By Parisa Hafezi
DUBAI, Jan 12 (Reuters) – Iran’s bazaar merchants, the merchant class that was the financial backbone of the 1979 Islamic Revolution, have turned against the clerics they helped bring to power, fueling unrest over an economy that has turned into anti-government protests.
Frustration among bazaar traders, from small traders to large wholesalers, has grown as their political and economic influence in Iran has waned over the decades as the elite Revolutionary Guards have strengthened their grip on the economy, building extensive and tight networks of power.
“We are struggling. We cannot import goods because of US sanctions and because only the Guards or those linked to them control the economy. They only think of their own benefits,” said a trader at Tehran’s centuries-old Grand Bazaar, speaking on condition of anonymity.
The wave of protests that have swept the country, posing one of the toughest challenges ever to the clerical leadership, erupted in late December in Tehran’s Grand Bazaar, where hundreds of traders denounced the rial’s sharp decline.
The demonstrations quickly grew and became political, challenging the legitimacy of the Islamic Republic. Protesters burned effigies of Supreme Leader Ayatollah Ali Khamenei and chanted “Death to the dictator” – undeterred by security forces armed with tear gas, batons and, in many cases, live ammunition.
Iran’s leaders, while acknowledging economic difficulties, have blamed their longtime enemies, the US and Israel, for causing the unrest. They appear intent on holding on to power at all costs, backed by a security apparatus honed over decades of suppressing ethnic riots, student movements and protests against economic hardship and social freedoms.
A combination of international sanctions and the Guards’ sprawling economic empire has limited the government’s ability to alleviate the dire economic situation.
Tehran-based analyst Saeed Laylaz said the government had lost control of the situation.
“What is striking is that unrest has started in the bazaar. For traders, the underlying problem is not inflation – it is price volatility, which leaves them unable to decide whether to buy or sell,” he said.
Economic disparities between ordinary Iranians and the clerical and security elite, along with economic mismanagement and state corruption — reported even by state media — have fueled discontent at a time when inflation is pushing the price of many goods beyond most people’s means.
The Iranian rial has lost almost half its value against the dollar in 2025, with official inflation reaching 42.5% in December.
CONTROL OF SECTORS FROM PETROLEUM TO CONSTRUCTION
Created by the late founder of the Islamic Republic, Ayatollah Ruhollah Khomeini, the Guards first secured an economic foothold after the Iran-Iraq war of the 1980s, when clerical rulers allowed them to invest in top Iranian industries.
Their influence has expanded exponentially over the decades, benefiting from Khamenei’s full support and the opportunities created by Western sanctions, which have effectively shut Iran out of the global financial and trading system.
The Guards now control vast sectors of the economy, from oil to transport, communications and construction.
Another trader said that the crisis is not over, as the Guardians have long proved adept at defending their economic interests.
“The government wants to solve the problem, but it lacks the means and power in this system. The economy is not controlled by the government,” said the trader, a 62-year-old carpet seller from Tehran.
All aspects of the sanctions-hit country’s oil business have come under the increasing influence of the Guards – from the shadow fleet of tankers that secretly transport sanctioned crude, to the logistics and front companies that sell the oil, mostly to China.
“No one knows how much of the oil money the Guards get from selling Iran’s oil comes back into the country … they are too powerful to be asked about that,” said a senior Iranian official, who asked not to be named.
During his 2013-2021 presidency, the pragmatist Hassan Rouhani repeatedly clashed with the Guards, publicly accusing them of opposing budget cuts, while his attempts to cut their business networks and assets were largely thwarted.
THE INSTITUTION COUNTS ON THE GUARDS TO GET IT DONE
Even as it relinquished economic power, the clerical establishment relied on its loyal forces—the Guards and affiliated Basij paramilitaries—to violently crush ethnic riots, student unrest, and protests over economic hardship, preserving political order.
“Given the sensitive circumstances in which the country faces foreign threats, Khamenei cannot upset the Guards by limiting their economic influence. The establishment needs them to quell protests and deal with foreign threats,” said an insider close to Rouhani.
US human rights group HRANA said it had verified the deaths of 544 people – 496 protesters and 48 security personnel – with 10,681 people arrested since protests began on December 28 and spread across the country. Reuters could not independently verify the accounts.
Authorities have not given a death toll, but officials say many members of the security forces have been killed by “terrorists and rioters” linked to foreign enemies, including the United States and Israel.
(Writing by Parisa Hafezi; Editing by Frances Kerry)