The looming failure of Operation Economic Outcast

Professor and Director of the Center for Sustainable Development at Columbia University. Advisor on the Middle East and Africa for UN Sustainable Development Solutions Network.

Last week, Pakistan announced that it will not comply with the latest sanctions the United States imposed on Iran and will continue trading with its neighbour. The news came just days after China made a similar statement.

The sanctions announced by US Treasury Secretary Scott Bessent on August 24 under “Operation Economic Outcast “ are supposed to be “the toughest sanctions in history” designed to impose “the greatest coordinated economic isolation in the history of the world”.

Earlier, President Donald Trump called it in a social media post “ECONOMIC D-DAY.” He promised “tremendous economic consequences” for any nation that extended Iran “any type of lifeline”.

Six months of US bombing and naval blockade have produced no US victory, so the plan now is to starve Iran into capitulation. The new approach is illegal, cruel and will fail for several reasons.

To begin with, there is the historical record. Economic sanctions do not bring down governments determined to survive them. Yes, sanctions can impoverish populations, empower the security services that control smuggling and hand the targeted nation a rallying point built on US malice. But they do not topple governments.

Consider, as well, the basic arithmetic of the world oil market. Bessent proposes to remove Iranian oil exports from a world that has already lost a fifth of its oil supply because the Strait of Hormuz is shut. The US proposes to deepen a stagflationary shock already being borne by Europe, Japan, and its other allies, and orders those countries to enforce sanctions that will throttle their economies.

Above all, the campaign is targeted against China, which buys more than 80 percent of Iran’s oil exports. If the US sanction the Bank of China or the Industrial and Commercial Bank of China, Beijing will not respond with a mild diplomatic note. It will restrict its rare earth exports, because it has already run this experiment once and won.