New Delhi: The United States is ready to dramatically escalate economic pressure on Iran, US Treasury Secretary Scott Bessent saying that the next step will be an “economic D-Day.” The Trump Administration’s desire is to isolate Iran from the economic and monetary lifelines still available to it.
This follows months of tensions between Washington and Tehran over military and diplomatic standoffs. In Trump’s new approach, he wants to wear Iran down through economic sanctions in a bid to convince Tehran to shift positions and eventually sign a new deal with the U.S.
What does Trump actually want?
The key element of Trump’s plan is maximum economic pressure. Washington aims at limiting the ways Iran can make money from oil, access to international banks and use of international trade networks.
The objective seems to be to push Tehran to a point at which it has no option but to abide by the tensions and escalations of the confrontation. Trump has consistently demanded restrictions on Iran’s nuclear efforts and has threatened nations and corporations against their aid to Tehran circumventing American sanctions.
In short, the U.S. wants the Iranians to be able to use their money less for the government, their military and their regional influence. Washington will strike at Iran’s remaining economic lifelines such as petroleum sales, banking and transportation networks, Bessent has said.
How will Iran be affected?
The most significant economic impact will likely be on Iran. The tighter the sanctions the more difficult it will be for Iranian companies to trade oil, and to be paid for their oil, as well as to engage in international commerce. But Iran’s currency and inflation are already under tremendous strain, and further restrictions may fuel further pressure and bring high-priced goods into the market for Iranian citizens. Bessent has claimed the US campaign had already taken Iran’s economy into a weak place.
But economics pressure alone will not force Iran to capitulate. Iran has already operated under American sanctions for years and they have figured out how to continue to sell oil and carry on trade relations despite the sanctions. Iranian authorities have brushed aside Washington’s fresh warnings and have declared the sanctions plan a failure.
What does it mean for the US?
There are risks to the United States from the strategy, as well. Iran is likely to respond by cutting oil supplies or otherwise adding turbulence to the energy market, sparking instability in world markets. Any disruption in the Strait could lead to a rise in oil and fuel prices as it is one of the world’s busiest oil-shipping lanes.
Ongoing boost in energy prices might impact American consumers through higher gasoline prices, transport and other cost of goods. Investors also might be keeping a close eye on the financial markets in anticipation of the possibility of a broader war in the Middle East.
Why are Gulf countries worried?
Saudi Arabia, the UAE and Qatar have a big stake in oil and gas goods flowing freely. They are afraid of a greater U.S. pressure on Iran setting off Tehran’s response to the U.S. hostility against regional energy infrastructure or shipping lines.
This is a challenging situation for the Gulf countries. While they may have close security and economic links to the US, they do not want to be a part of a larger US/Iran rivalry.
The bigger picture
The “economic D-Day” of Trump’s, then, is not just sanctions all over again. A tactic of financial pressure as a major tool against Iran and an attempt to coerce Tehran to Washington’s will.
However, this plan is a risky one. In the event that Iran is willing to reopen talks with Trump, he could assert that it was the economic pressure that succeeded. In the event Tehran takes escalation measures, all the countries, including the US, Iran and Gulf nations, may experience increased economic and security losses.
For the time being, the main point is whether or not Iran will return to the negotiating table, or whether the region will descend into the dangerous escalation it has experienced before in response to an economic crisis.
