The preservation of the corrupt, sanctioned, repressive regime in Tehran is a critically important outcome for Moscow. It will have watched with enormous (self) interest and will be drawing conclusions from the Iranian theocracy’s at least initial, blood-soaked success in forcing protesters off the streets. 

So, what lessons might the Kremlin have taken from the biggest protests in Iran since the 1979 revolution? 

Lesson One: Inflation Above All Else 

In terms of maintaining stability, it’s more important to control inflation than promote economic growth.  

Inflation in Iran has been high for decades, rarely dropping below 10% a year since the revolution. It’s been in double figures since the pandemic, peaking at 46% three years ago, before easing to 33% in a year, according to the World Bank.  

At the same time, the economy has grown at an average of 4.5% for several years. Falling oil prices and war with Israel will push inflation back up to 44% in the current financial year amid an economic downturn, the World Bank estimates. It was this latest round of price hikes that triggered the protests. 

On this front, Russia has relatively few worries. Thanks to draconian measures from the Central Bank, inflation is falling and running at about one-tenth the pace in Iran. Although price rises for food and essential goods are higher than the overall figure, Iranian-style price surges are unimaginable in Russia under current conditions.  

The Kremlin is prepared to sacrifice economic growth for price stability. The economic slowdown, especially in the civilian sector, is a direct consequence of that choice. Faced with a contraction due to war and falling oil prices, Iran cannot stimulate growth by easing monetary policy when inflation is at its current level.  

Russia’s central bank, which has combated price rises with years of tight monetary policy, can now reduce (very high) interest rates to help bring the economy down for a soft landing, rather than a crash.  

The events in Iran will only boost the camp in Moscow that supports price stability in their long-running battle against those pushing for growth at any price. 

Lesson Two: Stay on Top of Government Spending 

By Western standards, neither country has a big budget deficit or public debt. In 2023–2024 (Tehran’s accounting runs on a different calendar year), Iran’s deficit was 2.5% of GDP. The government had hoped to reduce it, but the war and falling oil prices prevented this, and in 2024–2025, the deficit is forecast to have increased to 3.3%. The World Bank expects it to top 4% in the current year. To cover the gap, the government doubled its borrowing plans on the domestic market and increased drawdowns from the National Development Fund. 

Russia faces an almost identical situation. In 2025, Russia posted a 2.6% GDP fiscal deficit — five times higher than planned. For 2026, Moscow approved a budget with a 1.6% deficit, but private conversations within the government cast doubt on whether that can be achieved due to a combination of the war in Ukraine, low oil prices, and sluggish growth. The liquid part of Russia’s National Welfare Fund, which has been covering the deficit since the start of the war, has halved since 2022. 

On the face of it, both Iran and Russia have tolerable budget deficits. For instance, Britain and France run shortfalls of 5.2% of GDP. However, sanctions force Moscow and Tehran to rely solely on domestic banks for borrowing to cover the difference. This pushes up the cost of loan servicing, and with high interest rates, the cost of domestic borrowing goes up further still, triggering a debt spiral. Moreover, pledging government bonds to the central bank to generate liquidity effectively fuels inflation as the debt increases. 

This de facto funding of the debt with the help of the central bank is a consequence of the closed financial systems in both countries. Like the Iranian government, Russia cannot cut spending. The current level of outlays is necessary to fund the war and maintain social stability. The Iranian protests could strengthen the position of those seeking spending cuts. But in Russia as in Iran, any decision on reducing military and social spending must come from the very top.  

Lesson Three: Strengthen the Banks 

One trigger of the Iranian protests was the collapse of the country’s largest private bank, Ayandeh. For many years, it had offered extremely high deposit rates while lending to affiliated companies.  

The bank’s owner had strong connections to the country’s leadership, purchased an estimated $475m of real estate in London and Europe, and used his bank’s loans to finance the construction of the largest shopping mall in the Middle East. A government bailout for the bank was reportedly the last straw for Iranians, who saw this as evidence of systemic corruption and realized the risks to their savings in other banks. 

Russia has had several high-profile bank collapses (for example, Ugra, Otkritie, Probiznesbank) over the last decade, but an effective Central Bank clean-up improved matters.  

When Russia launched its all-out invasion of Ukraine in 2022, the domestic banking system had largely recovered. Although high inflation and the economic slowdown have raised bad debts among corporate and retail borrowers, as this author wrote late last year, there are no signs of an impending banking crisis in Russia.  

The country has a far lower level of bad debt than Iran. Even defense companies’ lenient borrowing is backed by government guarantees at market rates, which are partially compensated by the budget. 

Lesson Four: The Internet Can Be Turned Off 

Russia seems to have learned this lesson even before events in Iran. The Kremlin began limiting access to some online services before the invasion of Ukraine. Since 2022, those efforts have greatly increased. (The Bell covered the growing scale of Russia’s internet blackouts here.)  

The two countries already have much in common when it comes to digital repression — almost complete state control over the media, varied means of filtering content, and the criminalization of social media posts. 

Compared to what appears to be the crude and blanket nature of Iran’s internet crackdown, Russia adopts a more sophisticated approach. Prohibiting access to sites is selective. When a foreign service is to be blocked, a domestic alternative is usually promoted in advance.  

VPNs are banned in name only, with an emphasis on propaganda and controlling the narrative, rather than switching off the entire internet. 

However, as Iran has shown, if the regime fears an existential risk, it is technically and politically possible to flick the switch. Russian authorities are more prepared to take such a step than they were at the start of the war in Ukraine. In 2024-2025, the Kremlin went as far as throttling WhatsApp and YouTube, two services which had previously been deemed off-limits due to the risk of triggering widespread public discontent. 

Lesson Five: Sanctions Work 

Officials in both Iran and Russia promote a rhetorical paradox on sanctions: blaming them for many domestic economic problems, while at the same time deriding the measures as weak, counter-productive, and failing to undermine the foundations of state stability. Iran has spent four times longer under strict restrictions than Russia. One key difference is that the measures against Iran are based on UN resolutions and therefore effective globally. Russia’s sanctions are piecemeal, only levied by the West, and less locked in. 

Both countries were disconnected from the SWIFT payments network and Western finance systems — although Russia’s exclusion is not as total. Both have boosted their reliance on China for trade, although, again, Russia has financial channels to other countries, particularly those outside the Western orbit, like fellow BRICS countries. And both are struggling to import technology — though once more, Russia seems to be coping better thanks to its better-developed domestic economy, and the fact that many countries, including those that it borders in the Caucasus and Central Asia, have not imposed sanctions. 

It may appear that all this leaves Russia in a better place. But those economic advantages — a more sophisticated economy, better technology, and higher standards of living — actually create bigger risks. Living under sanctions for the long-term without seriously reducing the well-being, security, and pain tolerance of the Russian public will be much harder. Events in Iran, in theory, should have Russia’s leaders doubting their ability to withstand sanctions indefinitely without facing increased risks to the system as a whole. 

Lesson Six: Repress First, Think Later 

The bloody and seemingly successful suppression of Iran’s protests should reinforce the Kremlin’s established approach — if dissent cannot be paid off, it needs to be put down, and the earlier the better. That means law enforcement must be prepared to kill and maim, and that the opposition cannot be allowed to assemble and organize anywhere (especially inside the country).  

There is also an understanding that the West will generally limit itself to stern words. This lesson goes beyond economics. It was likely absorbed by the Kremlin from studying Kyiv’s 2013-2014 Maidan revolution and the rallies in support of Alexei Navalny that once drew tens of thousands to the streets in Moscow and across the country. 

The crushing of protests in Iran may seem far removed from Russia’s economic reality, but the Kremlin was undoubtedly watching events closely. Moscow was likely left even more convinced of the wisdom of its strategy — particularly in curbing inflation and cleaning up the banking sector.  

It also provides a new argument for reducing government spending and working to ease at least some Western sanctions. Beyond economics, it could also promote a further tightening of the screws both online and in the real world. 

Alexander Kolyandr is a Non-Resident Senior Fellow at the Center for European Policy Analysis (CEPA), specializing in the Russian economy and politics. Previously, he was a journalist for the Wall Street Journal and a banker for Credit Suisse. He was born in Kharkiv, Ukraine, and lives in London.  

More on this and other aspects of the Russian economy in a weekly summary produced by the independent publication, The Bell.    

Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions expressed on Europe’s Edge are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.