It would be a mistake to view the protests across Iran that peaked on Jan. 7 and 8, and the subsequent brutal crackdown that killed at least 6,506 protesters, solely as a confrontation between state and society. Against a backdrop of economic hardship and political discontent, rival factions within the Islamic Republic have sought to steer, contain, or exploit unrest to advance their own agendas. The latest upheaval unfolded amid intense maneuvering inside the system, as competing power centers jockeyed over economic reform, foreign-policy direction, and control of the political field.
“My analysis is that the start of these widespread protests was likely by the design of the intelligence institutions themselves,” Ali Shakouri-Rad, a former member of Iran’s parliament and reformist activist, said shortly before his arrest in early February. “From the moment it began in the bazaar, they knew this would happen.”
It would be a mistake to view the protests across Iran that peaked on Jan. 7 and 8, and the subsequent brutal crackdown that killed at least 6,506 protesters, solely as a confrontation between state and society. Against a backdrop of economic hardship and political discontent, rival factions within the Islamic Republic have sought to steer, contain, or exploit unrest to advance their own agendas. The latest upheaval unfolded amid intense maneuvering inside the system, as competing power centers jockeyed over economic reform, foreign-policy direction, and control of the political field.
“My analysis is that the start of these widespread protests was likely by the design of the intelligence institutions themselves,” Ali Shakouri-Rad, a former member of Iran’s parliament and reformist activist, said shortly before his arrest in early February. “From the moment it began in the bazaar, they knew this would happen.”
His remarks referred to protests that began on Dec. 28 among bazaaris, or merchants, in Tehran. The protests would peak on Jan. 7 and 8 in a sweeping outpouring of public anger across the country. The state responded with overwhelming brutal force, killing at least 6,506 protesters, according to the Human Rights Activists News Agency, and imposing a near-total internet shutdown that lasted for weeks.
Supreme Leader Ayatollah Ali Khamenei himself framed the unrest in existential terms. He described the protests as “akin to a coup,” declaring that “the coup was suppressed.” Such language was revealing not only of the government’s heavily securitized mindset, but of the competition within the state itself.
Understanding these internal dynamics is essential to grasping the current moment, the delicate balancing act facing Iran’s multilayered security and political institutions, and Khamenei as they seek to consolidate authority while navigating mounting internal and external pressure.
The protests did not emerge spontaneously. Iran has been mired in deepening economic distress for years. Since the imposition of sweeping “maximum pressure” U.S. sanctions in 2018, millions have fallen from the middle class into poverty. Inflation has hollowed out wages, the currency has sharply and precipitously declined, and economic insecurity has become a defining feature of daily life. At the same time, broad swaths of Iranian society have grown ever more disillusioned with clerical rule and the political stagnation it represents.
But the protests’ origins in Alaeddin and Charsou malls, major hubs for mobile phone and electronics trade, may not have been coincidental. Alaeddin in particular has long been linked to a businessman believed to have ties to conservative power centers. In Iran’s deeply distorted and sanctions-ridden economy, such commercial nodes are not merely marketplaces. They sit at the intersection of politics, currency allocation, and informal trade networks. Years of sanctions have pushed much of Iran’s economy into gray- and black-market channels, empowering intermediaries who facilitate covert oil sales, currency transfers, and import arrangements.
The system of multiple exchange rates amplified these distortions. For years, a “preferential” rate of 285,000 rials to the dollar was granted to select importers and producers, while the free market rate had surged to roughly 1.4 million rials by late December. The enormous gap created vast arbitrage opportunities and fostered entrenched rent-seeking networks. It also fueled intense, largely behind-the-scenes infighting among rival elites competing over access to scarce hard currency and control over economic policy.
It was into this fragile and corruption-prone system that President Masoud Pezeshkian moved in November, attempting to narrow distortions and move toward exchange rate unification. The reforms aimed to curb arbitrage and reduce the influence of rent networks tied to the old preferential regime. But as importers were pushed into the thinner free currency market, demand for dollars surged and the rial slid further, deepening public anxiety and economic strain.
At the same time, reports emerged that billions in oil revenues held abroad by intermediaries, often referred to as “trustees,” had not been repatriated on schedule. Whether due to foreign pressure, mismanagement, or deliberate delay, the withholding of hard currency further constricted supply in an already fragile market. Some Iranian analysts saw this not merely as economic dysfunction, but as part of a broader U.S. or Israeli covert action against Iran and a coordinated effort to destabilize the government at a sensitive postwar moment following the June war with Israel.
Yet reducing these developments to external sabotage alone misses arguably the most consequential layer. In Iran, external pressure and internal rivalry are deeply intertwined. Competing elite factions routinely use moments of crisis to weaken rivals, advance preferred policies, and reshape the balance of power inside the system. The battle over exchange rate unification, the backlash from entrenched rent networks, the initial bazaar unrest, and the harsh repression that followed all unfolded within this ongoing struggle.
What has emerged from it remains uncertain. Figures such as Ali Larijani, a pragmatic conservative and current secretary of the Supreme National Security Council; Hassan Khomeini, a grandson of the Islamic Republic’s founder whose high visibility in recent weeks has fueled speculation that he is on a shortlist to succeed Khamenei; and Ali Shamkhani, who survived an Israeli assassination attempt last summer and was recently appointed head of Iran’s new Defense Council, appear relatively strengthened. Even former President Mahmoud Ahmadinejad has alongside Khomeini.
While the most consequential shifts may be unfolding behind closed doors, one development is unmistakable: In the aftermath of historic protests, Iran has launched its largest purge of reformists since 2009, arresting prominent former officials and senior leaders of the Reform Front, many of whom were instrumental in Pezeshkian’s election. Those detained include Azar Mansouri, the Reform Front’s secretary-general; Ebrahim Asgharzadeh, head of its political committee; Javad Imam, its spokesperson; and Ali Shakouri-Rad, the former lawmaker whose recent remarks questioning the official narrative of the protests drew hard-line fury.
This was not a marginal faction. The Reform Front had sharply condemned the mass killings of January, calling for an independent fact-finding committee to investigate what it described as an unprecedented tragedy. It proposed forming a “National Assembly” to help steer the country out of crisis. After the June war with Israel, it had even endorsed negotiations over uranium enrichment, long treated as a political red line. In short, it was attempting to reopen space for managed structural reform at a moment of acute danger.
Before their arrest, several of the movement’s leading figures were reportedly working to build a broader civic platform that would extend beyond the traditional reformist-conservative divide. At a moment of deep instability, such an initiative was likely seen by authorities as the embryo of an organized internal alternative. The arrests reflect a different strategic choice: to tighten the circle of insiders and block any convergence between structural reformists still inside the system and more openly oppositional former officials such as Mir Hossein Mousavi and Mostafa Tajzadeh, now under house arrest and in prison, respectively. With questions on Khamenei’s looming succession and nuclear talks restarting under the shadow of war, the Iranian leadership appears intent on preemptively neutralizing internal challengers before they can coalesce into something more consequential.
In any case, the sweep marks the culmination of the reformist movement’s long decline. From the optimism of the “Second of Khordad” movement after Mohammad Khatami’s 1997 election as president, reformists were steadily weakened in the ensuing years through press closures, mass disqualifications in elections, and systematic repression, with the crushed Green Movement of 2009 as the decisive rupture. What had remained to today was a diminished camp divided between technocrats seeking limited openings and structural reformists who advocated pressure from below and bargaining at the top. It is the latter who now seem to be pushed out of the system altogether.
In the audio that preceded his arrest, Shakouri-Rad warned that the disappearance of a credible political center would itself deepen the crisis. The middle ground, he argued, is a form of social capital that helps defuse unrest. Instead, he said, Iran is witnessing dangerous polarization. “We no longer have a middle force that can resolve crises,” he cautioned, describing a society in which protesters and security forces increasingly view one another as enemies rather than fellow citizens.
He also suggested that rising monarchist slogans reflect not ideological devotion but political abandonment. Many have turned to figures like Reza Pahlavi, he argued, because reformist and peaceful paths for change have been systematically closed. By sidelining reformists, the state may be eliminating not just rivals, but the last institutional buffer between itself and a deeply frustrated public.
