Nowhere is the guns-versus-butter debate more acute these days than in Iran. As the Islamic Republic invests heavily in reclaiming a regional military might it has lost in the last two years, including in the 12-day-war in June, cities and towns around the country are suffering increased shortages in water and other necessities of life. 

As a water crisis threatens to force the evacuation of 10 million residents from the Iranian capital, Tehran, a disconnect is growing between the government’s failure to provide most basic services on the one hand and its race to violently export its Islamist revolution on the other.

The question being posed by regional analysts is whether the gap between national aspirations and domestic incompetency will eventually bring the regime down.

Committed to Destruction of Israel  

Iran’s ruling clerics are committed to the destruction of Israel and to making the Shiite country dominant in the Muslim Middle East, where Sunnis are a majority. These two goals have suffered major hits since the October 7, 2023 Hamas assault on Israel. Top Iranian allies and proxy armies were diminished or completely eliminated by the Israel Defense Force, and Iran’s own nuclear program is in shambles after Israeli-American strikes in June.  

“Even with everything Iran has been through, even with the economy not in great shape, they’re still pumping a lot of money to their terrorist proxies,” an official of the Treasury department, John Hurley, said recently. In 2025, he said, Tehran funneled $1 billion to the Lebanon-based Hezbollah, which lost much of its arsenal and personnel last winter. 

Meanwhile, Iran is suffering its worst water crisis in decades, the results of years of neglect, mismanagement, overbuilding of dams, illegal well-drilling, and other factors. At Tehran, where 10 million people live, water rationing has reportedly already started, with spigots shutting down at night in several neighborhoods.

More rationing is expected, and unless it starts raining soon, “we will have no water at all and residents will have to evacuate Tehran,” President Masoud Pezeshkian said last week. Tehran officials say past administrations, outside forces, sanctions, and climate change are responsible for the crisis, but Iranians increasingly blame their government.

“Water shortages are only one aspect of the state machinery’s disintegration,” an 85-year-old Jerusalem-based Persian-language broadcaster, Menashe Amir, tells the Sun. “There are major electricity outages that hurt all industries. There are acute shortages in medicine, and running inflation. When I started my career as a journalist in Iran at the age of 17, we could buy one kilo of meat for one toman. Now it costs 1.5 million toman.”

The Man at the Top of the Pyramid

The suffering of the population, Mr. Amir adds, is comparable to that being faced by North Koreans. “But Iran is different. It’s the world’s most dictatorial democracy, or the most democratic dictatorship,” he says. In Iran, unlike in North Korea, there is a measure of freedom of speech.

Media outlets, and even regime insiders, criticize the government, especially the policies of the man at the top of the pyramid, Supreme Leader Ali Khamenei. Perhaps sensing that a growing public dissatisfaction with the policies of the top leader might sway regime insiders, Mr. Pezeshkian is rushing to Mr. Khamanei’s defense. 

“We can disagree with one another, but there is someone who ultimately makes the decisions,” Mr. Pezeshkian said Wednesday. “During the war I had no fear for myself, but I was worried that, God forbid, if something happened to the leader we would turn on one another” and “there would be no need for Israel to intervene.” Iranians “must value him and stand firmly behind him,” he said of the supreme leader.  

His speech, though, failed to convince large swaths of the country’s citizens. Protests across Iran have yet to reach the levels of the uprising in the aftermath of the 2022 killing of Mahsa Amini by morality police angered because she incorrectly wore her mandatory head covering. Teachers and other professionals are out on the streets again. For three days — and counting — this week, hospital employees at the city of Mashhad are striking. “Nurses are crushed while the officials’ pockets are filled,” they chant. 

“When they say ‘no Gaza, no Lebanon, my life is for Iran,’ they’re just saying stop wasting your money on your proxies and your nuclear weapons. You have to use water for your nuclear production anyways,” a correspondent for the London-based Iran International, Negar Mojtahedi, tells the Sun. Others in Iran, she says, argue that arming is “needed for national security, and then they use Israel and the 12-day war to legitimize it and say, ‘Well, look, they were able to attack because we didn’t have the bomb.’”

An Unwillingness to Give Up Nuclear Ambitions

The dissonance between an expensive arms race and lack of services, though, is hard for ordinary Iranians to ignore.

“Can there be a better split screen that defines the Islamic Republic?” an Iran watcher at the Foundation for Defense of Democracies, Behnam Ben Taleblu, tells the Sun. “An over-investment in asymmetric military capabilities that failed to meaningfully protect the country, and the results of their own policies on the environmental and economic fronts that are turning the Iranian homeland into a wasteland.”

Iran’s nuclear capabilities suffered major setbacks in June, when for 12 days the IDF destroyed enrichment facilities, research laboratories, missile manufacturing plants, and other installations. Israel also targeted top nuclear scientists, warning others to avoid joining the nuclear program. American B-2 bombers then joined in, dropping 30,000-pound bunker busters on the country’s most deeply-dug facilities, including Fordow. 

Since then, regime officials have made clear that they will not give up their pursuit of nuclear and other arms. “Knowledge resides in the minds of our scientists,” Mr. Pezeshkian said on November 2. “The destruction of buildings or factories will not cause any problem. We will rebuild them again, with even greater strength.”

The Department of State, meanwhile, announced on Wednesday new sanctions on 32 entities and individuals in Iran, China, Hong Kong, the United Arab Emirates, Turkey, India, and other jurisdictions, saying they “operate multiple procurement networks supporting Iran’s ballistic missile and unmanned aerial vehicle production, including on behalf of the Islamic Revolutionary Guard Corps.”

Nuclear Ambitions Unfazed

According to the International Atomic Energy Agency’s latest report, leaked on Wednesday to the Associated Press, the Vienna-based inspectors were unable to verify the status of Iran’s near weapons-grade uranium stockpile since the 12-day war in June.  

While Tehran first agreed to limited IAEA visits to its facilities, it has since blocked all inspections. Iranian officials said the reason was a decision by European members of the United Nations Security Council to trigger a mechanism known as snapback. The council then renewed all global sanctions on Iran that existed prior to a 2015 nuclear deal known as the Joint Comprehensive Plan of Action. 

For years, quarterly IAEA reports showed that “Iran was adding to its stockpile of highly enriched uranium,” the policy director at United Against Nuclear Iran, Jason Brodsky, tells the Sun. The latest report, though, indicates that “the program is stagnant, dormant.” While IAEA inspectors have no access, he adds, Israel and America do have intelligence to follow Iran’s enrichment. 

What Tehran learned from the June war is that attacking Israel directly “was not a great idea,” a former Iran envoy for Mr. Trump, Elliott Abrams, told Iran International recently. The product of that Iranian aggression “was to lose most of their air defenses, to lose most of their nuclear program, and then to have an attack by the United States that eliminated a lot of the rest of their nuclear program.”

Lacking air defenses, Mr. Abrams added, the Islamic Republic is unlikely now to once more risk a direct attack on Israel. Nor is Israel, exhausted from two years of war, eager to renew strikes in Iran. Yet he said, “if the regime in Tehran decides ‘we must quickly, as quickly as possible, rebuild the nuclear program,’ then they’re going to get hit again.” That is because “that nuclear program cannot be rebuilt, and if they try to rebuild it, they’re inviting an Israeli or American strike.”  

It’s unclear, though, whether the Tehran mullahs have similar calculations. For now it is rearming Hezbollah, the Houthis in Yemen, and other proxies around the Mideast and beyond. “That’s the nature of the regime,” Mr. Brodsky says. “Preserving and expanding the Islamic Revolution has always been the regime’s overarching priority. The Iranian people’s welfare is not.”