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The Economic Fallout: From War to HyperinflationIran is already preparing for the perilous transition from wartime unity to a fractious peace marked by severe economic distress. With peace not yet secured, the regime is grappling with how to survive the peace after having survived the war. The economic damage inflicted by the conflict is catastrophic, with estimates suggesting losses of $270bn (£200bn) to infrastructure, schools, energy, and housing.The immediate impact on the civilian population is stark. The country is facing food inflation at its highest level since the Second World War, with annual food inflation reaching 130% in May. Inflation for essential proteins has been even more severe, with meat and chicken prices soaring by 176%. This economic pressure is driving a crisis in nutrition, with health experts warning of rising malnutrition, osteoporosis, and growth stunting due to the elimination of dairy products from the average diet.The Limits of Sanctions ReliefWhile the prospect of peace brings hope for sanctions relief, Iranian economists are skeptical about the scale of the economic bonanza. Much depends on whether Donald Trump is willing to lift the economic blockade, but few believe the relief will be more than a small fraction of the estimated $270bn losses.Professor Albert Baghzian of the University of Tehran argues that an influx of $12bn to $24bn will not lead to a major economic opening. He notes that figures higher than this have been brought into the economy before, but due to poor planning and wasted resources, the country remains in its current state. The challenge is not just the lack of funds, but the dominance of command-based governance over rule-based governance, where decisions are driven by short-term expediency rather than transparent economic rules.Infrastructure Collapse and the Crackdown on DissentThe physical and social infrastructure of the country is under immense strain. The energy ministry has been forced to deny plans for controlled two-hour blackouts starting next month, despite warnings from industry leaders that daily shutdowns may be necessary to maintain production. Incentives such as 30% price discounts are being offered to consumers who cut their energy consumption by 10%.Simultaneously, the regime is facing a resurgence of dissent. The lifting of internet censorship has been a controversial move, leading hardliners in parliament to attempt the impeachment of the communications minister. The period between the 10-day war of 2025 and the renewed war in February 2026 saw a significant increase in repression, including 22 political prisoner executions between March and April. The Islamic National Unity party has publicly urged President Masoud Pezeshkian to stop executions, arguing they tarnish the country's image and fuel internal divisions.Can the Regime Survive the Peace?The ultimate test for the Iranian leadership is whether they can reorganize for peace by addressing the domestic and international problems that held the country back. The current cohesion is artificial, born of an external enemy; as soon as the front wins, the split within it begins.If the economic blockade continues and there is no opening for capital, technology, and raw materials necessary for reconstruction, the devastation will not be repaired but will become a permanent social condition. The destruction will turn from a temporary incident into a context of scarcity, exhaustion, and instability. The regime's ability to navigate this perilous transition will determine whether Iran remains a fractured state or finds a path toward recovery.

The Lead: Iran's Defiance After 100 Days of ConflictTehran, Iran – Iranian authorities remain defiant 100 days into the war launched by the United States and Israel as no lasting resolution appears in sight, and civilians bear the brunt of a conflict that has roiled global markets.On the streets of the capital, Tehran, most shops are open, although not with as many customers as before. Traffic has been restored, but only partially, since millions of jobs have either been suspended or eliminated after nationwide protests, aerial bombardment and two state-imposed internet shutdowns over the past several months.Armoured vehicles, heavy weaponry and security forces continue to be common sights in the metropolis of about 10 million people at all hours of the day.At night, armed forces are setting up numerous checkpoints across the city, escorting motorcades of state supporters blasting religious slogans. Main squares and many streets are typically closed so that people can gather, often heard chanting slogans against the US and Israel.The Power Transition: Leadership in CrisisPro-government messaging and flags of the Lebanese group Hezbollah and other members of the Tehran-backed "axis of resistance" are widely featured in banners and billboards across Iran.Some vehicles and city murals bear images of Mojtaba Khamenei, who was selected as supreme leader by a clerical body after the assassination of his father, Ayatollah Ali Khamenei, on the first day of the war.Mojtaba Khamenei, who was reportedly wounded in the same US-Israeli strikes that killed his father and other family members, has not been seen or heard from publicly since taking the helm, except for written messages attributed to him.The authorities have yet to hold funeral processions for Ali Khamenei, who ruled Iran for nearly 37 years. His family members were buried a week ago, and other top commanders and officials killed on February 28 were also buried months later.Economic Collapse: Hyperinflation and Currency CrisisYears-long economic woes have only worsened after oil and gas facilities, major steel and aluminium producers and industrial units were extensively bombed across the country. Trump has threatened more attacks against power plants and other civilian infrastructure if the war resumes. Many homes, hospitals, schools, offices and universities are in ruins or suffered damage.Inflation was running unchecked at nearly 84 percent year-on-year during the second month of the Persian calendar year that ended on May 21, according to the Statistical Center of Iran. Food inflation was at 130 percent for the same period, with solid vegetable oil up 431 percent, eggs 342 percent, chicken 287 percent and imported rice by 222 percent compared to the same month of the previous year.Iran's national currency, the rial, is also in the doldrums. On Sunday, it traded at about 1.77 million per US dollar in Tehran's open market – near an all-time low.The stock market has been rising after a controlled reopening last month, which experts told Al Jazeera was predominantly due to inflation, and the side effects of returning after nearly three months of total shutdown. After deals were concluded for Sunday in the Tehran Stock Exchange, the main index was on the verge of retaking the all-time high threshold of 4.5 million points first reached at the start of 2026.Geopolitical Chess: Control of Strategic WaterwaysThe institutions of the Islamic Republic survived and remain in power, as do many officials, including leaders of the Islamic Revolutionary Guard Corps (IRGC), who have continued to heavily disrupt the flow of energy and goods through the Strait of Hormuz while fighting off the US blockade of Iran's ports.After roughly 40 days of intense war and thousands of strikes, followed by months of tense "ceasefire" that has now included overnight exchanges of fire for more than a week, an interim deal to reopen the strategic waterway has not materialised. Any longer-term peace deal seems further out of reach.On Sunday, the Ministry of Foreign Affairs in Tehran hosted Pakistan's interior minister, the mediating country which itself was hosting an envoy from Lebanon, in an attempt to bridge gaps over Hezbollah and other issues with the US.In an editorial on Sunday marking the 100-day milestone, the hardline Keyhan newspaper, whose editor-in-chief was appointed by Ali Khamenei, said the experience has taught the system that "America retreated because of missiles, not negotiations"."Disrupt [Donald] Trump's game by halting negotiations and closing the Bab al-Mandeb Strait," Keyhan wrote about the strategic waterway off the coast of Yemen, arguing that the US president is using the talks to keep global oil prices under control.Military Resilience: Iran's Defense CapabilitiesArmed forces have demonstrated that despite the widescale bombing of Iran's military installations, including facilities dug deep into mountains, they retain the ability to fire ballistic and cruise missiles, as well as a variety of drones. They have also continued to shoot down a number of US drones, even though numerous air defense batteries were destroyed during the war.Most Iranian military aircraft and large vessels have also been destroyed, but the IRGC continues to deploy its fast boats and small vessels to advance objectives in the strait.Iranian authorities say they wish to entrench control over the strait and monetise passage, keep highly enriched uranium – now likely buried under the rubble of bombed facilities – inside the country to prevent future attacks, and secure relief from decades of sanctions and asset freezes that have battered the economy.Society Under Siege: Daily Life and RepressionConcerns about assassination and intelligence leaks remain high, keeping the parliament closed, except for a handful of limited or online sessions. Universities and schools have also remained shut, and many deferred exams are expected to be held online. A number of police forces are working from desks set up in the streets after their stations were bombed.The internet has been partially restored after the longest nationwide shutdown in any country, but remains heavily throttled by the authorities, who clamp down on Starlink or other connections that circumnavigate their filtering.The judiciary continues to announce near-daily executions of dissidents, including people arrested during the current war, during the nationwide protests in January and the 12-day war with Israel and the US almost a year ago. Tens of thousands have been arrested over recent months, and many will face intensified punishments based on a law approved after last year's war to punish charges of spying and working for hostile governments.Future Outlook: A Prolonged Conflict with Global ImplicationsAs Iran enters the fourth month of conflict with the United States and Israel, the path to resolution remains unclear. With both sides maintaining hardline positions and the economic situation deteriorating rapidly for ordinary Iranians, the conflict shows no signs of de-escalation.The control of strategic waterways like the Strait of Hormuz and Bab al-Mandeb will likely continue to be a focal point, with potential global repercussions for energy markets and shipping routes.International mediation efforts, including those by Pakistan and other regional actors, may intensify as the humanitarian and economic costs mount, but the fundamental disagreements over Iran's nuclear program, regional influence, and the future of the Islamic Republic's leadership structure remain deeply entrenched.

The Partial Internet Restoration Reveals Public AngerThe partial lifting of internet restrictions in Iran has revealed a rising tide of anger about food price inflation as ordinary Iranians decry annual price increases of 308% for vegetable oil, 190% for chicken, and 170% for rice. Iranian authorities began restoring the connection to the global internet that was severed on the first day of the US-Israeli war against the Islamic Republic on 28 February, as it had been during mass protests in January.Connectivity Remains Limited Despite Partial RestorationConnectivity remained patchy on Wednesday, with mobile internet still largely disconnected and many sites remaining restricted. But even the partial restoration was enough to reveal an outpouring of anger over price inflation and food shortages. "Everything is so expensive. It has become a disaster," wrote one user on social media. "You leave the market with a broken heart after spending all your savings. It is unbearable. We have no patience left to lead a normal life."Government Response and Blame-ShiftingPresident Masoud Pezeshkian, who has been given some credit for lifting the internet restrictions, blamed the US for Iran's economic woes, saying Washington "had moved to economic warfare after failing to bring the government down." In a lengthy statement, the ministry of intelligence revealed its concerns that internet freedom could be used for "cognitive warfare", warning that Iran's adversaries aimed to "incite protesters and drag them on to the streets."Hyperinflation Data Reveals Economic CrisisThe government announced the launch of a "resistance economy committee" to crack down on price gouging and address surging shortages, but hyperinflation is now endemic in Iran owing to trade sanctions, exchange rate pressure, and moves taken to reduce subsidies given to traders in January. Data from the International Monetary Fund showed food inflation had risen to between 140% and 200%, pushing overall inflation to 70%. Support for continuing internet restrictions was put at just 9% in a survey published on Wednesday.Government Propaganda and Public ResponseIn an attempt to forestall support for Reza Pahlavi, the son of the late shah, government backers tried to flood the internet with claims directed at "youngsters returning to the internet" that Pahlavi had openly applauded the attacks mounted by Israel and the US. Others expressed simple relief that they could now talk to the wider world. The human rights activist Emadeddin Baghi wrote: "Three bloody months have passed, but not for those who lost a loved one or had their home destroyed. In this period our voices found no echo except on some internal platforms and to the best of our ability we spoke and wrote in defence of the rights of the voiceless."Future Outlook: Digital Rights and Economic InstabilityThe prominent rapper Toomaj Salehi, who was sentenced to death in 2024 for supporting protests in 2022 but was later released, said being connected to the internet was "not a favour to us – it is our right. And without filters as well. Like free elections, freedom of expression, freedom of assembly, freedom of parties, and many other freedoms, these are our rights and not favours," he wrote on X. With public sentiment increasingly turning against the government and economic conditions worsening, Iran faces a precarious future balancing between maintaining control and addressing growing public discontent.

The Lead: US Imposes New Sanctions on Lebanon The United States has recently implemented additional sanctions targeting Lebanon, escalating economic pressure on the already struggling nation. These measures, announced by the US Treasury Department, come at a critical time as Lebanon faces its worst economic crisis in modern history, with over 80% of the population living in poverty and the currency losing over 90% of its value since 2019. The Event Details: Scope of New Sanctions The latest round of sanctions specifically targets Lebanese financial institutions and individuals accused of facilitating corruption and obstructing political reforms. The US Treasury designated several Lebanese banks and financial entities, freezing their assets and prohibiting American citizens from engaging in transactions with them. Additionally, sanctions were placed on Lebanese politicians and businessmen accused of undermining Lebanon's democratic institutions and facilitating illicit financial activities. The sanctions are part of a broader US strategy to pressure Lebanese officials to implement anti-corruption measures and form a government capable of implementing necessary economic reforms. The US has been critical of Lebanon's political deadlock, which has left the country without a fully functioning government for extended periods. The Data Analysis: Economic Impact Assessment Economic analysts predict that these sanctions could further strain Lebanon's already crippled banking sector. The country's banks have been subject to restrictions since 2019, but the latest measures could isolate them further from international financial systems. Key economic indicators that may be affected: Foreign currency reserves: Already critically low, further sanctions may limit access to international markets Inflation rates: Currently exceeding 200%, additional economic pressure could exacerbate hyperinflation Remittances: Lebanese diaspora contributions, which account for an estimated 15% of GDP, may be disrupted Humanitarian aid: Organizations providing essential services may face increased difficulties in transferring funds The International Monetary Fund, which has been engaged in negotiations with Lebanon for a potential bailout program, has expressed concern that the sanctions could complicate economic recovery efforts. The Impact Analysis: Regional Geopolitical Ramifications The sanctions occur against a backdrop of complex regional dynamics in the Middle East. Lebanon's political landscape is heavily influenced by Iran-backed Hezbollah, which the US has designated as a terrorist organization. The sanctions are likely to deepen the divide between Western-aligned factions and Iran-aligned groups within Lebanon's political spectrum. Regional implications include: Strain on US relations with France and other European allies who have advocated for more measured approaches to Lebanon Potential escalation of tensions between the US and Iran, with Lebanon caught in the middle Increased influence of China and Russia in Lebanon as alternative partners amid Western pressure Impact on the broader Arab world, where other nations may reassess their relationships with the US The sanctions also come as Lebanon continues to recover from the devastating 2020 Beirut port explosion, which killed over 200 people and left thousands injured. The investigation into that incident has been marred by political interference, with several Lebanese officials sanctioned by the US for obstructing justice. The Prediction: Path Forward for Lebanon Looking ahead, Lebanon faces a challenging period of economic adjustment and political realignment. The sanctions may ultimately achieve their stated goals of pressuring Lebanese officials to implement reforms, but they risk exacerbating the humanitarian crisis in the short term. Potential scenarios include: Formation of a reform-minded government capable of implementing IMF-mandated economic changes Deepening economic crisis leading to increased social unrest and potential political instability Greater regional involvement in Lebanon's affairs, with Gulf states potentially offering financial assistance in exchange for political influence Long-term economic restructuring that could take a decade or more to implement The international community will be watching closely to see how Lebanon navigates these challenges. The outcome will likely have significant implications not only for Lebanon's future but also for the broader geopolitical landscape of the Middle East.

The Humanitarian Crisis in Lebanon's Labor Market The ongoing economic and political turmoil in Lebanon has precipitated a severe humanitarian crisis, leaving thousands of African migrant workers stranded without wages, documentation, or support. As the nation grapples with hyperinflation and political paralysis, the safety net that once existed for foreign laborers has completely disintegrated. The Collapse of Employer Responsibility Under the traditional Kafala system, employers held immense power over migrant workers. However, the current crisis has seen a total abandonment of this responsibility. Employers have fled the country, defaulted on salaries, or simply ceased operations, leaving workers in a legal limbo where they are unable to work or return home without proper documentation. Mass Stranding: Thousands of workers are currently stranded in informal settlements or abandoned housing. Legal Void: Many have lost their legal residency status due to unpaid fees. Exploitation: Reports indicate a rise in human trafficking and exploitation as workers become desperate for survival. Economic Fallout and Demographic Shifts The departure of this workforce represents a significant blow to the remaining sectors of the Lebanese economy. Agriculture, domestic work, and hospitality—sectors heavily reliant on low-cost labor—are facing severe labor shortages. Furthermore, the financial burden of repatriating these workers falls on African governments and international aid organizations, straining limited resources. A Diplomatic and Human Rights Crossroads This situation has escalated into a diplomatic standoff. African nations are under immense pressure to secure the release of their citizens, leading to tense negotiations with Lebanese authorities. Human rights organizations are calling for an immediate suspension of the Kafala system to prevent future abuses, arguing that the current framework is inherently exploitative and ill-equipped to handle systemic economic collapse. The Path Forward for Stranded Migrant Workers Looking ahead, the situation requires immediate international intervention. Without a coordinated effort involving the Lebanese government, African embassies, and international NGOs, the fate of these workers remains precarious. The long-term solution likely involves a complete overhaul of labor migration policies to ensure that workers are not held hostage by the economic fortunes of their employers.

Two planes of Iranian negotiators, many from the Islamic Revolutionary Guard Corps, arrived in Pakistan to confront a 21‑hour deadline for talks that span two decades of nuclear tension and new strategic concerns such as control of the Strait of Hormuz and U.S. compensation for past attacks.The United States responded with a delegation that included Vice‑President JD Vance and roughly 300 officials, signaling a recognition that Iran’s seasoned team—featuring figures like Ali Bagheri Kani and former chief negotiator Abbas Araghchi—was well‑prepared.During the marathon, Vance held multiple conversations with former President Donald Trump and, notably, with Israeli Prime Minister Benjamin Netanyahu. Iranian officials claimed the Netanyahu call hardened the U.S. stance, underscoring the delicate diplomatic balance.Veteran negotiators Robert Malley and Aaron David Miller warned that the time frame was either too long for a mere reiteration of rejected demands or far too short for genuine negotiation, highlighting a strategic misreading of Tehran’s position.Vance concluded the session by presenting what he described as a “best and final offer,” leaving the door open for further dialogue pending Iranian acceptance.Meanwhile, President Donald Trump signaled an intention to impose a blockade of the Strait of Hormuz—a move that could inflate global oil prices and further destabilize the region.Iran’s objectives included drafting a memorandum of understanding to extend a tentative ceasefire and address three core issues: an end to Israel’s offensive in Lebanon, a governance framework for Hormuz shipping, and the disposition of its highly enriched uranium stockpile, whether through UN‑supervised down‑blending or export to a third party.Vance emphasized the need for an affirmative Iranian commitment not to pursue a nuclear weapon or the rapid pathways to one, a demand that intersects with ongoing debates about Iran’s sovereign right to enrich uranium—a capability currently null after recent U.S. strikes.In practice, Iran is already exercising selective control over Hormuz traffic, allowing 2 million barrels of Iraqi oil and 4 million barrels of Saudi oil to pass, a tactic described by an Iranian parliamentarian as a “continuous atomic bomb” that provides strategic depth.Beyond the diplomatic impasse, Iran confronts severe domestic challenges: hyperinflation approaching triple‑digit levels, an internet blackout threatening economic activity, and a political climate marked by assassination threats. These pressures compound the difficulty of achieving a sustainable peace settlement.