Why has Iran’s economy not collapsed under US war pressure?

What Happened

Iran's economy has not collapsed despite five months of war with the United States, sustained sanctions, and internal disruptions. Welfare economist Hadi Kahalzadeh defines collapse as famine or state failure to pay employees and deliver services, and asserts that current conditions do not meet that threshold. He explains that the economy absorbs shocks through inflation—now near 90 percent—and currency depreciation, which maintains production and import incentives but shifts costs onto households, with the state offering cash transfers and subsidized coupons to partially offset the burden. Government spokeswoman Fatemeh Mohajerani noted that coupon payments were delayed due to major cyberattacks on banks and that infrastructure damage from US strikes included 12 bridges, 2 tunnels, and losses to natural gas and electricity generation, leading to planned industrial blackouts. Professor Mohammad Reza Farzanegan highlighted that endemic corruption reduces productivity and rewards political connections, while the population responds by cutting consumption, postponing investment, and emigrating. Head of Iran's General Inspection Organisation Zabihollah Khodaeian disclosed that trustees designated to repatriate oil proceeds hold at least $11 billion, of which $1.6 billion has been misused, and that over 20,000 exporters have failed to repatriate 94 billion euros in export earnings.

Key Actors

Why It Matters

Iran’s ability to sustain its economy under maximum US pressure and military strikes challenges Western assumptions about the effectiveness of sanctions. The resilience relies on informal trade networks, oil smuggling, and cost-shifting to the population, fueling poverty and inequality that could destabilize the regime internally. Meanwhile, revelations of large-scale corruption among elites may erode public trust and complicate reform efforts. These dynamics directly influence Iran’s capacity to project power through its regional networks and its willingness to negotiate on the nuclear file.

Watch For

Monitor the IAEA Board of Governors meetings and quarterly reports on Iran’s nuclear program for compliance signals; any US Congressional moves to tighten sanctions or authorization for further strikes; reports on food inflation and poverty rates from Iranian statistical agencies and rights groups; investigations or arrests related to the $1.6bn in misused oil proceeds and unrepatriated export earnings; and the status of bank disruptions following cyberattacks.