What’s next and what it means for the country?

The death of Iran’s Supreme Leader Ayatollah Ali Khamenei sets in motion a formal succession process that could have significant consequences for the country’s political stability, the outlook for sanctions and an already strained economy.

Iranian state media confirmed that Khamenei was killed in a joint military attack by Israel and the United States. Iran’s Fars News Agency said that 86-year-old Khamenei was in his home office when he died. on Telegram.

Khamenei came to power following the death of Ayatollah Ruhollah Khomeini in 1989 and inherited a revolutionary state that was still consolidating itself in the wake of the Iran-Iraq war.

Khamenei was not seen as an obvious successor. Karim Sadjadpour, who did not have the religious qualifications required by the constitution at that time, policy analyst As stated in the Carnegie Endowment for International Peace His study on Khamenei.

Just months before Khomeini’s death, the constitution was revised to state that the Leader should be an expert in Islamic law with only political and administrative ability. A change that led to Khamenei’s rise.

Over time, the supreme leader’s office consolidated authority over Iran’s key institutions. While presidents change with elections, Khamenei kept in check on the military, judiciary, state broadcasting and important strategic decisions (Article 110).

Khamenei advocated “resistance economy” Promoting self-sufficiency under Western sanctions, exercising caution in relations with the West, and He lashed out at critics who argued that the security-first approach hindered reform.

His administration has faced repeated tests. In 2009, mass protests over alleged election fraud were met with a harsh crackdown. In 2022, demonstrations over women’s rights broke out. A serious challenge emerged in late December 2025, when economic troubles turned into nationwide unrest, with some protesters openly demanding the overthrow of the Islamic Republic.

Following the Iranians’ deaths, similar sentiments emerged on social media platforms. They were seen taking to the streets celebratingAccording to the New York Times.

But analysts warned that joy does not mean transformation.

The Council on Foreign Relations said, “Overthrowing Iran’s religious leader Ayatollah Ali Khamenei is not the same as regime change. The Islamic Revolutionary Guard Corps is the Regime.” He attracted attention after his deathlimiting the possibility of immediate political or economic transformation.

Khamenei’s death heralded only the second leadership change since the 1979 Islamic Revolution. A moment defined by CFR historically significant but deeply uncertain in its outcome.

While some Iranians have expressed hope that the leadership change could ease repression and economic isolation, the Council on Foreign Relations said the likely succession results do not point to meaningful political or economic liberalization immediately following the transition.

“Leadership change in Iran could follow three basic trajectories: regime continuity, military takeover, or regime collapse,” CFR reported. But the think tank warned that “none” of these short-term scenarios foresee a positive transformation within a year of transition.

As a result of continuity, essentially “Khameneiism without Khamenei,” investors and households may still face uncertainty because a new leader will need to “learn on the job” as he tries to shape economic policy with limited resources and rising tensions.

Even a shift towards tighter military dominance would not mean economic reform: the CFR argues that a security-focused model might speak of stability and economic management, but would still struggle against what it calls a “deeply distorted economy” with “stubborn inflation and a collapsing currency.”

Marko Papic, chief Strategist at Clocktower Group, echoed a similar stance: “Iran’s economy will soon become a parking lot unless the next Supreme Leader is more inclined to negotiate with the United States.”

If the Supreme Leader is replaced by another radical leader who does not want to negotiate with the United States and continues attacks on the region, then US military operations will become punitive and “Iran will return to the Middle Ages,” he said.

Keith Fitzgerald, managing director of Sea-Change Partners, framed the issue more clearly.

“Killing Khamenei is not ‘regime change’ per se. Think of it like changing a light bulb: To replace it, you must first remove the broken bulb that is there. But doing this is not changing the light bulb. It requires replacing it with a new one,” he wrote in a note.

Ali JS, a former strategic intelligence analyst at the NATO Joint Warfare Center, also said the Iranian opposition in exile is fragmented and lacks a unified leadership.

He said importing a political figure from abroad, whether a restored monarchy or some other alternative, “has limited credibility on the ground and risks repeating past experiments with parachuting elites that have gone badly elsewhere.”

Iran’s exile opposition is diverse but deeply fragmented. This group includes monarchists loyal to Reza Pahlavi, the US-based son of the late Shah, who was exiled after the 1979 revolution; republican and secular-democratic activists scattered across Europe and North America; Kurdish opposition groups operating along Iran’s western borders; and the People’s Mujahedin Organization of Iran (MEK), which maintains an organized political network abroad but has limited credibility within Iran.