Tehran witnesses the fatal shooting of two of its most-senior and controversial judges, underlining the unpopularity – at least in some quarters – of the regime and its fiercest lieutenants. Pezeshkian strengthens relations with Moscow, and domestic rumours grow around his predecessor’s death, forcing the military to publicly quash conspiracy theories. Meanwhile official concerns about the stability of the country’s banking and financial sector will be causing fresh headaches for regime leaders.
Judges assassinated. Two Supreme Court judges were fatally shot in Tehran on 18th January, in what state media described as a rare and unexplained attack on senior officials. The victims, Mohammad Moghiseh and Ali Razini, were both clerics. Initial reports suggested a third judge may have been targeted, but the Judiciary has denied this. Conflicting accounts about the identity of the killer circulated; government-aligned media stated that the attacker was a judiciary staff member responsible for refreshments, while the Judiciary Media Center said that the assailant entered from outside.
Moghiseh and Razini were known for issuing harsh sentences, including death penalties, targeting political dissidents, activists, Baha’i followers, clerics, and security-related offenders. Ali Razini had held senior judicial roles, including Chief of the Special Clerical Court and Tehran’s Department of Justice. He played a key role in the 1988 mass executions of political prisoners and previously survived an assassination attempt in 1998. Moghiseh was sanctioned by the US in 2019 for human rights violations and was also known for his involvement in the 1988 mass executions. Supreme Leader Ali Khamenei led funeral prayers on Sunday 19th January for the pair.
Strategic partnership agreement with Russia. Masoud Pezeshkian travelled to Moscow to meet Vladimir Putin on 17th January to sign a comprehensive strategic partnership agreement. The agreement reportedly spans trade, military cooperation, science, culture, and education. At a joint press conference in Moscow, Putin described the pact as a “real breakthrough” that would foster “stable and sustainable development for Russia, Iran, and the entire region.” The Kremlin said that the treaty will enhance “military-political and trade-economic” relations; however full details remain undisclosed. Pezeshkian emphasized that the agreement marks a new chapter in bilateral relations, particularly in trade. Negotiations for the treaty began years ago, building on a 2001 agreement that has been periodically renewed. Russian Foreign Minister Sergei Lavrov called the treaty “constructive” and said it aims to bolster the capabilities of Russia, Iran, and their global allies.
The treaty does not include a mutual defense clause, unlike similar agreements Moscow has signed with North Korea and Belarus: Iran’s ambassador to Moscow, Kazem Jalali, said ahead of the principals’ meeting, “This agreement has a different nature. Belarus and North Korea have formed partnerships with Moscow in areas we have not addressed. Independence, security, and self-reliance are crucial to our country. We have no interest in joining any bloc.”
Former president’s death conspiracy theories. The armed forces felt forced to issue statements on the May 2024 helicopter crash that in northwestern Iran that killed former President Raisi, Foreign Minister Amir-Abdollahian and others, dismissing claims that it was due to anything other than poor weather. A public statement followed remarks by Raisi’s family which raised doubts about the official explanation, which the military called “baseless” and attributed solely to “complex weather and geographical conditions.” Of three helicopters in the delegation, only one crashed. Mojtaba Mousavi, brother of Raisi’s security chief, revealed opposition to the trip, citing security concerns near the Azerbaijan border; speculation about sabotage has since emerged. Majlis member Kamran Ghazanfari accused the US, Israel, and Azerbaijan of involvement, rejecting weather as the cause. Internal rivalries have also been suggested in recent months, with Mehdi Nasiri linking Raisi’s death to succession plans for Supreme Leader Ali Khamenei. The crash, along with other high-profile deaths, has heightened concerns about threats to Iran’s leadership. Despite denials from Israel, figures like Ghazanfari continue to allege foreign interference.
Italian released. Italian journalist Cecilia Sala was released after being detained by Iranian authorities. Sala had been held in solitary confinement on unspecified charges despite holding a valid press pass. Iran had tied her release to Italy’s holding of an Iranian, Mohammad Abedini Najafabadi, a 38-year-old detained in Italy at the request of the United States. Rumours swirled online that Elon Musk was involved in her release (Musk is known to be close to Giorgia Meloni, Italy’s Prime Minister), denied by Foreign Ministry spokesman, Esmaeil Baghaei and his Italian counterpart. Najafabadi was released by Italian authorities following Sala’s return.
A new capital on the cards. Iran’s government has proposed relocating the capital to the underdeveloped Makran region in south-eastern Iran, sparking intense debate in Iran. A government spokeswoman announced the plan as being “underway,” but this has since been toned down by the President’s office as being “only an idea”, with no fixed timeline. This has not come entirely out of the blue; a 2015 parliamentary directive to explore relocation options remains incomplete. Tehran faces chronic water shortages, pollution, and seismic risks due to its location on major fault lines. Makran offers strategic access to the Indian Ocean via the Gulf of Oman and includes Chabahar, Iran’s only oceanic port with transit links to Central Asia and Afghanistan. It could rival Pakistan’s Gwadar port. However, US sanctions have hindered port development despite India’s $2 billion investment pledge. There are however multiple and significant challenges with Makran as a location: its proximity to open waters and the Pakistan border makes it vulnerable to security threats; the region lacks infrastructure, requiring costly investment that today’s struggling economy cannot support; and, serious doubts exist over the feasibility of sustaining a capital in the arid region without expensive desalination.
Rial.The rial dropped to another all-time low, ending the period at 800,000 IRR to the dollar on the black market.
Bad loans threaten banking system. A report from Iran’s Central Bank has revealed extensive insider dealings and corruption that jeopardize the country’s banking system. The leaked report lists overdue and non-performing loans owed by major debtors to banks, as well as the banks’ corresponding debts to the central bank. 27 major institutional debtors collectively hold approximately 790 trillion rials in non-performing loans. Non-performing loans (NPLs) are those unlikely to be repaid in full or subject to delayed repayment. Top Debtors include: Middle East Mines and Mineral Industries Development Holding Company (MIDHCO), the largest debtor; Debsh Sabz Gostar, a tea trading company embroiled in a $3.5 billion embezzlement scandal since 2023; SAIPA, the state-backed automaker; and, Esfahan Steel and Khuzestan Steel (partially owned by the IRGC), implicated in significant embezzlement cases. The MAPNA Group, Iran’s largest power plant construction company with strong IRGC ties, owes significant debts to Pasargad Bank, Parsian Bank, and Bank Saderat.
Tehran-Moscow currency agreement takes effect. Coinciding with the talks in Moscow this month, Iran and Russia have activated a bilateral currency agreement to facilitate trade using their national currencies. The currencies of both nations are now being exchanged at an agreed market rate for trade transactions. Central Bank Governor Mohammad-Reza Farzin, travelling to Moscow with the president, announced progress in linking the Russian Mir and Iranian Shetab card payment systems, stating that the initial phase of the integration has been launched.
Foreign exchange information denial. In DecemberMohammad-Reza Farzin accused a US-based website of fuelling the devaluation of the rial by ‘setting’ unofficial exchange rates used by Iranian exchange offices. “The Bonbast channel, which determines the dollar exchange rate for all Iranian exchange offices starting at 9 AM, is registered in the US, and all its servers are also located there,” Mohammad Reza Farzin said. Iran has multiple official exchange rates but the free (or black) market rate reflects the true value of transactions; Bonbast is widely known for publishing the free-market exchange rate of the rial against foreign currencies, not setting it.
In early January administrators of Bonbast.com, announced that they had taken the site offline following cyberattacks and security concerns. The website suffered “severe” distributed denial-of-service (DDoS) attacks after Farzin’s comments, a site spokesperson saying that, “due to these attacks and the security risks to our families and colleagues in Iran, we have decided to take the website offline.” The shutdown eliminates a crucial source of exchange rate data for foreign exchange traders and the public in Iran. The country’s government maintains multiple official exchange rates that differ from the open-market rate, which Bonbast.com tracked. The closure comes as the rial continues to hit record lows against the US dollar.
GPs on strike. Approximately 30,000 general practitioners are withdrawing their labour because of inadequate fees, according to the organization responsible for licensing and regulating the medical profession. The Iranian Medical Council has said that doctors’ incomes have seen minimal growth over the years when compared to the salaries of civil servants and workers; with inflation rates consistently above 40%, the purchasing power of nominal incomes has eroded since 2019. Medical fees in Iran are controlled by the government, which sets annual rates for private general practitioners, specialists, and dentists.
Maintaining stability will require careful management of both internal and external pressures, but the outlook remains highly uncertain. The risk of challenges arising from internal unrest, regional military threats, cyber vulnerabilities, and economic deterioration remains high.
Mainly bad news again this month, with likely more to come as the US Presidency formally passes to Donald Trump who, historically, is no friend of Iran. Trump’s inauguration brings with it the risk of renewed sanctions and further economic isolation in the country. The Rial’s drop to yet another all-time low signals eroding confidence in the economy, largely driven by on-going sanctions, high inflation and capital flight.
Published 20th January 2025