Updated ,first published
Washington: Scott Bessent gave the game away when he acknowledged the danger in taking the very step he had just told the world he was going to take.
When the US treasury secretary was asked why he was not immediately applying sanctions to Chinese banks that finance Iran’s oil trade, he replied: “We are giving everyone the opportunity to remedy bad behaviour. Why would I want to blow up the global financial system?”
Bessent and his boss, Donald Trump, spent the past week building up Monday’s announcement (US time) of crippling new sanctions against Iran and its enablers.
They said it would be “economic D-Day”. An unprecedented campaign of financial pressure. The White House even billed it as the endgame in the US-Israeli war against Iran.
But what Bessent presented fell far short of that. As is often the case with Trump’s bombastic administration, the substance did not match the rhetoric.
There were fresh sanctions against Iran-linked entities, people and ships, but not the big-ticket blacklisting of banks and financial institutions that enable Iranian commerce. To do that, the US would have to hit clearing houses in the United Arab Emirates, Turkey, India and Pakistan. Mostly, they would have to hit China.
Most analysts do not believe Trump would take such a measure with Chinese President Xi Jinping’s visit to the White House just weeks away. There is too much on the line for a US president who is wary of a full-blown trade war with China and who may still hold out hope of a grand bargain with Beijing.
Daniel Fried, a distinguished fellow at think tank the Atlantic Council and former assistant secretary of state for Europe, said the new sanctions were – in Bessent’s own words – a warning shot, not an “economic death blow”.
“None of the moves was a game-changer. The rhetoric was ferocious, but the punch less so,” Fried said. Going hard, he added, “involves costs and risks that Bessent suggested he isn’t eager to bear”.
Once again, these actions point to an administration that wants to end the war in Iran but doesn’t know how. Moreover, it has lacked a clear goal ever since Trump’s ambition of regime change went out the window and is operating within political, economic and military constraints.
Aaron David Miller, a former State Department negotiator and Middle East expert, wonders if the pain these sanctions are supposed to inflict on Iran will have the desired effect.
“What is the desired effect? That’s a core question?” he says. “Is it to break the regime and lay the basis of regime change? Is it to bring the Iranians to the negotiating table so they will somehow give up their leverage and control of the [Strait of Hormuz]? What is the purpose of this?”
Oddly enough, after months of the US trying to engage with the remnants of Iran’s brutal, fundamentalist Islamic regime, Bessent brought the goal of regime change back to the table during his speech on Monday.
He appealed to Iranian soldiers to consider why they might not be receiving their pay. “Ask whether your commanders are leading your country to triumph or to ruin,” he said. “And recall that the Berlin Wall fell when ordinary soldiers decided not to shoot at their own people.”
Their hardline leaders, however, appear unmoved. Iranian Economy Minister Ali Madanizadeh declared Tehran was “fully prepared” for its enemies to launch what he described as “an economic terrorist attack”.
Neither China nor Russia had “accepted” the US measures, he said, predicting that other countries would resist them.
The reality is that to seriously bring the Iranian regime to its knees, the US will need to target Chinese banks. There’s little evidence that Trump and Bessent are prepared to take that risk. Bessent said he preferred to use quiet diplomacy to that end. But that’s the opposite of the megaphone he tried to deploy on Monday.
He likened Operation Economic Outcast to the D-Day landings at Normandy during World War II: a massive Allied effort to confront evil.
Except in this case, the US is counting on co-operation from countries that are not allies. And it has spent the past 18 months confronting – sometimes bullying – friend and foe alike.
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Michael Koziol is the North America correspondent for The Age and Sydney Morning Herald. He is a former Sydney editor, Sun-Herald deputy editor and a federal political reporter in Canberra.Connect via X or email.