In the wake of widespread strikes initiated by merchants across Iran, the country's bazaar has begun to openly challenge the Islamic Republic, indicating a historic shift in the relationship between conservative traders and a state perceived as prioritizing military and security expenditures over economic stability. Historically, the Bazaaris, or conservative merchants, have been key allies of religious institutions, notably financing the 1979 revolution that brought Ayatollah Khomeini to power. However, after 46 years, this alliance appears to have fractured, with merchants now viewing their economic situation as untenable.

Merchants face accusations of price gouging despite having no role in inflation, and they are caught in a dilemma where rejecting state-mandated pricing leads to accusations of hoarding, while compliance risks financial ruin. The government's centralized allocation of foreign currency for imports has resulted in delays, forcing exporters to sell currency at a loss due to state pressure. The recent announcement of a new gasoline pricing policy has further heightened economic anxieties.

The government's budget proposal has drawn significant criticism, as it relies heavily on deficit spending and tax increases while cutting subsidies. With oil revenues projected to cover only 5% of administrative costs, the budget reflects a prioritization of military and security funding over public welfare, effectively shifting the economic burden onto citizens.

Merchants argue that they are being financially suffocated to support the state's regional ambitions, with chronic inflation and sanctions making survival increasingly difficult. The bazaar's response to these pressures has been to unite with the public in protests, which have evolved from economic grievances to broader political dissent against the government's priorities.

The state has responded predictably to the unrest, including a meeting with selected supportive businessmen and the scapegoating of the Central Bank Governor, Mohammad-Reza Farzin, who was dismissed amid the protests. However, the public perceives this as a superficial change, recognizing that the underlying issues remain unaddressed.

Public slogans during protests indicate a growing discontent with the regime's governance, suggesting that the economic distress is not merely a result of mismanagement but a consequence of deliberate state choices. The Islamic Republic now faces a critical decision: to abandon its military ambitions and engage in negotiations or to intensify repression, as evidenced by the violent response to protests.

Parliament Speaker Mohammad Bagher Ghalibaf has indicated that President Masoud Pezeshkian is willing to engage with lawmakers to revise the proposed budget, which has faced significant opposition due to concerns over inflation and its impact on household living standards. The proposed budget includes measures that could alleviate some economic pressures, but skepticism remains regarding the government's ability to implement effective reforms.

The unrest, which began with protests over the rising price of the US dollar and the devaluation of the rial, has expanded to include broader political demands. Protests have spread nationwide, with significant participation from students and merchants alike, signaling a potential shift in the political landscape. As protests continue, the government's response will be critical in determining whether this wave of unrest will lead to substantive change or further repression.