Iran Unveils Economic Rescue Plan as US Blockade Deepens Cost-of-Living Crisis

Iranian President Masoud Pezeshkian has launched a coordinated government effort to shield ordinary citizens from the economic fallout of the United States' naval blockade and sanctions, as the war that began on February 28 continues to devastate the country's finances.

Pezeshkian met with several cabinet members in recent days to discuss measures aimed at easing the financial strain on Iranians, including the plummeting value of the national currency and the spiraling cost of basic goods. The president framed the moves as a direct response to what he described as a deliberate campaign to cripple the country's economic lifelines.

"The enemy's plan in recent months has been to cut off the country's vital arteries with the aim of pressuring the noble people of Iran," Pezeshkian said in a social media statement following the discussions.

While the government has not published the full details of its strategy, the composition of the meeting and the president's public remarks offer clues about the direction of policy. At the heart of the response is a seven-point package drawn up by Iran's Plan and Budget Organisation, which was presented during the gathering.

The semi-official Tasnim news agency reported that the proposal is designed to help the country navigate the current challenges "in a more orderly and less costly manner," though no specifics of the seven measures have been made public.

In a follow-up directive issued the day after the meeting, Pezeshkian ordered the creation of a committee to coordinate the new economic arrangement. The body brings together Central Bank Governor Abdolnaser Hemmati, Interior Minister Eskandar Momeni, and Tehran's conservative mayor Alireza Zakani.

According to the state broadcaster IRNA, the committee's primary objective is to stabilise prices across the country. The inclusion of the central bank chief and the interior minister suggests the government intends to combine monetary policy with domestic enforcement and supply-chain management.

The economic backdrop to these measures is severe. Since the war erupted on February 28, US and Israeli strikes have killed senior Iranian political and military figures, and bombing campaigns have inflicted an estimated 270 billion dollars in damage on the country. The situation deteriorated further in late August, when Washington launched Operation Economic Outcast, an initiative aimed at completely isolating Iran from international trade.

The combined effect has been devastating. Iran's gross domestic product has contracted by 10 percent as energy exports collapsed under the weight of the US naval blockade. The Iranian rial has sunk to record lows, eroding household purchasing power and fueling a cost-of-living crisis that has hit low-income families hardest.

Maryam Ashrafi, a researcher at the London-based Bourse and Bazaar Foundation think tank, told Al Jazeera that Iranian consumers are facing increasingly difficult conditions, especially when it comes to food prices. In response, she said, households are "increasingly turning to cheaper, inferior goods" as their budgets shrink.

Ashrafi noted that shortages of raw materials used in the production of some staple foods, including margarine, have pushed prices higher. The blockade on Iran's southern ports has also disrupted imports of wheat and grains, cutting off a critical supply route for basic foodstuffs.

She explained that large bulk carriers serving those southern ports can transport upwards of 80,000 tonnes of agricultural commodities at a time. By contrast, ships rerouted to Caspian Sea ports, which fall outside the embargo, carry loads of only around 7,200 tonnes. Land routes offer little relief, with trucks limited to roughly 20 tonnes per vehicle.

The price of packaging materials has risen as well, leaving businesses grappling with supply chain disruptions that ripple through the wider economy. Insurance costs have climbed, even though war-related losses are generally excluded from coverage.

The pharmaceutical sector has not escaped the crisis. Although medicines themselves are not subject to sanctions, the raw materials Iran's drug industry relies on are becoming "increasingly difficult and expensive" to procure, according to Ashrafi. US sanctions on Iranian airlines have further disrupted air travel, heightening fears of medicine shortages nationwide.

Pezeshkian's public comments have placed particular emphasis on protecting the most vulnerable segments of society. Speaking to members of parliament on Monday, he said economic policy should prioritise groups such as female-led households, who often lack a financial buffer during times of hardship.

The president also identified energy efficiency as a central pillar of his government's approach. "We are working to ensure that under no circumstances are electricity and energy supplies to producers and businesses cut off," he said, signalling that keeping industry operational is a priority.

Among the more unusual measures Pezeshkian has championed is the implementation of "car-free Tuesdays," a weekly initiative in which citizens are encouraged to leave their vehicles at home to conserve fuel. He has urged state employees to participate as well, hoping their example will spur broader public engagement.

The push reflects a paradox at the heart of Iran's predicament: despite being one of the world's major oil and gas producers, the country has suffered petrol shortages and rolling power cuts since the war began. The blockade and the broader conflict have constrained the very energy exports that once underpinned the national budget.

For now, the full contours of Iran's economic response remain opaque. The government has yet to disclose the contents of its seven-point plan or explain how the new coordination committee will operate in practice. What is clear is that Tehran is searching for ways to soften the blow for a population facing rising prices, shrinking incomes, and uncertainty about how long the war will last.

The lifting of the blockade has become a central Iranian demand in negotiations with Washington over the reopening of the Strait of Hormuz, a waterway whose closure has compounded the economic pain. Until those talks yield a breakthrough, Pezeshkian's government appears to be preparing for a prolonged period of economic siege management, balancing crisis response with the need to maintain public confidence.