Iran at the Precipice: The Economics of Endurance
Iran’s “Resistance Economy” preserves the state – but consumes the nation
By: Amirreza Etasi
In the aftermath of recent Israeli-Iranian military confrontations, in which the US attacked nuclear sites in Fordow, Isfahan, and Natanz, followed by the rapid reimposition of sanctions, Iran’s economy stands at a pivotal juncture.
The state hasn’t collapsed, nor is it likely to in the near term. Yet beneath the surface of apparent continuity lies a deeper, more intricate reality. The crisis has peeled back the veneer of stability, exposing the internal contradictions of the Islamic Republic’s long-standing doctrine of survival: the Resistance Economy. This economic model, long hailed as the linchpin of sovereignty and independence, now reveals a far darker and more complex reality, demonstrating resilience at the cost of societal decay.
Once praised for its strategic foresight, the model now sustains the structure of power while simultaneously eroding the foundations of society. The mechanisms that insulated Iran from external shocks have evolved into a machine that systematically transfers the burden of endurance from the state to its citizens. Behind statistical stability lies a human crisis that is both economic and moral, reshaping everyday life, public expectations, and social contracts.
A Paradox of Survival
Recent data from international financial institutions paints an ostensibly resilient macroeconomic picture. Superficially, this might suggest a nation on the road to recovery. In reality, these figures expose a stark paradox: Iran’s economy appears to grow on paper even as ordinary citizens experience a decline in living standards, wealth, and opportunity.
Two distinct economies coexist within a single state: the state economy and the citizen economy. The first is the state economy – opaque, militarized, and meticulously structured around sanctions evasion. Anchored by semi-official oil exports, gray-market trade, and state-controlled enterprises, this sector produces enough hard currency to sustain government operations and maintain geopolitical leverage.
Meanwhile, the citizen economy, encompassing private businesses, salaried workers, and everyday households, faces inflationary pressures, unemployment, and a continuous erosion of purchasing power. For the citizens, “growth” is a cruel abstraction, a statistical mirage detached from lived experience. The IMF’s April 2025 outlook confirms that inflation remains stubbornly above 40 percent, underlining the dissonance between macroeconomic appearance and individual reality.
These figures illustrate an economy locked in managed decline, kept alive not by internal dynamism but by external circumvention and state prioritization. While certain macro-level metrics suggest resilience, they mask a deeper structural fragility.
The Human Recession
Despite macroeconomic charts that suggest resilience, daily life for ordinary Iranians is marked by uncertainty, frustration, and erosion of social stability. In Tehran’s bustling markets, prices change faster than trust can be built. Households now plan in weeks rather than years, constrained by inflation, scarcity, and economic unpredictability. A government wage increase of 25 percent in 2024 was swiftly nullified by runaway inflation, pushing millions further below the poverty line.
The once-dominant middle class – the social and economic engine of reform – has steadily eroded in both power and capacity to stabilize society. Households that once measured progress in material acquisitions now measure survival in caloric intake. Policy choices, including the abrupt termination of cash subsidies for millions in August 2025, have shattered a central pillar of the post-revolutionary social contract, transforming a system once defined by redistribution into one defined by withdrawal, extraction, and cautious endurance.
A Nation Draining Away
Perhaps the most alarming consequence is the accelerating exodus of human capital. What began as a chronic concern about brain drain has escalated into a civilizational hemorrhage. More than 70,000 skilled professionals are estimated to have left the country in 2024 alone, a mass departure that the IMF previously valued at up to US$50 billion annually in lost productivity. This talent flight is self-perpetuating: economic stagnation drives the exodus, and the exodus in turn deepens stagnation.
Universities, historically hubs of intellectual innovation, have become waiting rooms for emigration. The erosion of human capital is not merely economic; it is a civilizational loss. While physical infrastructure can be rebuilt, the departure of skilled professionals, educators, and innovators represents an almost irreversible depletion of national intellectual capacity.
Iran’s turn toward austerity reflects both necessity and ideological design. In this context, austerity is not neutral. It is deeply political. Every subsidy cut, every retrenchment of public spending, reshapes the social hierarchy. Institutions entrenched in the shadow economy capture advantages, while salaried workers, pensioners, and small business owners bear the brunt of policy choices. Labor strikes, sporadic protests, and rising public discontent have become an integral part of the economic landscape.
The state’s survival instincts, including repression, information control, and the assignment of external blame, continue to operate effectively, but they no longer inspire trust or confidence. Instead, they cultivate resignation and fatigue.
The Four Futures
Iran’s trajectory now hinges on how its leaders navigate the tension between survival and reform. Four plausible scenarios emerge, each with profound implications:
Continuation: The state doubles down on resistance economics, ensuring short-term stability while cementing long-term systemic decay.
Social Pressure Escalation: Economic hardship sparks unrest, forcing partial policy concessions without addressing deep-seated inefficiencies.
Structural Reform: A technocratic pivot, driven by crisis, attempts to rationalize the economy. Success requires political will and institutional capacity that may not be present.
International Opening: A strategic détente with the West leads to sanctions relief, reintegration into global markets, and potential economic revival, but also challenges ideological control and internal legitimacy.
Each scenario carries a distinct balance of risk, reward, and political complexity. The choice is not merely economic; it is existential.
Endurance or Emptiness
Iran today neither collapses nor fully recovers – it endures. State machinery functions, salaries are disbursed, and oil continues to flow. Yet endurance, stripped of purpose and long-term vision, is not resilience; it is slow implosion. The Resistance Economy preserves structural integrity while hollowing out societal vitality. For ordinary Iranians, this represents a Pyrrhic stability: survival achieved at the expense of future prosperity. Iran has mastered the mechanics of survival but, in the process, may have forgotten the true meaning of progress, opportunity, and national vitality.
Amirreza Etasi is a regular contributor to Asia Sentinel. He has served in management roles in Iran’s oil and gas sector, while contributing in-depth analysis to Middle Eastern publications. He can be reached at Amir.etasi@gmail.com.
A depressing article highlighting the impact Western sanctions have had on Iran's economy and society, a thing understood long before by perceptible observers outside when Iran's 'resilient economy's was being tom tommed by people both inside and outside Iran. Apart from the economy, a society cut off from normal interactions with the outside world mostly has negative effects on itself, a price Iranians agreed to pay for the political stance they have taken in the region's geopolitics.