How Iran's flagging economy inflamed its protests

Summary

Podcast Summary: The Indicator from Planet Money

Episode: How Iran's flagging economy inflamed its protests
Date: February 17, 2026
Hosts: Waylon Wong & Darian Woods (NPR)
Guest Experts: Arang Keshavarzian (NYU), Farshid Vahedafad (Tufts), Ali (Tehran bazaar shopkeeper, pseudonym)
Duration: ~10 minutes (excluding ads/intro/outro)

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Overview

This episode dives into the economic underpinnings of the massive protests that swept Iran around New Year’s 2026. While triggers like censorship and religious discrimination played a role, the initial catalyst was a collapsing economy—particularly rampant inflation, currency devaluation, and sky-high unemployment. The hosts illuminate how economic despair among shopkeepers in Tehran’s historic Grand Bazaar sparked much wider unrest, situating today’s crisis in Iran’s political and historic context.

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Key Discussion Points & Insights

1. Immediate Geopolitical Context

• Tensions in the Middle East: U.S. military presence has been ramped up, with President Trump putting pressure on Iran regarding nuclear weapons and missiles.
  [00:11]
• Iran’s Vulnerable Leadership: Massive protests have shaken the regime, forcing a bloody crackdown to quell dissent.
  [00:32]

2. Economic Roots of the Protests

• Inflation & Currency Collapse: Shopkeepers began closing their stores in protest after months of soaring inflation (50%) and a plummeting rial, which made it nearly impossible to sell goods at affordable prices or import merchandise.
  [03:24]-[03:41]

  “They produce, but it’s very difficult for them to sell. They are only producing, not selling.”
  —Ali, Tehran shopkeeper, paraphrased by Arang Keshavarzian [03:35]

• Initial Spark: Protests ignited not from activists but from everyday merchants, who closed their shops—an echo of historical protest tactics in Iran.
  [04:16]

  “They simply shut down their shops, closed the metal curtains. Sometimes…they stayed inside the store as a kind of a symbol of their unwillingness to open and sell their good.”
  —Arang Keshavarzian [04:16]

3. Historical Power of the Bazaaris (Merchant Class)

• Deep Political Influence: Bazaaris have a legacy of protest and political clout, playing key roles in Iran’s 20th-century revolutions. Their current protests were taken seriously by the regime, if belatedly.
  [04:34]-[05:06]

  “The Bazaaris since 1979 are viewed as a strong pillar of the regime. They’re generally socially conservative.”
  —Arang Keshavarzian [05:06]

• National Multifaceted Networks: Well-developed supply, lending, and information networks allowed protests to spread rapidly across the country.
  [05:35]

  “If there is a kind of a disruption in the bazaar, that information and that news quickly spreads…”
  —Arang Keshavarzian [05:35]

4. Beyond Economics: Water, Drought, and Broader Discontent

• Environmental Factors: Severe drought and water mismanagement, exacerbated by decades of dam-building and climate change, fueled further anger—food, power, and water shortages hitting daily life.
  [06:14]-[06:48]

  “The whole country has been struggling with a severe drought.”
  —Farshid Vahedafad [06:30]

5. Escalation and State Response

• Crackdown on Protests: Demonstrations grew to include university students and spread rapidly, making the regime feel existentially threatened, leading to lethal force.
  [07:23]-[07:43]

  “The truly brutal crackdown of January obviously has hit Iranians very, very hard. This has kind of reached a scale that I think most Iranians did not expect.”
  —Arang Keshavarzian [07:43]

6. Sanctions, Deeper Wounds, and Outlook

• International Sanctions: U.S. sanctions remain targeted at Iran’s oil sector, further strangling the economy on top of internal mismanagement and corruption.
  [08:18]
• Endemic Problems: Economic turmoil is not just about sanctions but also long-standing recession, corruption, and rising inequality.
  [08:23]

  “The Iranian economy has been basically for the past 10 years, 15 years, been in recession. This is…a vicious cycle combining sanctions as well as mismanagement of the economy…”
  —Arang Keshavarzian [08:23]

7. Daily Life Now

• Commerce Grinds Down: Ali reports that apart from food, little is selling in the bazaar—the public’s purchasing power and optimism have collapsed.
  [09:02]-[09:17]

  “The only market which is still working in a normal way is the food industry.”
  —Arang Keshavarzian [09:09]
  “They think that if I can’t buy a new sneaker, why shouldn’t I spend it for a good restaurant?”
  —Arang Keshavarzian (on people’s logic) [09:17]

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Notable Quotes & Memorable Moments

• Ali’s Business Struggles:
  “They are only producing, not selling.” [03:35]

• Historic Parallels:
  “This is the same sort of repertoire of actions that merchants and bazaaris have used for well over 100 years…” [04:34]

• Political Power:
  “The humble shopkeeper has a huge amount of political power in Iran.” —Waylon Wong [05:02]

• Spread of Protests:
  “Within the first couple of days in December, we saw protests all across the country.” —Arang Keshavarzian [05:35]

• Scale of Repression:
  “This has kind of reached a scale that I think most Iranians did not expect.” —Arang Keshavarzian [07:43]

• Systemic Economic Crisis:
  “This is…a vicious cycle combining sanctions as well as mismanagement of the economy… a lot of corruption and development of oligarchs and monopolists…” —Arang Keshavarzian [08:23]

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Timestamps for Important Segments

• [00:11] U.S. military context & President Trump’s Iran policy
• [03:24] On-the-ground marketplace economics in Tehran
• [04:16] Shop closures: beginning of protest
• [05:35] Nature and spread of bazaar protests
• [06:30] Water issues and environmental mismanagement
• [07:23] Crackdown accelerates, protests grow
• [08:18] Sanctions, international politics, and deeper economic roots
• [09:09] Daily survival: food industry as the only robust sector

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Conclusion

The episode shows how Iran’s fraught economy, worsened by political repression, sanctions, and environmental collapse, set the stage for a protest movement that briefly posed an existential threat to the regime. It reveals the special role of Iran’s bazaar merchant class in catalyzing and spreading dissent, linking today’s crisis to a long tradition of economic protest. The outlook, as the experts make clear, is bleak—enduring economic pain remains, and true reform seems distant.

Transcript

[NPR Announcer]

Npr.

[Waylon Wong]

As we speak, U.S. navy troops are in a state of waiting. They're telling their husbands, wives and children that they're going to be away from home for more months. That's because last week news broke that the US Government told a second aircraft carrier group to go to the Middle East. President Trump is imploring Iran to make a deal on its nuclear weapons and missiles program.

[Darian Woods]

Iran's leadership is in a vulnerable position. This comes off the back of massive countrywide protests that swept the nation around New Year's.

[Waylon Wong]

They've mostly been quelled for now because of a bloody crackdown by the Iranian government. So far, activists say that at least 7,000 protesters were killed. There are many reasons for those huge protests, censorship, religious discrimination, corruption. But the initial seed of these protests was economic. It started with shopkeepers frustrated with inflation and a currency collapse. This is the indicator from Planet Money. I'm Waylon Wong.

[Darian Woods]

And I'm Darian Woods. Today on the show, the economic roots of Iran's protests. We speak with a small business owner in Tehran and we learn why Iran is in such an economic message.

[NPR Sponsor Announcer]

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[Darian Woods]

You were dropped down from the sky onto central Tehran, you might find yourself at the Grand Bazaar. The Grand Bazaar is a gigantic marketplace of interlocking corridors. It's where wholesalers and retailers sell shoes and fabrics and cleaning supplies. And just outside the Grand Bazaar, you might find a workshop owned by Ali and his family.

[Arang Keshavarzian]

My parents, my grandparents, as much as I know about my background, they were all from bazaar.

[Waylon Wong]

Ali asked NPR not to use his full name because he fears retribution from the Iranian government and we were actually lucky to be able to speak with him.

[Darian Woods]

You might have cut out because Iran's.

[Waylon Wong]

Internet has been restricted off and on since early January.

[Darian Woods]

Hello again. Thank you for your patience.

[Arang Keshavarzian]

No problem.

[Darian Woods]

Ali's family business makes interior decorations that shop owners in the bazaar sell.

[Waylon Wong]

Ali says business has been bad recently. He traces this back to the 12 day war between Iran, Israel and the US last summer, he told us what his business managers have been telling him.

[Arang Keshavarzian]

They produce, but it's very difficult for them to sell. They are only producing, not selling.

[Darian Woods]

Inflation in Iran is running at around 50% 5 0. That means by the time the bazaaris, the shopkeepers buy their products and then go to sell them, they're having to mark up their prices a lot. And then the customers are refusing to pay such high prices.

[Waylon Wong]

The Iranian currency, the riyal, has also lost extraordinary amounts of value. That means it's harder for bazaaris to import their goods from overseas.

[Darian Woods]

In late December, a handful of shop owners just outside of the Grand Bazaar had had enough. Arang Keshavazian is a Middle Eastern and Islamic studies professor at New York University.

[Arang Keshavarzian]

They simply shut down their shops, closed the metal curtains. Sometimes, in some cases they stayed inside the store as a kind of a symbol of their unwillingness to open and sell their good. In other cases, they took to the street.

[Waylon Wong]

Shop closures, sit ins and rallies have a historical significance.

[Arang Keshavarzian]

This is the same sort of repertoire of actions that merchants and bisaris have used for well over 100 years, whether it was the constitutional revolution at the beginning of the 20th century or the oil nationalization movement in the 1950s or the 1979 revolution.

[Darian Woods]

In fact, bizaris were a driving force of the 1979 revolution. They helped fund demonstrations that led to Iran establishing a theocratic democratic hybrid, one that's suspicious of Western influence.

[Waylon Wong]

The humble shopkeeper has a huge amount of political power in Iran.

[Arang Keshavarzian]

As a general rule, The Bazaaris since 1979 are viewed as a strong pillar of the regime. They're generally socially conservative. And one way to see that is that when these protests started on December 28, the government was actually quite conciliatory. It acknowledged the legitimacy of the concerns of these shopkeepers and merchants and so forth. And it tried to actually negotiate and sit down with them, but it was.

[Waylon Wong]

Too little, too late. The protests were spreading to bazaars all around the country.

[Arang Keshavarzian]

All bazaars really have nationwide networks, whether it's lending networks or supply chains, networks between wholesalers and retailers and so forth. So part of the reason that protests in the bazaar could actually spread and take on national scope is that if there is a kind of a disruption in the bazaar, that information and that news quickly spreads to shopkeepers and other brokers and to. And that's what happened. Within the first couple of days in December, we saw protests all across the country, in other commercial centers and bazaars and other cities and even small towns.

[Darian Woods]

Soon the discontent was about more than just the exchange rate or inflation. Water supply has been a big issue, for example. Farshid Vahedafad is a professor of civil and environmental engineering at Tufts University. Over the past, I would say past few years, past five, six years, the.

[NPR Sponsor Announcer]

Whole country has been struggling with a severe drought.

[Waylon Wong]

This has meant power cuts from dry hydropower dams and even water restrictions in cities like Tehran. Farshad says the water problem has its roots decades ago when the new Islamic Republic of Iran got a bit carried away, building too many dams, building new.

[NPR Sponsor Announcer]

Dams, kind of becoming a kind of sign of independence and sign of development.

[Darian Woods]

In fact, Fashed used to design these dams in Iran himself until he moved to the US in 2007. He says they were as big as the Hoover Dam. These dams would extract more and more water from natural sources, sources so that Iran could grow more of its own crops. And after several decades worsened by climate change, access to water started to become a real problem in Iran.

[Waylon Wong]

Water was just one other pent up issue. NYU professor Aran Kashavarzian says university students were concerned about civil rights.

[Arang Keshavarzian]

By the third day, it included universities and university students in Tehran as well as other major cities, Esfahan and Yazd.

[Darian Woods]

After enormous demonstrations around the country, there was talk that this could be existential for the regime. There could be some sort of new revolution. That's when the government started shooting protesters in the street.

[Arang Keshavarzian]

The truly brutal crackdown of January obviously has hit Iranians very, very hard. This has kind of reached a scale that I think most Iranians did not expect.

[Waylon Wong]

In early January, President Trump said he would come to the protesters rescue. But that hasn't happened. The White House's main focus in negotiations with Iran is still preventing it from acquiring a nuclear bomb. That's one of the big reasons why President Trump put extra sanctions on Iran last year, limiting its oil sales. This is a major cause of this economic crisis.

[Darian Woods]

That said, as much as lifting sanctions would help Iran's economy, the problems go deeper than that.

[Arang Keshavarzian]

The Iranian economy has been basically for the past 10 years, 15 years, been in recession. This is a combination and kind of a vicious cycle combining sanctions as well as mismanagement of the economy, which has generated lots of negative outcomes. Most importantly from my perspective, a lot of corruption and development of oligarchs and monopolists and so forth. And connected to that is a lot of inequality, right? So this is in the background.

[Waylon Wong]

Arang is not optimistic about real change in the short term. That's because the inflation and currency collapse last year was just the spark the country had long been sitting on bone dry tinder.

[Darian Woods]

Right now in Tehran, Ali says people aren't buying much of anything at the bazaar, with one exception.

[Arang Keshavarzian]

The only market which is still working in a normal way is the food industry.

[Darian Woods]

People still have to eat.

[Arang Keshavarzian]

Yes, they think that if I can't buy a new sneaker, why shouldn't I spend it for a good restaurant? Maybe I wouldn't do that, but everyone do that.

[NPR Announcer]

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