In brief

The Iranian regime has now quashed widespread protests and will manage the pending Majlis (parliament) election in March 2024 to ensure that hardliners remain in control. Prospects for negotiating a reinstatement of the 2015 nuclear deal in the 2024-28 forecast period are minimal and in the wake of the war in Gaza, and the outlook for an easing of US sanctions under an informal "less for less" arrangement with the US has also dimmed. Although we do not expect the war in Gaza to develop into a regional conflagration, Iran's already strictly controlled access to billions of dollars in previously trapped foreign exchange under the arrangement will now be halted. In any case, without a full lifting of US sanctions, the Iranian economy will continue to struggle, and we expect that the ensuing economic hardships, including still-high inflation and unemployment and weak growth, will continue to drive outbreaks of unrest. 

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