The sixth month active war between U.S., Israel and Iran had paused, but post the anticipated failure of Economic Outcast strategy, U.S. and Iran have reverted to attacking each other. However, war by other means also continues. All of this has left U.S. unipolar status challenged, Israel on the back foot, and Iran, despite being burnt and bruised, squarely back in the game. Pakistan and Qatar continue with mediating attempts, having had the green both from U.S. and Iran.

The recent pitch by the U.S. to squeeze Iran economically may hurt Iran more than it cares to admit. Iranian leaders have acknowledged that foreign trade has shrunk by a third due to American sanctions and blockade, but are still not ready to buckle under the pressure. Iran needs the deal desperately but it is not ready for the kind of surrender Trump is looking for. The humiliation and capitulation it wants to inflict on Iran will not be achieved through the “Economic Outcast Strategy” laid out by Scott Bessent, the U.S. Treasury Secretary.

What was supposed to be a short military campaign and excursion as per Donald Trump, has mitigated into global economic pain through the weaponization of the right of free navigation. Mediation remains on the table but every warring party wants it on its own terms; not allowing a middle ground win-win to emerge. Even the White House continues to talk of an endgame, but the path to it keeps changing.

The so called new pitch the “Economic D-Day” is not an entirely new strategy. The U.S. has used sanctions and economic isolation against Iran for decades. The most relevant precedent remains Trump’s first-term “maximum pressure” campaign of 2018. It caused severe economic damage and sharply reduced Iran’s oil exports, but it did not produce the political capitulation Washington had sought. Iran instead expanded its nuclear activities and continued its regional strategy of investing in proxies.

The difference today is that Washington is trying to squeeze Iran in a world where compliance to the US call is not immediate. The success of Operation Economic Outcast largely hinges on China, which imports 90% of Iran’s oil. China has already shown reluctance to accept Washington’s terms. It has ordered firms not to comply with US sanctions targeting Chinese buyers of Iranian oil. Beijing has continued purchasing Iranian crude oil using overland trade routes that do not depend on the passage through the Strait of Hormuz. It has also warned it will take “all necessary measures” if Chinese interests are targeted. The Trump administration is attempting to reset its relations with China, with Xi Jinping set to visit the White House on September 24th. This may put Washington in a position of weakness vis-a-vis China. The sword of mid-term elections also remains in place. Iran wants a resolution maximum by October, whatever be the results of the mid-term it will embolden Trump.

The more countries find ways around the sanctions regime, the harder economic isolation becomes. Iran has also warned that it could prevent Gulf oil exports through routes designed to bypass Hormuz. Tehran has condemned the measures as “state terrorism” and urged governments around the world not to enforce them. It also called the sanctions a “crime against humanity” that threatens civilian livelihoods, and appealed to the UN and other international bodies to intervene.

Washington has warned countries to cut business ties with Iran or face secondary sanctions. This is easier said than done. US officials are on record saying that imposition of secondary sanctions announced will slow down global economy having a direct impact on the pump even in the US. Thus, the Treasury Department stopped short of imposing penalties against major Iranian trade partners such as China and India.

Tehran’s response has been equally unambiguous. Mohsen Rezaei, the new Secretary of Iran’s Supreme National Security Council, has warned that any country’s participation in or support for the U.S. economic campaign will be considered an “act of war”. He has also warned that if the economic war continues, not a single drop of oil will be exported through the Strait of Hormuz or from the Persian Gulf. Iran is not succumbing. It is planning to hit back. What we have at best is a stalemate.

Abdul Aziz Sagar, Chairman of the Saudi-based Gulf Research Center, said Gulf governments are unconvinced that sanctions alone can rapidly alter Iranian behavior given the leadership’s resilience and ability to maintain internal control. The biggest nightmare of the Gulf States and US-Israel is that finale would let Iran claim a victory. The perception is already there; voices from inside the US and the world have conceded to the emergence of a new non-compliant Iran.

There is an irony in this. While Washington is intensifying economic pressure, it is also looking for a way back into negotiations. Pakistan is once again seen trying to persuade Iran to return to the negotiating table along with Qatar.

The larger issue is no longer only Iran. The war has exposed the limits of military power, the limits of economic coercion and the vulnerabilities of a region that has long depended on an external security provider.

A more pertinent query, is whether West Asia is moving towards an indigenous security architecture, where countries such as Saudi Arabia, Türkiye, Pakistan and the Gulf states have a greater role in managing their own security environment. A thrust Iran strongly supports. The stalemate may continue but the security architecture of West Asia has changed forever.

Link: https://pakobserver.net/economic-out-casting-of-iran-the-new-front/