In these very days, dozens of US economic attachés around the world are meeting with representatives of their host countries, handing over files packed with information. Each file contains a comprehensive mapping of the economic ties between the relevant country and Iran. The Trump administration is demanding a sweeping, complete severance of all these connections.
The economic war declared by the US on Iran is now entering its decisive phase. After successfully breaking the IRGC maritime blockade on the Strait of Hormuz, which had turned into a trap solely for Iranian oil as a result of America’s own naval blockade, Washington is now determined to bring about the regime's collapse, or its surrender, through economic strangulation.
To this end, the US has targeted five key sectors: gold and crypto, which have become the Iranian regime's primary alternative payment methods following the collapse of the rial; shipping and aviation, logistical lifeline through which Tehran still manages limited economic ties with the outside world; and the technology sector, linked to the smuggling of military equipment, spare parts, and other critical components, with an emphasis on Iran's missile and drone industries.
All of these sectors were under sanctions even before US Treasury Secretary Scott Bessent announced the launch of Operation Economic Outcast, also dubbed "Economic D-Day." What has changed is the scope and intensity of the sanctions, and most importantly, their transformation into secondary sanctions.
This means that whereas previously the US imposed sanctions on a specific refinery or logistics company doing business with Iran, the net is now widening exponentially. Anyone doing business with Iran will be excluded from the US financial system, barred from doing business in the US, blocked from transferring funds via the SWIFT system (the main messaging network through which international payments are initiated) and their assets in America, if any exist, will be seized.
This applies not only to individuals and corporate entities, but to entire nations. In short, what America is now telling the world is this: you must choose whether you want to do business with Iran or with us, because doing both is no longer possible.
For the Iranian regime, this represents a greater existential threat than any bomb. Images of long lines at gas stations in Tehran and regional cities are just the tip of the iceberg. Beneath the surface, middle-class Iranians are already cutting back on purchases of the most basic essentials, including food. There are also initial reports, though difficult to verify, of the regime's growing struggle to pay salaries to security forces, a massive danger for a government that relies on its bayonets.
Within the political and defence establishments in Israel, as well as across most of the US administration, there is near consensus that if President Trump persists with his "maximum economic pressure" policy and implements sanctions strictly, the regime's breaking point will arrive. Put starkly, one could say it will occur the moment the hardships for the Iranian public equal the fear of being shot in the streets. As cruel as it sounds, for a person to seriously consider protesting against a regime that will not hesitate to open fire, they must internalise that the alternative is at best a life not worth living.
When might this point be reached? That is the trillion-dollar question that no one can answer. However, it can be estimated that it is slightly further away than we might hope, not two to three months, but closer to six months or even a year. Years of living under brutal oppression and economic sanctions have accustomed the Iranian public to hardship and to living with very little. Their breaking threshold is high, but it is not infinite.
Yet, will the US administration go all the way and enforce sanctions without exceptions? A positive indicator occurred about ten days ago when the United Arab Emirates announced, following US pressure as well as outrage in Abu Dhabi over Iranian attacks, that it was cutting all trade ties with Iran. This is a significant move, not only because the UAE is one of Iran's largest trading partners, but primarily because it serves as the main hub for evading sanctions.
For years, mainly through Dubai, banned goods from China and other nations flowed almost unhindered to the other side of the Persian Gulf into Iran. Goods arrived at the free trade zone surrounding the port of Jebel Ali, where shell companies could easily be established to repackage products and issue fictitious invoices and shipping documents as if they originated in the UAE.
Over those years, Washington identified hundreds of companies operating under this scheme and sanctioned them, but refrained from imposing secondary sanctions on the banks and service providers that enabled their operations, and above all, gave a pass to its strategic ally, the UAE. Similarly, UAE banks served as conduits for laundering Iranian financial activity, allowing the regime to continue trading globally. Now, all of that has ended. It can be assumed that trade will not be severed overnight and Iran will manage to sneak certain products through shell companies, but it has become significantly harder.
Even so, the elephant in the room remains: China. Washington can, with great effort, force key Iranian trading partners like the UAE, Iraq, and perhaps even Turkey to cut or drastically reduce their economic ties with Tehran, but the task is vastly more complex when dealing with the Chinese giant. Beijing, which until the US naval blockade of Hormuz purchased around 90 per cent of Iran's exported oil, has already issued a statement labelling the new sanctions "unilateral and illegal."
China, will almost certainly not comply fully and automatically with US sanctions. Unlike other countries, its relationship with the U.S. resembles a balance of terror far more than a client-patron dynamic. The Chinese hold significant leverage over the US, though Washington also possesses leverage over Beijing. It is likely that this complex situation will lead to some form of compromise, under which Chinese trade with Iran will not cease entirely but will be significantly scaled back.
For now, Iran is managing, albeit very partially, to bypass the naval blockade on Hormuz via two primary routes. First, through the Caspian Sea, using cargo ships that still sail between Russia's southern coast and Iran's northern coast. This is a vulnerable route that was already struck by the Israeli Air Force during Operation Epic Fury/Roaring Lion, and is also constrained by the limited number of oil tankers operating in the Caspian Sea. Still, wheat, milk, and basic commodities flow through it from Russia to Iran, while drones and arms components travel in the opposite direction to support Russia's endless war in Ukraine.
The second route involves land border crossings. In talks between senior Israeli and US officials in recent months, the possibility of expanding the economic blockade to the land was raised. Iran shares thousands of kilometres of borders with seven countries (Iraq, Turkey, Armenia, Azerbaijan, Turkmenistan, Afghanistan, and Pakistan), but trade can be significantly disrupted by closing border checkpoints.
While dozens of crossings exist, only a fraction handle significant volumes of goods. Given the near-total air superiority achieved by Israel and the US over Iranian skies, maintaining a constant presence of armed drones above these checkpoints is not unreasonable. However, a land blockade may now materialise without direct kinetic threats, as the sweeping US demand to halt all commercial activity with Iran also applies to goods moved via land routes.
Statements emanating from inside Iran already indicate immense pressure, at least among those considered part of the regime's more pragmatic wing. President Pezeshkian called in recent days to "end the war now, from a position of strength and preservation of our dignity," while Parliament Speaker Ghalibaf was quoted stating that Iran cannot survive ongoing economic strangulation for long. Yet, in the rough division between the "suit-wearers" and the "gun-holders," actual power in Iran today resides with the latter.
IRGC officials, led by Ahmad Vahidi, adhere to a hardline stance and continue demanding Iranian sovereignty over Hormuz, even as that demand appears increasingly detached from reality with every passing day. The status of Supreme Leader Mojtaba Khamenei remains unclear. He is likely alive but severely injured, yet to the extent he is involved in decision-making, the Western assumption is that he sides with the IRGC’s hard line.
Even so, a regime collapse is not guaranteed, and it may be preceded by a resumption of kinetic warfare initiated by Iran itself. If Tehran senses that its breaking point is near, a decision may be made to reignite the war while posing a direct threat to Gulf state oil infrastructure, the last strategic card remaining in the regime's hands after losing most of its ability to disrupt shipping in Hormuz. This scenario most concerns President Trump and his allies, as it could allow the Iranians to demand a more favourable settlement to end the conflict.
At this juncture, the war favours America and Israel, but it has not yet been decided. The test of Operation Economic Outcast will lie in its implementation. It is difficult to see America refraining entirely from granting exemptions or turning a blind eye toward China and a few strategic partners, but even if the threats from President Trump and Treasury Secretary Bessent are implemented at only 70 per cent, that may well be enough to bring about the regime's collapse. The keywords remain patience, determination, and endurance.
Tamir Morag is the diplomatic correspondent for Israel’s TV channel and news site Channel 14
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