TEHRAN, Iran – As the threat of new war between the United States and Israel looms, the Iranian government is developing contingency plans for basic governance.
President Massoud Pezeshkian will gather governors and economy ministers of Iran’s border regions in Tehran on Tuesday and delegate some of the responsibilities to them in the event of war, state media reported. A working group was also established tasked with ensuring increased flow of essential goods, especially food.
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Governors have the power to import goods without using foreign currency, conduct barter and allow seafarers to bring in goods under simple customs rules, according to the government-run IRNA news agency.
“In addition to importing essential goods, in order to balance the market and prevent hoarding, the governor now has the authority to import all goods directly related to the lives of the people and the needs of the market,” Pezeshkian said at the meeting.
“The implementation of this policy will neutralize a significant part of the pressure arising from the cruel sanctions,” he said, referring to the severe restrictions imposed by the United States and the UN sanctions that the Iranian government reimposed in September for the economic crisis the country is experiencing.
But while the government focuses on the basics, nearly all of Iran’s 90 million people and all sectors of the country’s beleaguered economy continue to suffer from an unprecedented internet shutdown.
The digital blackout was imposed by the theocracy on January 8 after nationwide protests reached a boiling point and thousands of Iranians were subsequently killed.
Intranets set up to provide some basic services during the state-imposed shutdown have been slow and unable to ramp up online business. Traditional shops are also struggling to attract customers.
economic difficulties continue
Most shops are now open in Tehran’s Grand Bazaar and other downtown business districts, where protests against poor economic conditions began on December 28, amid a heavy deployment of armed security personnel.
However, a Grand Bazaar shopkeeper told Al Jazeera that business activity is a fraction of what it was a few weeks ago.
“There’s not a lot of vibrancy or energy in the market these days,” he said on condition of anonymity. “The worst part is that everything is still unpredictable, and that’s reflected in the exchange rate.”
The Iranian rial has fallen sharply after markets partially reopened this week, reducing confidence in the country’s currency.
The rial hit a new record low of about 1.6 million rials to the dollar on Wednesday. Each dollar traded for around 700,000 rials a year ago and around 900,000 rials in mid-2025.
But Iran’s central bank governor Abdulnasser Hemmati said at a meeting with governors in Tehran that the currency market was “following its natural course.”
He said $2.25 billion worth of foreign currency transactions had been registered in recent weeks on the state-run market set up to control imports and exports, which he called “an acceptable and significant number.”
The comments by Hemmati, who served as central bank governor from 2018 to 2021 and was impeached as economy minister in March, drew immediate condemnation from the ultra-conservative Kihan newspaper, whose editor-in-chief is directly appointed by Supreme Leader Ali Khamenei.
The paper said his comments contradicted the reality of the turbulent foreign exchange market and the promise Hemmati made when he was re-elected as central bank chief last month to stabilize prices for essential goods.
While Pezeshikian’s government is dealing with pressure from abroad, it is also being hounded by hard-liners at home who are demanding immediate changes to the relatively moderate cabinet.
The conflict has become so serious that the supreme leader publicly intervened, telling MPs and other officials in a speech last week that it was “forbidden” to “insult” the president at a time when the country should be focused on providing essential goods to its people.
Subsidy system
Pezeshkian’s comments continue to focus solely on “fighting corruption” through efforts to eliminate the subsidy currency rate used to import certain goods, including food.
Pezeshkian’s government claimed that the subsidized currency was being misused by state-linked entities. This system was supposed to deliver cheaper imported food, but that is not the case.
The funds raised by the initiative were distributed to Iranians in the form of electronic coupons, allowing them to buy food from selected stores at prices set by the government.
However, each citizen will only receive 10 million rials a month for four months. The amount was worth just over $7 when it was announced during protests earlier this month, but is now worth nearly $6, with the depreciation of the local currency further eroding purchasing power.
To add insult to injury, the announcement of the subsidy scheme suddenly caused the prices of some essential goods such as cooking oil and eggs to triple or quadruple. Iran’s annual inflation rate remains near 50% and has been trending upward in recent months.
Iran’s top two state-run automakers, which hold a major monopoly in the country’s auto industry, are also poised for further price hikes as the end of the Iranian calendar year approaches in March.
One of the companies, Iran Khodro, announced on Tuesday that it would raise prices by up to 60%, and local media reported that another, Saipa, is expected to follow suit. The government reportedly intervened to slow or slow price increases.
Tehran Stock Exchange’s main index TEDPIX continued its recent decline on Wednesday, dropping 30,000 points to 3.98 million points. It rose in early January and hit an all-time high of 4.5 million last week.
