sanction

Washington has recently stepped up efforts to economically pressure Tehran amid the deadlocked truce talks.

Washington plans to impose sanctions on another bank this week as it steps up its campaign to economically isolate Tehran amid the deadlocked truce talks, the US Treasury chief has said.

In an interview with The Associated Press news agency on Sunday, Treasury Secretary Scott Bessent declined to name the bank to be targeted by sanctions.

The announcement comes just days after Washington said it would cut off the United Arab Emirates’s operations of Basque Misr from the US financial system after accusing Egypt’s second-biggest bank of doing business with the Iranian government.

“This is going to be financial violence if we have to,” Bessent told AP on Sunday. “We are showing people that we know who you are, you know who you are, and this has got to stop.”

⁠In an interview with the Reuters news agency, Bessent said the next step may be cutting off an institution entirely from the dollar-based financial system.

“You’re going ⁠to see a lot ⁠more of these every week,” he said on Sunday, ahead of a Group of 20 finance leaders ⁠meeting in Asheville, North Carolina. “We’re starting with the banks, and we’re telling ⁠the banks it’s not OK ⁠to have Iranian money and to aid the regime.”

The US has stepped up efforts to economically pressure Tehran to submit to Washington’s demands, a campaign dubbed “Operation Economic Outcast”, amid the stalled truce talks between both parties.

Last week, the Treasury Department imposed new sanctions on nearly 60 individuals and entities that Washington accused of being part of networks helping Iran generate oil revenue, procure weapons and conduct cyber-operations.

Iran, however, has rejected the latest US sanctions, with Minister of Finance and Economic Affairs Ali Madanizadeh saying they will fail.

Violence in the conflict resumed on Sunday, the first time since late July, with Iran launching missiles at two US bases in Jordan following a US attack on Larak Island in southern Iran.

Cooperation against Iran

Bessent is preparing to host the meeting of the G20’s finance leaders, where he will huddle individually with his counterparts from the world’s major and developing economies to encourage cooperation against Iran.

The US Treasury chief also told AP that he would speak to his Chinese counterparts at the meeting and “all options are on the table” in terms of sanctioning Beijing for its continued trade with Tehran. 

But he rejected the idea that the US was reluctant to confront China, calling it “a completely false narrative that the media picked up on”.

He insisted that Beijing and Washington agreed on the need to reopen the Strait of Hormuz and prevent Iran from developing a nuclear weapon.

Aug. 28 (UPI) — Treasury Secretary Scott Bessent announced Friday that the United States is working to cut off bank branches in the United Arab Emirates from the U.S. financial system, part of his campaign to target financial systems that enable Iran.

The Department of the Treasury said it is proposing a rule that will ban U.S. banks from facilitating transactions involving the UAE-based branches of Banque Misr, one of Egypt’s largest banks.

“Iran’s enablers cannot continue to enjoy access to the U.S. dollar and the global financial system,” Bessent said in a statement. “Banque Misr UAE decided to find out the hard way, and today, we are taking the first step in holding it accountable for its continued, egregious support of the Iranian regime.”

Bessent on Monday announced a new pressure campaign called Operation Economic Outcast to force countries to sever ties with Iran.

The department accused Manque Misr’s operations in the UAE of being “a significant conduit for Iranian shadow banking.” It said the bank allows Iranian entities access to U.S. dollars, circumventing U.S. sanctions.

Treasury said it had found 103 potential front companies that moved $1.8 billion through Banque Misr UAE accounts from January 2024 to June 2026.

Bessent is invoking powers under the Patriot Act that allow the treasury secretary to take action against foreign banks that are a “primary money-laundering concern” to the U.S.

It also said the Treasury will sanction the general manager of the Dubai branch of Bank Melli and a Hong Kong-based company it alleges is laundering money for Iran.

Earlier this month the UAE said it was suspending all trade with Iran.

BEIRUT — Iran’s economy, already strained by high inflation, years of Western sanctions and a war that has sharply reduced oil revenue, is poised for more instability as the Trump administration tries to coerce other countries into ending all financial dealings with the Islamic Republic.

A decision by the United Arab Emirates to suspend trade relations with Iran last week kick-started the White House’s latest attempt to isolate Tehran into submission. Iran entered the war with its foreign commerce concentrated among a relatively small group of countries, leaving it with fewer places to turn now.

The success of the U.S. strategy largely will hinge on China, the main buyer of Iranian oil and its top trading partner. Russia, a fellow target of sweeping U.S.-led sanctions, has a military conflict and economic crisis of its own and probably can’t offer longtime ally Iran much hard financial support.

Regional partners like Turkey, Pakistan and Iraq maintain important relationships with both Iran and the U.S., giving them reason to avoid exposure to the secondary sanctions that Treasury Secretary Scott Bessent said awaited nations that did not cut economic ties with Iran.

“Those who stand with the United States will reap the rewards of our partnership,” Bessent said Monday while outlining the plan he called “Operation Economic Outcast.” “Those who tether themselves to the Iranian regime should expect to share in the isolation.”

The Emirates will be hard for Iran to replace as a conduit for foreign goods and payments

Despite Western sanctions, Iran in 2024 exchanged $125 billion worth of goods globally, according to Trade Data Monitor, a private firm. Iran is not a member of the World Trade Organization.

The bulk of its declared international trade, though, was with a handful of partners. The UAE, China and Turkey supplied nearly three-quarters of Iran’s merchandise imports. Four countries — China, Iraq, the UAE and Turkey — accounted for more than two-thirds of its non-oil exports.

On the supply side, the UAE held outsized importance. It was Iran’s biggest source of imported items and a gateway to financial channels that helped Iranian businesses make and receive international payments. Both roles kept Iran connected to the global economy.

As a reexport hub, the UAE processed shipments from foreign suppliers reluctant to deal directly with Iranian customers.

“From Iran’s perspective, the UAE can be replaced, but the Iranians are openly saying it’s not going to happen overnight,” said Alex Vatanka, a senior fellow at the Middle East Institute in Washington.

China has deep economic ties to Iran but depends less on the relationship

Beijing has economic interests in the Persian Gulf beyond Iran, and so far has avoided getting drawn into the conflict the U.S. and Israel initiated. China buys the overwhelming majority of Iran’s crude through opaque trading networks that bypass sanctions.

Its manufacturing clout and stranglehold on critical mineral supplies nonetheless give Beijing more room than Iran’s other partners to resist U.S. pressure, said David Lubin, a senior research fellow at Chatham House. Aggressive action against major Chinese banks and businesses could revive trade tensions as Chinese leader Xi Jinping prepares to meet with President Trump in Washington next month.

“I don’t see China playing ball by any means,” Lubin said.

China is both Iran’s largest reported export market and a supplier of essential parts and products, according to WTO and United Nations data.

During the Obama administration, Beijing did agree to reduce energy imports from Iran, said Atlantic Council fellow Daniel Fried, a former U.S. ambassador to Poland.

“We will want the Chinese to go a lot farther than they have gone in the past,” Fried said. “But it’s a lot harder now.”

China has experience helping an ally survive sanctions: It has long been North Korea’s economic lifeline and main diplomatic backer. Experts say China has avoided fully enforcing U.N. sanctions on North Korea and sent clandestine aid to help its impoverished neighbor stay afloat.

Expanding bilateral trade would create problems for Iran’s neighbors

Iranian Parliament Speaker Mohammad Bagher Qalibaf, who has been his country’s lead negotiator over the last six months, was in Iraq the day of the UAE’s trade suspension. A purpose of his visit, he said, was “speeding up efforts to expand joint cooperation among all countries in the region, without foreign interference.”

The U.S. dollar’s preeminence in international trade and finance, however, means none of Iran’s trading partners would antagonize Washington lightly, Vatanka said. “We’re still at a point where if the U.S. wants to hurt you, it will matter,” he said.

Underscoring potential consequences, Turkey settled a years-long U.S. dispute in July over the role of a state-owned bank in helping Iran evade sanctions through an oil-for-gold scheme. Trump also moved to lift sanctions on its fellow NATO member stemming from Turkey’s purchase of a sophisticated Russian missile system.

“I really don’t think Turkey would like to become the next country helping Iran to evade sanctions right now,” said Riccardo Gasco, an analyst at the IstanPol think tank in Istanbul.

Iran is a vital import source for Iraq and retains influence there through allied political factions and armed groups. Baghdad has sought closer economic and security ties with Washington. Since it invaded Iraq in 2003, the U.S. has significant control over the nation’s foreign currency reserves because they are housed in the Federal Reserve Bank in New York.

Oman, a frequent intermediary between Washington and Tehran, has found its balancing act suddenly precarious. Trump threatened Oman last week over its ongoing negotiations with Iran on the future management of the Strait of Hormuz.

One easy route for goods slipping past sanctions on Iran would be ports like Gwadar near the Persian Gulf in Pakistan, said Peter Harrell, a visiting scholar at Georgetown University.

“Ship an intermodal container of drone parts to one of the ports in western Pakistan and unload it onto a truck and have it driven across the border into Iran,” he said.

While Pakistan, a key ally and economic partner of China in the region, wants to increase trade with Iran, it faces competing pressures. It is serving as a key mediator between Tehran and Washington and has deep security ties with Saudi Arabia, Iran’s longtime regional rival.

Caspian Sea trade route alternatives unlikely to grow quickly

With the Strait of Hormuz mostly blocked and Russia’s war with Ukraine endangering ships on the Black Sea, Iran has sought to develop a “road of life” on the Caspian Sea, said Nikita Smagin, an independent analyst and a former Russian state news agency correspondent in Tehran.

Russia reportedly sent drones to Iran this year, repaying Tehran’s favor after Moscow’s full-scale invasion of Ukraine. It also rerouted exports to Iran via Caspian Sea ports like Astrakhan. Agricultural products make up 80% of Russia and Iran’s reported trade.

“Both economies are exporting natural resources and have little to offer each other,” Smagin said.

The other countries that border the Caspian — Azerbaijan, Turkmenistan and Kazakhstan — probably won’t rush to join in, said Umud Shokri, a fellow at George Mason University.

Yet Russia and Iran are already in an “axis of the sanctioned,” said Mark Galeotti, executive director of the Mayak Intelligence firm. For decades the pair have collaborated to thwart trade restrictions, and increasing bilateral trade in both “strategic goods” and contraband like military technology, microchips and Gucci handbags could be a next step.

“Pomegranates and tomatoes only go so far,” he said.

Chehayeb and McNeil write for the Associated Press. McNeil reported from Brussels. AP writers Amir Vahdat in Tehran and Dasha Litvinova in Tallinn, Estonia, contributed to this report.

WASHINGTON — The United States unveiled plans Monday for new sanctions against Iran that Trump administration officials said are designed to sever Tehran from the global financial system as the nearly six-month conflict between the two countries drags on.

Treasury Secretary Scott Bessent, who previewed the announcement last week as “economic D-Day,” described the measures as the opening of an all-out financial assault on the Iranian government and its trade partners — a group that includes China, India, Turkey and the United Arab Emirates.

“To those who enable Tehran, do not discount the cost of testing Washington’s resolve,” Bessent said at a news conference. “No nation should expect to enjoy the rewards of our system while helping those who seek to destroy it.”

Bessent said it was time for world leaders to “make a decision” between “America and Iran,” adding that President Trump has already been calling foreign leaders to make specific requests ahead of the new sanctions.

But when asked whom the president had been talking to, Bessent said he would not “name names.” He also said the secondary measure would not take effect immediately, arguing that the administration is trying to give “everyone the opportunity to remedy bad behavior.”

“Why would I want to blow up the global financial system?” Bessent said when a reporter pressed him on why the sanctions weren’t immediate. “We believe that it is important to level set and give people a cure period, but they should know that that will move very quickly and that we are serious.”

The pressure campaign will build on a naval blockade and other sanctions the Trump administration has already imposed in its effort to force Tehran into a deal that ends the war on U.S. terms.

Trump’s latest economic push against Iran revives a familiar strategy from presidents of both parties, using financial leverage to pressure Tehran toward more serious negotiations over its nuclear program. Sanctions helped bring Iran to the table before a 2015 nuclear deal brokered by President Obama, but the agreement was widely criticized as weak by Republicans. After Trump withdrew from the agreement in his first term, a new “maximum pressure” campaign failed to secure a new deal.

Trump’s decision to return to a strategy of economic coercion has signaled to Iran that the fighting phase of the war is probably over, for now, with the U.S. administration choosing a path “neither of war nor of peace,” Masoud Pezeshkian, Iran’s president, said this week.

Iranian officials, who had been anticipating the move, pushed back on Washington’s strategy even before Bessent began speaking Monday.

Foreign Minister Abbas Araghchi told Iranian state media over the weekend that the sanctions amounted to a repackaged version of decades-old American pressure tactics that Tehran has already learned to withstand. Esmail Baghaei, Iran’s foreign ministry spokesman, warned of “grave consequences” for any countries cooperating with what he said was “illegal behavior” by the United States. And Mohsen Rezaei, the secretary of Iran’s Supreme Security Council, suggested that the economic pressure could shut down oil exports through the Strait of Hormuz, a threat that would ripple through global energy markets.

That defiance underscores the central gamble of Washington’s strategy. Rather than aiming sanctions at Iran alone, Bessent’s plan to potentially squeeze major economies like China and India over their ties to Tehran could pose a diplomatic risk to the U.S.

The fallout could also reach beyond foreign diplomacy as a hit to global markets also risks compounding Trump’s troubles at home ahead of the midterm elections, as Americans grow unhappy with the economy and their support for the conflict in the Middle East plummets. The Iran sanctions also land as the administration wages a separate trade fight with Canada, adding uncertainty to global and domestic markets.

Whether Washington will be able to apply pressure on Iran’s trade partners remains an open question.

China alone shares nearly $10 billion in bilateral trade with Iran, and paid roughly $31.2 billion for unreported Iranian crude oil imports in 2025, according to the U.S.-China Economic and Security Review Commission. That makes China the largest buyer of Iranian crude oil by a wide margin, accounting for more than 90% of Iran’s oil exports, according to the commission.

It is unclear whether Trump has spoken to China’s leader, Xi Jinping, about the sanctions. But the two leaders are set to meet in Washington next month, adding to the diplomatic dynamics of the moment.

Other trading partners have already made some moves.

The UAE said last week that it was suspending trade with Iran, a decision that followed accusations that Tehran had fired two ballistic missiles at the Emirates.

Afra Al Hameli, a spokesperson for the Emirati Ministry of Foreign Affairs, said in a post on Aug. 18 on X that all trade, commercial exchanges and financial transactions with Iran have been halted until further notice. She added that the Emirates was “firmly committed to safeguarding the integrity of the international financial system.”

Bessent said Monday that he expects other countries will “take similar actions as we continue our engagement.”

In an opinion article written for the Financial Times last week, Bessent has cast the new measures as the “single greatest financial offensive ever marshalled against an adversary.”

Bessent wrote that countries that “sever Iran’s remaining financial and commercial connectivity” will see their economies reinvigorated, and those who don’t will experience the end of their “lasting prosperity.”

“Any nation that serves as a financial artery of a withering regime should expect to share in its isolation,” he wrote. “To become a sanctuary for terror is to become, in the eyes of the United States, a global pariah.”

Ahead of the announcement Monday, Trump posted on Truth Social that Iran was “completely collapsing.”

Meanwhile, Iran’s central bank governor, Abdolnaser Hemmati, said the U.S. had already done all that it can against Iran and that the central bank had been shoring up its foreign currency reserves for months. Last week, he said Iran’s crude exports had “virtually stopped.”

“[The Americans] have done everything, so what else can they do?” he said in an interview with Tasnim News.

Despite his assurances that the central bank was working on preventing a devaluation of the Iranian rial, the currency has struggled to remain above a black market exchange rate of 2 million per dollar — a record low. The Central Bank rate stands at roughly 1.5 million rial to the dollar.

Though experts question the effectiveness of additional economic pressure on Tehran, Bessent’s threat to target Iran’s trading partners — especially the UAE, China and Turkey, who together comprise almost three-quarters of Iran’s foreign imports — will undoubtedly be painful for Iranians.

For example, Iran uses the UAE as a reexport hub and buffer, and receives vehicle spare parts from China, according to the Observatory for Economic Complexity. Iranian economic experts say both the agricultural and pharmaceutical sectors also rely on imports from countries such as Brazil and Turkey.

Ceballos reported from Washington and Bulos from Beirut.

NEW YORK — Nearing the six-month mark of the Iran war and facing diminishing stockpiles of key weapons, the Trump administration is touting a crushing financial campaign against Tehran, promising an “economic D-Day” against a country that has withstood nearly five decades of punishing American sanctions.

With sparse details, President Trump announced this week that the U.S. would be imposing an “unprecedented” level of economic warfare and isolation on Iran, aiming to force its leadership to cave to demands to end its nuclear program and fully reopen the crucial Strait of Hormuz to oil and natural gas tankers.

It reflects the dire reality Trump faces with an increasingly unpopular war he can’t seem to end just months before pivotal midterm elections that will decide whether his Republican Party keeps control of Congress. Whether out of desperation or strategy, the president is refocusing America’s might on bringing Iran to its knees through an accelerated sanctions campaign against one of the most economically penalized countries in the world.

In response to the threat, Iranian Foreign Minister Abbas Araghchi posted Friday on X the history of U.S. sanctions against Iran, saying, “We have seen this movie before. Same bull. Different bullies.”

The immediate reaction from Iran hawks has been praise and a call for patience as it plays out, while other analysts warn that Trump is refusing to learn the lessons of his predecessors.

In an interview Thursday on CNBC, Treasury Secretary Scott Bessent offered a small glimpse of what may be ahead, threatening secondary sanctions on nations and companies that conduct business with Iran.

He did not reveal who would be targeted as part of this next phase of the administration’s Operation Economic Fury, which earlier had focused on entities and people who buy oil from or bank with Iran. China and India, however, are major buyers of Iranian oil.

“If you insist on doing business with them, then the U.S. Treasury and U.S. government will put its full might and force against you,” Bessent said. “It’s time for our allies and the rest of the world to make a decision.”

Some experts see ‘uncharted waters’ that could force Iran’s hand

Despite decades of U.S. sanctions against Iran, the Trump administration is arguing that it’s only a matter of time and that striking the right economic target would get Tehran to its breaking point.

Richard Goldberg, who coordinated efforts to put diplomatic pressure on Iran in Trump’s first term, said the consequences of U.S. strikes on Iran’s nuclear sites last year, the war this year and the American naval blockade on Iranian ports have created the perfect storm for capitulation — one that didn’t previously exist.

“I think we’re watching a strategy, whether it takes a short time or a long time, that is very much about fundamentally changing the future of the world by seeing the end of this regime,” said Goldberg, who is now at the hawkish Washington think tank Foundation for Defense of Democracies, or FDD.

“I caution everyone — including myself, who has worked on sanctions, who’s worked on financial warfare — to have the humility to admit that we are in uncharted waters,” he said.

He said the decision this week by the United Arab Emirates — once one of Tehran’s most important trading partners — to suspend trade with Iran over an alleged missile attack will only further isolate the government.

Beyond trade in domestically produced goods, the Emiratis had helped the country absorb some of the shocks caused by sanctions through its re-export hub.

Targeting allies and partners comes at a price

With nearly all of Iran’s energy, financial and transportation sectors already covered by U.S. sanctions, Trump’s aim appears to be to apply secondary sanctions on countries, including allies and partners, that have not cut all ties with Iran to starve the country of any remaining income it may still be receiving.

In many ways, it is a redux of Trump’s first-term maximum-pressure campaign, which he has ramped up during his second term to include military action.

But as Trump and his allies discovered during his first administration, it can be difficult to enforce secondary sanctions without harming U.S. interests and provoking reciprocal measures. There were numerous instances of the administration granting sanctions waivers to countries, particularly those that rely on Iranian oil for their energy needs.

“Trump’s strategy now rests on targeting Tehran directly by impeding its touch points and access to the formal financial system and international economy,” said Behnam Ben Taleblu, senior director of the FDD’s Iran program. “This will require making the Iran issue more important in U.S. bilateral relations with countries in Europe and Asia.”

Iran doesn’t see an ‘open door’ at the end of the sanctions campaign

Iranian officials and analysts have accused the Republican president of flip-flopping with his latest pivot to economic pressure against Tehran. Trump has long derided past leaders who used sanctions to limit Iran’s ability to pay for its military and nuclear development.

In a post last week on X, Esmail Baghaei, a spokesman for Iran’s Foreign Ministry, wrote that Washington’s pattern of retreating to sanctions when it doesn’t want to pursue diplomacy has proven to be futile.

“Iran has demonstrated over decades that it will not be strangled by these exhausted refrains,” he said. “The real risk is that American politicians, clinging to this bad habit, will instead strangle their own remaining chances of a less humiliating exit from a crisis of their own making.”

Ali Vaez, Iran director at the International Crisis Group, said the Trump administration’s decision to take its own maximum-pressure policy to new heights with military action seems to ignore years of U.S. foreign-policy lessons that show Iran does not respond well to pressure.

If anything, he says, the latest economic campaign has only “hardened Iran’s position.”

“I think (Trump’s) blind spot is the fact that the only thing that the Iranian regime views as more dangerous than suffering from U.S. sanctions is surrendering to U.S. terms,” Vaez said.

Plus, the past year of start-stop diplomacy has only worsened the already fragile dynamic between the longtime adversaries, Vaez says, adding that Iranian officials’ lack of trust in Trump and his mediators has created an untenable foundation.

“They believe that even if they capitulate to U.S. terms under economic duress, Trump would move the goalposts and ask for more,” he said. “And this is really the fundamental problem: Pressure without an open door is an exercise in futility.”

Amiri writes for the Associated Press. AP writers Matthew Lee and Fatima Hussein in Washington contributed to this report.