The United States announced new sanctions on Iran and a slew of global entities doing business with the country on Monday, in what officials have called an “economic D-Day” and officially dubbed “Operation Economic Outcast”, in an effort to force Tehran to negotiate an end to the war.
The announcement followed repeated demands by US President Donald Trump that Iranian leaders take actions like dropping their claims over the Strait of Hormuz and return to talks to end its nuclear programme.
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Nearly six months into its war on Iran, the US is seeing little impact from its military operations against the country. Crucial military munitions stocks have been depleted, and important tools used to project power globally have been redirected towards Iran.
The long-term implications of the war, analysts say, have pushed the Trump administration to try economic sanctions, but these are unlikely to compel Iran into meeting the demands.
“The United States is returning to economic pressure because military force has failed to deliver the quick victory it expected,” Negar Mortazavi, senior fellow at the US-based Center for International Policy, told Al Jazeera. “The ‘economic D-Day’ declaration underscores the war’s failure so far to force Iran’s surrender or achieve Washington’s political objectives.”
What prompted the new sanctions?
“On paper, the US and Iran are a huge military mismatch,” Ryan Costello, policy director at the National Iranian American Council (NIAC), told Al Jazeera. “The US caused a lot of destruction with its munitions, but so too did Iran with its missiles and drones. So it is hard to describe the war to date as anything but a catastrophic mistake.”
While the US has killed key Iranian political and military leaders, Tehran has leveraged its geography and vast arsenal of drones and missiles, striking out at key oil and gas infrastructure in a region that has depended on drawing investors by offering stability. And Tehran’s choking of traffic through the Strait of Hormuz has brought pain for consumers as far away as the US, who now pay about 40 percent more at the petrol pump than before the war.
“It was a fundamental miscalculation Trump did in the outset that the threat of war will compel the Iranians to surrender,” Trita Parsi, head of the Washington, DC-based Quincy Institute, told Al Jazeera. “Instead they fought back, and they fought back very hard.”
The US supply of missile interceptors has fallen low, according to experts like those at the Washington, DC-based Center for Strategic and International Studies. In late July, the centre found it would take at least three years for the Pentagon to bring supplies back to pre-war levels. The White House has denied any such shortage exists, but analysts say the problem is very real, even if it is temporary, and the Pentagon has been forced to redirect resources away from adversaries like China.
That has included US aircraft carriers. The Pentagon has pulled a key asset away from China, dispatching the USS George Washington from Japan to relieve the USS Abraham Lincoln in the Gulf, whose sailors have been at sea for months longer than planned because of the war.
Key US bases in the region – including the Navy’s Fifth Fleet headquarters in Bahrain – have been damaged or become unsafe for use, adding hundreds of kilometres to supply lines as ships look as far away as the Indian Ocean island of Diego Garcia for sourcing.
“In my judgement, the US Armed Forces have probably permanently lost access to 15 Persian Gulf bases,” retired US Army four-star general Barry R McCaffrey wrote on X.
“I think it became clear the US is running out of runway on this, so the administration pivoted to what it knows best, or has perceived as effective in the past, which is these economic tools,” said Jamal Abdi, head of the NIAC. “Really, it’s a way for the administration to scale back to where it was before this war but present it as this new enhanced pressure policy.”
‘Why would I want to blow up the global financial system?’
Instead of hitting Iran and others doing business with it, Monday’s sanctions announcement turned out to be little more than yet another warning, analysts say. While the US Department of the Treasury did sanction 60 new individuals and entities from around the globe over their business with Iran, it did not include major Chinese banks or others that help Tehran sell its oil.
At least 90 percent of Iran’s crude oil exports end up in China, netting Tehran tens of billions of dollars in revenue. Ending that trade would need the US to confront China far more directly than it is willing to do. In fact, US Treasury Secretary Scott Bessent admitted exactly that on Monday, when he responded to a question from reporters about why the US did not immediately announce sanctions on Chinese entities long known to facilitate oil trade.
“Why would I want to blow up the global financial system?” Bessent responded.
“To me, it’s more a psychological operation than an actual warfare,” Sina Azodi, assistant professor of Middle East Politics at the George Washington University, told Al Jazeera. “It will have an impact, there’s no question, and I’m sure it’s going to scare off people and affect Iran’s economy by creating more chaos and adding uncertainty … but I don’t think it will ultimately change Iranian calculations in the short term.”
Pain for the Iranian people, gain for Washington?
The new US measures seek to expand the scope of already broad restrictions against the Iranian economy, adding the possibility of secondary sanctions against non-Iranian entities dealing with sectors like digital assets, gold, technology, aviation and shipping.
Tensions with Washington have already forced Iranians to contend with things like shortages of medicine and higher fuel prices. Many of the new sectors being targeted are crucial for common Iranians looking to find ways around previous sanctions, analysts point out. Gold can help preserve wealth as the Iranian rial tumbles. Digital assets like cryptocurrencies let relatives send and receive money across borders. Airlines let Iranians visit relatives abroad, or check on loved ones inside the country.
Quincy Institute’s Parsi said he doubts new sanctions would have an impact on the Iranian government, but they will on the Iranian people.
“I think they will likely be quite impactful and painful for the Iranian people,” he said. “But translating that pain into a shift in their policy is a completely different thing.”
He pointed out that the Trump administration has long known how Tehran reacts to attempts to squeeze it economically. During his first term in 2019, Trump was engaged in an online war with Iran, and economic measures tried to exert more pressure on Tehran, prompting Iran-backed Houthi forces to hit tankers in the Gulf as well as oilfields in Saudi Arabia.
Experts say if Iran’s back is against the wall, it will retaliate.
“If the point of these sanctions is to force them to capitulate, then from what we see in the past, the Iranians would rather escalate than capitulate,” Parsi said.
The attempted use of new sanctions will end up further exposing the limits of US power in the conflict, said the Center for International Policy’s Mortazavi.
“The sanctions will deepen the economic pain facing ordinary Iranians. But years of maximum pressure have shown that economic hardship does not automatically translate into political capitulation,” she said. “If anything, this move exposes the limits of the war: Washington can continue raising the costs for Iran, but it has yet to force Tehran to change course.”
Meanwhile, the continued failure to force Iran to give up has not only made the war itself unpopular in the US, but it has also yielded the lowest approval ratings ever for Trump himself, with just 31 percent of Americans supporting the war, and 33 percent approving of the president’s performance, according to a Reuters/Ipsos poll.
With US midterm elections just a few months away, that is something leaders in Tehran are well aware of, said George Washington University’s Azodi.
“They calculate ahead of midterm elections in the US that the Trump administration is not going to have an appetite for more conflict,” he said. “Iran is most likely going to try to weather the storm, absorb the pain, until the Trump administration gives them a good offer.”
The announcement followed repeated demands by US President Donald Trump that Iranian leaders take actions like dropping their claims over the Strait of Hormuz and return to talks to end its nuclear programme.
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list 2 of 3US launches Economic war on Iran
list 3 of 3Sanctions or missiles? How Gulf will view Trump’s new Iran approach
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Nearly six months into its war on Iran, the US is seeing little impact from its military operations against the country. Crucial military munitions stocks have been depleted, and important tools used to project power globally have been redirected towards Iran.
The long-term implications of the war, analysts say, have pushed the Trump administration to try economic sanctions, but these are unlikely to compel Iran into meeting the demands.
“The United States is returning to economic pressure because military force has failed to deliver the quick victory it expected,” Negar Mortazavi, senior fellow at the US-based Center for International Policy, told Al Jazeera. “The ‘economic D-Day’ declaration underscores the war’s failure so far to force Iran’s surrender or achieve Washington’s political objectives.”
What prompted the new sanctions?
“On paper, the US and Iran are a huge military mismatch,” Ryan Costello, policy director at the National Iranian American Council (NIAC), told Al Jazeera. “The US caused a lot of destruction with its munitions, but so too did Iran with its missiles and drones. So it is hard to describe the war to date as anything but a catastrophic mistake.”
While the US has killed key Iranian political and military leaders, Tehran has leveraged its geography and vast arsenal of drones and missiles, striking out at key oil and gas infrastructure in a region that has depended on drawing investors by offering stability. And Tehran’s choking of traffic through the Strait of Hormuz has brought pain for consumers as far away as the US, who now pay about 40 percent more at the petrol pump than before the war.
“It was a fundamental miscalculation Trump did in the outset that the threat of war will compel the Iranians to surrender,” Trita Parsi, head of the Washington, DC-based Quincy Institute, told Al Jazeera. “Instead they fought back, and they fought back very hard.”
The US supply of missile interceptors has fallen low, according to experts like those at the Washington, DC-based Center for Strategic and International Studies. In late July, the centre found it would take at least three years for the Pentagon to bring supplies back to pre-war levels. The White House has denied any such shortage exists, but analysts say the problem is very real, even if it is temporary, and the Pentagon has been forced to redirect resources away from adversaries like China.
That has included US aircraft carriers. The Pentagon has pulled a key asset away from China, dispatching the USS George Washington from Japan to relieve the USS Abraham Lincoln in the Gulf, whose sailors have been at sea for months longer than planned because of the war.
Key US bases in the region – including the Navy’s Fifth Fleet headquarters in Bahrain – have been damaged or become unsafe for use, adding hundreds of kilometres to supply lines as ships look as far away as the Indian Ocean island of Diego Garcia for sourcing.
“In my judgement, the US Armed Forces have probably permanently lost access to 15 Persian Gulf bases,” retired US Army four-star general Barry R McCaffrey wrote on X.
“I think it became clear the US is running out of runway on this, so the administration pivoted to what it knows best, or has perceived as effective in the past, which is these economic tools,” said Jamal Abdi, head of the NIAC. “Really, it’s a way for the administration to scale back to where it was before this war but present it as this new enhanced pressure policy.”
‘Why would I want to blow up the global financial system?’
Instead of hitting Iran and others doing business with it, Monday’s sanctions announcement turned out to be little more than yet another warning, analysts say. While the US Department of the Treasury did sanction 60 new individuals and entities from around the globe over their business with Iran, it did not include major Chinese banks or others that help Tehran sell its oil.
At least 90 percent of Iran’s crude oil exports end up in China, netting Tehran tens of billions of dollars in revenue. Ending that trade would need the US to confront China far more directly than it is willing to do. In fact, US Treasury Secretary Scott Bessent admitted exactly that on Monday, when he responded to a question from reporters about why the US did not immediately announce sanctions on Chinese entities long known to facilitate oil trade.
“Why would I want to blow up the global financial system?” Bessent responded.
“To me, it’s more a psychological operation than an actual warfare,” Sina Azodi, assistant professor of Middle East Politics at the George Washington University, told Al Jazeera. “It will have an impact, there’s no question, and I’m sure it’s going to scare off people and affect Iran’s economy by creating more chaos and adding uncertainty … but I don’t think it will ultimately change Iranian calculations in the short term.”
Pain for the Iranian people, gain for Washington?
The new US measures seek to expand the scope of already broad restrictions against the Iranian economy, adding the possibility of secondary sanctions against non-Iranian entities dealing with sectors like digital assets, gold, technology, aviation and shipping.
Tensions with Washington have already forced Iranians to contend with things like shortages of medicine and higher fuel prices. Many of the new sectors being targeted are crucial for common Iranians looking to find ways around previous sanctions, analysts point out. Gold can help preserve wealth as the Iranian rial tumbles. Digital assets like cryptocurrencies let relatives send and receive money across borders. Airlines let Iranians visit relatives abroad, or check on loved ones inside the country.
Quincy Institute’s Parsi said he doubts new sanctions would have an impact on the Iranian government, but they will on the Iranian people.
“I think they will likely be quite impactful and painful for the Iranian people,” he said. “But translating that pain into a shift in their policy is a completely different thing.”
He pointed out that the Trump administration has long known how Tehran reacts to attempts to squeeze it economically. During his first term in 2019, Trump was engaged in an online war with Iran, and economic measures tried to exert more pressure on Tehran, prompting Iran-backed Houthi forces to hit tankers in the Gulf as well as oilfields in Saudi Arabia.
Experts say if Iran’s back is against the wall, it will retaliate.
“If the point of these sanctions is to force them to capitulate, then from what we see in the past, the Iranians would rather escalate than capitulate,” Parsi said.
The attempted use of new sanctions will end up further exposing the limits of US power in the conflict, said the Center for International Policy’s Mortazavi.
“The sanctions will deepen the economic pain facing ordinary Iranians. But years of maximum pressure have shown that economic hardship does not automatically translate into political capitulation,” she said. “If anything, this move exposes the limits of the war: Washington can continue raising the costs for Iran, but it has yet to force Tehran to change course.”
Meanwhile, the continued failure to force Iran to give up has not only made the war itself unpopular in the US, but it has also yielded the lowest approval ratings ever for Trump himself, with just 31 percent of Americans supporting the war, and 33 percent approving of the president’s performance, according to a Reuters/Ipsos poll.
With US midterm elections just a few months away, that is something leaders in Tehran are well aware of, said George Washington University’s Azodi.
“They calculate ahead of midterm elections in the US that the Trump administration is not going to have an appetite for more conflict,” he said. “Iran is most likely going to try to weather the storm, absorb the pain, until the Trump administration gives them a good offer.”
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