The Trump administration calls its policy towards Iran one of “maximum pressure.” By its latest move, it would more properly be called “siege and starve,” as the feigned interest in establishing leverage for comprehensive negotiations with Iran has been replaced by a full-throttle push to pulverize Iran’s economy and collapse its social and economic life.
The Trump administration has now designated Iran’s entire financial sector under Executive Order (“E.O.”) 13902, subjecting all Iranian financial institutions — formal or otherwise — to an effective international boycott. Even with the crushing sanctions thus far visited on Iran, this move will have devastating impact, severing the limited ties that connect the Iranian people to the outside world and that allow them to sustain some modicum of economic life. Disconnected from the global financial system, unable to conduct the most basic of cross-border financial transactions, and denied their limited currency reserves abroad, Iran’s economy will be forced into the dark, surviving, if at all, on a subterranean diet of barter and shell companies.
The humanitarian impact could well be significant. The Iranian people deserve more than the most basic of medicines and foodstuffs, but even those will be made difficult to come by as a result of this policy. Even as the Trump administration claims that it will preserve existing humanitarian exceptions, banks that remain linked to Iran’s economy will sever those relationships, unsure of what the future holds, unclear about the financial benefits of maintaining trade with Iran, and fearful of being sanctioned for dealing with Iran’s banks in any capacity, humanitarian or otherwise.
Those who practice U.S. sanctions have long been cognizant of the peculiar challenges conducting trade in humanitarian goods with Iran, which existed even when significant parts of Iran’s economy remained open for business. Those challenges will now not just be exacerbated but will erect a prohibitive bar. No one, in good-faith, could advise that trade in humanitarian goods with Iran is without sanctions risk.
Some, like those at the Foundation for Defense of Democracies — the brain trust for the Trump administration’s Iran policy and a group whose views generally align with Israel’s Likud Party — will dispute all this, claiming that the new policy leaves open clear channels for humanitarian trade with Iran.