Washington is once again turning to one of its most powerful foreign-policy tools: access to the U.S. financial system. The latest warnings are characteristically severe: Treasury Secretary Scott Bessent has threatened immediate expulsion from the U.S. financial system for any entity assisting Iran with money laundering, while the administration threatens damaging sanctions against any country refusing to sever economic ties with Iran.
At first glance, the strategy appears to be producing results. U.S. President Donald Trump has declared that Iran is “collapsing”, pointing to a currency that has plummeted to a record low against the dollar. The economic data paints a bleak picture of internal strain, and there is no doubt that the Iranian population is enduring severe financial suffering.
However, the apparent success of the strategy may be premature, resting on a fundamental misreading of both Iranian history and regional geography.
First, there is the error of equating economic pain with political collapse. Iran’s economic deterioration is measurable, but economic pain does not automatically translate into political collapse. Decades of sanctions and isolation have forced the country to develop mechanisms for enduring prolonged external pressure.
This resilience was on full display in the reactions of Iranian officials. Rather than projecting panic, Finance Minister Ali Madanizadeh claimed Tehran is fully prepared to counter any impending sanctions. Meanwhile, top negotiator Mohammad Bagher Ghalibaf simply brushed off the U.S. threats entirely. While some of this is undoubtedly bravado for public consumption, it reflects a deeply ingrained regime posture: defiance in the face of external pressure is a core pillar of Tehran’s identity.
Second, and perhaps more importantly, Washington’s unilateral financial decrees are colliding with regional geopolitical realities. Tehran is not sitting idly by as its financial lifelines are squeezed; instead, it is actively cultivating regional diplomatic networks to bypass and blunt the impact of Western coercion. Iran’s ability to withstand economic pressure, however, does not depend solely on its domestic capacity for endurance. It is also shaped by the regional relationships that give Tehran alternative diplomatic, economic and strategic channels.
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