On 19 August, US President Donald Trump announced on social media that his administration would carry out what he called “the most crushing economic operation ever conducted against any country”. He named it “Economic D-Day”.
Trump threatened “massive economic consequences” against any country providing Iran with “any kind of lifeline”. After six months of US bombing and a naval blockade without achieving victory, Washington’s new plan is to starve Iran into submission.
The approach is illegal, harsh and destined to fail.
US Treasury Secretary Scott Bessent told CNBC that Washington would impose “the toughest sanctions in history”, organise “the greatest coordinated economic isolation in the history of the world”, and effectively tell every other government: “You are either with us or against us.”
In an article published in the Financial Times on the same day, Bessent wrote that “the world must understand that our objective is to cut off every economic lifeline”.
His threats were not limited to Iran. He warned other countries that “any remaining connection to Tehran will accelerate the economic ostracism of countries and entities”.
On 24 August, the US Treasury Department announced “Operation Economic Outcast”, describing it as an unprecedented whole-of-government economic campaign against Iran and those dealing with it.
The Office of Foreign Assets Control issued five sectoral determinations under Executive Order 13902 covering digital assets, technology, gold, aviation and maritime shipping. These measures allow sanctions to be imposed on any person, wherever they are based, operating in those sectors of the Iranian economy.
Sanctions Do Not Topple Governments Determined to Survive
Economic sanctions do not overthrow governments determined to remain in power.
They can impoverish populations, strengthen security institutions that control smuggling networks, and provide the targeted state with a domestic rallying point built around resentment of the United States. But they do not necessarily remove governments.
The president and his Treasury secretary appear comfortable assuming the role of economic coercers.
Article 2(4) of the United Nations Charter prohibits the threat or use of force against the territorial integrity or political independence of any state.
Yet the US retreat from the UN-centred multilateral system extends far beyond Iran.
Of the United Nations’ 193 member states, the United States has become one of the least aligned with UN-based multilateralism. In January 2026, Washington withdrew from more than 60 international organisations, while in 2025 it voted with the international majority in only 5 per cent of recorded UN General Assembly resolutions.
US policy is likely to continue failing for reasons that are not difficult to identify.
The historical record is the first.
Economic sanctions do not topple governments determined to survive. They may deepen poverty, empower security structures that profit from sanctions evasion, and reinforce domestic hostility towards Washington, but they do not necessarily produce regime collapse.
The Oil Market Makes the Strategy Even Riskier
There is also the basic arithmetic of the global oil market.
Bessent is proposing to remove Iranian oil exports from a global market that has already lost one-fifth of its oil supply because of the closure of the Strait of Hormuz.
In effect, Washington is proposing to deepen a stagflationary shock already affecting Europe, Japan and other US allies, while simultaneously instructing those same countries to enforce sanctions that could further damage their own economies.
More importantly, the campaign is fundamentally directed at China, which purchases more than 80 per cent of Iran’s oil exports.
If Washington sanctions the Bank of China or the Industrial and Commercial Bank of China, Beijing is unlikely to respond with a polite diplomatic note.
It could instead restrict exports of rare earth minerals, having already tested that strategy once and emerged in a stronger position, as events last year demonstrated.
Beijing has already issued its response.
“China’s cooperation with Iran is conducted within the framework of international law and therefore should not be disrupted,” it said. “China is closely following developments and will do whatever is necessary to firmly defend its legitimate rights and interests.”
China’s Rare Earth Leverage
In April 2025, China imposed an export licensing regime on heavy rare earth minerals.
Within weeks, US and European car manufacturers slowed or halted assembly lines because of shortages of magnets produced using those minerals.
In October 2025, China announced a much broader package of restrictions.
Washington then retreated and agreed to withdraw recently expanded export controls in exchange for Beijing suspending its new measures for one year.
The April controls were never lifted, while the suspension of the October measures expires on 10 November 2026.
Bessent has therefore chosen this particular moment, only 11 weeks before China’s broader rare earth regime returns and just weeks before a planned visit by Xi Jinping to Washington, to tell Beijing that it must either stand with the United States or against it.
This is a trap Washington has set for itself.
Three Conclusions Other Governments May Draw
Every government should draw three conclusions.
First, the United States has turned away from the UN Charter.
Second, American security guarantees cannot be assumed to be reliable.
Third, dependence on dollar-based trade leaves countries exposed to US sanctions.
This helps explain why governments are moving towards new defence arrangements, including the Mecca agreement between Saudi Arabia, Turkey and Pakistan.
Countries are also increasingly moving away from settlement in US dollars and reducing the proportion of US Treasury securities held in their foreign reserves.
They are also turning towards Chinese open-weight artificial intelligence models to meet their AI needs at a fraction of the cost of closed American models.
The Thucydides Warning
Thucydides’ ancient account of the Peloponnesian War is often read today as a mirror of US-Chinese competition.
Its most famous line comes from the Athenian leaders’ exchange with the people of Melos in 416 BC: “The strong do what they can, and the weak suffer what they must.”
Today, the United States speaks to Iran and other countries in a similar tone.
Yet only 12 years after that exchange, Athens itself was defeated by Sparta.
Hubris precedes collapse, and no government today displays greater arrogance than the United States under Donald Trump and his Treasury enforcer Scott Bessent.
Governments around the world are unlikely to follow Washington blindly into disaster.
