“To me, this isn’t D-Day. It’s Desperation Day.” That was Aaron David Miller, a former US diplomat and senior fellow at the Carnegie Endowment, on the new sanctions Treasury Secretary Scott Bessent announced on Monday, when he invoked the 1944 landings in France.
Six months after US and Israeli forces attacked Iran, killing its supreme leader and maiming his son and successor, the war has settled into a costly stalemate. The Iranian government is under economic siege. It also still holds power and believes time is on its side.
The war began on February 28. The latest measures move the fight from missiles and airstrikes to Iran’s oil revenues, banks and trading partners. Bessent said Washington will cut off the financial lifelines sustaining Iran’s economy, while a US-led naval blockade restricts oil exports and access to hard currency.
Tehran’s bet
Iran is wagering that President Donald Trump will not take the last step: aggressively enforcing secondary sanctions on the countries keeping its economy afloat, chiefly China and India. One senior Iranian official told Reuters that countries such as China would not stop cooperating with Iran just to serve US interests. “If the pressure increases, Iran’s approach will change too,” the official said.
Washington rejects that reading. “The Iranian economy is in free fall and the regime’s military has been decimated,” State Department spokesperson Tommy Pigott said. “President Trump holds all the cards, and we are cutting off every financial lifeline the regime has remaining.”
Michael Knights of the advisory firm Horizon Engage said the blockade may matter more than the sanctions. Iran has endured earlier “maximum pressure” campaigns without changing its behavior, he said, and its problem is now how to break out of the squeeze. He thinks Tehran could copy the Houthis in the Red Sea, with periodic attacks and intermittent talks aimed at making the conflict too costly for Gulf states, especially Saudi Arabia, to tolerate.
Alan Eyre, a former US diplomat who worked on Iran, doubted that Washington has the allies and the bureaucratic machinery to make the sanctions stick. The campaign before the 2015 nuclear deal was multilateral; this one, he said, leans on public threats.
Prices and unrest
Iran’s Statistical Centre put annual inflation at 66 percent in July. Food prices rose 128 percent from a year earlier. President Masoud Pezeshkian said last week: “Our problems have multiplied several times over, while our income has also fallen.”
For the rulers, the greater danger may be another round of mass unrest. Demonstrations over economic hardship in January were crushed by the Revolutionary Guards and the Basij militia, with thousands killed. This month Hossein Taeb, a key architect of earlier crackdowns, was appointed to lead the Basij. A former reformist official called it one of the clearest signs of official worry.
Gulf states and Hormuz
Gulf governments prefer economic and diplomatic pressure to another war. They fear an outcome that lets Iran claim victory while keeping the power to disrupt the Strait of Hormuz, which Tehran has effectively blocked, pushing up global oil prices.
Abdulaziz Sager, chairman of the Saudi-based Gulf Research Center, said Gulf governments doubt sanctions alone can quickly change Iran’s behavior. He does not expect the theocratic leadership to collapse soon.
Each side wants something the others will not give. Washington wants Iran to give up its leverage over Hormuz without a role in managing the waterway. Iran wants the blockade lifted without appearing to surrender.
