A woman holds an illustration depicting Iran’s Supreme Leader Ayatollah Khamenei as others wave Iranian flags during a demonstration in support of the government and against US and Israeli attacks outside a mosque in Tehran on February 28, 2026.
Atta Kenare | AFP | Getty Images
The death of Iran’s supreme leader Ayatollah Khamenei begins a formal succession process that could have significant implications for the country’s political stability, prospects for sanctions, and 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 reported on Telegram that Khamenei, 86, was in his office at the time of his death.
He seized power in 1989 after the death of Ruhollah Khomeini, inheriting a revolutionary state that remained strong even after the Iran-Iraq war.
Khamenei was not seen as the obvious successor. Karim Sadjadpour, a policy analyst at the Carnegie Endowment for International Peace, said in his research on Khamenei that he lacked the religious qualifications required by the constitution at the time.
A few months before Khomeini’s death, the constitution was amended to specify that leaders should only be experts in Islamic jurisprudence with political and managerial skills, which enabled Khamenei’s elevation.
Over time, the supreme leader’s office has strengthened its authority over Iran’s key institutions. Although the president was replaced by election, Khamenei maintained control over the military, judiciary, state television, and major strategic decisions (Article 110).
Khamenei has championed a “resistance economy” that promotes self-sufficiency despite Western sanctions, remaining wary of engagement with the West and cracking down on critics who say his security-first approach stifles reform.
His reign faced repeated challenges. In 2009, large-scale protests against alleged electoral fraud were met with severe repression. In 2022, demonstrations over women’s rights broke out. In late December 2025, serious challenges emerged as economic dissatisfaction spread to nationwide unrest and some demonstrators openly called for the overthrow of the Islamic Republic.
What’s next for Iran?
“Khamenei is dead. Today is the best day of my life. It’s a glorious day for Iran,” said Masoud Ghodrat Abadi, an Iranian engineer who left Iran at the age of 27 and is now based in the United States.
“I believe his death could be the beginning of a new chapter in our nation’s history…I hope that in the long run, this moment will be transformative,” he told CNBC.
Similar sentiments surfaced across social media platforms after his death, with footage showing Iranians taking to the streets to celebrate, according to the New York Times.
But analysts cautioned that jubilation does not equal change.
Following his death, the Council on Foreign Relations pointed out that “removing Iran’s supreme leader Ayatollah Ali Khamenei is not the same as regime change.The Islamic Revolutionary Guard Corps is the regime,” and pointed out that the prospects for political and economic change are limited for the time being.
Khamenei’s death heralds the second leadership change since the 1979 Islamic Revolution, and the CFR said it was a historically significant moment, but its outcome was highly uncertain.
Although some Iranians have expressed hope that a change in leadership could ease repression and economic isolation, the CFR said the most likely outcome of the succession does not suggest meaningful political or economic liberalization in the immediate aftermath of the transition.
CFR reported that “change in Iran’s leadership could take three main trajectories: regime continuity, military takeover, or regime collapse.” However, the think tank cautioned that none of these short-term scenarios assume that positive changes will occur in the first year or so after the transition.
In a continuum outcome that is essentially “Khameneiism without Khamenei,” investors and households may still face uncertainty as the new leader will need to “learn on the ground” while trying to shape economic policy amid limited resources and escalating tensions.
A shift to stronger military control does not mean economic reform. The CFR suggests that while a security-led model may promise stability and economic management, it will still struggle with what it calls a “deeply distorted economy” with “persistent inflation and currency collapse.”
Marko Papik, chief strategist at Clocktower Group, echoed a similar position, saying, “Iran’s economy will soon become a parking lot unless the next supreme leader is more open to negotiations with the United States.”
If the supreme leader does not want to negotiate with the United States and is replaced by another hardliner who continues to attack the region, U.S. military operations will become punitive and “Iran will return to the Middle Ages,” he said.
Keith Fitzgerald, managing director of Sea-Change Partners, put it more bluntly.
“The killing of Ayatollah Khamenei is not ‘regime change’ per se. Think of it like changing a light bulb. To change a light bulb, you first have to remove the broken light bulb that was there. But that does not change the light bulb. It requires replacing it with a new one,” he wrote in a memo.
Additionally, Iranian rebels in exile remain fragmented and lack unified leadership, said Ali JS, a former strategic intelligence analyst at the NATO Integrated Warfare Center.
Importing political symbols from abroad, whether for the Restoration or other alternatives, “risks repeating past experiments with parachuted elites that have limited credibility on the ground and have met with disastrous results elsewhere,” she said.
Iran’s opposition in exile is diverse but deeply divided. They include monarchists aligned with Reza Pahlavi, the late Shah’s US-based son, who defected after the 1979 revolution. Republican activists and secular democracy activists are scattered across Europe and North America. Kurdish rebels operating along Iran’s western border. The People’s Mojahedin Organization of Iran (MEK) maintains an organized political network abroad, but its credibility within Iran is limited.
