Analysis: Iran faces collapse as internal unrest and external pressure converge

Iran is experiencing a critical convergence of internal fragmentation and external escalation that threatens the stability of the Islamic Republic. A sustained wave of domestic protests, triggered by economic hardship and political discontent, coincides with heightened geopolitical pressure following US-led military actions against Iranian nuclear facilities in 2025.

Structural Weaknesses and Domestic Unrest

The regime faces systemic challenges, including soaring youth unemployment, rampant inflation, a collapsing currency, and severe water scarcity. More than 40% of Iran’s population is under 25, yet unemployment among young people exceeds 20% nationally and approaches 35% for women. Annual inflation has hit 60%, with food prices rising over 70% in the past year. Environmentally, Iran is losing an estimated 5 billion cubic meters of groundwater annually, and key reservoirs have fallen to around 13% capacity—driving internal displacement and straining public infrastructure.

Military and Geopolitical Pressure

Following Operation Midnight Hammer in June 2025—US strikes on Iranian nuclear sites—Tehran has pursued ballistic missile development with Chinese technological support. However, Iran’s conventional military capabilities and proxy networks have weakened. Hezbollah has suffered significant losses, and Syrian instability has disrupted supply routes. During recent confrontations, most Iranian missile launches were intercepted, revealing vulnerabilities in its deterrent posture. Neither Russia nor China provided meaningful support during the 12-day war, highlighting the transactional nature of these partnerships. China continues to purchase over 90% of Iran’s oil exports at steep discounts, extracting economic benefit without assuming security commitments.

Regional and Strategic Implications

The Trump administration has demonstrated a willingness to enforce red lines, as seen in Venezuela and against Iranian nuclear advances. Iran’s defiance, including recent provocations linked to Supreme Leader Ayatollah Ali Khamenei, risks further escalation at a time when the regime lacks the economic, social, and military reserves to absorb sustained pressure. With its legitimacy eroding and strategic options narrowing, Iran’s capacity to project power or stabilize domestically is increasingly in doubt.