Council member Inna Vernikov backed out of the event and suggested the decision was connected to antisemitism on the right.

Collins has responded to questions about his connections to these white nationalist elements by saying he condemns “all forms of antisemitism” and hate, and citing his support for Israel.

J Street, the liberal Jewish Middle East advocacy group, homed in on Collins’ far-right connections in a 15-second ad released last week that ended with the message, “Mike Collins: Dangerously extreme for Georgia.”

The attack ad was the first released in J Street’s $3 million campaign this year to take down six Republican candidates who are backed by the pro-Israel lobbying group AIPAC. In a piece for the Atlanta Jewish Times, Collins wrote earlier this month that he supports Israel “because my faith tells me to and because it is the right policy for America.”

Ossoff, meanwhile, has long targeted Collins over his white nationalist ties, calling him a “notorious bigot, antisemite and extremist” in June. Ossoff told Collins during a debate that he “hired half the Third Reich to staff your congressional office.”

The quip drew some pushback. “Jon Ossoff, my advice to him is, if you start calling your political opponents Nazis, maybe it’s time to shut up,” said The Atlantic’s center-right staff writer David Brooks, during a PBS NewsHour conversation about personal attacks in this year’s U.S. Senate races. “That’s just not what we do here in this country.”

Meanwhile, Collins’ Jewish supporters have said that Ossoff’s status as a Democrat — a party that increasingly includes strident anti-Zionist voices — is more damning than the headlines around Collins.

“At a time of rising antisemitism, at a time when Jewish Americans need friends, Mike Collins has been a friend to the Jewish community,” Sam Markstein, spokesperson for the Republican Jewish Coalition, told JTA. He said that Collins was “a friend to the Jewish community in the aftermath of Oct. 7” and pointed to his voting record on Israel.

Eric Levine, an RJC board member, said he has not been involved in this particular race but that extremes “must be condemned” on both sides.

“It is never a good thing to have ties to antisemitic/far-right figures,” he told JTA in a text. “I will also say, it is never a good thing to have ties to antisemitic/far left figures like Hasan Piker, [New York Mayor] Zohran Mamdani, [Michigan Senate candidate] Abdul el-Sayed and much of the DSA/Democratic caucus.”

Piker, an anti-Israel streamer who has campaigned with some left-wing Democratic candidates, has drawn heat for remarks about American Jews’ connection to Israel. Earlier this year, he named Ossoff positively as a “dark horse” contender for the 2028 Democratic presidential nomination. Ossoff later distanced himself from Piker and has said he will not run for president in 2028. Ossoff endorsed El-Sayed after he won the Democratic nomination in Michigan.

Ossoff has also come under fire for his decision to vote to block certain arms sales to Israel during the height of the Gaza war in November 2024, a position that he has generally stuck to since then.

In July 2025 he voted to block a sale of rifles to Israel, citing mass starvation in Gaza caused by “the policies of Prime Minister Benjamin Netanyahu’s government,” but voted against a resolution that would block an air-to-ground munitions sale.

Ossoff wrote at that time that the U.S. “must continue to support the Israeli people, who face the persistent threat of rocket and missile attack and have been subjected to intense aerial bombardment from Iran, Lebanon, and Yemen.”

Though Ossoff called his commitment to Israel’s security “ironclad” in a Senate floor speech ahead of the arm sales vote, some Jewish voters and organizations said it rang hollow.

Michael Morris, publisher of the Atlanta Jewish Times, penned an open letter this August blasting Ossoff for “lying to me and your constituents” about his support for Israel.

Ossoff’s first vote against weapons in November 2024 spurred another critical letter from several Georgia Jewish organizations including synagogues, Jewish schools, the local Anti-Defamation League chapter and other groups. His vote also drew the attention of AIPAC, which released 30-second ads attacking U.S. senators — including Ossoff — who had voted to block weapons sales.

Asked about Collins’ far-right ties, Morris told JTA he did not believe they were disqualifying.

“Most of the complaints about him are about his son-in-law who is a virulent antisemite,” Morris said in a text. “But his son-in-law does not get to vote, and as a father of 4 girls I can tell you that we do not get ANY say in who our girls marry, so from that standpoint, I am not concerned.”

Morris also said that neither President Donald Trump nor President Joe Biden condemned the most extreme among their voters, and opined that when it comes to Collins’ own extreme backers, he “can maintain their support without taking in their position.”

A number of readers disagreed with Morris’ sharp criticism of Ossoff, however, and wrote letters to the editor expressing their disapproval, as well as their concern about Collins.

“Mike Collins has peddled antisemitism. He has surrounded himself with bigotry while refusing to denounce white supremacy,” wrote a reader named Richard Mitchell, who said he is from Atlanta. “These values do not represent Georgians and are fundamental to why I will not be supporting Collins this election.”

Halier Soifer, CEO of the Jewish Democratic Council of America, which has endorsed Ossoff, wrote in a statement to JTA that her organization recognizes Ossoff’s “steadfast support for Israel’s security and future as a Jewish and democratic state.”

“Georgia voters should remember that a vote for Mike Collins is a vote for Donald Trump, and Collins is one of the most extreme candidates on the ballot,” she wrote.

This article originally appeared on JTA.org.

The post Ossoff vs. Collins: The choices facing Jewish voters in the Georgia Senate race appeared first on The Forward.

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Arab parties have rarely been full partners in governing Israel. It’s time to let them into the tent of Abraham.

Like a goal-line pileup in football, with half the players signaling a touchdown and the other half celebrating a defensive stop, everyone is claiming victory in Israel’s election. Prime Minister Benjamin Netanyahu points to Likud’s status as Israel’s largest party. His opponents point to the loss of his governing majority. Did Netanyahu win? Did the opposition win? Those of us watching from the stands are waiting for the referee’s signal, unsure of what exactly is going on in the field.

The arithmetic is straightforward. In Israel’s 120-seat Knesset, a governing coalition needs 61 seats. Netanyahu’s bloc won 53. The principal Jewish-led opposition parties won 48. Israel’s Arab parties won an unprecedented 19 seats, nearly doubling their previous representation. Neither major bloc can govern alone. The election is over, but the overtime game of coalition politicking has just begun.

There are several paths forward. Netanyahu and his opponents could form a national unity government. Alternatively, either bloc could seek cooperation with Arab parties. The difficulty is that political leaders have drawn red lines against both possibilities.

Herein lies one of the most uncomfortable paradoxes of Israeli democracy: Arab citizens have exercised their democratic rights in extraordinary numbers, yet the very parties whose votes could break the political deadlock are those whom much of Israel’s political establishment refuses to consider as governing partners.

Arab parties have rarely been full partners in Israeli governing coalitions. During Israel’s early decades, Arab lists affiliated with the ruling party participated but enjoyed little autonomy. In the 1990s, Yitzhak Rabin relied on Arab parties from outside his coalition. In 2021, Mansour Abbas and his Islamist Ra’am party became the first independent Arab party to join an Israeli government. Ironically, Netanyahu himself had explored cooperation with Abbas earlier that year.

Since Oct. 7, political boundaries have hardened. The attack, the hostages, the war, the continuing grief and fear have shattered trust. Many Israeli Jews now regard cooperation with non-Zionist parties with profound suspicion. These anxieties cannot be dismissed; there remains a trauma through which much of Israeli society sees its present and future.

The predicament has been called a “dilemma from hell.” Either politicians find a way to cross red lines or Israel risks another election, another round of recriminations, another deepening of its internal divisions.

At the heart of this political dilemma lies a question as old as the Jewish people itself: Can the Jewish family make room for those who do not share its Jewish identity? Can we affirm our own destiny without excluding another?

The biblical precedent

This is not the first time the Jewish people have confronted the question of whether there is room in the Jewish family for those who do not share its identity. The question goes back to the very first Jewish family. In the biblical account, Abraham and Sarah are blessed with Isaac, their long-awaited son. But Isaac is not Abraham’s firstborn. Years earlier, Sarah had given her Egyptian maidservant Hagar to Abraham, and Hagar had borne Ishmael. When Isaac arrives, Sarah perceives Ishmael as a threat. Biblical commentators debate her motivations: Was Ishmael behaving dangerously? Was Sarah concerned about inheritance? Whatever her concerns may have been, Sarah’s demand is unequivocal: “Cast out that woman and her son.” Despite Abraham’s distress, Hagar and Ishmael are sent into the wilderness.

The first Jewish family could not find a way to live together.

Jewish, Christian and Islamic traditions have long associated Ishmael with the ancestry of Arab peoples. It raises the question. What if Isaac’s covenantal destiny had not required Ishmael’s expulsion? What if Abraham’s tent had been large enough for Isaac to remain Isaac, Ishmael to remain Ishmael, and both to know they belonged?

We cannot rewrite Genesis. But given the crossroads Israel faces today, we can ask whether its tragedy must remain ours.

Three considerations make this moment worthy of serious political imagination.

First, consider Israel’s internal political health. Imagine what cooperation across entrenched political divisions might communicate to Israeli society. Coalition politics have always required compromise: Religious parties negotiate military-service exemptions and yeshiva funding. Why should negotiations with Arab parties be categorically unthinkable?

Not all Arab parties are alike, and their differences matter. Mansour Abbas condemned the atrocities of Oct. 7 and has acknowledged Israel’s Jewish character. Surely the “Start-Up Nation” can devise an agreement that safeguards Israel’s security and Jewish character while giving Arab representatives substantive governance over the issues affecting their communities.

Second, consider Israel’s international standing. Israel faces mounting criticism and accusations of discrimination and apartheid. Arab participation in government would not resolve the Palestinian question or erase existing inequalities. But imagine the Jewish state’s democratic promise expressed not only through Arab citizens voting, or the oft-cited presence of Arab pharmacists, but through Arab representatives sharing responsibility at the highest levels of government. What happens in Israel does not stay in Israel. Those of us who defend Israel in the public square understand the significance such an arrangement could carry.

Third, and perhaps most importantly, consider Israel’s Arab citizens. Their communities face violent crime, inadequate policing, infrastructure deficiencies, housing shortages and educational disparities. Effective representation matters. As the saying goes, nobody brings a rental car to the car wash. People invest in institutions in which they have a stake. Giving Arab representatives governing responsibility would strengthen the sense that Israel belongs to all its citizens.

An Israeli friend offered a simple observation this week: “If everyone keeps their pre-election promises, we’re going to have another election.”  His comment reminded me of hatarat nedarim, the Jewish legal institution for annulling certain vows.  Judaism takes promises seriously.  Yet Jewish law also recognizes, as reflected in the tradition of hatarat nedarim and the familiar words of Kol Nidre, that commitments made without full knowledge of future circumstances may, under prescribed conditions and for the greater good, be reconsidered. What good could be greater than the future welfare of the Jewish state?

Jews love invoking Abba Eban’s famous observation that the Arabs never miss an opportunity to miss an opportunity. I can’t help but wonder if this is a moment that future generations will turn that observation back on us.

Perhaps what appears to be a dilemma could become an opportunity to break political deadlock and reconsider entrenched patterns of exclusion – a moment calling for political imagination across the spectrum.

It is the great “what if” of our people, from the first Jewish family to the present day. What if Abraham had found a way to keep Ishmael in the fold? Israel’s leaders now have a chance to recognize possibilities that have longed seemed out of reach; its citizens have a chance to give those leaders the political room to act, and together the opportunity to summon the courage and collective imagination to build a Jewish and democratic state capacious enough for all who seek a place within the tent of Abraham.

The post Arab parties have rarely been full partners in governing Israel. It’s time to let them into the tent of Abraham. appeared first on The Forward.

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American Jews have fought BDS for 20 years. Israel’s election just handed them the winning move.

For decades, the American Jewish community has battled the Boycott, Divestment, and Sanctions movement against Israel. Now, in the aftermath of the election there, it has the opportunity to deal it the biggest blow yet. All it has to do is send one clear message to the Israeli opposition leaders: Join with the Arab parties.

Many Israelis, such as The Democrats party leader Yair Golan, are making the same argument. Arab Israelis voted in historic numbers in this week’s national election, winning a total of 19 seats with all votes counted. Together Zionist and Arab parties would, with 67 seats, become the country’s ruling coalition and bring an end to the government of Prime Minister Benjamin Netanyahu.

Opposition leader Gadi Eisenkot pledged not to bring Arab parties into his coalition, and doing so would be no easy task. But if pressure builds at home and abroad — and if he gets cover and encouragement from Jewish leaders around the world — he might find a way. It’s a big ask of Eisenkot and more conservative opposition members, but it’s the right ask.

Breaking that one promise would enable Eisenkot to keep many more. He could pass his top legislative priorities, including an independent inquiry into Oct. 7, a crackdown on Jewish terrorism in the West Bank and a restoration of democratic norms.

Those are the immediate — and sufficient — Israeli reasons. There is a more basic one: a democracy shouldn’t treat the votes of 20% of its citizens as treyf. And from abroad, there’s an added benefit, one that could have a long-term impact on Israel’s well-being: Undermining the BDS movement.

For a generation, the movement to boycott, divest and sanction the Jewish state has called on governments, businesses and institutions to pull their investments from Israel, cancel Israeli academics and performers, and ban the import of Israeli goods.

It hasn’t succeeded — yet. Israeli international exports surged to $169 billion in 2025, the highest ever, and more than 35 states have passed anti-BDS laws. But BDS has been notching some major wins: In June, United Auto Workers delegates voted — barely —  to divest from Israel bonds, the first major union to do so. Internationally, at least 50 universities, institutions and academic groups ended cooperative programs with Israeli universities, and there have been more than 1,000 cases of academic boycotts, cancellation of student exchange programs and research grants.

Some of that is in direct response to the Gaza War, but the BDS movement has built the infrastructure that turned outrage over the war into concrete actions.

The BDS movement has also normalized, or tried to normalize, the idea that entities that do business with Israel are complicit in apartheid, that Israel is a sham  democracy and that Zionism is racism. BDS supplies the vocabulary of anti-Israel diatribes on social media.

Now Israel’s election provides a historic opportunity to prove BDS wrong,  to take the steam out of a movement that shows no sign of slowing. Bringing together Jews and Arabs in a ruling coalition would be the single greatest blow to BDS.

For decades, American Jewish leaders and organizations have lobbied government officials, organized counter-petitions and worked to stem the BDS tide.

That job can now either get much easier, or immeasurably more difficult. A Jewish-Arab ruling coalition that acts on the issues of crime and under-investment plaguing Israel’s Arab communities would belie BDS advocates’ claim that a Jewish state and democracy are mutually exclusive.

That same Jewish-Arab partnership would have to work toward resolving Israel’s occupation of the West Bank and the Gaza disaster — but those enormous tasks will be much easier with a strong majority and in a country not facing constant international pressure.

And if those 19 Arab seats amount to nothing? If the Jewish parties do all within their power to disempower Arab citizens who turned out in historic numbers?

Try arguing against the BDSers then. Try defending Israel as “the only democracy in the Middle East” when 20% of its citizens were just shut out of national representation.

Of course, there are other good reasons to bring the Arab parties into the government. One of them is written into Israel’s Declaration of Independence, which promises Arab inhabitants of the State of Israel, “full and equal citizenship and due representation in all its provisional and permanent institutions.”

For decades many Arab Israelis didn’t believe that sentence because they didn’t experience it. They stayed home, many because they refused to participate in a system that they believed would never truly serve them. This time, enraged by the Gaza War, fearful of violence in their own community and disgusted by the overt racism of Netanyahu’s Kahanist cabinet ministers, they chose to vote.

“I also wanted to show that Palestinians can participate when we choose to, and that our exclusion cannot be blamed on our refusal to enter the political arena,” wrote the journalist  Nagham Zbeedat in Haaretz.

Seeing Arab Israelis dance in celebration when the election results were announced is a testament to the power of democracy and the hope it brings.

I know that what gives hope to American Jews like me instills fear in many Israelis. Palestinians from Gaza came over a border and slaughtered their loved ones.

But Palestinian citizens of Israel did not join the terror — something Hamas leader Yahya Sinwar counted on them doing. Arab Israelis were killed alongside their Israeli Jewish neighbors. And in many cases, they rescued Jews under attack.

American Jewish institutions need to step up and fight as hard for including Israeli Arabs in a new government as they do against boycotting Israel. Because fighting for democracy and fighting against BDS — it’s the same fight.

The post American Jews have fought BDS for 20 years. Israel’s election just handed them the winning move. appeared first on The Forward.

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