Iran Economy & Internet Shutdown Worsen Amid US-Israel Conflict

Tehran, Iran – For the fourth week, Iranians are navigating the cascading effects of the ongoing US-Israeli conflict alongside a rapidly deteriorating economic situation and what constitutes the longest internet shutdown in the nation’s history. The confluence of geopolitical instability and domestic economic hardship is creating a precarious environment for a population already grappling with years of sanctions and internal challenges.

While much of the country is observing the Nowruz holidays, the Persian New Year, the sense of celebration is muted. This year’s respite comes on the heels of numerous unexpected closures – a 12-day war with Israel and the US in June, widespread protests in January, and persistent air pollution stemming from an ongoing energy crisis. These disruptions have collectively taken a significant toll on Iran’s economic activity.

Economic Strain Deepens

Business owners are reporting substantial declines in income, particularly in the period leading up to Nowruz, traditionally a peak season for commerce. “There was some action in those last few days, but our sales were probably about one-third of usual levels around this time,” a textile vendor in Tehran’s Grand Bazaar told Al Jazeera, requesting anonymity due to security concerns. “Nobody is sure what comes next when we open back up after the holidays. Things have only gotten worse over the past few years.”

The erosion of purchasing power has been a long-term trend, exacerbated by local corruption, mismanagement, and the “maximum pressure” campaign of sanctions initiated by the Trump administration in 2018. Prior to the recent escalation of conflict, annual inflation officially stood at around 70 percent, with food inflation exceeding 100 percent – a worrying sign for lower-income families. The stock market has been in decline, prompting concerns about potential hyperinflation and a shift towards dollarization of the economy.

The government has responded with measures such as planned spending cuts, a 60 percent increase in the minimum wage, and a modest cash subsidy. However, these efforts are largely overshadowed by rising costs, a situation compounded by the economic fallout from the June conflict. Taxes have also increased significantly this year, adding to the financial burden on citizens and businesses. A grocery shopkeeper in western Tehran noted a growing trend of customers carefully scrutinizing prices and calculating costs before making purchases.

Displacement and Uncertainty

The recent hostilities have prompted some families to leave major cities like Tehran, seeking safety elsewhere. Many are drawing on their savings, facing an uncertain future. Despite suggestions from former President Donald Trump regarding potential diplomatic avenues to halt the conflict – as reported on March 24th – the situation remains volatile, with the Islamic Revolutionary Guard Corps (IRGC) continuing to launch projectiles at regional neighbors and contributing to global energy price increases.

The Digital Blackout

Adding to the hardship, over 90 million Iranians have been without access to the global internet for 25 days, a state-imposed blackout that is deepening the sense of isolation and hindering access to information. This shutdown not only restricts the ability of Iranians to communicate with the outside world and share their experiences but also inflicts significant psychological and financial damage. “This time, there is not even a word about when the internet might get reconnected. It is not only humiliating, but it is also forcing businesses to close down and inflation to grow,” said a young woman who ran an online jewellery business.

The current internet shutdown follows a similar 20-day disruption in January, imposed during widespread anti-establishment protests that resulted in numerous deaths. Many online businesses suspended operations in the aftermath of those protests to raise awareness about the killings.

Asset Seizures and Crackdowns

The Iranian government has intensified its crackdown on dissent, confiscating the assets of individuals perceived as opposing the regime. This includes private businesses that expressed solidarity with protesters, even through social media posts. On Tuesday, the judiciary announced the confiscation of assets belonging to Borzou Arjmand, an actor advocating for the government’s overthrow, and others associated with him, labeling them as collaborators with “terrorists” and “the US-Israel child-killing regimes.” The judiciary also announced its ability to identify and seize online assets linked to individuals deemed aligned with “hostile countries.”

Iran has carried out multiple executions in recent weeks, citing national security concerns related to last year’s conflict and the January protests. Authorities are actively suppressing any attempts to disseminate footage of the war or armed checkpoints to external media outlets. The IRGC-affiliated Fars news agency recently publicized the “confession” of a young woman arrested for filming a missile impact, warning that those sharing information with “anti-Iranian media” will face consequences.

Escalating Repression

Authorities have explicitly warned that anyone participating in protests will be shot and killed, labeling them as “enemies.” They continue to mobilize pro-government paramilitary and civilian groups to maintain control. Brad Cooper, the top US military commander in the region, advised Iranian citizens to remain indoors for their safety, while suggesting that a signal for public demonstrations would be given at a later date, as indicated by President Trump.

What’s Confirmed and What Remains Unclear

It is confirmed that Iran is experiencing a severe economic downturn, exacerbated by ongoing conflict, sanctions, and internal political pressures. The extent of the internet shutdown and the government’s crackdown on dissent are also confirmed. The number of casualties from the January protests remains disputed, with varying reports from different sources. The viability of Trump’s reported diplomatic efforts to de-escalate the conflict is currently unclear, as attacks continue. The long-term impact of asset seizures on the Iranian economy is also uncertain.

Looking Ahead: Procedural Next Steps

The immediate future hinges on the trajectory of the US-Israeli conflict and the potential for diplomatic intervention. While Trump has suggested a path towards negotiations, the continued attacks and escalating rhetoric suggest a prolonged period of instability. The Iranian government’s internal response – including the severity of the internet shutdown and the extent of the crackdown on dissent – will also be crucial in shaping the country’s future. The international community’s role, particularly regarding sanctions relief and humanitarian aid, remains to be seen. Monitoring the actions of the IRGC and their impact on regional energy markets will be essential in assessing the broader geopolitical implications of the crisis.