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.



Amr Moussa to Asharq Al-Awsat: Gaddafi Initially Treated Me as an American Spy, Then Things Changed

Hosni Mubarak was able to manage the difficult relationship with Moammar al-Gaddafi. (AFP)
Hosni Mubarak was able to manage the difficult relationship with Moammar al-Gaddafi. (AFP)
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Amr Moussa to Asharq Al-Awsat: Gaddafi Initially Treated Me as an American Spy, Then Things Changed

Hosni Mubarak was able to manage the difficult relationship with Moammar al-Gaddafi. (AFP)
Hosni Mubarak was able to manage the difficult relationship with Moammar al-Gaddafi. (AFP)

In the third installment of his interview with Asharq Al-Awsat, former Egyptian Foreign Minister and ex-Secretary-General of the Arab League Amr Moussa discusses various experiences with Arab leaders, emphasizing the nuances of diplomacy in a turbulent region.

Moussa recalled that former Egyptian President Hosni Mubarak “was neither bloodthirsty nor a pharaoh, nor did he try to be one.” He points to a famous remark by President Anwar Sadat, who once said: “Gamal (Abdel Nasser) and I are the last of the pharaohs.”

The Gaddafi encounter

Reflecting on his complex interactions with Libyan leader Moammar al-Gaddafi, Moussa admitted that the beginning was anything but smooth. “When I first met Gaddafi, he treated me as if I were an American spy. He wouldn’t look at me directly, only speaking while facing another direction. It was very theatrical,” Moussa said. He recalled this behavior with a certain amusement, treating it almost like a game: “I would wager with myself before our meetings—will he speak to me directly this time, or not?”

Initially, rumors had reached Gaddafi that Moussa had been sent with a US agenda, though he had actually been Egypt’s ambassador to the UN in New York, not Washington. “But once he observed how I performed in my role, he began to change his mind. Eventually, he would ask President Mubarak if I could join their private discussions.”

Moussa recalled a specific instance in Tobruk, where he was invited by Gaddafi to sit at a table with him and Mubarak to discuss a matter of importance. He knew this would stir unease among others present, but the conversation went ahead regardless. This type of scene, he noted, happened several times.

Hosni Mubarak, Moammar al-Gaddafi and Amr Moussa at the Arab summit in Sirte in 2010. (AFP)

Diplomatic drama in a tent

When Gaddafi visited Cairo during Moussa’s tenure as foreign minister, the Libyan leader insisted on setting up his trademark tent in the gardens of the Qubba Palace. Though the palace was fully equipped, Gaddafi would receive guests only in the tent. “At that time, he still saw me as a US spy,” Moussa said, “so he avoided looking at me during our meeting. He inspected every corner of the tent—except the one where I was sitting.”

Despite Gaddafi’s sometimes abrasive behavior, Moussa conceded that the Libyan leader was intelligent and unique. “He was eccentric, yes, but he had a cleverness about him. His actions often carried a deeper rationale, even if misguided.”

Gaddafi’s erratic rule extended to his own ministers. Moussa noted how even highly regarded officials like Abdul Rahman Shalgham and Ali Treki were subject to his whims. “If Gaddafi was displeased with something, he might simply tell you to stay home—and that could mean house arrest for years. Yet, your salary would still arrive at your door.”

A moment of humor

One incident stood out. Libya was scheduled to host the Arab summit and had failed to pay its dues to the Arab League, and as Secretary-General, Moussa received an envoy from Gaddafi carrying a list of demands. Moussa didn’t even read the letter; he simply locked it in a drawer. “When the envoy asked what to report back, I told him exactly that,” Moussa laughed.

Soon after, Gaddafi summoned him to Sirte. As Moussa waited in the tent, Gaddafi’s secretary, Bashir Saleh, walked by singing an old Arabic poem: “You seem tearless, and patience is your nature.” Moussa quipped: “Tell the leader he’s not tearless—he’s payment-less!” Saleh shared the joke with Gaddafi, who burst into laughter and finally paid Libya’s dues.

Later, during an Arab summit in Libya, Gaddafi displayed a surprising sense of responsibility. Moussa recalled a heated moment when Yemeni President Ali Abdullah Saleh demanded immediate action on forming a pan-Arab army. Gaddafi gently interrupted: “Take it easy, Ali.” That phrase—“Take it easy, Ali”—spoke volumes, according to Moussa. “It revealed Gaddafi’s desire to manage tension even among volatile leaders.”

On Hosni Mubarak and the ‘pharaoh’ myth

Asked if Mubarak ever resembled the authoritarian archetype of a “pharaoh” as Russians view their “czars,” Moussa was firm: “No, not Mubarak. Maybe Sadat had some traits—he liked symbolism. But Mubarak? He wasn’t violent, nor bloodthirsty. Yes, he could be firm, but he didn’t revel in bloodshed.”

Moussa clarified that while Mubarak might have approved harsh punishments as president, it never escalated to a murderous level. “Perhaps there were isolated incidents, especially within the prison system, but it wasn’t part of Mubarak’s character to govern through violence. He wasn’t built that way.”

Saddam Hussein meets with Amr Moussa in Iraq in January 2002. (AFP)

The song that stirred controversy

When the Egyptian folk singer Shaaban Abdel Rahim sang “I hate Israel, and I love Amr Moussa,” it caused a stir. Moussa downplayed the drama. “I don’t think Mubarak himself was offended. He was the president; no foreign minister would rival him in popularity. But some people in the surrounding circles—not necessarily his inner circle—were irked.”

Eventually, another version of the song emerged, replacing Moussa’s name with Mubarak’s. “But it was the original that made waves. Even a diplomat from Latin America once told me, ‘We’re dancing to this song here!’”

A difficult meeting with Saddam Hussein

One of the most tense encounters Moussa ever had was with Iraqi President Saddam Hussein. After being elected Secretary-General of the Arab League in 2001, Moussa set out to visit all Arab leaders. He deliberately left Saddam until the end, knowing the sensitivities involved.

In January 2002, Moussa visited Saddam at a small palace. He carried a message from UN Secretary-General Kofi Annan regarding weapons inspections. “I told Saddam that Annan was open to negotiations, and that continued confrontation with the US would lead nowhere. At some point, no one would stand by him.”

Moussa asked Saddam directly: “Do you possess nuclear weapons?” Saddam answered, “No.” Moussa pressed him again: “Are you absolutely sure?” Saddam repeated, “No.” This made Moussa’s deputy, Ahmed Ben Helli, visibly nervous. “He probably thought we weren’t going to walk out of there.”

Moussa then asked why Iraq objected to the UN inspectors. Saddam responded: “These people don’t just inspect nuclear sites. They ask civilians about food supplies, their opinions on the government. What business is that of theirs?”

Moussa promised to report this to Annan, which he did. Negotiations resumed between Iraq and the UN, but history took its course and the US-led invasion followed.

Asked if he felt fortunate never to have served directly under a figure like Gaddafi, Moussa answered without hesitation: “Absolutely. I saw how respected men like Shalgham and Treki were sidelined. You could be a top official one day and under house arrest the next.”