Pezeshkian: Iran's Economy Worsens, Pakistan-Qatar Mediate

Pezeshkian Says Iran's Economy Is Getting Worse, as Araghchi Confirms Pakistan and Qatar Are Still Passing Messages to Washington

The Pakistan Times — Islamabad, August 16, 2026

Iran's President Masoud Pezeshkian laid out just how badly the war with the US and Israel has hit the economy, saying oil revenue has dropped sharply while factories destroyed in the fighting have become a financial burden rather than a source of income. On the diplomatic side, Foreign Minister Abbas Araghchi confirmed that Pakistan and Qatar remain actively involved as go-betweens with Washington, though he was careful to draw a clear line, message relaying is not the same thing as negotiations.

Pezeshkian's Economic Warning

Speaking at a meeting covered by Iranian state media, Pezeshkian said Iran used to sell oil regularly and simply cannot do that at the same levels anymore, which has hit government revenue directly. He pointed to a chain reaction from there, imported goods now have to travel longer, more expensive routes into the country since the more direct paths aren't functioning the way they used to, and that's pushing prices up further for ordinary Iranians. On the factories damaged during the war, he described the situation bluntly, the government can't even collect taxes from many of them anymore, and in some cases has to actually send them money just to keep operating at all. Our income has gone down while our problems have piled up, he said, summing up where things currently stand.

The numbers back up how serious this is. The IMF is projecting Iran's economy will shrink by more than 6 percent this year, and inflation has been running close to 69 percent. Iranian economic officials have reportedly told Pezeshkian privately that fully repairing war damage could take Iran more than a decade, a timeline that puts his public remarks in a much heavier context than a routine economic update.

Araghchi Clarifies Pakistan and Qatar's Role

On the diplomatic front, Araghchi gave one of his more detailed public breakdowns yet of exactly what Pakistan and Qatar are doing right now. Both countries are exchanging messages between Iran and the other side and staying in contact with Tehran, he said, but stressed this does not amount to negotiations, and that Iran has not yet made any decision on whether to formally resume talks with Washington. He placed responsibility for the return to fighting squarely on the US, referring back to the interim agreement, the Islamabad Memorandum of Understanding, that was signed in Pakistan back in June and later collapsed once strikes resumed on both sides.

According to earlier reporting on this same backchannel, the mediation effort has stayed genuinely active behind the scenes even through the collapse. Pakistan's army chief, Field Marshal Asim Munir, has held direct calls with Araghchi and remains in regular contact with senior US officials including the vice president and Washington's special envoy, while Pakistan's foreign minister Ishaq Dar has separately invited Araghchi to visit Islamabad. Araghchi himself has previously credited Pakistan as the country that carried the bulk of the mediation effort, with Qatar assisting at various points, particularly on financial matters.

Araghchi also separately addressed Iran's ongoing technical discussions with Oman, which he said are entirely distinct from anything involving the US. Those talks are focused narrowly on working out a new, workable shipping route through the Strait of Hormuz, since he said the old routes are no longer functional. Even once a route is agreed, he added, actually reopening the strait more broadly still depends on separate conditions Iran wants the US to meet first.

Two Fronts, One Larger Standoff

Put together, these two threads point to the same underlying reality. Iran's economy is under real, worsening strain, and Tehran still isn't ready to sit down formally with Washington despite active channels through Islamabad and Doha staying open. Whether economic pressure eventually pushes Iran toward the negotiating table faster than political resistance at home allows is probably the question worth watching most closely from here.

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Sources:  Arab News, Al Jazeera

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