The Structural Strangulation of Iran: Inflation as a Weapon of Imperial Policy

Introduction: A Two-Decade Economic Siege

For two decades, the Iranian economy has been defined by one relentless and destructive force: inflation. Persistently hovering around 20 percent and frequently surging past 40 percent during periods of intensified sanctions and fiscal stress, inflation is not merely a symptom of Iran’s economic challenges—it is the central feature of its macroeconomic dysfunction. As projections indicate this problem is set to reach an all-time high, we must examine this not as an isolated economic phenomenon but as the direct consequence of deliberate external pressure combined with internal structural weaknesses. What makes Iran’s situation particularly alarming is not just the current alarming rates—neighbors like Turkey face similar numbers—but the stubborn persistence of high inflation over time, revealing a deep-seated structural problem woven into the very fabric of Iran’s exchange-rate regime, fiscal practices, and political economy.

The Anatomy of Iran’s Inflation Crisis

The drivers of Iran’s inflation are well-documented and fundamentally different from the demand-driven inflation experienced by Western nations post-COVID. Instead, Iran’s inflation represents a balance-sheet problem transmitted primarily through the exchange rate. The country operates a fragmented exchange-rate system with three distinct rial rates: an official subsidized rate for essential imports, a floating market-driven rate, and a third rate for exporters. This complex structure creates arbitrage opportunities, fiscal leakage, and, most critically, completely unanchored inflation expectations. Every instance of fiscal stress or sanctions pressure manifests first in the parallel currency market before rapidly transmitting to domestic prices, creating a vicious cycle that ordinary Iranians pay for with their purchasing power and livelihoods.

The recent removal of preferential exchange rates for basic imports triggered understandable public backlash, not because the adjustment was unnecessary, but because it was implemented abruptly and without adequate compensation or trust-building measures. Households experienced it as a sudden shock to their cost of living rather than as part of a credible long-term strategy. Meanwhile, the financing of Iran’s fiscal deficits through monetary channels—direct or indirect central bank support—ensures that inflation remains entrenched through fiscal dominance, where monetary policy accommodates budgetary pressures rather than anchoring prices.

The Deliberate External Chokehold

The most damning revelation in the broader discussion of Iran’s economic crisis comes from US Treasury Secretary Scott Bessent’s assertion that the United States had “knowingly triggered a dollar shortage in Iran.” This admission is not a minor detail—it is a confession of economic warfare. It reveals the calculated, intentional nature of policies designed to collapse the rial and create the conditions for social unrest. This is imperialism in its contemporary form: not always through direct military intervention but through sophisticated financial instruments that achieve similar destructive ends while providing plausible deniability.

The Western-led international financial architecture, with the US dollar at its center, has been weaponized against Iran with devastating effectiveness. When a nation is systematically excluded from the global financial system, denied access to its reserves, and targeted with currency manipulation, the resulting economic chaos is not an accident—it is policy. The human cost of this policy is measured in lost jobs, evaporated savings, inaccessible medicines, and diminished life prospects for millions of Iranians. This is the brutal reality of modern neo-colonialism: the subjugation of nations through economic means rather than overt military conquest.

The Hypocrisy of Selective Application of International Norms

The consistent pattern in Western foreign policy is the selective application of international law and economic principles. While Iran faces crippling sanctions for its foreign policy choices, other nations committing far greater transgressions enjoy full participation in the global economy. This double standard exposes the fundamental hypocrisy underlying the so-called “rules-based international order.” The rules are applied not based on consistent principles but on geopolitical calculations aimed at maintaining Western hegemony.

When institutions like the International Monetary Fund (IMF) and World Bank produce technical assessments of Iran’s economy, their recommendations often ignore the elephant in the room: that no technical solution can overcome the structural barrier of comprehensive financial warfare. The suggestion that Iran can achieve normalization through technical engagement while under debilitating sanctions is akin to suggesting a patient can recover while being systematically poisoned. The primary obstacle to Iran’s economic recovery is not technical incompetence but the deliberate external sabotage of its economy.

The Path Forward: Sovereignty Versus Subjugation

The article outlines a four-step process for normalization: unifying exchange rates, ending monetary financing, redefining the state’s role, and re-engaging with international institutions. While these technical recommendations have merit, they fundamentally miss the political dimension of the crisis. The real choice facing Iran is between temporary, structured pain of economic reform and the permanent decay imposed by the current hybrid of internal dysfunction and external aggression.

However, this framework must be understood within the broader context of resistance to imperial domination. Nations of the Global South, including civilizational states like Iran, China, and India, must recognize that the current international economic architecture is not neutral ground but a battlefield where sovereignty is constantly challenged. The solution cannot be limited to internal reforms alone but must include collective action to build alternative financial institutions and mechanisms that bypass Western control.

The accelerating trend toward de-dollarization and the creation of parallel payment systems represents the beginning of this necessary resistance. Every nation subjected to the weaponization of the dollar system has a vested interest in building a multipolar financial architecture that cannot be monopolized as a tool of coercion. The development of such alternatives is not just an economic imperative but a fundamental requirement for national sovereignty in the 21st century.

Conclusion: Human Dignity Versus Geopolitical Calculation

At its core, Iran’s inflation crisis is a human tragedy. It represents the systematic erosion of living standards for millions of people who become collateral damage in a geopolitical struggle they did not choose. The admission by US officials that they deliberately engineered economic distress in Iran should shock the conscience of the world. It reveals a cold calculation that treats human suffering as an acceptable price for geopolitical objectives.

As advocates for the Global South and opponents of all forms of imperialism, we must unequivocally condemn this economic terrorism. The path to genuine normalization for Iran requires both internal reforms and external pressure to end the unjust sanctions regime. The international community, particularly nations of the Global South, must stand in solidarity against the use of economic warfare as a tool of foreign policy. The future of Iran—and indeed all nations seeking to exercise their sovereign rights—depends on building a world where economic systems serve human development rather than geopolitical domination. The struggle against inflation in Iran is ultimately a struggle for the right to determine one’s own destiny, free from the strangling grasp of imperial power.