Iran's Political Landscape in 2025–2026: What It Means for South Asian Diplomacy

A Country at the Edge of Something

On June 13, 2025, Israel launched a twelve-day military campaign against Iran targeting nuclear facilities, ballistic missile factories, senior military commanders, and nuclear scientists. The attack upended five rounds of US-Iran nuclear negotiations that had been quietly progressing since the start of the year — and triggered a cascade of events that by the end of 2025 had left Iran more isolated diplomatically, more battered economically, and more politically fragile than at any point since the 1979 revolution. What happens in Iran in 2026 will reverberate across South Asia in ways that foreign policy analysts in Dhaka, Islamabad, and New Delhi are only beginning to map.

The Reformist Who Couldn't Reform

Masoud Pezeshkian won Iran's snap presidential election in July 2024 with 54.8 percent of the vote — the first reformist president in nearly two decades. The circumstances were unusual: he was running to replace Ebrahim Raisi, who had died in a helicopter crash in May. Pezeshkian ran on a platform of economic engagement with the West, a softer approach to the compulsory hijab law, and the belief that renewed diplomacy could lift the sanctions that had compressed Iran's economy for years.

Within eighteen months, the gap between that agenda and the political reality was stark. The Supreme Leader Ali Khamenei had determined, by November 2025, that the Trump administration was not a suitable partner for negotiations. The hardline-dominated parliament was threatening to impeach key ministers. Vice President Javad Zarif — the architect of the original 2015 nuclear deal — had already resigned. Internal memos describing a phase of "political erosion" were circulating in the moderate press. Pezeshkian himself publicly acknowledged his own limitations in March 2025, stating in a speech that he had favoured negotiations with Washington but had been overruled.

The June 2025 Israeli-US strikes changed the political calculus entirely. What Pezeshkian had framed as a diplomatic opportunity became, in the aftermath of the attacks, a question of regime survival. Iran halted cooperation with the International Atomic Energy Agency, suspended nuclear negotiations, and its parliament passed a law prohibiting IAEA access to sites struck during the war without Supreme National Security Council approval. The reformist president had become a figurehead managing a crisis he could not control.

The Nuclear File: Where Things Stand

The JCPOA — the 2015 nuclear deal — formally expired on October 18, 2025. France, Germany, and the United Kingdom had triggered the snapback mechanism in August, which automatically reimposed all UN Security Council sanctions that had been lifted under the 2015 agreement. China and Russia opposed the move but could not prevent it. Iran announced it would no longer be bound by the JCPOA's terms.

The situation in early 2026 is a deadlock. Iran is not currently enriching uranium at full capacity — the Israeli strikes damaged enrichment facilities significantly — but Tehran insists that any future agreement must preserve its right to domestic enrichment. The US demands zero enrichment, an end to Iran's support for regional proxy groups, and restrictions on its missile programme. The IAEA has no access to sites struck in June and has no reliable information on the status of Iran's enriched uranium stockpiles. No talks are scheduled. Both Washington and Tehran say they are open to negotiations; neither has taken a concrete step to start them.

US intelligence assessments continue to state that Iran is not currently pursuing a nuclear weapon. But the combination of damaged infrastructure, suspended inspections, hardened political positions, and an ongoing domestic crisis creates conditions under which miscalculation becomes more likely. Several Iranian parliamentarians have publicly called for withdrawal from the Nuclear Non-Proliferation Treaty. The Supreme Leader has not endorsed this, and analysts generally view it as a last resort — but it is on the table in a way it was not before June 2025.

The Domestic Crisis: Protests, Economy, and Survival

Beginning on December 28, 2025, protests erupted in all 31 of Iran's provinces — the most geographically extensive wave of unrest since the Women, Life, Freedom movement of 2022–23. The immediate trigger was Iran's collapsing currency and rising living costs, but the protests quickly hardened into demands for fundamental change. Food price inflation had reached above 70 percent by late 2025. The World Bank projected in October 2025 that Iran's economy would contract in both 2025 and 2026, and that annual inflation would rise toward 60 percent.

Between 36 and 45 people were reported killed in the initial weeks of the protests, and over 2,000 were arrested. This followed an extraordinary repression campaign in June 2025, after the Israeli strikes, during which Iran arrested a reported 21,000 people — citing foreign espionage. At least 1,500 people were executed in Iran in 2025, an increase from prior years. Pezeshkian responded to the December protests by acknowledging the legitimacy of the grievances — a notable departure from decades of official denial — but was explicit that he lacked the power to resolve the structural causes. The central bank governor was replaced, new household subsidy measures were announced, and the Supreme Leader instructed security services to dialogue with protesters while "putting rioters in their place."

The question of whether the Islamic Republic survives 2026 with its power intact has moved from the realm of dissident speculation into mainstream analytical discussion. Whether the current protest cycle follows the familiar pattern of surge, crackdown, and exhaustion — as it has four times in the past fifteen years — or breaks into something more consequential depends on variables that are genuinely uncertain: the scale of economic deterioration, the cohesion of the security apparatus, and whether the reform faction around Pezeshkian can mobilise politically before it is completely marginalised.

Iran and South Asia: The Connections That Matter

For South Asian countries — particularly Pakistan, Bangladesh, and India — Iran's crisis matters across three overlapping channels.

The first is energy. Iran is a major potential energy supplier for Pakistan and India, both of which have explored pipeline and LNG arrangements repeatedly over the past two decades. Sanctions had already made those arrangements effectively impossible. The reimposition of full UN Security Council sanctions under snapback, combined with Iran's own economic collapse, has moved the prospect of an Iran-Pakistan-India energy corridor further away than it has been since the 1990s. Pakistan's electricity crisis — which led to rolling blackouts throughout 2024 and 2025 — was directly worsened by its inability to access Iranian energy at scale.

The second is trade. Pezeshkian's visit to Pakistan in 2025 produced twelve memoranda of understanding and an ambitious target of increasing bilateral trade from $3 billion to $10 billion. The mechanisms discussed — barter trade, expanded export quotas for Pakistani rice, fruits, and meat, land and rail transit routes, joint free economic zones — represent a genuinely consequential potential corridor if Iran's sanctions environment ever permits full implementation. At the moment it does not. The snapback sanctions have reinforced the restrictions on banking and trade finance that make large-scale commerce with Iran effectively impossible for entities with exposure to the US financial system.

The third is regional security. Iran's reduced capacity to project influence through its proxy network — Hezbollah and Hamas both significantly weakened in 2024–25, Assad's regime fallen in Syria — has created a different kind of instability than the one that prevailed when Iran was ascendant. A weakened Iran with a damaged nuclear programme, an enraged domestic population, and a hardline-dominated government navigating an existential threat may behave in less predictable ways than the Iran that operated through calculated strategic patience. For South Asian countries that depend on the Strait of Hormuz for energy imports and export shipping, the risk of miscalculation in the Persian Gulf has increased.

What Bangladesh Should Understand

Bangladesh does not have a direct strategic stake in Iran's nuclear programme the way Pakistan and India do. But the indirect effects are significant. Bangladesh imports roughly 85 percent of its petroleum products and 100 percent of its LNG. The Strait of Hormuz is the passage through which a substantial portion of those imports travel. Any military escalation between Iran and Israel, or between Iran and the US, that disrupts traffic through the Strait would hit Bangladesh's fuel costs — and therefore its electricity prices, transportation costs, and inflation — almost immediately.

Bangladesh also has a growing trade corridor with Turkey and a developing relationship with the Gulf states, both of which are intimately affected by the Iran-Israel-US triangle. The March 2025 "March for Gaza" rally in Dhaka — which drew hundreds of thousands to Suhrawardy Udyan — demonstrated the depth of popular engagement with Middle Eastern issues in Bangladesh. How the incoming BNP government manages its public positioning on Iran, Israel, and the Palestinian question while maintaining functional trade relationships with both Gulf states and Western partners is a diplomatic challenge that will require more careful navigation than any previous Bangladeshi government has been asked to perform.

The Year Ahead

The Iran file in 2026 will be defined by two questions with genuinely uncertain answers. The first is whether the protest movement produces systemic change, cycles into exhaustion, or prompts a crackdown severe enough to trigger international consequences. The second is whether the nuclear deadlock breaks — through resumed negotiations, a further Israeli or US military action, Iranian NPT withdrawal, or some combination — or whether it simply persists as a slow-motion crisis that periodically flares and subsides.

What is already clear is that Iran's trajectory affects South Asian security, energy, and trade in ways that do not require direct bilateral engagement to be felt. Bangladesh is downstream of Iran's instability in the most literal sense — through the fuel it imports, the shipping routes its goods travel, and the diplomatic environment in which its government has to function. Understanding Iran's political crisis is not a matter of abstract geopolitics. It is a practical requirement for any government navigating 2026 with realistic expectations.

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