In a move that has temporarily defused soaring tensions, U.S. President Donald Trump announced on January 16 that he had decided against immediate military action toward Iran. He framed the decision as a personal one, stating, "Nobody convinced me. I convinced myself."
The de-escalation followed his public gratitude toward Iran for reportedly calling off the executions of hundreds detained in the recent wave of protests—a gesture he shared on his social media platform.
An economy in distress
This respite redirects attention to the domestic turmoil within Iran that prompted the U.S. threats. The protests are widely linked to profound economic distress. Klaus Larres, a fellow at the Wilson Center, identified the root causes as "deep economic problems and high unemployment, high inflation."
This analysis is firmly grounded in the lived experiences of observers on the ground. Chen Guanting and Li Xuanxuan, Chinese exchange students at the University of Tehran who evacuated in mid-January, provided a stark snapshot of the economic erosion during their brief stay. Li quantified the crisis by noting the rapid depreciation of the national currency, observing that the exchange rate plummeted from approximately 1,130,000 to over 1,470,000 Iranian rials per U.S. dollar during their two-month stay from November to January. This macroeconomic shock translated directly into crushing daily hardship.
An Iranian couple checks the price of meat while shopping for food products at a state chain store in downtown Tehran, Iran, on January 16, 2026. (Photo: CFP)
The students witnessed prices for staples spiraling: a standard 1.3-liter bottle of cooking oil jumped from 3 million to over 5 million rials. During Yalda Night celebrations, an Iranian middle-class family told them the price of nuts, a holiday essential, had doubled in a year, and that they had significantly reduced their meat consumption. "Every round of currency devaluation hurts ordinary people," Li observed, noting a critical lag in the economy's adjustment mechanism. He explained that wage increases typically trail price hikes by months, meaning "with each devaluation, the public endures a period of compressed purchasing power before their real income gradually catches up."
Beyond prices, the students highlighted a psychological and social divide exacerbated by the economy. For Iranians working domestically and paid in rials, life, while strained, retains a degree of predictable, if diminished, purchasing power within the country's "resistance economy."
However, for those involved in foreign trade or who aspire to spend savings abroad, the crashing rial shatters their dreams. A friend's expensive trip to Istanbul, encountering Turkey's own inflation and perceived unfriendliness to foreigners, underscored the fading allure of traditional getaways like Dubai or Istanbul. "Many are realizing that the money they earn goes further inside Iran," Li noted, suggesting a forced re-evaluation of lifestyle aspirations.
This economic pressure, compounded by stringent Western visa policies that have made emigration far more difficult, is fostering a complex form of disillusionment. "For many Iranians, a certain fantasy about the West is fading," Li reflected, indicating that sanctions and economic isolation, while inflicting pain, are also reshaping expectations and solidifying a difficult, homebound resilience for a segment of the population.
A complex domestic landscape
However, the students' account complicates a monolithic narrative of national revolt. They emphasized that the unrest was not uniform. A key local factor was the concentration of severe violence in small towns within minority regions, where traditional nomadic communities hold special licenses for hunting rifles. "This legal privilege related to firearms makes violent activities there more frequent and harder to control," Li explained, while stressing that for the vast majority of Iranians, access to guns remains extremely rare. "To equate armed clashes in these specific areas with a nationwide uprising would be misleading," he suggested.
This geographical and demographic specificity underscores a deeper societal fragmentation. The protests lacked a unified leadership or a cohesive set of demands that could bridge profound internal divides. As Li observed, the generational, urban-rural, and socio-economic gaps in Iran are immense, making effective communication and collective action across different segments of society extraordinarily difficult. The goals of urban students, struggling with unemployment and cultural restrictions, often differ fundamentally from those in economically marginalized peripheral regions or from the traditional middle class that still finds resonance in state-organized nationalist or religious narratives.
Women cross a street under a huge banner showing hands firmly holding Iranian flags as a sign of patriotism, as one of them flashes the victory sign, in Tehran, Iran, Wednesday, Jan. 14, 2026. (Photo: CFP)
This fragmentation, as noted by Wilson Center fellow Klaus Larres, has been met with a state apparatus willing to use "brutal force" to reassert control where it can, further suppressing visible protest but not necessarily resolving the underlying discontent.
In Tehran, the students observed this fragmented dynamic firsthand: while online dissent was common, large-scale student street protests were less visible. Simultaneously, they witnessed substantial government-organized rallies. Chen spoke with a couple pursuing doctoral degrees at one such event who expressed clear support for the government.
"This segment of society may be less visible in international media, but they are significant," he noted. This visible, organized support—contrasting with the more diffuse, localized, or online opposition—paints a picture not of a nation uniformly rising up, but of a deeply divided social landscape where competing visions of the country's present and future coexist in tense stalemate. The resulting complexity makes any simple prediction about Iran's political trajectory, or any uniform external policy response, fraught with difficulty.
A major situation is still under scrutiny
This internal complexity weighed on the international calculus, as did the practical and strategic challenges of intervention. Klaus Larres expressed skepticism about the efficacy of any potential U.S. strike, questioning the ease of targeting key Iranian leadership or security installations. This aligns with reports that Trump's advisors warned a large-scale attack was unlikely to achieve regime change and might instead ignite a wider conflict.
Iranian mourners participate in a funeral procession for those killed in the recent unrest in Iran, who the Iranian government describes as defenders of security, in Tehran, Iran, on January 14, 2026. (Photo: CFP)
Furthermore, Larres highlighted the critical restraining role of regional actors. "The Arab countries like Saudi Arabia, are not interested in a big war in the Middle East. Neither is Israel," he observed, noting Israel's own preoccupations and its reported communications with Tehran to avoid mutual escalation. Perhaps the most significant deterrent, Larres cautioned, was the fear of chaotic aftermath: a power vacuum in Iran that "will not easily be filled" and could be taken by "even more extreme forces."
President Trump's decision to pause reflects a confluence of restraining factors: a nation under acute stress but deeply divided, not in unified revolution; a region wary of another war; and a sober assessment of the risks and limits of military power. As Larres concluded, with the Trump administration's highly personalized decision-making, the situation remains fluid. For now, the immediate trigger has been lowered, but the underlying tensions—economic, social, and geopolitical—persist, captured through the converging lenses of strategic analysis and the firsthand testimony of observers on the ground.
Reporter: Guo Zedong
Editor: Yuan Zixiang, James Campion, Shen He
