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Tehran, Iran – Iranians are dealing with the fallout of the US-Israeli war on their country for the fourth week while being squeezed by a dwindling economy and the longest internet shutdown the country has ever experienced.

Most of the country is closed down this week for Nowruz holidays to celebrate the Persian New Year.

But Iran has had numerous unexpected shutdowns this year, including those due to the 12-day war with Israel and the US in June, and the bloody nationwide protests in January, as well as air pollution rooted in an energy crisis.

For many business owners, significantly reduced market activity over the past year, and specifically in the lead-up to Nowruz, has meant significantly slashed income.

“There was some action in those last few days, but our sales were probably about one-third of usual levels around this time, which is supposed to be the time of the year when we get the most business,” said a vendor selling textiles and related commodities in Tehran’s Grand Bazaar.

“Nobody is sure what comes next when we open back up after the holidays. Things have only gotten worse over the past few years,” he told Al Jazeera, asking to remain anonymous due to security concerns.

Iranians’ purchasing power has been steadily falling for years, and well-paying jobs have become scarce due to a destructive mix of local corruption and mismanagement, paired with a “maximum pressure” campaign of all-encompassing sanctions started in 2018 during President Donald Trump’s first term in office.

Annual inflation was officially about 70 percent just before the war, with food inflation rates pushing more than 100 percent, signalling more trouble ahead for lower-income Iranians. The stock market was in the red with a lot of capital exiting, and experts raised concerns about potential hyperinflation and dollarisation of the embattled economy.

The government has said it is cutting spending and will raise the minimum wage for workers by 60 percent in addition to offering a meagre cash subsidy, but rising costs have proven crushing, particularly since the 12-day war in June. Taxes are also up significantly this year.

A small grocery shopkeeper in western Tehran said the store has regularly had access to most goods and items since the start of the war on February 28, but rising prices have dismayed many customers.

“You can see a lot of people double – checking the prices or making calculations when coming in to buy things. It’s not an uncommon sight these days,” he said.

Some families left Tehran and other major metropolises shortly after the start of the war and have yet to return, concerned about the safety of themselves and their loved ones. Many are burrowing into their modest savings and are left with an uncertain future.

But there is no sign of reprieve, at least in the short term, even though Trump suggested on Monday that diplomacy may yet have a chance to stop the war, they have also seen the Islamic Revolutionary Guard Corps (IRGC) launching projectiles at regional neighbours and driving up global energy costs.

Internet blackout

Inside Iran, the fact that more than 90 million people have now been blocked by the state from accessing the global internet for a 25th day is making everything grimmer for a population left in the dark.

Not only has the shutdown prevented most Iranians from getting their voices out to the global community during the war and largely limited the flow of information to state-run outlets, but it has also inflicted serious psychological and financial pain on the population.

“This time, there is not even a word about when the internet might get reconnected. It is not only humiliating, but it is also forcing businesses to close down and inflation to grow,” said a young woman who ran a small online business selling jewellery and accessories on Instagram and Telegram.

She explained that she has not had a sustainable income in months since another 20-day near-total internet shutdown was imposed by the country in January, when many thousands were killed on the streets during nationwide anti-establishment protests.

Many online shops chose to either stop advertising or suspend operations entirely in the aftermath so they could help spread the news about the unprecedented protest killings.

Assets confiscated

Many private businesses were shuttered or had their online pages suspended by the authorities because they expressed solidarity with the killed protesters, even by posting Instagram stories.

The judiciary also confiscated the assets of a number of Iranians, including those of a renowned businessman who owned cafes and food brands, for protesting.

The latest effort was announced on Tuesday, when the judiciary said a man and a number of those close to him have all had their assets confiscated for being “active elements who are colluding and collaborating with the terrorists and the US-Israel child-killing regimes”.

Local media identified the man as Borzou Arjmand, an actor who has been advocating for the overthrow of the government since leaving the country some time ago.

The judiciary also announced on Tuesday that it now has the ability to “identify and confiscate assets online” for people believed to be aligned with “hostile countries”.

This comes amid numerous warnings of asset seizure issued by authorities against Iranians inside and outside the country for dissent.

“The court cases of terrorist agents of the enemy that have led to definitive sentences are being implemented,” Hamzeh Khalili, the first deputy of the judiciary, told state television in a video message on Monday.

Executions

Iran has executed multiple people over the past week based on national security charges related to last year’s June war and the nationwide protests in January.

Authorities also continue to crack down on any efforts amid the internet shutdown to send footage of war or armed state-run checkpoints on the streets to media outlets outside the country.

The IRGC-affiliated Fars news agency released the “confessions” of an unidentified young woman on Tuesday, who had her eyes and mouth covered with a black mask.

She was arrested because she filmed a missile impact point from the window of her home.

“Those who send videos to anti-Iranian media must await this moment,” said Fars.

Iranian authorities have also explicitly warned that anyone who protests against the establishment on the streets will be shot and killed as an “enemy”.

They have continued to mobilise pro-establishment paramilitary and civilian backers to maintain control on the ground.

Addressing the Iranian people during an interview this week, Brad Cooper, the top US military commander in the region, said it is better for antigovernment protesters “to stay inside for now”.

As the United States-Israeli war with Iran sends tremors through the global economy, the poorest members of the Global South are the most exposed to the fallout.

In Asia, Africa and the Middle East, developing economies are bearing the brunt of surging energy costs prompted by the closure of the Strait of Hormuz and attacks on oil and gas facilities across the Gulf.

From Pakistan to Bangladesh and Sri Lanka, through to Jordan, Egypt and Ethiopia, policymakers are facing the double whammy of being both heavily dependent on imported energy and having limited financial firepower to absorb the shock of spiking prices.

In Pakistan, which imports about 80 percent of its energy from the Gulf and has lurched between economic crises for years, authorities have scrambled to roll out measures to conserve fuel.

Facing the depletion of the country’s petrol and diesel reserves within weeks, officials have closed schools, introduced a four-day working week for government offices, ordered half of the country’s public sector employees to work from home, and slashed fuel allowances for official business.

Pakistani Prime Minister Shehbaz Sharif said last week that he had decided against a proposed hike in petrol and diesel prices before the Eid Al-Fitr celebration, saying the government would “bear the burden” of rising costs.

Sharif’s announcement came after the government had earlier this month approved a 55 rupee ($0.20) rise in the price of a litre (0.26 gallons) of petrol or diesel.

While government subsidies have helped cushion the blow for the public, there are fears that petroleum prices will surge and bring economic activity to a halt if the war drags on, said S Akbar Zaidi, the executive director of the Institute of Business Administration in Karachi.

“The overall shock is quite severe, although it has not been fully passed on to consumers and to industry,” Zaidi said.

“I expect the next few weeks to make things far worse once the disruption and price factors pass through.”

In Bangladesh, which imports about 95 percent of its oil and is expected to run through its fuel reserves within days, petrol pumps in some districts have run dry despite the introduction of fuel rationing.

Sri Lanka, which imports about 60 percent of its energy needs and is still reeling from an economic meltdown that began in 2019, has declared every Wednesday a public holiday and introduced a mandatory fuel pass for vehicle owners to conserve petrol and diesel, stockpiles of which are projected to run dry within weeks.

In Egypt, one of the biggest energy importers and among the most indebted economies in the Middle East, the government has ordered malls, shops and cafes to close by 9pm on weekdays and 10pm during weekends, and cut back on public lighting.

Facing growing pressure on public finances due to the government’s heavy subsidisation of fuel prices, Egyptian officials on March 10 announced price hikes of between 15 and 22 percent for petrol, diesel and cooking gas.

While acknowledging the burden on the public, Egyptian President Abdel Fattah el-Sisi said the move was necessary to avoid “harsher and more dangerous outcomes”.

“For a majority of developing economies, especially those already grappling with debt and high import dependence, they are facing a potent mix of inflation, currency pressures and fiscal strains,” said Yeah Kim Leng, a professor of economics at the Jeffrey Cheah Institute on Southeast Asia at Sunway University in Kuala Lumpur, Malaysia.

“The hardest hit are net energy and food importers, especially those with fragile macroeconomic foundations and pre-existing vulnerabilities that typified countries with low per capita income and high poverty rates,” Yeah added.

Pakistan, Bangladesh, Sri Lanka, Jordan, Senegal, Egypt, Angola, Ethiopia and Zambia are among the most at risk, according to a recent analysis by the Washington-based Centre for Global Development, which looked at factors including dependence on fuel imports, public debt levels and foreign exchange reserve/import ratios.

Currency depreciation

The weakening of many developing countries’ currencies against the US dollar – the result of investors buying the greenback amid heightened geopolitical uncertainty – has compounded the situation by further driving up costs.

“Countries such as Indonesia and the Philippines have already seen their currencies at near record lows even before the start of the conflict, making imports, including oil, much more expensive,” said Azizul Amiludin, a non-resident senior fellow at the Malaysia Institute of Economic Research in Kuala Lumpur.

Much as the fallout of the war poses particular challenges for governments in developing countries, the effect on citizens is disproportionate, too.

In less advanced economies, citizens spend much more of their pay cheques on fuel and food, leaving them more exposed to rising living costs.

At the same time, governments in developing countries have less capacity to provide a safety net for those at risk of falling through the cracks.

“In vulnerable economies, governments often attempt to shield their populations from price hikes by subsidising fuel and food,” said Yeah, the Jeffrey Cheah Institute professor.

“However, with depleted fiscal buffers and shrinking revenues, this becomes unsustainable. The ensuing austerity, combined with hyperinflation, can trigger widespread social unrest and a full-blown fiscal crisis.”

With the US and Israel barely a month into their war and no clear timetable for its end in sight, many analysts expect things to get worse before they get better.

Khalid Waleed, a research fellow at the Sustainable Development Policy Institute in Islamabad, said rising transport costs would soon be felt at supermarket checkouts.

“Diesel is the backbone of Pakistan’s freight and agricultural economy,” Waleed said.

“Trucking costs have started climbing, and that will feed into everything from flour to fertiliser in the weeks ahead.”

Once Pakistan’s wheat harvest gets under way in April, food prices could spike well beyond their current levels, Waleed said.

“Combine harvesters, threshers, tractors for haulage from field to market, and the trucks that move grain from fields to flour mills and storage facilities all run on high-speed diesel,” he said.

“For a country where wheat flour is the single largest item in the food basket of the bottom two income quintiles, this is not a marginal concern,” Waleed added.

Trita Parsi, Vice President of the Quincy Institute, argues that Iran is unlikely to agree to end the war without sanctions relief, while there is little sign Donald Trump is willing to offer meaningful concessions, adding that a deal remains unlikely until then.

Thousands of people took to the streets in Buenos Aires to mark the 50th anniversary of Argentina’s last military coup. The day is a national holiday to honour the estimated 30,000 people who were disappeared during the dictatorship’s so-called “Dirty War”.