Washington: Donald Trump has announced he will hit Iran and other countries with “unprecedented” new sanctions aimed at crushing the regime’s economy after the two parties failed to strike a deal to end the war.
The US president said any country that allowed its financial institutions, businesses, airports or government entities to provide any type of lifeline to Iran would face “TREMENDOUS Economic Consequences”.
While the administration did not immediately provide specifics, Treasury Secretary Scott Bessent recently foreshadowed a new sanctions package that would significantly dial up restrictions on Iranian finance.
“Oil smuggling, swap lines, cash transfers, exchange houses, ship registries, front companies – It all needs to stop NOW. You know who you are,” Trump said on Truth Social on Wednesday evening (US time).
“This will be an ECONOMIC D-DAY, and we need all of our Allies to stand with the United States of America to isolate, and defeat, the Iran threat.”
The announcement reflects a new reality that was already clear to many observers: that the war with Iran – at least the “hot” war, with missiles and bombs – has effectively ended. The “cold” war – with economic coercion beyond the significant sanctions already in place – is to begin.
Trump has said as much already. He pulled back from a supposedly massive attack that would have involved hits on Iran’s energy infrastructure, or perhaps an attempt to commandeer Kharg Island, to indulge a final attempt at a deal.
That hasn’t happened. Earlier this week, contradicting his peace envoy and son-in-law Jared Kushner, Trump declared there were “no talks or conversations going on, or scheduled” with Iran.
On Wednesday, he said: “No one has given the Islamic Republic of Iran a greater opportunity to make a Deal than me. TRAGICALLY, for them, they have failed to take it.”
But there will not be a return to active warfare, save for enforcement of the US naval blockade on ships entering or leaving Iranian ports, which is now one of its main coercive tools.
Even Iran’s attacks in the Strait of Hormuz are falling flat. This week, a projectile hit a ship transiting the strait, reportedly killing the chief engineer, while the United Arab Emirates accused Iran of firing two ballistic missiles that fell into the water. Neither of these provocations elicited a US response.
It may seem that there are precious few sanctions left with which to hit the Iranians, or that sanctions have failed to achieve anything so far, but neither of those observations is quite right.
The measures Trump flagged on Wednesday looked a lot like the steps former State Department negotiator Aaron David Miller, a veteran Iran analyst, predicted two days earlier when he spoke with this masthead.
“It would involve everybody, including Australia,” he said. “Any bank that does business with Iran would be subject to severe sanction. If your bank processes significant Iranian oil payments, for example, or provides financial services to Iran, you would lose access to the US financial system.
“That’s a severe sanction. I don’t know if they’ll go that far [but] there are other things they can do.”
One thing that appears likely is to target Chinese banks and financial institutions that finance purchases of Iranian oil, and the foreign exchange houses that help Iran repatriate money.
Even the UAE has such exchange houses, as Bloomberg News reported last week. The Emirates got ahead of Trump on Tuesday following the attempted missile strikes, announcing it would suspend all financial and economic transactions with Iran until further notice.
Trump could also resuscitate a 25 per cent tariff on any countries that “do business with Iran”, something he threatened at the start of this year but never enacted.
Such measures will have an impact, but the extent and speed are uncertain. Beni Sabti, an Iran researcher at the Israel-based Institute for National Security Studies, told a roundtable in Washington last week that Iran was weaker than many Western commentators admitted.
Iranian imports had been smashed, Sabti said, while its oil storage was reaching capacity and some wells had stopped working. “The country is suffering much more from the sanctions, from the blockade. Prices are four times to six times higher than they were before, in January.”
Others, including Sabti’s institute colleague Danny Citrinowicz, are more sceptical. “Iran has operated under varying degrees of sanctions and economic isolation for decades,” he wrote on X on Saturday.
“This does not mean economic pressure is irrelevant. It means that there is a major difference between hurting the Iranian economy and changing the strategic calculations of the Iranian leadership.”
Miller said the additional US sanctions could have a severe impact, but perhaps not for months. “I don’t think any of these things will, in a reasonable period of time, change Iran’s calculation on their core issues,” he said. “So, right now, in my judgment, we’re nowhere.”
With Reuters
Get a note directly from our foreign correspondents on what’s making headlines around the world. Sign up for our weekly What in the World newsletter.
Michael Koziol is the North America correspondent for The Age and Sydney Morning Herald. He is a former Sydney editor, Sun-Herald deputy editor and a federal political reporter in Canberra.Connect via X or email.From our partners
Discover more from PressNewsAgency
Subscribe to get the latest posts sent to your email.