The US has declared the "final phase" of the war against Iran, increasing financial pressure on Tehran to the fullest in order to force it to capitulate. However, the regime is well prepared and can significantly affect the world economy.
The US has declared an economic "D-Day" against Iran - "the largest financial offensive ever organized against a rival," announced US Treasury Secretary Scott Besant. Besant warned that countries that trade with Iran and buy oil from the Islamic Republic must end their relations with the regime, otherwise they will be subject to severe sanctions. The goal is to cut off all flow of funds to the regime, including through hidden transactions and digital payments. “This is a long-term operation aimed at depriving Iran of all opportunities,” explained the US Treasury Secretary.
Will Washington succeed in this way in delivering a blow that will neutralize Tehran? Or will the opposite happen - these threats and possible economic moves will further increase the cost of this war for the entire world?
Is the US ready for another head-on clash with China?
China buys over 80% of the oil exported from Iran. So far, the Trump administration has avoided directly attacking Beijing over its ties with Tehran, and the timing is delicate because in just a month, Xi Jinping will visit Washington, notes the “New York Times”, for the first time in a decade.
A strong confrontation between the US and China or an open trade war between the two countries will lead to severe consequences for global economic markets. Oil will become more expensive, imports and exports will become more complicated, and the price of a number of goods and raw materials will soar.
How can Iran respond?
Iran responded immediately to the American threats. Iranian Economy Minister Ali Madanizadeh said that Tehran is “fully prepared“ for the sanctions and that they will lead to “another defeat“ for the US. Iran has said it is ready to sanction or seize 46 vessels that violated protocols for transiting the Strait of Hormuz. Tehran has said it is ready to respond to "American economic terrorism," and oil prices have immediately risen.
However, Iran could escalate the situation further and make the war more expensive for both US allies in the Middle East and the world. "If the economic war continues, not a drop of oil will be exported - neither through the Strait of Hormuz nor from any point in the Persian Gulf," threatened Mohsen Rezaei, secretary of Iran's Supreme National Security Council.
The Revolutionary Guard still has the ability to attack ships trying to leave the Persian Gulf with drones, missiles and boats. At the same time, the Houthis are severely restricting passage through the Red Sea, threatening to block any ship exporting oil from Saudi Arabia through the Bab el-Mandeb Strait. Any attack like the one on a ship near the Saudi oil port of Yanbu yesterday and the drone attack on the Suez Canal that we witnessed in early August can only lead to more uncertainty and higher fuel prices, writes Reuters.
Iran can also rely on subversion and terrorism carried out by its proxies or mercenaries. The electricity and water supply networks of the Persian Gulf states are a prime target. At the same time, the West is not spared. On Monday, Britain said hackers linked to Iran had disrupted a small power plant, while US authorities accused Tehran of being most likely behind cyberattacks on water treatment plants in Minnesota.
Has Iran prepared for a larger escalation?
Iranian authorities have used the days following the signing of a ceasefire memorandum with the US and Israel to prepare for a larger escalation, the “Wall Street Journal" revealed, citing its sources.
The publication writes that Tehran was convinced that the agreement would be used to impose control over the world economy, followed by an even heavier blow to the Islamic Republic. Therefore, counterintelligence operations were strengthened, as was the production of drones and missiles. The services of Arab countries intercepted signals that Iran was coordinating its actions with its proxy groups in Iraq and Yemen to expand the war and increase its cost to the economy. It was planned to increase pressure on weaker countries in the region, such as Kuwait. At the same time, missiles and military systems were moved near the Red Sea, so as to facilitate attacks on Saudi Arabian ships.
“We took advantage of the ceasefire”, admitted Revolutionary Guard spokesman Hossein Mohebbi in an interview with the organization-affiliated Tasnim news agency in July. “We have expanded our capabilities, accelerated the pace of missile production and improved their accuracy.” The organization's plans also include operations to cut internet cables in the Persian Gulf and provoke political clashes in neighboring countries with Shiite minorities.
No danger of new protests
In recent months, the Revolutionary Guard, which is a large-scale military, political and economic structure in Iran and includes more than 200,000 people, has tightened its grip on power and control over institutions and public life in the country. Iran's new supreme leader - Mojtaba Khamenei - is considered close to the Revolutionary Guard, and the “Basij” militias, which can mobilize millions, are also subordinate to it. Even if the Iranian population continues to pay a high economic price for the escalating war with the United States, it is these paramilitary structures that can suppress discontent, as they have done in the past. Donald Trump and the Republicans in the United States, who will go to key midterm elections in less than three months, do not have such a “luxury”.