When the Islamic Revolution toppled the shah of Iran in 1979, one US dollar (€0.86) was worth just 70 Iranian rials. By early 2026, that figure had soared to an astonishing 1.4 million rials for a single dollar.

The collapse of Iran's national currency has become a defining symbol of the country's economic decline, with growing numbers of Iranians bearing the brunt. Under the shah, the rial was almost 20,000 times stronger against the dollar than it is today.

Current discontent has spread well beyond traditional opposition circles. In recent weeks, even groups that once supported the Shiite Muslim regime after the 1979 revolution have joined the protests.

In late December 2025, influential bazaar merchants in Tehran were among the first to publicly demonstrate against the deepening economic crisis, galloping inflation of nearly 50% and the rial's dramatic loss of value.

"We are struggling. We cannot import goods because of US sanctions and because only the Guards or those linked to them control the economy. They only think about their own benefits," one bazaar merchant, who asked to remain anonymous, recently told news agency Reuters.

Iran's economic malaise is compounded by decaying infrastructure, said Andreas Goldthau, an Iran expert at the University of Erfurt in Germany, with its energy infrastructure in particular being in "poor condition."

"Iran is therefore struggling to uphold its social contract [with the population]. Despite its energy wealth, power outages are a daily occurrence. As energy subsidies consume an ever larger share of the state budget, gasoline prices have been raised, hitting families and businesses," he told DW.

Revolutionary Guards, bonyads and Iran's elite economy

Iran's economy is tightly interwoven with the political elite of the Islamic Republic, above all the Islamic Revolutionary Guard Corps (IRGC), which controls vast swaths of economic activity.

Alongside IRGC operates a network of religious foundations known as bonyads, which wield significant influence over infrastructure projects, education and the pharmaceutical sector.

Even the so-called Seal of the Prophet has nothing to do with the historic relic displayed at Istanbul's Topkapi Palace in Turkey. In Iran, the name belongs to the country's largest construction and industrial conglomerate, which is also controlled by the Revolutionary Guards.

The IRGC profits from nearly every corner of the economy: airline passengers, shipping containers, exports and imports of all kinds. Whether oil production, the arms industry, or specialized medical clinics, little functions without the Guards' involvement. They are widely regarded as Iran's largest smuggling network, exporting sanctioned oil to China and importing banned goods such as alcohol.

The Guards also own Western-sanctioned airlines, including Mahan Air, and hold a dominant stake in Iran's largest telecommunications operator, TCI. In the sector's second-largest company, MTN Irancell, the military is joined by figures close to Iran's Supreme Leader Ali Khamenei.

Just how extensive the Guards' economic reach is remains a matter of debate, even among Iran specialists.

The IRGC's corporate holdings and business networks are notoriously opaque, with virtually no meaningful oversight, despite occasional corruption cases pursued by state authorities.

Kayhan Valadbaygi, a researcher at the International Institute of Social History in Amsterdam, Netherlands, said there was no doubt that the IRGC and the bonyads have been the "dominant economic actors in Iran since the late 2000s."

"But estimating their exact share of GDP is difficult. They operate complex networks of holding companies, shell firms and so-called charitable foundations, making the full scope of their activities hard to capture," he told DW.

Valadbaygi estimates that by the late 2010s, the combined economic network of the military and religious-revolutionary foundations already accounted for around 50% of Iran's GDP. "Since then, their influence has only deepened," he said. "Today, they control well over half of the country's economic output."

The Guards' aggressive pursuit of economic influence became evident when the IRGC blocked the planned stock market listing of Divar, Iran's leading online classified ads platform, despite holding no stake in the company.

"In Iran, whenever you make money, all of a sudden some organization, some institution, some quasi-governmental place pops up to throw itself in your business", an entrepreneur close to Divar's management told The Washington Post newspaper in August 2025.

How much longer can Iran's 'zombie regime' stay in power?

The pool of disaffected Iranians is expanding, according to Karim Sadjadpour of the Carnegie Endowment for International Peace in Washington, D.C.

"The revolution of 1979 took a year to reach its climax," Sadjadpour told the US broadcaster MS Now. "Protests against the shah began in January 1978, followed by 12 months of unrest. The current protests, by contrast, began only about three weeks ago."

Sadjadpour describes Iran's rulers as a "zombie regime with a dying ideology, dying legitimacy, a dying economy, and a dying, 86-year-old dictator."

Yet, he cautioned, the system remains capable of deploying lethal force. "And that is what keeps the regime in power," he added.

Such repression can only delay, not prevent, a reckoning, Sadjadpour argued. "Iran is a nation on the cusp of transformation. Whatever emerges from these protests, there is an 86-year-old supreme leader who will soon leave the scene. And I don't believe anyone — neither in society nor within the regime itself — expects the status quo to last."

For Kayhan Valadbaygi, the decisive factor lies not in street protests alone, but in US policy — though not in the form of military intervention. 

Even a renewed fall in oil prices below $50 per barrel would not necessarily threaten the regime, he argued, since Iran has endured prolonged periods of low prices before and adapted to volatility in global energy markets.

"During the oil price collapse from 2014 to 2016, and again in 2020, prices fell well below this level while Iran was already under severe international sanctions," Valadbaygi noted.

What ultimately matters, he said, is not the oil price itself but whether Iran can continue exporting oil despite US sanctions. "Low prices are painful but manageable," Valadbaygi said. "A near-total halt to oil exports, however, would be far more damaging to state revenues and fiscal stability."

This article was originally written in German.