The TOI correspondent from Washington: US president Donald Trump is preparing to turn his military campaign against Iran into a global economic choke after warning countries providing Tehran with an economic “lifeline” — including through oil purchases, financial institutions, cash transfers or shipping registries — they could face “TREMENDOUS Economic Consequences.”Treasury secretary Scott Bessent is scheduled to unveil what the administration calls an “economic D-Day” designed not merely to punish Tehran but to choke off the foreign trade and financial networks he claims is keeping it afloat. This will involve the broadest use yet of U.S. secondary sanctions against countries, banks, companies, shipping firms and other intermediaries that continue doing business with Iran.The significance is that Washington is moving beyond sanctioning Iran itself to squeezing countries across the globe, including BRICS nations who have a historically close ties with Teheran. “At dawn begins an economic D-Day — the single greatest financial offensive ever marshalled against an adversary,” Bessent wrote in the Financial Times, revealing that Trump had created the conditions for Washington to use “every agency, every authority” available to isolate Iran and sever “every economic lifeline” sustaining the Iranian regime.The administration has already imposed layers of sanctions on Iranian oil, shipping, banks and companies and has used a naval blockade to disrupt Iranian petroleum exports. Bessent described the new strategy as a “one-two punch”: “We have the blockade … and we are going to have the toughest sanctions in history,” he said, adding the aim was to “collapse this regime.”What makes Monday’s announcement different is therefore enforcement and reach. Washington is expected to target the third-country networks through which Iran has continued to sell oil, move money and obtain goods despite decades of sanctions. The message is essentially: doing business with Tehran will increasingly mean choosing between access to Iran and access to the U.S.-dominated financial system.Tehran has responded with a threat that could make the economic offensive a global energy crisis. Mohsen Rezaei, secretary of Iran’s Supreme National Security Council, warned that if the “economic war” continues, “not a single drop of oil will be exported” from the Persian Gulf. Iran has also threatened countries cooperating with U.S with retaliation and has tightened restrictions on vessels transiting the Strait of Hormuz.All this puts Gulf nations and even friends and allies of both countries in an unenviable position. The UAE has already halted much of its trade with Iran, while Saudi Arabia, Qatar, Oman, Kuwait and Bahrain face the risk that Iranian retaliation could hit ports, shipping, energy infrastructure or trade routes. Iran’s ability to disrupt Hormuz gives it a potent weapon: even a partial interruption could send oil and insurance costs sharply higher.For New Delhi, the immediate concern is trade rather than strategic alignment. Indian exports of rice, tea and pharmaceuticals to Iran have increasingly moved through Dubai, and the UAE’s restrictions combined with tougher U.S. sanctions could severely disrupt those flows. Bilateral trade has already fallen more than 90% from its 2018-19 peak of about $17 billion.China will be the bigger test for Washington. Beijing is Iran’s principal oil customer and has continued buying discounted Iranian crude through independent refineries and opaque shipping and payment networks. Iranian shipments to China fell to about 534,000 barrels a day in August from 823,000 in July, but flows have remained substantial. Bessent has warned Beijing that cooperation would be in its own interest, but China, armed with plenty of leverage ahead of President Xi’s visit to the U.S in two weeks, has rejected unilateral sanctions, saying that they “do not help resolve the problem.”All this makes the “economic D-Day” potentially much bigger than an Iran policy. If Washington actually sanctions major Indian and Chinese refiners or financial institutions, Trump’s Iran campaign could collide with his fragile economic detente with New Delhi and Beijing. The result could be a sanctions war layered on top of the Middle East war — with oil prices, global inflation and the international financial system caught in the crossfire.
