Iran’s Rulers Caught Between Trump’s Crackdown and a Fragile Economy 

Iran's Supreme Leader Ali Khamenei speaks during a meeting with Iranian students in Tehran, Iran, March 12, 2025. Office of the Iranian Supreme Leader/WANA (West Asia News Agency)/Handout via Reuters
Iran's Supreme Leader Ali Khamenei speaks during a meeting with Iranian students in Tehran, Iran, March 12, 2025. Office of the Iranian Supreme Leader/WANA (West Asia News Agency)/Handout via Reuters
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Iran’s Rulers Caught Between Trump’s Crackdown and a Fragile Economy 

Iran's Supreme Leader Ali Khamenei speaks during a meeting with Iranian students in Tehran, Iran, March 12, 2025. Office of the Iranian Supreme Leader/WANA (West Asia News Agency)/Handout via Reuters
Iran's Supreme Leader Ali Khamenei speaks during a meeting with Iranian students in Tehran, Iran, March 12, 2025. Office of the Iranian Supreme Leader/WANA (West Asia News Agency)/Handout via Reuters

For Iran's clerical leaders, engaging with the "Great Satan" to hammer out a nuclear deal and ease crippling sanctions may for once be the lesser of two evils.

Though it harbors deep mistrust of the United States, and President Donald Trump in particular, Tehran is increasingly concerned that mounting public anger over economic hardships could erupt into mass protests, four Iranian officials said.

That's why, despite the unyielding stance and defiant rhetoric of Iran's clerical leaders in public, there is a pragmatic willingness within Tehran's corridors of power to strike a deal with Washington, the people said.

Tehran's concerns were exacerbated by Trump's speedy revival of his first term's "maximum pressure" campaign to drive Iran's oil exports towards zero with more sanctions and bring the country's already fragile economy to its knees, they said.

President Masoud Pezeshkian has repeatedly highlighted the severity of the economic situation in the country, stating that it is more challenging than during the Iran-Iraq war in the 1980s, and pointing this month to the latest round of US sanctions targeting tankers carrying Iranian oil.

One of the Iranian officials said leaders were concerned that cutting off all diplomatic avenues might further fuel domestic discontent against Ali Khamenei - given he is the ultimate decision maker in the country.

"There is no question whatsoever that the man who has been the Supreme Leader since 1989 and his foreign policy preferences are more guilty than anybody else for the state of affairs," said Alex Vatanka, director of the Iran Program at the Middle East Institute think-tank in Washington.

It was Iran's weak economy that pushed Khamenei to give tentative backing to the nuclear agreement struck with major powers in 2015, leading to a lifting of Western sanctions and an improvement in economic conditions. But then-President Trump's renewed onslaught against Iran after he pulled out of the nuclear pact in 2018 squeezed living standards once more.

"The situation worsens daily. I can't afford my rent, pay my bills, or buy clothes for my children," said Alireza Yousefi, 42, a teacher from Isfahan. "Now, more sanctions will make survival impossible."

Iran's foreign ministry did not respond to a Reuters request for comment.

'ON EQUAL TERMS'

At the same time as upping the pressure on Iran with new sanctions and threats of military action, Trump also opened the door to negotiations by sending a letter to Khamenei proposing nuclear talks.

Khamenei spurned the offer on Wednesday, saying repeatedly that Washington was imposing excessive demands and that Tehran would not be bullied into negotiations.

"If we enter negotiations while the other side is imposing maximum pressure, we will be negotiating from a weak position and will achieve nothing," Iran's top diplomat Abbas Araqchi told the Iran newspaper in an interview published on Thursday.

"The other side must be convinced that the policy of pressure is ineffective - only then can we sit at the negotiating table on equal terms," he said.

One senior Iranian official said there was no alternative but to reach an agreement, and that it was possible, though the road ahead would be bumpy given Iran's distrust of Trump after he abandoned the 2015 deal.

Iran has staved off economic collapse largely thanks to China, the main buyer of its oil and one of the few nations still trading with Tehran despite sanctions.

Oil exports slumped after Trump ditched the nuclear deal but have recovered in the past few years, bringing in more than $50 billion in revenue in both 2022 and 2023 as Iran found ways to skirt sanctions, according to US Energy Information Administration estimates.

Yet uncertainty looms over the sustainability of the exports as Trump's maximum pressure policy aims to throttle Iran's crude sales with multiple rounds of sanctions on tankers and entities involved in the trade.

PUBLIC ANGER SIMMERS

Iran's rulers are also facing a string of other crises - energy and water shortages, a collapsing currency, military setbacks among regional allies and growing fears of an Israeli strike on its nuclear facilities - all intensified by Trump's tough stance.

The energy and water sectors are suffering from a lack of investment in infrastructure, overconsumption driven by subsidies, declining natural gas production and inefficient irrigation, all leading to power blackouts and water shortages.

The Iranian rial has shed more than 90% of its value against the dollar since the sanctions were reimposed in 2018, according to foreign exchange websites, officials and lawmakers.

Amid concerns about Trump's tough approach, Iranians seeking safe havens for their savings have been buying dollars, other hard currencies, gold or cryptocurrencies, suggesting further weakness for the rial, according to state media reports.

The price of rice has soared 200% since last year, state media has reported. Housing and utility costs have spiked sharply, climbing roughly 60% in some Tehran districts and other major cities in recent months, driven by the rial's steep fall and soaring raw material costs, according to media reports.

Official inflation hovers around 40%, though some Iranian experts say it is running at over 50%. The Statistical Center of Iran reported a significant rise in food prices, with over a third of essential commodities increasing by 40% in January to leave them more than double the same month the previous year.

In January, the Tasnim news agency quoted the head of Iran's Institute of Labor and Social Welfare, Ebrahim Sadeghifar, as saying 22% to 27% of Iranians were now below the poverty line.

Iran's Jomhuri-ye Eslami newspaper, meanwhile, said last week that poverty rates stood at around 50%.

"I can barely cover the rent for my carpet shop or pay my workers' salaries. No one has the money to buy carpets. If this continues, I will have to lay off my staff," Morteza, 39, said by phone from Tehran's Grand Bazaar, giving only his first name.

"How do they expect to solve the economic crisis if they refuse to talk to Trump? Just talk to him and reach a deal. You cannot afford pride on an empty stomach."

NUCLEAR RED LINE

Based on Iranian state media reports, there were at least 216 demonstrations across Iran in February, involving retirees, workers, healthcare professionals, students and merchants. The protests largely focused on economic hardships, including low wages and months of unpaid salaries, according to the reports.

While the protests were mostly small-scale, officials fear a deterioration in living standards could be explosive.

"The country is like a powder keg, and further economic strain could be the spark that sets it off," said one of the four officials, who is close to the government.

Iran's ruling elite is acutely aware of the risk of a resurgence of the unrest similar to the 2022-2023 protests over Mahsa Amini's death in custody, or the nationwide protests in 2019 over fuel price rises, the officials said.

The senior Iranian official said there had been several high-level meetings to discuss the possibility of new mass protests - and potential measures to head them off.

Nevertheless, despite the worries about potential unrest, Iranian officials said Tehran was only prepared to go so far in any talks with Trump, stressing that "excessive demands", such as dismantling Iran's peaceful nuclear program or its conventional missile capabilities, were off the table.

"Yes, there are concerns about more economic pressure, there are concerns about the nation's growing anger, but we cannot sacrifice our right to produce nuclear energy because Trump wants it," the senior official said.

Ali Vaez, Iran project director at the International Crisis Group, said Iran's rulers believed that negotiating with Trump under coercion would signal weakness, ultimately attracting more pressure than reducing it.

"That is why Khamenei seems to believe that the only thing that is more dangerous than suffering from sanctions is surrendering to them," he said.



West Bank Palestinians Losing Hope 100 Days into Israeli Assault

Israel's military deployed tanks in Jenin in late February - AFP
Israel's military deployed tanks in Jenin in late February - AFP
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West Bank Palestinians Losing Hope 100 Days into Israeli Assault

Israel's military deployed tanks in Jenin in late February - AFP
Israel's military deployed tanks in Jenin in late February - AFP

On a torn-up road near the refugee camp where she once lived, Saja Bawaqneh said she struggled to find hope 100 days after an Israeli offensive in the occupied West Bank forced her to flee.

Tens of thousands of Palestinians have been displaced in the north of the territory since Israel began a major "anti-terrorist operation" dubbed "Iron Wall" on January 21.

Bawaqneh said life was tough and uncertain since she was forced to leave Jenin refugee camp -- one of three targeted by the offensive along with Tulkarem and Nur Shams.

"We try to hold on to hope, but unfortunately, reality offers none," she told AFP.

"Nothing is clear in Jenin camp even after 100 days -- we still don't know whether we will return to our homes, or whether those homes have been damaged or destroyed."

Bawaqneh said residents were banned from entering the camp and that "no one knows... what happened inside".

Israel's military in late February deployed tanks in Jenin for the first time in the West Bank since the end of the second intifada.

In early March, it said it had expanded its offensive to more areas of the city.

The Jenin camp is a known bastion of Palestinian militancy where Israeli forces have always operated.

AFP footage this week showed power lines dangling above streets blocked with barriers made of churned up earth. Wastewater pooled in the road outside Jenin Governmental Hospital.

- 'Precarious' situation -

Farha Abu al-Hija, a member of the Popular Committee for Services in Jenin camp, said families living in the vicinity of the camp were being removed by Israeli forces "on a daily basis".

"A hundred days have passed like a hundred years for the displaced people of Jenin camp," she said.

"Their situation is dire, the conditions are harsh, and they are enduring pain unlike anything they have ever known."

Medical charity Doctors Without Borders in March denounced the "extremely precarious" situation of Palestinians displaced by the military assault, saying they were going "without proper shelter, essential services, and access to healthcare".

It said the scale of forced displacement and destruction of camps "has not been seen in decades" in the West Bank.

The United Nations says about 40,000 residents have been displaced since January 21.

Israeli Defense Minister Israel Katz has said the offensive would last several months and ordered troops to stop residents from returning.

Israeli forces put up barriers at several entrances of the Jenin camp in late April, AFP footage showed.

The Israeli offensive began two days after a truce came into effect in the Gaza Strip between the Israeli military and Gaza's Hamas.

Two months later that truce collapsed and Israel resumed its offensive in Gaza, a Palestinian territory separate from the West Bank.

Since the Gaza war began in October 2023, violence has soared in the West Bank.

Israeli troops or settlers have killed at least 925 Palestinians, including militants, in the territory since then, according to the Ramallah-based health ministry.

Palestinian attacks and clashes during military raids have killed at least 33 Israelis, including soldiers, over the same period, according to official figures.