Will Washington’s Economic Fury Be the Straw That Breaks the Mullahs’ Backs?

By launching Operation Economic Fury, President Trump is signaling that added financial pressure on the Islamic Republic will intensify as bombing from the air abates. Will intense financial pressure become the silver bullet that forces Tehran to accept America’s conditions for ending the war?The White House press secretary, Karoline Leavitt, dismissed on Wednesday reports that Mr. Trump, at least for now, intends to extend a two-week ceasefire that is due to expire next Wednesday. Instead, the White House is expressing increased confidence that Tehran will soon abide by America’s red lines. Additional American military assets are headed for the region even as the Department of the Treasury announces new measures to squeeze Iran economically. A U.S. Navy partial blockade stops any tanker that leaves Iran through the Strait of Hormuz or travels through it to Iran to load oil. Will new economic measures force the Iranians to agree to America’s terms, end the war, and as a result abate a global oil crisis? Depending on how quickly negotiations with Iran progress, “I’m optimistic that sometime between June 20 and September 20, that we can have $3 gas again,” the secretary of the Treasury, Scott Bessent, told White House reporters on Wednesday. For weeks, the talk in Washington was about “boots on the ground” that would land on Kharg Island, where 90 percent of Iranian oil exports are handled. That would expose troops to possible Iranian attacks; the Navy blockade presents an alternative strategy. “The logic of this move is to get the same impact that people thought could only come from seizing Kharg Island and some of the other islands in the Gulf, but without the kinetic risks associated with taking islands from Iran,” a senior research fellow at the Center for Research on Terrorist Financing, Emanuele Ottolenghi, tells The New York Sun. The Iranian regime’s losses from the blockade could amount to $13 billion a month, according to Washington’s estimates. Tehran has almost no alternative sources of income. A cash crunch might force even the most hard line mullahs to soften up in negotiations that are expected to resume at Islamabad in the next few days. The Treasury Department is imposing additional measures meant to disrupt Iran’s access to funds. It announced on Tuesday that a 30-day waiver permitting the sale of Iranian oil already at sea, which is due to expire on Sunday, will not be renewed. Also, it vowed to exclude financial institutions that hold Iranian accounts — at Hong Kong, in Communist China, the United Arab Emirates, and Oman — from the U.S.-dominated global banking system.By bombing its Arab neighbors, the Islamic Revolutionary Guard Corps made a “fatal mistake,” Mr. Bessent said on Wednesday. As a result, he added, Gulf countries “are now willing to be much more transparent in terms of the funds, or do a deeper dive in investigating the funds that are held within their banking systems.” Dubai has long served as Iran’s banking launderer, handling accounts into which illicit funds from sanctioned transactions are deposited. Mr. Ottolenghi says the UAE is now starting to “put the screws on all sorts of Iranian operations — cultural, financial, economic, commercial.” Mr. Bessent said that tightening the monetary screws is the “financial equivalent” of the bombing campaign: “We have told companies, we have told countries, that if you are buying Iranian oil, that if Iranian money is sitting in your banks, we are now willing to apply secondary sanctions, which is a very stern measure, and the Iranians should know that this is going to be the financial equivalent of what we saw in the kinetic activities.” Tehran spokesmen, meanwhile, are threatening economic retaliation in the form of pressuring Iran’s Yemeni proxy, the Houthis, to shut down shipping at Bab el Mandeb. Closing down that route would all but halt traffic at the Red Sea, where Saudi oil is exported to Europe and Asia. As yet, though, the Houthis have refrained from repeating the Red Sea shut down. For now America believes its financial might is prevailing in the tit-for-tat economic wars. Washington “is proving that it still can escalate pressure even as there is a ceasefire, that it does not just have the kinetic power to pressure Iran, that it has other tools, and that the Iranians are vulnerable to them,” Mr. Ottolenghi says.

Will Washington’s Economic Fury Be the Straw That Breaks the Mullahs’ Backs?

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