Protests that erupted in Iran in late December have rapidly escalated into the largest wave of unrest the country has seen in three years, driven by economic collapse, soaring inflation and mounting external pressure.

On December 28, angry merchants in Tehran shut down their shops to protest the collapse of the Iranian rial, which plunged to a historic low of 1.42 million rials to the U.S. dollar, alongside a sharp rise in living costs. The demonstrations quickly spread beyond the capital, evolving into nationwide protests across the majority of provinces.

Clashes between protesters and security forces have been reported in multiple cities. According to media reports, dozens of people have died so far. Observers describe the unrest as Iran's most serious domestic challenge since protests erupted in 2022.

What triggered the protests?

Experts say the current unrest is the result of long-simmering domestic and external pressures converging at a critical moment.

Wang Jin, a researcher at the Institute of Middle East Studies at Northwest University of China, told CGTN that Iran's protests are fundamentally driven by failed economic policies and chronic inflation. Since 2025, the rapid depreciation of the national currency and the sharp rise in living costs have significantly intensified public discontent.

Tang Zhichao, director of the Center for Middle East Development and Governance Studies at the Chinese Academy of Social Sciences, said Iran's economic collapse has been driven largely by U.S. sanctions and Washington's "maximum pressure" policy, which have cut the country off from the international financial system and global energy markets, leaving it with little capacity to respond effectively.

Since the United States withdrew from the Iran nuclear deal in 2018, Iran has been subjected to multiple rounds of severe sanctions, triggering currency depreciation, runaway inflation and a sharp contraction of economic activity. At current exchange rates, the average Iranian's full-time monthly income is just over $100, barely enough to cover basic food needs.

Official Iranian data show that by December 31, 2025, the exchange rate had reached 1.38 million rials per dollar, up from around 820,000 in 2024. While the government set an official rate of 42,000 rials per dollar in 2018, the free-market rate has surged to around 1.5 million, highlighting a massive gap. Repeated attempts at currency reform have failed, each time triggering renewed depreciation.

Inflation has further fueled public anger. Official figures show Iran's year-on-year inflation rate hit 52 percent in December 2025, eroding purchasing power and sharply lowering living standards – particularly for merchants and the urban middle class, who formed the backbone of the initial protests.

Compounding the crisis, Tehran and surrounding regions are facing severe drought and worsening water shortages, placing additional strain on livelihoods and agriculture.

What role do the U.S. and Israel play?

Experts say external factors have also played a significant role in prolonging and intensifying the unrest.

The protests have lasted for two weeks and have grown increasingly confrontational. AFP and Reuters reported incidents in several cities involving arson attacks on police stations and vehicles, as well as assaults on facilities linked to the Islamic Revolutionary Guard Corps. Casualties have been reported on both sides.

Iranian authorities have blamed the unrest on foreign interference. On January 5, Tasnim News Agency reported that security forces had detained an alleged agent of Israel's Mossad among rioters involved in attacks on Iranian security forces. The individual reportedly confessed to being recruited by Israeli intelligence and was linked to an active spy network.

Tang noted that while protests had been subsiding earlier, they flared up again following renewed external pressure. He cited U.S. President Donald Trump's warnings to Iran, Israel's public threats of further military action and Trump's statements on the protests as factors that helped fuel escalation.

Zhou Yiqi, an associate research fellow at the Shanghai Institutes for International Studies, said previous military clashes, like the 12-day conflict in June last year, failed to weaken Iran's political system and instead strengthened domestic unity. "Under these circumstances, the U.S. and Israel are seeking new pressure points, hoping to exploit Iran's internal contradictions," he said. Unlike past protests, this round saw violent attacks on police and military targets at an early stage, suggesting possible external orchestration, Zhou added.

Will Trump intervene?

Following the outbreak of protests, Trump warned on January 2 that the U.S. was "ready" to intervene in Iran. Days earlier, he had threatened renewed military action if Iran resumed its ballistic missile program. On January 8, Trump escalated his rhetoric, warning of "severe consequences" if deaths continued.

Observers are questioning whether Washington might replicate its recent actions against Venezuela. The U.S. previously assassinated Iranian military commander Qassem Soleimani in 2020 and carried out strikes on Iranian nuclear facilities last year.

Tang said Washington is currently observing developments cautiously but may adjust its approach if conditions worsen. "If there are mass casualties, civil war, or the regime's survival is seriously threatened, the likelihood of U.S. military intervention would increase," he said.

Wang said the likelihood of U.S. military intervention in Iran remains low under current conditions. "While the U.S. may have the intent to intervene, it is not yet prepared to carry out military strikes," he added.

Wang noted that the U.S. has not deployed air combat formations near Iran, and aircraft carrier strike groups would still need nearly 20 days to reach the region. In addition, military deployments at bases surrounding Iran are not yet complete, meaning more time is needed to finalize preparations for any potential action.

Liu Zhongmin, a professor at Shanghai International Studies University, said that the U.S. has little appetite for a large-scale or prolonged conflict, as reflected in its latest National Security Strategy. "Washington prefers cognitive and psychological pressure to force change, rather than launching a large-scale military operation," he said, adding that the U.S. will encounter greater systemic challenges if it handles the Iran issue the way it has dealt with Venezuela, as Iran is geographically farther from the U.S., and the issues involved are far more complex and intractable than those in Venezuela.

How will the protests end?

Experts say the outcome remains highly uncertain.

Iranian authorities have adopted a dual-track approach: tolerating economic protests while cracking down on violence and anti-regime actions. Measures include tax relief for merchants, suspending tax penalties, providing subsidized foreign currency for imports and replacing the central bank governor.

Iranian President Masoud Pezeshkian has ordered security forces to avoid suppressing peaceful protests and to clearly distinguish demonstrators from armed rioters. He warned that those carrying weapons and attacking police or military facilities would face severe punishment.

Supreme Leader Ayatollah Ali Khamenei said exploiting merchants' protests to incite unrest and threaten national security is "absolutely unacceptable."

Despite these measures, analysts caution that political divisions within Iran – between those favoring dialogue and hardline security institutions advocating force – could prolong instability.

"Socioeconomic problems cannot be meaningfully eased in the short term through policy measures alone. The turbulence is likely to continue for some time," Wang said.