Happy new year, and welcome back to the MBN Iran Briefing, a new offering from the premier Arabic-first American news and commentary platform about the Middle East.
In my year-end edition of the briefing, I noted that “in a country and region where surprises abound, anything can happen.” Little did I know that we were just days away from a shock protest among bazaaris in Tehran that has now spread across most of the country. We’ll catch up on the latest in the unfolding and growing unrest across Iran – as well as peer further out into the crystal ball, even as the news changes moment to moment.
Share your thoughts, analysis and predictions with me at ailves@mbn-news.com. If you were forwarded the newsletter, please subscribe. Read me in Arabic here, or on the flagship Alhurra Arabic-language and English-language news sites.
Quote of the week
“Your presence in the streets across Iran has kindled the flame of a national revolution.”
–Reza Pahlavi, Crown Prince of Iran
IRAN IN 2026
Iran is a house on fire heading into 2026. So far, metaphorically speaking. Street unrest over the collapsing rial and the cost of living has plunged the regime into the biggest crisis since the wave of protests in 2022-23. The leadership is grappling with a stagnant economy, pressing questions about succession, a risky nuclear “gray zone,” and a regional environment still shaped by the 12‑day war with Israel in June 2025. The year ahead will test how far the system can keep muddling through via repression and calibrated foreign‑policy escalation before the cycle of unrest, economic decay and security overreach becomes unmanageable for the regime.
Protest Watch
This week, I’m launching “Protest Watch,” which will be a regular feature of the MBN Iran Briefing. It will closely follow the ups and downs of the continuing unrest, analyzing the likelihood of dramatic change.
Nationwide protests have entered their second week, broadening from an economic revolt into a political challenge to the Islamic Republic. Demonstrations began on Dec. 28 over soaring inflation and unpaid wages, then spread to at least 27 of Iran’s 31 provinces, with bazaaris, industrial workers, teachers and students joining in. Rights groups say security forces have escalated their crackdown sharply since Supreme Leader Ali Khamenei’s Jan. 3 speech branding protesters as “rioters.” Troops and police have opened fire on demonstrators and conducted mass arrests, even staging raids on hospitals treating the wounded. At least 36 people have been reported killed and thousands detained.
Reza Pahlavi, the exiled son of the last shah, has stepped into the current protest wave more directly than at any point since the Mahsa Jina Amini uprising in 2022-23. In a message on Jan. 2 he called for a “revolution,” urging residents of Tehran to mount a “simultaneous, million‑strong presence” across the capital, blocking main roads and “seizing the streets” to overwhelm the security forces. Subsequent statements and media appearances have called for disciplined protest tactics, including coordinated evening chants and street barricades. Kurdish opposition groups have separately called for nationwide strikes.
Inside Iran, civil society figures are edging towards open calls for political transition. A joint statement by seventeen political and social activists, including Nobel laureate Narges Mohammadi and jailed lawyer Mohammad Najafi, has demanded, in their words, a “transition away from the Islamic Republic,” and teachers’, writers’ and workers’ organizations have issued communiqués backing the protests. President Masoud Pezeshkian has pledged dialogue over the cost‑of‑living crisis, but his room for maneuver looks narrow, and the security apparatus is tightening the crackdown. Stay tuned. This is not dying down anytime soon.
Iran: Five things to watch in 2026
It’s already been quite a year for the world, and we’re only on day eight. But looking out further into the year, you can see clearly the themes that will give shape to 2026. Here are five.
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Protests and regime response
An overturned car and multiple fires burn as protesters chant outside a police station in Lorestan province, Iran. Photo: Reuters
Looking at the current surge of unrest, three questions stand out: Will the bazaar and other traditional constituencies keep joining in? Will students and workers sustain strikes? And how far is the security apparatus prepared to go in suppressing overt dissent?
What is new in 2026 is how much of this anger builds on a deeper, slower‑burning transformation of dissent. The “Woman, Life, Freedom” uprising normalized everyday acts of defiance, from unveiled women in the streets of big cities to neighborhood networks organizing around local grievances.
Protest chants that link livelihoods to foreign policy, including “Neither Gaza nor Lebanon, my life for Iran,” encapsulate a broader rejection of the regime’s priorities and its long-term ideological project. The anger goes deeper than exchange rates and prices. Iranians are fed up.
The regime is trying to sound conciliatory. Government spokesperson Fatemeh Mohajerani, says “establish[ing] a mechanism for dialogue with people … indicates that the government recognizes these protests” and adds that they are “an opportunity to repair and strengthen the social foundation in order to strengthen the foundation of dialogue.”
But the streets aren’t having it. The response to “mechanisms for dialogue” is Molotov cocktails, burning banks and rocks hurled at riot police.
If unrest continues at this scale or grows, it will narrow the regime’s policy options. Any serious economic adjustment will hurt in the short term, while backing down risks emboldening protesters, increasing the temptation to externalise pressure through missile tests, proxy attacks or nuclear brinkmanship as in past cycles.
What to watch for in 2026: Do bazaaris and other traditional constituencies keep mobilizing, or do they peel away once the currency stabilizes a bit? Do students and workers move from one‑off protests to sustained strikes that bite? And does the state settle on rotating repression, or will it at some point impose a full security lockdown?
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Economy at breaking point
People walking through a local market in Tehran as the value of the Iranian rial plummets. Photo: Reuters
Iran has one of the world’s highest inflation rates and a sinking currency. IMF and other estimates put consumer price increases above 40% in 2025 and still above that level this year, with food prices rising even faster. Data show year‑on‑year inflation near 50% last autumn, while some analysts warn it could approach 60 percent unless there are major changes in policy.
Iran now sits in the same high‑inflation bracket as Sudan, Argentina and Venezuela, all of which are struggling with battered currencies and deep recessions.
The rial’s latest crash is part of a long slide that has gutted real wages and undermined basic governance. Over the past two years the rial has set one record low after another on the open market. This freefall has steadily eroded real wages and pushed small traders to the edge, even before the most recent bazaar strikes.
At the same time, chronic water shortages, power cuts, and a neglected infrastructure have turned many provincial towns into cauldrons where economic, environmental, and safety grievances merge.
Sanctions linked to the nuclear program and regional meddling still choke off investment and access to hard currency. The state tries to muddle through with improvised fixes, such as multiple exchange rates, ad hoc subsidies, and off‑book oil sales routed through intermediaries. These efforts may keep the system afloat for now, but they also make prices more chaotic and push more of the economy into the shadows, buying time but also fueling corruption and deeper inequality.
The risk to the regime in 2026 is that these stopgaps will fail, forcing either a disorderly adjustment or a deeper squeeze on ordinary Iranians that feeds the cycle of dissatisfaction leading to further unrest.
What to watch for in 2026: Does inflation drift down into the 20 to 30% range, or does it stay stuck around 40 to 50%? Does the government bite the bullet and move towards a single, more honest exchange rate, or does it stick with today’s maze of official, semi‑official and black‑market rates that reward insiders and confuse everyone else? And at what point do water, power and safety failures in the provinces start producing new rounds of protests that the security forces can no longer treat as isolated “economic riots”?
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Age and weakness at the top
Iran’s Supreme Leader Ayatollah Ali Khamenei attending a ceremony mourning the deaths of Iranian military commanders and scientists in Iran’s 12-day war with Israel, in Tehran. Photo: Reuters.
The Islamic Republic has known only two Supreme Leaders since 1979. The current incumbent, Ali Khamenei, who’s served in the role since 1989, turns 87 in April, and although he remains active, recurring rumors about his health have intensified speculation over who is to follow him. It’s worth remembering that he effectively vanished from public view for much of the 12‑day war last June, retreating to a bunker and communicating only through pre‑recorded videos. That absence during the gravest crisis in decades has dented the image of an ever‑present “supreme commander,” even among parts of his own base.
Khamenei sits atop a visibly aging establishment. The Assembly of Experts that will choose his successor is dominated by men in their seventies and eighties, and the president, Masoud Pezeshkian, has spent his first year oscillating between apologizing for his lack of authority and pleading with hard‑liners to give him room to deliver on even modest economic promises. His constrained role, caught between a furious public and unelected power centers that control the security forces, courts, state media, and much of the economy, has reinforced the sense of drift at the top rather than reassuring anyone that there is a plan for what comes after Khamenei.
The sitting Assembly of Experts, which is tasked with choosing the Supreme Leader, was elected in 2024, and it is almost sure to be the one that chooses Khamenei’s successor.
A small committee has been formed to work through options. The jockeying among Islamic Revolutionary Guard Corps (IRGC) commanders, clerics and various insiders is real and open: a Reuters investigation last year described how Khamenei’s office and senior Guard commanders stepped up contingency discussions after the war with Israel. Among the possible successors: Khamenei’s son Mojtaba.
Some analysts sketch out two broad options: another all‑powerful Supreme Leader much like Khamenei, or a weaker figurehead surrounded by councils and security chiefs who make more of the real decisions. Hard continuity would mean another powerful Supreme Leader with broad formal and informal authority, a loyal Assembly of Experts that quickly closes ranks around him, and an IRGC that accepts a familiar chain of command in exchange for guarantees that its economic and regional portfolios stay intact. That version offers short‑term stability but locks in the same centralized decision‑making and ideological rigidity that helped produce today’s overlapping crises.
And this is no ceremonial, paper‑tiger role. The Supreme Leader is commander‑in‑chief of all armed forces, controls the missile program and has the power to declare war. Domestically he can overrule any president, parliament, or court whenever he chooses.
The figurehead path, by contrast, would see a Supreme Leader chosen more for manageability than charisma, with key decisions relegated to the Assembly’s leadership committee, IRGC command circles, and the Supreme National Security Council, where commanders and officials already meet to manage day‑to‑day crises. If that path is pursued, horse trading among factions will matter more than a single man’s word, potentially leading to paralysis and turf wars, as no center of power will feel able or obliged to take responsibility for painful course corrections.
What to watch for in 2026: Will Khamenei’s public appearances become shorter and rarer, or will he stage more set‑piece events to project control? Do we see any concrete moves by the Assembly of Experts’ succession committee that suggest it is narrowing the field to one or two names? Are there hints of constitutional tinkering that would shift authority from a single Supreme Leader towards various councils? Do key factions in the Guards, the clerical establishment and the security services start lining up more openly behind particular contenders? Will Masoud Pezeshkian gain any real room to shape economic policy and security decisions, or will he slide more openly into the role of scapegoat‑in‑waiting for choices made by others?
4. Nuclear “gray zone”
An employee working inside a nuclear facility in Isfahan, Iran. Photo: Reuters
On the nuclear front, Iran sits well beyond the limits of the 2015 deal but short of a declared weapons program. By late 2025 the IAEA and European governments reported that Tehran’s stockpile of enriched uranium had reached roughly 48 times the cap set by the JCPOA, including more than 440 kilograms enriched up to 60 percent, technically close to weapons grade. Inspectors say they have lost “continuity of knowledge” over parts of the program because of monitoring restrictions and unanswered IAEA questions about past undeclared nuclear work.
The 12‑day war with Israel underscored how volatile that situation has become. Israeli and U.S. strikes reportedly hit elements of Iran’s nuclear and missile infrastructure, prompting Tehran to further harden and disperse its assets while making clear it would not roll back enrichment. Independent experts judge that Iran still retains enough 60 percent material that, if further enriched, could be converted into “significant quantities” of weapons‑usable uranium in relatively short order.
In 2026 the question is less about Iran’s technical capability than about political decisions in Tehran, Washington, and European capitals. Iranian officials have floated ideas for narrow “mini‑deals” that would cap specific activities or increase monitoring in exchange for targeted sanctions relief. Meanwhile the Trump administration and Europe are debating whether to tighten pressure at the UN or live with a managed gray zone that keeps Iran near the threshold but shy of a bomb. Either path will feed straight back into domestic politics, where hardliners present compromise as humiliation and many protesters blame sanctions‑driven isolation for their worsening lives.
There are also suggestions that Tehran is focusing on restoring its ballistic missile production capacity over reconstructing its nuclear program.
What to watch for in 2026: Do IAEA reports show Iran slowing, freezing, or accelerating its 60 percent enrichment and stockpile growth? Does Tehran restore any monitoring and safeguards access that would rebuild “continuity of knowledge” for inspectors? Do Washington and European governments move towards a specific mini‑deal on enrichment caps or toward new UN/EU sanctions resolutions? And how quickly do any nuclear moves show up in the Iranian street in the form of new protests blaming both the regime and sanctions for making life worse?
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Foreign policy after the 12‑day war
Then-president Nicolas Maduro of Venezuela shaking hands with Iranian President Masoud Pezeshkian on the sidelines of the BRICS summit in Kazan, Russia, October 2024. Photo: Reuters
Regionally, Iran comes out of last year’s war with Israel both exposed and emboldened.
The war also forced the antagonists to reveal parts of their playbooks: how far they are willing to strike, and how quickly the U.S. steps in, for example. Military analyses say the war revealed gaps in Iran’s air defenses and command systems and likely prompted a rethink of how to deter future attacks.
Iran’s proxy network has survived the past two years of covert attacks and assassinations, but in a more frayed, less tightly controlled form. Hezbollah, the Iraqi militias, the Houthis, and pro-Tehran Palestinian factions were damaged by Israeli attacks before the war and during it. Some launch sites and logistics hubs were hit or exposed, several groups briefly dialed back fire or went quiet, and a few pursued their own skirmishes regardless of what Tehran wanted.
What has emerged from this year of grinding war is not a disciplined axis marching in step with Tehran, but a looser constellation of groups that still draw on Iranian money and branding but are now focusing on local politics and survival. This leaves Tehran with less deterrent leverage over Israel and the United States than it once imagined.
Russia’s focus on Ukraine and its weakened position in Syria have complicated the regional chessboard, but Moscow and Beijing still offer Tehran important economic and diplomatic cover, albeit short of a formal alliance. Iran is in a kind of informal “axis of the sanctioned,” closing oil, arms, and barter deals with Russia, China, and North Korea. Yet diverging interests and U.S. secondary sanctions keep those partnerships more transactional than trusting.
Circumstances can change overnight. Until the morning of Jan. 3, Venezuela could be counted on to serve as Iran’s main beachhead in Latin America, a place to sell sanctioned oil, build and test drones, move cash, and give Hezbollah and other networks a relatively permissive hub far from the Middle East. Maduro’s removal threatens that whole arrangement. It turns Iranian‑backed refinery repair projects, fuel‑swap deals, Venezuelan plants assembling Iranian‑designed drones, and covert finance schemes from sheltered assets into exposed liabilities, and it cuts Tehran’s ability to project power and evade sanctions in the Western Hemisphere.
In 2026, Iran’s foreign policy will be pulled between the need to restore deterrence, the desire to keep partners active but not uncontrollable, and the domestic imperative to avoid a war the economy cannot bear. A firmer U.S. approach, an Israel that openly keeps military options on the table, and Gulf states trying to hedge between confrontation and de‑escalation – not to mention a public with little appetite for more foreign adventurism over attention to bread and butter issues – will leave Tehran with little margin for error.
What to watch for in 2026: Do Iranian air‑defense and missile tests, or fresh long‑range strikes, suggest that Tehran thinks it has fixed the vulnerabilities exposed in the 12‑day war? Will Hezbollah, Iraqi militias, the Houthis and kindred groups keep firing in rough coordination with Iran, or will they peel off into more local fights and bargains of their own? Will Russia, China and other sanctioned partners deepen oil, arms and financial lifelines for Tehran, or will they trim cooperation to avoid U.S. pressure, especially after the shock of Maduro’s fall in Caracas? And does a poorer, war‑weary Iranian public swallow another year of brinkmanship abroad, or will it start to push back against foreign adventures that threaten what is left of the economy at home?
Adding it all up
What ties these five threads together is how little slack the system has left. A poorer, better‑connected, and more defiant society is colliding with an ageing leadership, an economy held together by stopgaps, a nuclear program in the gray zone, and a foreign policy that keeps Iran close to the edge of open war without quite crossing it.
In 2026, the question is no longer whether Iran can muddle through, but how many of these pressures can peak at once before something has to give.
Andres Ilves
Andres Ilves is Senior Director for Strategic Initiatives at MBN. His career as a journalist and writer includes two decades at the BBC and Radio Free Europe.
