America’s war against Iran has been at a standstill for months. The Trump administration’s new plan to use America’s considerable economic leverage could break the deadlock. But success will only be possible if Washington stops wavering.
On Sunday, Treasury Secretary Scott Bessent said the U.S. is “entering the endgame” in its war against the Islamic Republic of Iran. His comments came after President Donald Trump warned that Iran will face an “economic D-Day.”
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In a post on Truth Social, the president vowed to enact the “MOST CRUSHING ECONOMIC OPERATION EVER TAKEN AGAINST ANY OTHER COUNTRY.” Trump promised “historic” measures that would target oil smuggling, swap lines, cash transfers, exchange houses, ship registries, and front companies.
Now is the time to increase economic pressure on Tehran. Iran’s economy is reeling, and a concentrated push by the U.S. and its allies could deliver a knockout blow.
Iran’s currency has dropped to a record low. On Monday, the rial traded at 2.02 million to the U.S. dollar. Rice prices are reportedly up 60%, and beef has skyrocketed 150%. The International Monetary Fund estimates that Iran’s GDP will contract by more than 5%.
Iran’s central bank governor, Abdolnaser Hemmati, said exports of crude oil have “virtually stopped” due to a U.S. naval blockade, crippling Iran’s ability to generate foreign capital.
Iran, Trump said, is “completely collapsing.” He might be right.
Under the late Shah Reza Pahlavi, a modernizer who enacted far-reaching reforms, Iran enjoyed great economic growth. By 1977, it boasted the 18th-largest economy in the world.
That came crashing down after Iran’s 1979 revolution. For nearly half a century, a theocratic, despotic, and kleptocratic dictatorship has ruled Iran. The Islamic Republic’s chief exports are oil and terrorism. The whole world, including the Iranian people, has paid the price.
Iran’s future looked bleak long before the U.S.-Iran war. On the eve of that conflict, Iran, a nation of 93 million people and the 17th-most populous country on Earth, had a GDP lower than that of Peru or Romania.
The Iranian regime is well aware that inflation and shortages of essential goods trigger unrest.
Economic grievances and downturns played a central role in previous revolutions in Iran, including the constitutional revolutions of 1905 and 1911, as well as the toppling of the Pahlavi dynasty in 1979. A similar fate may now await the mullahs.
Tehran’s seizure of the Strait of Hormuz gave the regime leverage, which it has used to great effect. But its hold appears to be slipping.
Oil tanker transits are increasing, and major oil-producing countries are advancing long-term plans for overland pipeline export routes far from the Persian Gulf and Tehran’s reach.
Iran’s seizure of the Strait might prove to be a Pyrrhic victory, and the country may finally be forced to pay a price for its overreliance on oil and its devotion to terror.
Yet the Iranian regime has also shown that it has a high pain threshold.
The Trump administration and the U.S. Congress have previously enacted stringent sanctions against Tehran. But thanks to other nations, including erstwhile U.S. allies such as the United Arab Emirates, the Islamic Republic has survived. For too long, the UAE has acted as Iran’s piggy bank, allowing the regime to evade sanctions while also accounting for roughly 30% of Iran’s foreign goods imports.
The Trump administration is poised to cut off that lifeline.
Trump called for “all of our allies to isolate, and defeat, the Iran threat.” Bessent was even more blunt, warning that “any nation that serves as a financial artery of a withering regime should expect to share its isolation.”
“No one is beyond the reach of U.S. sanctions,” he warned, and anyone who is part of the “ecosystem” keeping Iran afloat will face consequences.
The decision to expand the economic war against Iran to include its enablers and bankers could bring about the regime’s end, or at least force greater compliance during negotiations.
But it will only work if the United States holds firm. As the late British Prime Minister Margaret Thatcher famously told then-President George H.W. Bush in the run-up to another Middle East war: “Now is not the time to go wobbly.”
