Pooria Asteraky, an engineer in Iran’s capital Tehran, has watched his small software company fall apart in the five weeks that war has ravaged Iran. His staff stopped coming to work for fear of air strikes. Clients cancelled contracts, and no new orders came in.
With banks being bombed and the internet shut down by the government, checks would not clear. Asteraky (50) said he has not paid salaries since the war started and has struggled to make rent. Facing the prospect of having to close down his company, he has spent hours explaining his plight to his employees. Sometimes they all cry.
“The economic impact of the war has been devastating; it’s hard to put into words. Every sector has been affected,” Asteraky said in a telephone interview from Tehran.
While talks between Iranian officials and US vice-president JD Vance and other Americans over the weekend broke down without a deal, Iran’s economy will likely be a key topic of any future talks. As part of a peace deal, Iran has demanded that the United States lift all sanctions against it. Iran has also sought reparations for financial losses from the war, and the release of billions of dollars in blocked funds, officials have said.
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Iran’s economy was in shambles long before bombs began to drop on February 28th. Sanctions imposed years ago by the United States, and more recently by the United Nations, depleted government resources and contributed to the collapse of the currency. An energy crisis brought widespread power cuts. Rampant mismanagement and corruption worsened inflation, which recently spiked to 50 per cent.
The war, however, has delivered a staggering blow. Intense US and Israeli bombardment has destroyed or damaged petrochemical plants, steel manufacturing plants, pharmaceutical factories, universities, schools, hospitals, banks, seaports, airports, parts of the power grid, bridges, railroads, shops, homes and more.
Iran is still assessing the cost of the calamity since the fragile ceasefire took hold on Tuesday, but early estimates are between $300 billion (€260 billion) and $1 trillion, according to three Iranian officials who were not authorised to speak publicly, and two economists. Recovery will take years.
Economists said that attacks on Iran’s largest petrochemical complexes and steel plants, which, according to Iranian media, employed more than 200,000 people, were among the most damaging to the economy, with far-reaching consequences. The agricultural, manufacturing, textile and other industries that bought their products will have to import supplies instead, slowing production and driving up prices. Furloughed workers will provide less business to shopkeepers.
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The three Iranian officials estimated that more than one million people have lost their jobs.
“The pathway for Iran’s economic development has been closed by this war,” said Esfandyar Batmanghelidj, the chief executive of the Bourse & Bazaar Foundation, a London-based think tank that tracks the Iranian economy, before the negotiations. “The reality is that Iran is going to have a very difficult time rebuilding or reconstructing critical infrastructure if it remains under sanctions.”
He said the economic losses from the war would reinforce Iran’s resolve to demand sanctions relief in negotiations. Iran will need foreign investment and the ability to buy machinery from abroad if it is to recover and address public discontent that has led to waves of protests. None of that will be possible without a comprehensive deal with the United States that removes sanctions, Batmanghelidj said.
Iranian president Masoud Pezeshkian had acknowledged in speeches before the war that the government faced a budget crisis. “We don’t have money; we don’t have it,” he said when struggling to explain how his administration could address a multitude of crises like inflation and acute shortages of energy and water.
For legions of ordinary Iranians, financial struggles have taken a critical turn. Many people who work in service jobs or are day labourers have not been paid since February. Shops and businesses, and the bazaars that are the pulse of the economy, have been shuttered. Iran’s flourishing ecommerce, particularly businesses reliant on social media platforms, has been all but wiped out.
“My friends, I’m in dire financial need and have put these four items up for sale. If anyone wants an urban/road bike or a car model, I’m at your service,” Nima Omrani, a web programmer, wrote in a social media post.
Sepehr (19), a musician in Tehran who made a living by uploading music videos and songs to SoundCloud and social media, said in an interview that “this internet blackout has pushed all our future monthly incomes to essentially zero and we don’t know what’s going to happen”. Like many people interviewed, he asked that his surname be withheld for fear of retribution.
Amir, a resident of Rasht, is a partner in a factory that makes concrete blocks for construction projects, but those have stopped. “We have not had any sales since the war started; we are producing and putting it in storage, but I’m not sure how long we can survive,” he said.
Afshin (54), an owner of a spice business in Tehran, said in a text message: “We have to pay more for everything we need, and pay it in cash because banking is not functioning properly, and this piles to our expenses.” Strikes on banking data centres had caused service outages at two of Iran’s largest banks, Sepah and Melli.
Jila Amiri lost her beauty salon in Heravi Square in northern Tehran to an Israeli air strike. Israel’s military said it had targeted the offices of Al Araby, a Qatar-based television network, which occupied the same building as her salon. Videos and photographs show the building collapsed and nearby residential buildings severely damaged. Amiri had said on social media that when she opened her salon in 2024, it was the realisation of her lifelong dream and 16 years of labour.
In another part of Tehran, a drone hit Honak music school. “Nothing is left of it; all the musical instruments are gone. My wife and I invested 15 years into building this school, brick by brick, and in one night, it was all destroyed,” said owner Hamidreza Afarideh, in a video message published on BBC Persian.
Alireza Doroodian, the owner of an electronics factory, said that with sales at a standstill and production costs up, many factory owners have begun laying off workers.
“We posted two job openings last week and every day we are receiving about 30 applications,” he said. “Before the war, we would receive a few a day. The economic fallout of the war is staggering, but we hope our officials can negotiate sanctions relief so we can rebuild and stand tall again.”
- This article originally appeared in The New York Times.
