Trump envoy says Iran reached out through back channels
Donald Trump’s Middle East envoy, Steve Witkoff, said Iran used indirect channels to respond after the US president sent a letter to Supreme Leader Ali Khamenei earlier this month.
Donald Trump’s Middle East envoy, Steve Witkoff, said Iran used indirect channels to respond after the US president sent a letter to Supreme Leader Ali Khamenei earlier this month.
Meanwhile, the return of Donald Trump to the White House and the revival of the US administration’s maximum pressure policy have further tightened the noose on Iran’s economy.
While the Central Bank reported a year-on-year inflation rate of 45% last month, local media suggest that actual price increases are far higher. In reality, the cost of food, medicine, and other essential goods has nearly doubled.
Moreover, the fiscal year is ended with the US dollar surging to nearly 1 million Iranian rials, marking a 65% increase since the beginning of the past fiscal year. The depreciation of the rial has accelerated sharply in recent days.
At the same time, Central Bank data reveals that Iran’s foreign reserves have been rapidly depleting, plunging to just one-fourth of their level in March 2024 and a mere tenth of their March 2023 levels.
Iran’s foreign trade situation:
The latest figures from the Central Bank show that Iran's foreign exchange revenue crisis persisted in the first half of the current fiscal year, which began on March 20, 2024. No data has yet been released for the second half of the year.
During this period, Iran recorded a positive overall trade balance of $11.5 billion, including oil, goods, and services. However, the country also experienced capital flight totaling $12.5 billion.
As a result, the net balance of foreign currency inflows and outflows—including gold bullion—turned negative.
Given the sharp decline in Iran’s oil exports to China since September, the situation is expected to worsen—particularly as oil, petroleum products, and natural gas account for more than half of the country’s total exports.
Over the first 11 months, Iran has imported approximately 93 tons of gold bullion worth $7.3 billion in exchange for its oil and goods exports—three times the amount imported in the previous year. More than 55% of this gold was purchased from Turkey.
Indeed, around 13% of Iran’s total oil and non-oil exports have been bartered for gold instead of foreign currency. This highlights the government’s inability to collect payments for exported goods and oil and transfer foreign currency into the country, due to US banking sanctions. As a result, Iran is facing a severe shortage of foreign exchange reserves.
Government debt crisis
Recent data from the Central Bank shows that the Iranian government’s debt to the banking system has surged by 41% during the current fiscal year. To cover its widening budget deficit, the government has relied heavily on borrowing from domestic banks, tapping into the National Development Fund, and issuing bonds.
According to the International Monetary Fund (IMF), Iran’s total government debt now exceeds $120 billion—roughly one-third of the country’s economy. In contrast, Iran’s total external debt, including both governmental and non-governmental liabilities, stands at less than $10 billion—just 2% of GDP—underscoring the country’s extreme financial isolation and the reluctance of international institutions to fund Iranian projects.
Two decades ago, before the imposition of heavy sanctions, Iran’s external debt was more than 12% of GDP, largely driven by foreign investment in oil and gas projects. Today, the government’s increasing dependence on domestic borrowing has sharply boosted liquidity, further fueling inflation. Over the past year alone, liquidity in Iran has risen by 28%.
The economic crisis has pushed more Iranians into poverty. Official reports suggest that one-third of the population lives in extreme poverty. However, based on the World Bank’s global poverty standards, around 80% of Iranian households earn less than $600 per month and fall below the poverty line.
Energy and Water Crisis
For the first time, Iran has experienced electricity and gas shortages across all seasons. During peak summer demand in 2024, electricity shortages reached 20%, while winter gas shortfalls surged to 25%. Officials warn that energy shortages could worsen by at least 5% in the next fiscal year.
Industrial reports show that since summer 2024, energy disruptions have forced 30–40% of Iran’s industrial capacity to shut down. At the same time, the country has been grappling with growing gasoline and diesel shortages since 2023. Without new refinery projects, these fuel deficits are expected to escalate rapidly.
Meanwhile, Iran’s water crisis has reached a critical stage. Tehran’s main reservoirs are reportedly at just 7% capacity, and officials warn of severe water shortages by summer 2025.
A second tremor, measuring 4.5 magnitude, followed just hours later at 1:03 PM local time, according to the Iranian Seismological Center.
In response to concerns about the site’s safety, Behrouz Kamalvandi, the deputy head of Iran's Atomic Energy Organization, said the earthquakes had no impact on the Natanz nuclear facility. “The Natanz nuclear site is designed to withstand earthquakes far more powerful than what occurred today,” he added.
Local officials reported shattered windows in several residential buildings across nearby villages, though no casualties have been reported so far.
The Natanz facility, mostly deep underground and central to Iran’s controversial nuclear program, has been the target of past sabotage. In July 2020, a blast at the centrifuge assembly plant at Natanz caused extensive damage, which Iranian officials later blamed on sabotage. Less than a year later, in April 2021, a second major incident struck the facility, again reportedly the result of sabotage, with Iran directly accusing Israel.
The 2021 attack came just after new advanced centrifuges had been activated, and US intelligence sources later told The New York Times that the strike destroyed the facility’s independent internal power system, delaying enrichment activities for months.
Last year, an Israeli airstrike targeted an S-300 air defense system near Esfahan, the same province housing Natanz—raising regional security concerns.
The quake comes at a delicate time, as US and Israeli officials prepare for high-level consultations in Washington next week to discuss Iran's nuclear program and potential diplomatic options. With tensions simmering, analysts warn that even natural events near sensitive sites could escalate geopolitical anxieties.
Natanz remains a flashpoint amid growing scrutiny from the International Atomic Energy Agency (IAEA), which recently expressed concern over Iran’s stockpile of near-weapons-grade uranium.
“I’m not at liberty to talk about the specifics,” Witkoff said in an interview released Friday on The Tucker Carlson Show. “But clearly through a, you know, back channels, through multiple countries and multiple conduits, they've reached back out.”
According to Axios, Trump’s letter to Ali Khamenei, delivered via a senior Emirati diplomat, included a two-month deadline for reaching a new nuclear agreement and warned of consequences if Iran expanded its nuclear program. The letter was described by sources as “tough” in tone.
However, Witkoff presented the message differently during his interview. “It roughly said, I'm a president of peace. That's what I want. There's no reason for us to do this militarily,” he said. “We should talk. We should clear up the misconceptions. We should create a verification program so that nobody worries about weaponization of your nuclear material.”
He also said Trump believes the issue “has a real possibility of being solved diplomatically” and “acknowledged that he's open to an opportunity to clean it all up with Iran.”
Iranian Foreign Minister Abbas Araghchi recently affirmed that indirect talks through countries like Oman are “not a strange method,” and on Friday he held a phone call with his Emirati counterpart. No details were released about the conversation.
Witkoff added that Trump wants to build trust with Iran and would prefer to avoid war. “He’s a president who doesn’t want to go to war,” he said. “He’ll use military action to stop a war.”
Carlson, a longtime ally of Trump, warned earlier in the week that a military strike on Iran “would certainly result” in a broader conflict and “thousands of American deaths.” Iranian media highlighted both his remarks and Witkoff’s interview, portraying them as possible signs of a shifting tone in Washington.
Still, Iran’s official stance remains defiant. Khamenei has rejected direct talks under pressure and, in a speech on Friday, . “Anyone who commits villainy against the Iranian people will be struck with a harsh slap,” he said.
At the US State Department, spokesperson Tammy Bruce said Friday that Washington remains committed to preventing Iran from acquiring nuclear weapons and continues to rely on pressure. “Iran’s behavior, as we know, across the globe threatens US national interests,” she said, adding that the administration’s campaign of sanctions and diplomatic isolation has been very effective.
