This article originally appeared in the Western Standard.
By Joe Varner, January 9, 2026
The most dangerous moment for an authoritarian regime is not when it is challenged at home, but when it still has the power to strike abroad.
The latest wave of protests in Iran has again triggered speculation about imminent regime collapse. That framing misunderstands what is unfolding. Iran is not on the brink of revolution, but it is entering a more dangerous and unstable phase marked by accumulating legitimacy loss, economic anxiety, and strategic risk.
The issue is not collapse but slow erosion, and history suggests that systems under this kind of pressure often behave unpredictably, both at home and abroad. The Islamic Republic’s survival continues to rest on coercive force, fragmented opposition, and elite cohesion. For now, those pillars hold. Security forces remain loyal and capable, opposition movements lack unified leadership or organizational depth, and the senior clerical and security elite remains aligned around the Supreme Leader, Ali Khamenei. These realities make a street-driven overthrow unlikely in the near term. Yet there is a fourth pillar that has long mattered in Iran and is now visibly weakening: the confidence of the merchant class.
Iran’s bazaar networks are not merely economic actors. They are social stabilizers, capital allocators, and political weathervanes. Historically, their withdrawal of cooperation has preceded major political change. In 1979, the loss of bazaar support was decisive in the collapse of the Shah’s authority. Since then, the relative accommodation of merchants has helped anchor the Islamic Republic through repeated crises. That accommodation is fraying.
Shop closures, strikes, and open or tacit sympathy with protest movements signal more than episodic discontent. The merchant class is structurally risk-averse. When it begins to hedge against the state rather than rely on it, the signal is that predictability and protection have given way to fear and uncertainty. The regime’s response, coercion and selective punishment, may restore compliance in the short term, but it replaces consent with intimidation and accelerates capital flight, informalization, and long-term economic decay. This erosion matters because revolutions are not made by protest alone. They succeed when commerce, logistics, and finance stop cooperating with authority.
Against this backdrop, renewed attention on the exiled Iranian Crown Prince and prominent opposition figure, Reza Pahlavi, reflects less a clear pathway to restoration than a search for symbolic alternatives. For disparate opposition groups, segments of the diaspora, and some economic actors, he embodies continuity without clerical rule and nationalism without revolutionary ideology.
That symbolism has value in a fragmented political landscape, but it should not be mistaken for imminent power. There is no organized internal movement capable of installing him, no declared support from security institutions, and no governing apparatus prepared to execute a transition. History suggests that exiled figures return only when internal elites decide they are useful instruments of change, not when crowds alone demand it. In that sense, the Crown Prince is better understood as a potential option in a future elite-managed transition than as the leader of a looming restoration.
Meanwhile, the regime’s preferred method of survival remains familiar. It suppresses leadership nodes, exhausts protest cycles, controls the information space, and offers limited concessions on social issues without structural reform. This approach is tactically effective, but strategically corrosive. Each failed uprising radicalizes younger generations, normalizes violence, accelerates brain drain, and further hollows out social trust. The state maintains order at the cost of legitimacy.
The most underestimated risk, however, lies beyond Iran’s borders. Regimes facing sustained internal pressure often seek relief through external confrontation. When domestic confidence erodes, acting against external enemies can rally nationalist sentiment, justify repression, and force wavering elites to close ranks. Iran has repeatedly demonstrated its willingness to use regional escalation, proxy conflict, maritime pressure, and calibrated confrontation to shift attention outward and reframe internal dissent as a security threat.
This creates a dangerous paradox. A regime that appears constrained at home may be more volatile abroad. External action can temporarily arrest internal decline, but it raises the risk of miscalculation, escalation, and unintended conflict, particularly in a region already dense with flashpoints. Iran’s internal legitimacy crisis has direct implications for regional stability and global security, not just domestic politics.
For Canada, the threat posed by Iran is no longer theoretical or distant. As internal pressure on the regime intensifies, Tehran has already demonstrated a willingness to project risk outward in ways that directly implicate Canadian security, including the decision to designate the Royal Canadian Navy as a terrorist organization. This is not rhetorical posturing. It reflects a regime seeking to manufacture external enemies to consolidate control at home and deter allied cooperation abroad.
Canada hosts a large Iranian diaspora that becomes more vulnerable to intimidation and surveillance when the regime feels threatened. Canada’s armed forces operate alongside allies in regions where Iran actively destabilizes security through proxies and coercive pressure. Canada’s economy remains exposed to the energy and maritime disruptions that follow escalation in the Middle East. Framing Iran solely as a human rights concern obscures the reality that a regime governing without consent and under economic strain is more likely to test boundaries abroad before it reforms at home.
Iran is not collapsing, but it is changing in ways that make it more dangerous.
Joe Varner is the deputy director of the Conference of Defence Associations, a senior fellow of the Macdonald-Laurier Institute, and the Center for North American Prosperity and Security in Washington, DC.
