The new president’s cabinet, while not as inclusive as fellow reformists would like, has at least been approved by the Majilis in a show of unity, under pressure from the Supreme Leader. Pezeshkian’s political honeymoon had barely started when he was faced with his first major crisis – responding to Israel’s assassination of Hamas leader in Tehran; so far, so restrained.
Retaliation Delayed. Israel and Hezbollah seem to have stepped away from a wider conflict despite launching a significant exchange of fire on 25th August in the biggest escalation between the two since shortly after the 7th October attacks. The two sides each expressed satisfaction with their own attacks, which involved military targets and resulted in a small number of casualties. They both feel they have some space to declare victory from the exchange. The situation remains tense, but it appears that neither side is looking for an excuse to escalate. For weeks, Iran has also been expected to attack Israel over the killing of Hamas’ political leader, Ismail Haniyeh, in Tehran last month. But Hezbollah’s move might have eased pressure on Iran to do something big; it also looks likely now that whatever Iran will do will come separately from Hezbollah’s response, as opposed to part of a coordinated response. Still, the US is keeping two carrier strike groups in the region, and Israel remains on high alert – a signal that American and Israeli officials believe an Iranian attack remains a possibility and could come with little warning.
Earlier in August, Iran’s foreign ministry strongly criticized European leaders for urging Tehran not to attack Israel, asserting that Iran remained determined to defend its security and would not seek permission to respond to attacks. The UK, France, and Germany issued a joint statement calling on Iran and its proxies to refrain from escalating tensions following Haniyeh’s assassination.
Cabinet Approved. The hardline Majilis approved the cabinet proposed by new President Masoud Pezeshkian, marking a victory for the new government amid growing challenges. Pezeshkian emphasized that his cabinet, a blend of compromise and cooperation, was designed to foster unity within Iran’s political system, a crucial factor in addressing the country’s issues. He acknowledged that key ministers, including Foreign Minister Abbas Araghchi and Roads Minister Farzaneh Sadegh, were selected in coordination with Iran’s supreme leader, Ayatollah Ali Khamenei. Sadegh’s appointment is notable as she becomes only the second female minister since the 1979 revolution. Araghchi, a former nuclear negotiator, as Foreign Minister, signals a potential shift toward a more pragmatic approach in negotiations with the West for sanctions relief. Pezeshkian’s cabinet selections have drawn criticism from reformists for not going far enough in promoting inclusivity, particularly the exclusion of Sunni minorities. This show of unity in parliament reflects a broader attempt by the regime to moderate its stance and pursue renewed nuclear negotiations, which could potentially alleviate Iran’s economic difficulties. Despite some hardliner opposition, the vote is a triumph of moderation over extremism.
Accelerating Enrichment. Iran has further increased its stockpile of uranium enriched to near weapons-grade levels in defiance of international demands, a confidential report by the United Nations’ nuclear watchdog said on 29th August. The report by the International Atomic Energy Agency said that Iran has 164.7 kgs uranium enriched up to 60%, representing an increase of 22.6 kgs since its last report in May. Uranium enriched to 60% purity is just a short technical step away from weapons-grade levels of 90%. According to the IAEA, 42 kgs of uranium enriched to 60% is the amount at which creating one atomic weapon is theoretically possible — if the material is enriched further, to 90%. IAEA chief, Rafael Mariano Grossi, has previously warned that Tehran has enough uranium enriched to near-weapons-grade levels to make “several” nuclear bombs if it chose to do so. The August report follows a June resolution by the 35-member IAEA Board of Governors to censure Iran for failing to cooperate; Tehran has not reconsidered its decision to ban inspectors from monitoring its nuclear programme. Earlier in August the IAEA wrote to Tehran demanding access to a centrifuge manufacturing site in Isfahan, to enable the agency to service monitoring cameras, but received no reply. Just days before the report’s publication, the Supreme Leader opened the door to renewed negotiations with the United States over Iran’s accelerating nuclear program, declaring there was “no harm” in engaging with the “enemy.” While Khamenei reiterated his oft-repeated warnings that Washington was not to be trusted, his remarks give President Masoud Pezeshkian the required cover to resume talks.
Medicine Shortages. Several prominent medics are leading a public campaign to counter the severe impact of medicine shortages in Iran. Since the reintroduction of US sanctions in 2018, tens of thousands of patients have died due to lack of access to essential drugs, claim the campaigners, looking to publicly lobby the new president, himself a medic and former Minister of Health. The crisis has been exacerbated by both sanctions and domestic mismanagement, with shortages affecting treatments for cancer, multiple sclerosis, and other serious conditions. Pezeshkian is said to be prioritizing the shortages; despite claims from Tehran and Washington that sanctions do not target medicines, the reality on the ground is stark, with costs rising and patients struggling to obtain necessary treatments. Iran has traditionally relied on European imports, but sanctions have led to a reliance on substandard foreign products, with black markets and inflated prices compounding the issue. Critics argue that while sanctions are to blame, the Iranian government’s mismanagement also plays a significant role in the crisis, impeding the import of essential medicines and limiting the country’s healthcare infrastructure and global collaboration.
Elections Interference. US intelligence officials have confirmed that Iran was behind recent hacking attempts targeting Donald Trump’s presidential campaign and had also tried to compromise the Harris campaign. These actions are part of Iran’s increasingly aggressive efforts to interfere in the US election, driven by the perceived impact on its national security. The FBI and other agencies noted that Iran’s efforts included hacking, influence operations, and attempts to access individuals with direct ties to both campaigns through social engineering.
Rial. The rial remained steady, ending the month at 595,000 IRR to the USD on the black market.
Nurses’ Strike. The cities of Arak, Mashhad, and Yasuj saw Iranian nurses launch widespread protests, demanding better working conditions, fair compensation, and respect for their profession. Demonstrations, which began on 5th August, escalated into strikes. Many workers in the healthcare sector are also barely surviving on wages around $200 per month, below the poverty line. As the protests gain momentum, support from other sectors is growing. The Progressive Student Association has urged all members of society, particularly medical students, to join the nurses’ movement. The Teachers’ Association of Fars Province has also issued a statement supporting the strike, emphasizing its legality and necessity.
Fuel Subsidies. President Pezeshkian has criticized the lack of logic in importing petrol at high market prices only to sell it domestically at much lower, heavily subsidized rates. Iran has struggled with a growing petrol deficit since 2022, importing at least 1.5 billion litres during the last fiscal year, which ended in March. Pezeshkian’s remarks suggest that a significant increase in petrol prices may be necessary – a sensitive issue that previously triggered national protests in November 2019. Pezeshkian’s call for higher gasoline prices comes despite the Oil Minister’s announcement on 22nd August that no pricing changes are being considered to address the imbalance. No new refineries have been brought online since 2019, while around one million high-fuel-consumption domestic vehicles have been introduced annually into the market in the same period.
IRGC Gas Leak. A suspicious incident at an IRGC facility in Isfahan Province resulted in multiple casualties. The IRGC’s Saheb al-Zaman Headquarters reported that a “gas leak” at a “workshop” led to the death of one person and injured 10 others. The statement did not elaborate further but referred to the deceased as a “martyr.” Subsequently the IRGC’s public relations office in Isfahan announced that the death toll had risen to two, identifying the victims as Captain Mojtaba Nazari and Lieutenant Colonel Mokhtar Morshedi. Initially the IRGC-affiliated Fars News Agency used the hashtag #Israel in its report on the leak; use and later removal of the hashtag fuelled speculation that the incident might have been an act of sabotage. Isfahan hosts several key military installations, including the Shahed Aviation Industries Research Centre, known for producing Shahed-136 drones, as well as sites related to Iran’s nuclear programme.
War Crimes. Ukraine’s Prosecutor General announced that a case has been opened against Iranian brigadier general, Abbas Mousavi Sharifi Mollasaraei, on suspicion of aiding Russia and war crimes against Ukraine. According to the Ukrainian Prosecutor General, between July and August 2022, Russian military representatives reached an agreement with the Islamic Republic on the purchase of Shahed-136 and Mohajer-6 attack drones, along with related equipment, from Iran.
Political, economic and security developments suggest that the odds are growing of a reach out by the Islamic Republic to the Americans to restart negotiations at some level; sanctions easing for offers on halts on further enrichment seem likeliest, but will not be enough for either potential incoming US administration.