As infighting over the war response intensifies at the core of Iran's top power structure, an assessment has emerged that Iran's chronic economic crisis is nearing a breaking point.
According to Iran International, an Iran opposition outlet based in London, rifts between the president and the military have deepened inside Iran as the war with the United States and Israel drags on. Masoud Pezeshkian, the president, and Ahmad Vahidi, the Islamic Revolutionary Guard Corps (IRGC) commander in chief, are seen as clashing over continued IRGC drone and missile attacks on neighboring Gulf countries.
President Pezeshkian's position is that the IRGC's strategy of attacking neighboring countries and heightening tensions in the Middle East will inflict long-term damage on Iran's economy and society at large. According to internal sources, Pezeshkian emphasized that "without a truce, Iran's economy will completely collapse within three weeks to a month," and is said to have ordered the IRGC to halt attacks.
In fact, President Pezeshkian has continued efforts to tamp down the Middle East's gale of conflict. On the 7th he appeared in a national TV address and, regarding the IRGC's "free-fire" style attacks on neighboring countries such as the United Arab Emirates (UAE), Qatar and Kuwait, said, "We have no intention of carrying out any attack. They are our brothers," adding, "We express our apologies to neighboring countries harmed by Iran's attacks."
However, as the IRGC continued drone and missile attacks afterward, the clash over attack authority appears to have intensified further. President Pezeshkian demanded that administrative and management authority be restored to the executive branch, but Commander in Chief Vahidi flatly rejected the move, deepening the rift. Vahidi instead is said to be rebuking the administration, saying, "The current situation is the government's responsibility for failing to carry out structural reforms before the war."
Vahidi, appointed on the 28th to succeed Commander in Chief Mohammad Pakpour, who was killed in a U.S. airstrike, is classified as a hard-liner, the opposite of pragmatist reformer Pezeshkian. Like his deceased predecessor, he is sticking to a hard-line external stance. Nati Toubian, a Middle East expert well versed in Iran's internal affairs, assessed Vahidi by saying, "Far from a truce, he will try to fight by any means."
The problem is that Iran's economic situation has already reached a grave level. As the war enters its fifth week, reports are mounting in major Iranian cities of cash machines being empty or out of service, and state bank online services have been intermittently disrupted, indicating the financial infrastructure is entering a phase of rapid collapse.
The industrial base is also weakening rapidly. Factories and production facilities face shortages of raw materials, sending operating rates plunging, and production disruptions are widening due to supply chain breakdowns. Earlier, after striking the South Pars gas field in the south on the 18th, Israel bombed a steel plant on the 27th, pursuing a strategy of resetting targets to economic facilities.
Prices are already judged to be beyond the range of control. Local testimony continues that prices for some daily necessities have soared at least 50% compared with before the outbreak of war, rising by the hour. Given that even in February, before the war, inflation for essential goods had already reached 105% to 115%, it appears the public has effectively entered a phase of hyperinflation that is impossible to bear.
Iran's poverty rate is hitting a record high day after day. More than 40% of the total population is currently below the absolute poverty line, and in the capital, Tehran, the ratio is estimated to exceed 50%. According to government officials, a significant number of public-sector workers' salaries and allowances have not been paid on time over the past three months.
Some also raise concerns that rising discontent across society could rekindle large-scale anti-government protests. From late December last year for about a month, anti-government protests swept Iran nationwide amid the economic crisis, and at least 3,000 people were counted as having died in the government's bloody suppression.