Iranian security forces have killed at least 208 demonstrators protesting a reduction in fuel subsidies since Nov. 15, and have arrested thousands more, according to Amnesty International. The protests reveal both the human impact of US sanctions on Iranian oil trade (“maximum pressure”) and deep popular discontent with the Iranian government’s policies.

While some may cast the narrative in Iran primarily as street vs. regime, with an implicit countdown to government collapse, it is worth recalling that Iran is a country of 81 million people, with a complex political, social, economic and regional environment, and a government that has held on under siege for four decades. Here are eight trends we are following that might help fill out the picture:

1. “Even allies fear buying Iranian oil.” Conservatives criticized First Vice President Eshaq Jahangiri, a Reformist, for saying out loud what everyone knows — that US sanctions are hurting Iran. If maximum pressure is all about economic pain, then it’s a success. Iran is feeling it. The Wall Street Journal reported this week that US sanctions may precipitate a cash reserve crisis that could trigger an economic collapse.
2. Iran’s parliament matters. Yes, we know, and don’t dispute, that the ultimate and unchallenged decider in Iran is Supreme Leader Ayatollah Ali Khamenei. But there is politics in Iran, too, such as elections in February 2020 for the 290-member Islamic Consultative Assembly, or parliament. Even though the so-called Guardian Council must approve candidates, the parliament is a lively and fractious body. Even if you aren’t watching this trend (and you should be), you should know that Iranian politicians and activists are consumed with it, as whoever controls the parliament will be a bellwether for the 2021 presidential election (Iran President Hassan Rouhani will not run for reelection). The assembly presently includes 120 members from the Reformist party; 86 Principlists (conservatives or hard-liners); another 10 from another Principlist party; 66 independents; and five minorities.
3. Hard-liners blame the protests on Rouhani. Iranian Reformists and hard-liners are looking to capitalize on the protests for political advantage. Both factions are calling for parliamentary investigations. But while the Reformists are seeking transparency and accountability for those killed by security forces, the hard-liners seek to pin the blame on Rouhani’s call for an end to the fuel subsidy, as Al-Monitor staff report here. Khamenei and his acolytes have also sought to pin the unrest on foreign agents. Political rivals have already pilloried Rouhani for the failure of the nuclear deal.
4. Both camps are losing the people. “Iranians' rage has intensified as they witnessed more corruption scandals and increasing inequality,” Rohollah Faghihi reports from Iran. “The protesters believe that neither hard-liners nor Reformists can represent them. Their distrust in both camps has grown. That’s why today's protesters have no leader, while in 2009 they pinned their hopes on Reformists like [former prime minister and presidential candidate Mir Hossein] Mousavi and the late Ayatollah Akbar Hashemi Rafsanjani, who both acted as the opposition leaders. If the political establishment does not address the public's anger and demands, such protests will likely be triggered in the future over issues as basic as an increase in the price of eggs.”
5. Under pressure, Iran is not letting Iraq go. We wrote here last month that given the pressure of US sanctions there is “no way Iran is cashing out on Iraq” as it “needs the Iraqi economic lifeline.” While Iran, like the United States, might prefer stability in Iraq, “unlike the United States, which has been invested in Iraqi institutions, Iran is only concerned with its power and influence. Tehran has a higher tolerance for chaos and bloodshed, as long as it's on Iraqi soil.” If the United States wants to turn Iraq into a battlefield, the response in Iran, without qualification, is “Game On.”
6. Regional diplomacy gaining momentum? We have tracked the uptick in regional diplomacy since the summer, including the initiative of Pakistan Prime Minister Imran Khan and UAE Minister of State for Foreign Affairs Anwar Gargash, who said last month that “there could be a path to a deal with Iran that all parties might soon be ready to embark on.” And this week, Oman’s foreign affairs minister, Yusuf bin Alawi, met with Rouhani in Tehran. Bin Alawi is trusted by all parties as a discreet facilitator between adversaries. Rouhani told bin Alawi that Iran seeks a resolution to the Yemen war and that there is “no obstacle” to restoring ties with Saudi Arabia. Another, perhaps related, development is Saudi King Salman bin Abdul-Aziz Al Saud’s invitation to Qatar Emir Sheikh Tamim bin Hamad Al Thani to the Gulf Cooperation Council summit in Riyadh Dec. 10.
7. Rouhani still willing to talk with US … if sanctions are lifted. Rouhani said again Dec. 4 that he has “no problem” with official Iran-US meetings once all “illegal, unjust and terrorist sanctions” are lifted. That still seems a stretch. Bin Alawi was in Washington to meet with US Secretary of State Mike Pompeo 10 days before meeting with Rouhani. The State Department readout of the meeting conspicuously does not include reference to Iran, but notes that they did discuss “the importance of a united Gulf Cooperation Council.” A regional diplomat told Laura Rozen that Oman’s diplomacy is primarily focused on Yemen and the region, and only secondarily on US-Iran relations, which are “in very slow motion.”
8. About that fuel subsidy. Bijan Khajehpour explains that reducing the fuel subsidy could make sense to cut government bloat and corruption, although any benefits have already been drowned out by the brutal crackdown on demonstrators. Khajehpour concludes that the policy’s “success will fully depend on applying the needed governance and operational reforms, which may not happen, as the same corrupt bureaucracy will be in charge of implementing it.”