How is the resilience of Iran’s authoritarian system being reshaped amid the erosion of domestic legitimacy, mounting international pressure, and technological disintermediation? And which variables will determine the likelihood of regime collapse in the near term?
At the core of this question lies a more fundamental dilemma: can Iran’s theocratic system adapt to new forms of global pressure and deepening social fragmentation without losing its institutional core? Put differently, is it possible for the “Islamic Republic” to survive as a functional state once the Islamic Revolution itself has ceased to serve as a source of legitimacy?
Since 1979, the Islamic Republic of Iran has constructed a distinctive model of governance that fuses a religious hierarchy (velayat-e faqih), a militarized bureaucracy (the Islamic Revolutionary Guard Corps and the Basij), and a rent-based economy reliant on oil revenues and external smuggling networks. For decades, this architecture delivered a degree of internal stability. By 2026, however, it has entered a phase of systemic entropy - a condition in which reproducing the regime requires more resources than the state can still command.
Iran’s core problem is not the intensity of external pressure or the effectiveness of the opposition. It is the exhaustion of a system built on managed fear. As research from leading Western think tanks has consistently shown, authoritarian regimes endure so long as repression is perceived as functional - so long as it delivers order. Once violence becomes an end in itself, power loses political meaning and devolves into mechanical coercion without strategy.
Institutional Anatomy: The IRGC as the Core of Corporate Authoritarianism
Iranian resilience today rests not on religion, but on the institutional consolidation of coercive power. By 2026, the Islamic Revolutionary Guard Corps has evolved into a sprawling military-economic conglomerate, controlling an estimated share of the national economy that rivals that of the formal state. Through a web of subsidiaries, including the Basij and quasi-charitable foundations, the IRGC is embedded across construction, heavy industry, telecommunications, and foreign trade.
In political-theory terms, this is a corporate para-military bureaucracy whose loyalty is grounded in material dependence. The system has shed most of its ideological character and now functions as a mechanism of collective self-preservation. For its beneficiaries, regime collapse would not mean a mere change of leadership but the disintegration of vast economic interests encompassing hundreds of thousands of people.
Yet this form of stability carries its own risks. Violence becomes oligarchized. The IRGC is no longer monolithic: the interests of senior generals, regional commanders, and rank-and-file personnel increasingly diverge. At lower levels, demoralization is spreading, driven by the fatigue of perpetual repression, falling real incomes, and the visible moral decay of the elite. This “entropy of the repressive apparatus,” documented in earlier studies of Egypt and Sudan, is now unmistakably present in Iran.
The Social Dynamics of Protest: Fragmentation Without a Center, Synchronization Without Leaders
Unlike the revolutionary movements of the twentieth century, Iran’s contemporary protests lack vertical leadership. They consist of decentralized micro-movements, loosely connected through digital channels and a shared culture of exhaustion with state violence. This structure makes them unusually resilient to targeted repression: there are no leaders to arrest, no parties to ban.
Technological disintermediation has become a decisive factor in shifting the balance between state and society. After Tehran imposed sweeping internet restrictions in late 2025, protesters migrated en masse to satellite-based communications, most notably Starlink. The result has been a new form of digital transparency of violence: every killing, every beating, instantly enters the global public sphere.
Domestic repression is thus converted into external political capital for the opposition - a phenomenon previously observed in Myanmar after 2021 and in Hong Kong in 2019. While digital repression has intensified dramatically, protest resilience has grown even faster, underscoring the structural advantage of horizontal communication networks over vertical systems of control.
Economic Entropy and the Collapse of the Social Contract
Iran’s economic system has entered a stage of fiscal insolvency. Food inflation has soared above 70 percent, the rial has collapsed to historic lows against the dollar, and the budget deficit has breached double digits as a share of GDP. Renewed sanctions by the United States, the European Union, and Japan have slashed export revenues, while oil trade with China and India has increasingly moved into the shadows.
At the same time, the state remains overwhelmingly dependent on oil rents, leaving it acutely vulnerable to external shocks. The social consequences are stark. The fiscal legitimacy that once underpinned basic loyalty among poorer segments of society has eroded. The state is no longer able to perform the redistributive functions that sustained a minimal social contract. Poverty now affects nearly half the population, while youth unemployment approaches levels historically associated with late-stage systemic breakdowns.
Iran’s economy now operates under conditions of negative fiscal legitimacy: citizens no longer believe that paying taxes or participating in state programs yields any collective benefit, while elites treat the state primarily as a source of private rent.
A System Running on Inertia
Contemporary Iran represents a rare case of long-term institutional adaptation by a theocratic authoritarian regime under permanent external pressure and internal economic decay. For nearly half a century, the Islamic Republic displayed a paradoxical resilience, blending sacralized authority with a corporate-military state. By 2026, however, its traditional survival matrix - ideological mobilization, oil rents, and centralized repression - has lost its effectiveness.
The system’s erosion is not unfolding as a sudden rupture but as a structural slowing of every mechanism of power reproduction. In the language of comparative authoritarianism, Iran has evolved from a form of competitive authoritarianism into a closed corporate regime in which elite loyalty has become the primary currency of survival.
Unlike the monarchies of the Persian Gulf, however, Iran’s theocracy has lost its internal mechanism of legitimation. This is not simply a crisis of leadership surrounding Ali Khamenei. It is a crisis of the very concept of the Islamic Republic itself - a political form that has proven incapable of institutional modernization in a radically transformed social and technological environment.
The Regime’s Corporate Architecture: The IRGC as the Core of Power
Since the late 2000s, the Islamic Revolutionary Guard Corps has evolved from a military force into the central institution of Iran’s economic and political order. Controlling as much as 40 percent of GDP - across infrastructure, energy, logistics, and the IT sector - the IRGC has become the regime’s strategic operator, the place where power is accumulated, managed, and defended.
Viewed through the lens of institutional economics, Iran increasingly resembles a quasi-corporation in which the state and the coercive apparatus function as interdependent beneficiaries. The IRGC’s revenues do not flow primarily from the formal budget but from rents and parallel shadow streams. This financial autonomy insulates the security apparatus from the civilian bureaucracy and cushions it against fiscal crises that would otherwise cripple the state.
Yet corporate autonomy is also a source of vulnerability. As export revenues shrink and sanctions deepen Iran’s isolation, centrifugal forces inside the IRGC are intensifying. Regional units are competing for contracts and access to resources, while the command echelon is showing growing signs of political differentiation.
The machinery of coercion is thus turning into an arena of internal power redistribution. Observers note a widening institutional gap between the IRGC elite and the clerical establishment: the former increasingly prioritizes the preservation of property and economic assets, the latter the survival of ideology. What once functioned as a unified pillar of the system is gradually fragmenting into factions with diverging endgames.
Economic Entropy and the Loss of Fiscal Legitimacy
The economic foundations of Iran’s resilience are eroding faster than its political shell. Inflation in basic food categories has surged past 70 percent, the budget deficit has reached roughly 10 percent of GDP, and the rial has collapsed to around 650,000 to the dollar. Oil rents, which accounted for as much as 60 percent of state revenues in the 2010s, have now fallen by more than half.
Sanctions are only part of the story. The deeper problem lies in the structural inefficiency of a patrimonial economy. More than 65 percent of industrial output is controlled by quasi-state entities, while youth unemployment exceeds 30 percent. The result is what Max Weber once described as the loss of rational legitimacy: the state’s inability to perform even minimal distributive functions.
This has produced a condition of negative fiscal legitimacy. Taxpayers no longer believe the state redistributes resources fairly and respond with widespread tax evasion, further hollowing out the revenue base. According to recent international estimates, Iran’s shadow economy now exceeds 40 percent of GDP - levels comparable to Egypt on the eve of the 2011 uprising. This is a direct indicator of institutional decay, not merely economic distress.
The Communications Revolution and the End of the State’s Monopoly on Fear
For decades, the Iranian system maintained control through ideological isolation and tight command over information flows. That monopoly has been shattered. Satellite communications, underground VPN networks, and decentralized digital platforms have enabled society to construct a new infrastructure of horizontal interaction beyond the state’s reach.
This technological disintermediation has rewritten the logic of protest. Where the Green Movement of 2009 was vertically organized and thus vulnerable, the protests of late 2025 and early 2026 are networked, leaderless, and far more resilient to repression.
For a regime built on the invisibility of violence, digital transparency has been devastating. Videos of executions, beatings, and crackdowns now circulate instantly through global information networks, converting domestic repression into an international legitimacy crisis. Control over communication - once a cornerstone of regime survival - has turned into a liability. Fear, as analysts have put it, is no longer the exclusive property of the state.
International Pressure: Trump’s Strategy and Structural Isolation
In 2026, the administration of U.S. President Donald Trump has pursued a strategy best described as “economic strangulation without invasion.” Its centerpiece is sanctions extraterritoriality: 25 percent tariffs on countries that continue to do business with Iran, effectively transforming engagement with Tehran into a toxic asset.
The aim is not sudden regime collapse but prolonged exhaustion. Washington is weaponizing the global trading system through secondary sanctions, turning commerce itself into an instrument of strategic pressure. China, still Iran’s principal oil buyer, has responded cautiously, diversifying its imports to limit exposure. Turkey and India have cut their purchases by 15 to 20 percent - not a shock, but a trend that steadily undermines Iran’s long-term financial viability.
Combined with shrinking rents and rising social expenditures, the sanctions regime is compressing the domestic market and deepening reliance on the parallel economy dominated by the IRGC. The result is a system that survives less by governing than by extracting - more insulated, more militarized, and ultimately more brittle.
Internal Dynamics: The Erosion of the Vertical and the Elite Rift
Formally, Iran’s political system still preserves a rigid hierarchy. In practice, it has entered a phase of bureaucratic decomposition. The clearest signal came in late 2025, when the Assembly of Experts proved unable to produce a consolidated position on the question of Ali Khamenei’s succession.
This was not a procedural failure but a symptom of institutional exhaustion. Loyalty no longer guarantees security, and ideology no longer provides motivation. Under these conditions, the primary instrument of governance has become the distribution of fear - a finite resource that ultimately consumes itself.
According to Freedom House, internal contradictions among the clerical establishment, the IRGC, and the civilian administration have reached their highest level in two decades. The regime now rests on a narrow force-based consensus among elites, one that is structurally incapable of surviving even partial fragmentation.
Regional Projection and the Shifting Balance of Power
Iran’s crisis is no longer a purely domestic affair. It is increasingly reshaping the architecture of the Middle East. Tehran’s capacity to project power into Lebanon, Syria, and Yemen has visibly diminished. Funding for Hezbollah has reportedly fallen by roughly 40 percent, while Iranian influence in Damascus has been reduced to localized networks rather than systemic control.
This contraction is opening space for a new triangle of influence: the United States, Israel, and Turkey. Washington continues to operate through strategic containment, while Ankara is positioning itself as a mediator and architect of regional reconfiguration.
Saudi Arabia, fatigued by ideological confrontation, has moved toward pragmatic neutrality. Together, these shifts create the preconditions for a post–Iran-centric regional security system.
Scenario Analysis: Three Paths of Transformation
Drawing on scenario typologies developed by RAND and analysis from the Hudson Institute, three plausible trajectories emerge for the 2026–2028 period.
The first is a controlled transition: partial liberalization managed by segments of the elite, preserving basic statehood while dismantling the theocratic framework. The probability is low - around 20 percent - given the absence of genuine power dualism and the lack of established mechanisms for authority transfer.
The second is revolutionary collapse: mass protests combined with the defection of parts of the IRGC, with external shocks accelerating systemic breakdown. This scenario carries a medium probability, estimated at 30 to 35 percent.
The third, and most likely in the short term, is degradation without collapse: a protracted process of regional erosion marked by provincial autonomization, corruption-driven federalization, and the gradual loss of monetary sovereignty. Its probability is high - 45 to 50 percent - though it ultimately leads to the disintegration of governability.
Prospects for a Post-Theocratic Transition
In the event of systemic collapse, the central challenge will be institutional vacuum. Once the theocratic core is removed, Iran risks sliding into a Libya-style scenario, where the absence of a unified center of power produces a mosaic of quasi-state entities.
The Iran Prosperity Project proposed by Reza Pahlavi represents an attempt to articulate a technocratic roadmap for a civilian transition, modeled loosely on Eastern European experiences of the 1990s. Its implementation, however, would require external mediation and credible security guarantees.
A hybrid scenario is also conceivable, involving international observers, digital governance platforms, and external investors tasked with maintaining infrastructural stability during the transition.
Strategic Recommendations
The United States and the European Union should coordinate sanctions and humanitarian policies to prevent uncontrolled disintegration.
Turkey should expand its mediating role, balancing containment with integration.
International financial institutions, including the IMF and the World Bank, should begin preparing the infrastructure for post-crisis stabilization.
An international mechanism for oversight of nuclear facilities during any transition period is essential.
The overriding priority is to prevent a regional power vacuum and the spillover of instability into Iraq and the Caucasus.