Iran’s Inflation Crisis, New Espionage Law Expands Punishments, Economic Fallout of Iran’s Snapback Sanctions, and More

Iran’s Inflation Crisis and Record-Breaking Surge in September 2025

Iran is grappling with one of the most severe inflationary crises in its modern history, with new records broken in September 2025. According to the Statistical Center of Iran, the Consumer Price Index (CPI) reached 384.6, marking a 45.3% year-on-year inflation rate. This means that Iranian households spent 45.3% more for the same basket of goods and services compared to September 2024. Monthly inflation rose by 3.8%, while annual inflation climbed to 37.5%, a 1.2 percentage point increase.

The food sector has been the main driver of September’s inflationary spike. Food prices rose 57.5% compared to the previous year, accounting for 16 percentage points of the overall 45% inflation rate. Bread and cereals inflation hit 94.3%, meaning bread prices nearly doubled in just twelve months. Fruits and nuts rose 77.2%, further squeezing household budgets. The impact has been most severe on low-income families, widening inequality and fueling social distress.

Housing, traditionally a major driver of inflation in Iran, also surged in September. Rising inflation expectations quickly spilled into the housing market, pushing up property prices and rents. According to Tejarat News, the average price of housing in Tehran climbed to 125.8 million tomans per square meter. Many renters were forced to downsize into smaller homes or move to suburban areas, reshaping urban demographics and placing significant financial strain on families. Rent inflation also followed the same upward trajectory.

The persistence of inflation is striking. Since 2017, Iran has experienced inflation above 30% for 61 consecutive months, an unprecedented phenomenon in modern Iranian economic history. By contrast, the 1990s saw a temporary 49% inflation rate, which subsided quickly, and between 2013–2015 inflation fell below 15%. For a period after the JCPOA, inflation even dropped to single digits. But since 2018, sanctions, fiscal indiscipline, and currency crises have entrenched high inflation as a permanent feature of the economy.

Internationally, Iran’s inflation rate now surpasses that of Turkey and Argentina, countries long plagued by chronic inflation. With food, fuel, and housing prices surging, the government faces pressure to expand subsidies and cash transfers. Yet such measures risk widening the budget deficit and fueling further inflation, creating a vicious cycle of rising costs and shrinking purchasing power.

The economic outlook is further clouded by recessionary signals. Iran’s economic growth in the first quarter of 2025 turned negative, raising fears of stagflation—a combination of high inflation and economic contraction. As inflation eats into real incomes and savings, businesses face shrinking demand, while political and geopolitical risks exacerbate instability.

Iran is now in the midst of a deep economic crisis, with no sign of a solid plan to control inflation. The recent currency depreciation, triggered by the return of UN sanctions, has worsened the situation, pushing prices higher and eroding purchasing power even further. Unless immediate and effective measures are taken, the crisis is set to intensify, leaving ordinary Iranians to bear the heaviest burden.

Iran’s New Espionage Law: Expanding Punishments and Raising Concerns

Iran’s Guardian Council has approved a new bill increasing punishments against those deemed to be collaborating with Israel and other hostile states. The bill, entitled “Intensification of Punishment for Espionage and Cooperation with the Zionist Regime and Hostile States Against National Security and Interests,” was first passed by Parliament during the twelve-day war earlier this year, and is now set to be implemented after notification by the Speaker of Parliament to the President. At the same time, the Council also approved a separate bill regulating the use of non-military drones.

The espionage law introduces some of the harshest penalties in Iran’s legal framework. Any intelligence or espionage activity conducted for Israel, the United States, or other hostile states is now classified as “corruption on earth” (ifsād fī al-arḍ) under Article 286 of the Islamic Penal Code—a charge that carries the death penalty. Cooperation that falls short of this threshold—whether through intelligence work, political or economic support, or cultural and media activity—remains punishable by lengthy prison terms and permanent disqualification from public service.

The scope of the law goes far beyond traditional espionage. It criminalizes the supply or development of conventional, chemical, biological, nuclear, or unconventional weapons for hostile entities; the use of drones, micro-drones, or robotic technologies for sabotage or surveillance; cyberattacks and hacking against critical infrastructure; and even media and propaganda support for Israel, including the transmission of videos or images to foreign outlets deemed hostile. Courts are given broad discretion to impose maximum sentences, even when actions do not meet the “corruption on earth” standard.

A key part of the legislative process was the removal of one controversial clause by the Guardian Council. In the version passed by Parliament, the law included a sweeping article that would have criminalized a wide range of political, cultural, and media activities—from the publication of content deemed false or damaging to public morale, to unauthorized marches or demonstrations during wartime. It also imposes prison terms for the creation of “artificial damage” for publicity purposes and for sending films or images to foreign outlets if such content could undermine morale or unity. Under this clause, those found guilty could face third-degree imprisonment, permanent bans from public service, and even fourth-degree prison sentences for unauthorized gatherings.

The Guardian Council judged the clause to be poorly drafted, legally inconsistent, and politically contentious. Its deletion prevented the law from criminalizing vast areas of expression and public assembly even more explicitly than it already does. Nevertheless, critics argue that the final version of the law still leaves enormous room for judicial interpretation, giving authorities broad latitude to equate dissent with espionage.

Supporters defended the law as a vital response to modern threats. Ebrahim Azizi, a member of Parliament and former deputy head of the National Security and Foreign Policy Committee, stated that Iran must “confront espionage in all its new forms—from cyber operations to media campaigns—by ensuring spies and collaborators face the most severe punishments.”

Yet opposition has been sharp. Fifty-seven prominent legal scholars issued a public letter condemning the law, describing its drafting and passage as hasty and a “great disaster” for Iran’s legal and judicial system. They warned that it violates multiple constitutional principles and risks enabling unchecked punishment. The jurists wrote: “The publication of the full text of the ‘Intensification of Punishment for Espionage’ bill, alongside news of the arrest of hundreds of people in the country and the implementation of several executions, has created serious concerns and signals the possibility of a major catastrophe in the legal and judicial system.”

The passage of the law reflects the heightened security atmosphere following the short but intense conflict with Israel earlier in 2025, during which authorities claimed to have arrested hundreds of alleged spies. Combined with the snapback of UN sanctions and Iran’s growing international isolation, the new legislation highlights Tehran’s effort to project strength while tightening internal control.

Iran’s new espionage law represents a major escalation in its domestic security laws. By embedding the death penalty and severe punishments into a wide range of activities—from cyber and military support to cultural and media acts—it significantly strengthens the government’s hand. Supporters like Azizi frame it as essential for national defense, while critics, including dozens of legal scholars, warn that it risks turning the judiciary into a tool for repression and mass punishment. The law’s true impact will depend on how broadly Iran’s courts apply their new powers, and whether the warnings of a looming “legal catastrophe” prove to be justified.

Iran’s Conditional Accession to the CFT Convention: Symbolism, Substance, and the Road Ahead

On October 1, 2025, Iran’s Expediency Discernment Council formally approved the country’s accession to the International Convention for the Suppression of the Financing of Terrorism (CFT), but only under strict conditions. This decision marks a turning point in Iran’s long and contested debate over aligning with international financial norms, particularly those demanded by the Financial Action Task Force (FATF). The Council’s spokesman announced the decision on X, noting that the approval came after four full sessions and several joint committee meetings. He emphasized that accession was conditional and that compliance would operate “within the framework of the Constitution and domestic laws.” This means that if any provision of the CFT is judged to conflict with Iranian law, domestic law will prevail. Importantly, this safeguard was added by the Expediency Council and had not been present in the earlier bill passed by Parliament.

The conditional approval reflects Iran’s political balancing act. For years, Parliament and successive governments pushed to adopt the CFT and the Palermo Convention, both essential benchmarks for FATF compliance. Yet the Guardian Council and hardline factions resisted, warning that such conventions could jeopardize Iran’s independence and expose sensitive financial networks tied to its regional activities. Reformists countered that remaining on FATF’s blacklist had crippled Iran’s access to the global banking system. By approving CFT with caveats, the Expediency Council has sought to bridge these positions—signaling cooperation internationally while preserving sovereignty domestically.

Beyond legal approval, Iran has begun introducing new financial regulations to demonstrate progress. The Central Bank of Iran has instructed all banks to impose annual transaction ceilings to combat money laundering. Salaried account holders may not exceed 20 billion tomans annually, while the ceiling for unemployed individuals is set at 5 billion tomans. Customers surpassing these limits must present financial documents to justify the legitimacy of their funds. Banks are required to automatically detect irregularities, notify customers, and—if unresolved within a week—restrict online services and reduce daily withdrawal limits to 10 million tomans. These measures echo FATF’s recommendations on customer due diligence and suspicious transaction monitoring. While enforcement remains uncertain, they represent a visible step toward aligning with international standards.

The broader significance lies in the potential effect on Iran’s financial isolation. Since February 2020, Iran has been on the FATF blacklist, subject to counter-measures that deter foreign banks from maintaining links with Iran and raising transaction costs. By acceding to Palermo in May 2025 and now to CFT, Iran has addressed the most visible legal gaps identified by FATF. However, FATF focuses on implementation and enforcement, not just ratification. If Iran applies its conditionality clause too broadly, international observers may judge compliance as inadequate, delaying any suspension of counter-measures. Moreover, any forthcoming FATF decision could be heavily shaped by U.S. and European pressure.

Iran’s decision also reflects acute economic pressures. Years of sanctions and currency instability have created incentives to reduce obstacles to banking transactions. Even though U.S. and European sanctions remain in place, FATF blacklisting adds a separate layer of difficulty. Many banks, even in countries friendly to Iran, treat FATF’s list as a non-negotiable risk factor. Thus, accession is viewed as necessary to rebuild credibility, even if it cannot alone restore banking ties. At the same time, Iran’s leaders remain cautious about exposing sensitive activities, hence the insistence that domestic laws override international commitments.

Whether Iran benefits from this move remains uncertain. With the snapback of UN sanctions now active, it is unclear if FATF compliance alone can deliver practical relief. The sanctions environment remains the dominant barrier, and FATF progress will likely prove insufficient unless paired with broader diplomatic breakthroughs. Iran’s challenge is to demonstrate enough compliance to persuade FATF to suspend counter-measures, while also navigating the larger sanctions regime that constrains international banks regardless of FATF status.

The next year will be decisive. FATF will evaluate whether Iran has criminalized terrorist financing without exemptions, strengthened its Financial Intelligence Unit (FIU), enforced asset-freezing, and credibly supervised banks. Early enforcement—such as penalties, prosecutions, or regulatory actions—will be key signals. Foreign banks will watch closely to see if Iran’s measures reduce risk. If implementation falters, the approval may be dismissed as symbolic. Conversely, credible reforms could reduce one barrier to reintegration, though snapback sanctions mean benefits will remain limited.

The Expediency Council’s conditional approval of the CFT represents progress but also ambiguity. It addresses formal FATF requirements while embedding broad carve-outs. The Central Bank’s new anti-money laundering rules provide a concrete step, but implementation and enforcement will determine credibility. For Iran, this decision offers a potential path to reduce financial isolation, but whether it yields tangible benefits depends on genuine compliance and the broader sanctions climate. The combination of conditionality, economic necessity, and external pressure ensures that Iran’s accession to CFT remains as much a political signal as a legal commitment, and its ultimate value will hinge on the actions that follow.

Iran Executes Bahman Chobi Asl on Espionage Charges Amid Rising Wave of Capital Punishments

On the morning of September 29, 2025, the Iranian judiciary announced that it had executed a man on charges of espionage for Israel. The individual, identified as Bahman Chobi Asl, was described by state authorities as a “trusted and reliable” spy of Israel’s Mossad intelligence agency. The case, presented as one of the most important espionage prosecutions in recent years, reflects both the seriousness with which Iran pursues alleged security threats and the persistent concerns surrounding the fairness and transparency of such proceedings.

According to the judiciary’s official account, Chobi Asl had engaged in “extensive and deliberate cooperation” with Mossad in the field of databases and information systems. He was said to have infiltrated a knowledge-based company inside Iran, where his technical expertise allowed him to take part in sensitive projects involving telecommunications and government data networks. Iranian authorities asserted that, owing to his specialization, he acted as a manager in all of the company’s projects and held high-level access to vital and sovereign databases. This access, they alleged, created a pathway for Israel to penetrate Iran’s data infrastructure and potentially compromise national security.

The judiciary further claimed that Mossad had arranged for Chobi Asl to be invited to Ireland, where he reportedly underwent “specialized training courses.” The stated goal of these sessions was to prepare him to collect sensitive data from Iranian state institutions and to help create breaches in the country’s data centers. Beyond Ireland, officials asserted that he traveled repeatedly to the United Arab Emirates, Armenia, India, Thailand, Vietnam, and Bulgaria to meet Mossad officers and receive instructions. These international trips, combined with his domestic access to data systems, were cited as evidence of his deep involvement in espionage activities directed against Iran.

Despite the gravity of these accusations, very little is publicly known about the judicial process that led to Chobi Asl’s execution. The judiciary’s news agency, Mizan, published a report that avoided specific dates, offering no details about the time of his arrest or the timeline of his trial. It was confirmed that his case was appealed to Iran’s Supreme Court, but that his request for review was rejected and the original death sentence upheld. Beyond this acknowledgment, however, there are no public records that shed light on the legal defense available to him, the evidence presented in court, or whether he was able to challenge the state’s allegations effectively.

The execution comes at a moment when Iran is carrying out a wider series of capital punishments in cases linked to espionage, particularly those alleged to involve Israel. Following the twelve-day war earlier this year between Israel and Iran, several individuals in Iran have been executed on similar charges. Just days before Chobi Asl’s death, Iranian authorities executed Babak Shahbazi, who had been arrested in January 2024 and sentenced to death in May 2025 on allegations of spying for Israel. His execution was carried out on September 16, 2025. Additionally, just two days before Chobi Asl’s execution, the judiciary in Alborz Province announced death sentences for two individuals accused of espionage on behalf of both Mossad and the People’s Mojahedin Organization of Iran (MEK), while two other alleged members of the same network were sentenced to prison terms.

The scale of executions in Iran overall remains a central concern for international human rights organizations. The group Iran Human Rights has reported that more than 940 people have been executed in the country this year alone, marking one of the highest rates in recent decades.

Iran’s Snapback Sanctions: Economic Fallout, Domestic Reactions, and Diplomatic Fault Lines

On Friday, September 26, 2025, the United Nations Security Council rejected an attempt by Russia and China to delay the reimposition of sanctions on Iran. That decision cleared the way for the snapback mechanism under Resolution 2231 to take effect, automatically restoring six UN Security Council Resolutions on Iran that had been lifted under the 2015 nuclear agreement. At the turn of the clock to Sunday, September 28, the resolutions came back into force and with it the binding Security Council exhortations, arms embargo, travel bans, and asset freezes that they contained. Iran immediately denounced the move as unjust and illegal, recalling its ambassadors from London, Paris, and Berlin while declaring that it would remain in the Nuclear Nonproliferation Treaty (NPT).

At the Security Council session, the Russian representative strongly rejected the snapback, declaring that it had no legal basis and was never properly triggered under UN Security Council Resolution 2231. China did not explicitly make this argument during the meeting, but Iranian officials have claimed that Beijing has conveyed privately that it shares Moscow’s position and has advised Tehran not to recognize the snapback. This divergence between public ambiguity and private reassurance underscores the delicate diplomacy at play, with Iran hoping to count on both Russia and China to counterbalance Western pressure.

Efforts had been made to avert snapback, but it appears that the Trump administration, the E3 and Iran were far apart on expectations for a deal. While Iran focused on concessions involving restoring transparency to its program, the Trump administration appears to have asked for an abandonment of enrichment and an elimination of its enriched uranium stockpile in exchange for a delay on snapback. Without common ground on terms, each party found it preferable to let the deadline expire and the sanctions to return.

In the days that followed, the Iranian economy felt the shock. The rial depreciated in open markets, trading at a record rate of above 110,000 to the dollar, fueling panic among consumers and traders. Prices of food, medicine, and household goods began to rise, while importers warned of bottlenecks and industrial suppliers reported disruptions. Inflation, already severe, now threatens to spiral higher as reinforced sanctions risk cutting off additional financial channels, pushing transactions into gray markets, and forcing Tehran to sell oil at steeper discounts.

The European Union reinforced the pressure by reinstating its own suspended measures, including bans on Iranian oil and petrochemicals, prohibitions on investment in energy, blocks on trade in gold and diamonds, restrictions on banknotes and coins, and limits on banking services that could cut Iranian institutions off from SWIFT. Shipping and aviation sanctions were also reimposed, striking at the arteries of Iran’s foreign trade.

The Iranian government struck a defiant tone. President Masoud Pezeshkian declared on September 29, “The dream of forcing Iran to its knees is a fantasy and a delusion. We will never yield to such filthy and despicable individuals. Even imagining it is impossible...they sanction us because we refuse to bow down; because we refuse to be humiliated.”

Amir Saeed Iravani, Iran’s ambassador to the UN, took issue with the UN Secretariat’s notification to member states about reactivated sanctions. In letters to the Secretary-General and the President of the Security Council, Iravani accused the Secretariat of siding with the European trio and the United States. He described the Secretariat’s move as a serious violation of Article 100 of the UN Charter and insisted that UN Security Council Resolution 2231 gives no authority to the Secretariat in this regard. Foreign Ministry spokesman Ismail Baghaei echoed these objections, demanding that the sanctions be annulled.

Leaders in the Iranian parliament also denounced snapback, and began to discuss how to respond. Parliament Speaker Mohammad Bagher Ghalibaf stated “We announce that if any country wants to take action against Iran based on these illegal resolutions, it will face serious reciprocal action from Iran, and the three European countries that are the initiators of this illegal action will also face our reaction.” The speaker for parliament’s National Security Commission, Ebrahim Rezaei, detailed that many proposals have been put forward pushing Iran to withdraw from the Nuclear Non-Proliferation Treaty. Rezaei expressed personal support for withdrawal, noting that Iran has seen no benefit and thus has no reason to stay in the treaty, but indicated that such a decision would require consensus.

In a closed-door session of the Iranian parliament, some representatives reportedly discussed the possibility of withdrawing from the Nuclear Non-Proliferation Treaty (NPT), though no concrete decisions were made and the talks remained at the level of expressing opinions. According to MP Hashem Khenfari, the meeting was mainly intended for consultation on regional developments and did not follow a specific agenda, with various issues—including the NPT withdrawal and the activation of the snapback mechanism—being raised informally. However, he stressed that these were only discussions without any serious resolution. Meanwhile, in his Telegram channel, MP Mehdi Koochakzadeh claimed that one of the key goals of some parliamentarians who had requested the closed session was precisely to push for debate on the NPT withdrawal in light of what he described as the long record of Western breaches and violations. Yet, he criticized the Speaker of Parliament for not allowing the issue to be formally presented, despite repeated insistence.

Western leaders balanced firmness with openness to diplomacy. In a joint statement, the foreign ministers of Britain, France, and Germany pledged to pursue a new diplomatic arrangement to ensure that Iran never acquires nuclear weapons. Likewise, EU foreign policy chief Kaja Kallas announced the immediate enforcement of sanctions but stressed that this did not close the door on talks, stating that only negotiation could deliver a lasting solution.

U.S. Secretary of State Marco Rubio also expressed open to negotiations, stating “A deal remains the best outcome for the Iranian people and the world. For that to happen, Iran must accept direct talks, held in good faith, without stalling or obfuscation.” Britain’s Foreign Secretary Yvette Cooper defended the use of the snapback, saying that Iran had offered no guarantees and had refused negotiations, but added that sanctions did not mean the end of diplomacy.

Inside Iran, the snapback provoked sharp debates. Kayhan daily ran an editorial titled “An Ordinary Day,” downplaying the importance of the news and criticizing former president Hassan Rouhani. It argued that sanctions were not what halted progress but the weakness and inaction of certain officials. By contrast, the Jomhouri Eslami newspaper called the sanctions the “ominous legacy” of Ahmadinejad’s governments and criticized officials who tried to minimize their importance, saying they lived privileged lives shielded from hardship. Javan daily declared bluntly that “the JCPOA is finished,” warning that unless political actors reached consensus, internal disputes would weaken the country. Etemad described the situation as “Iran in the Post-Snapback Era,” warning of a serious blow to diplomacy and highlighting the risk of Israeli aggression if Tehran pursued 90 percent enrichment or reduced IAEA oversight.

The conservative daily Aghah ran the headline “Morning of Disgrace,” publishing photos of Javad Zarif, Gholamhossein Karbaschi, and Ali Motahari and accusing them of misleading the public about negotiations. It repeated Ayatollah Khamenei’s position that talks with the U.S. are futile and argued that Pezeshkian’s New York trip ended in failure. Shargh headlined “Death of the JCPOA at New York Time,” calling this one of the toughest moments in Iranian diplomacy. Ham-Mihan ran an editorial called “Worse than Snapback,” accusing some domestic voices of aligning with Israel and stabbing the Iranian people in the back, arguing that Iran’s deepest problems were rooted at home rather than abroad.

Beyond domestic debate, the broader geopolitical context matters. Russia and China both opposed the snapback in different ways. Moscow did so openly at the UN, calling it illegitimate and untriggered, while Beijing avoided making such a formal statement but is reported by Iranian officials to privately share the same position. If China in particular continues purchasing Iranian oil and expanding trade, it could blunt some of the sanctions’ force. Since Iran already has limited direct transactions with the West, its reliance on Asian markets is critical. Continued Chinese demand could provide Iran with a lifeline of revenue and a political counterweight to Western isolation. For Moscow, deepening ties with Iran fits its strategic rivalry with the West, while for Beijing, discounted crude supplies align with both energy security and its independence from U.S.-led pressure. Thus, while the EU and the U.S. tighten sanctions, China’s choice will be decisive for Tehran’s ability to manage the crisis.

Iran’s strategy, therefore, appears two-fold. First, it aims to manage the sanctions through non-Western partnerships, leaning on China and Russia to keep revenues flowing and avoid complete collapse. Second, it hopes to buy time until a better opportunity emerges to restart negotiations, betting that eventually Western powers will prefer diplomacy to an unchecked Iranian nuclear program. Iranian officials have signaled defiance, but beneath that posture lies a calculation: if Iran can weather this storm with Chinese and Russian support, it may return to talks from a position of resilience rather than weakness.

For now, however, the snapback has reshaped Iran’s reality. The rial’s free fall, renewed sanctions on oil, petrochemicals, banking, shipping, and aviation, and sharp political divisions are plunging the country into a dangerous new phase. Western leaders believe they hold leverage, while Iran insists on resistance and counts on Eastern partners. Diplomacy remains possible, but the gulf has widened considerably and mutual interest appears minimal. What comes next will depend on whether Tehran escalates with nuclear steps or successfully manages sanctions through Eastern partnerships long enough to reopen negotiations on its own terms.

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