Bessent unveils sanctions designed to cripple Iran

Treasury Secretary Scott Bessent announced on Monday that the U.S. will impose punishing sanctions on countries and entities that do business with Iran — an attempt to bring the country to heel absent renewed military strikes.

Why it matters: The move is aimed at ratcheting up pressure on the Iranian regime amid the current "no war, no deal" limbo.

• U.S. officials say the expanded "secondary" sanctions are expected to be the main course of action against Iran until at least after the midterm elections, when a new military campaign could again be on the table.

Yes, but: While Bessent has been conducting a PR buildup for the last 10 days over an "economic D-Day" against Iran, the reality is more complicated.

• The U.S. already has significant secondary sanctions targeting countries that trade with Iran, particularly its oil sector. But the U.S., including the current administration, has only partially enforced them.
• For the new economic pressure campaign to be effective, the U.S. will need to mobilize its Western allies to form a coalition to enforce the measures against Iran.
• The Trump administration will also have to aggressively confront countries like China, Russia, India, Pakistan, Qatar, Turkey and others that still trade with Iran, something it hasn't done so far.

Reality check: Iran has been under international sanctions for years, but the regime hasn't significantly changed its behavior in the region or its posture regarding its nuclear program.

State of play: The war has sunk the Iranian economy into an even deeper crisis. Its currency, the rial, hit a new low Monday, dropping to 2 million rials to the U.S. dollar.

• The current U.S. naval blockade has prevented Iran from exporting most of its oil, cutting off the lifeblood of the economy.
• U.S. officials say Iran is struggling to establish alternative transport routes over land or sea, eroding its ability to provide basic goods and services.
• Soaring inflation is driving up food prices.
• President Trump and other U.S. officials say the regime is struggling to pay the salaries of government workers, including the military and police.
• "Their system is designed to insulate the elites, but even their purchasing power is plummeting, and some of them — for the first time in their lives — have faced uncertainty about whether their paychecks will arrive on time," a U.S. official said.

The other side: The Iranian leadership has tried to downplay U.S. threats of a new economic isolation push and even threatened to retaliate against countries that cooperate with the sanctions.

• At the same time, several senior Iranian leaders have acknowledged that the threat of an economic collapse is real.
• Iranian President Masoud Pezeshkian said the government does not deny the economic shortages and stressed that Iran should end the war now, while it is in a position of strength.
• The speaker of the Iranian parliament, Mohammad Bagher Ghalibaf, who is also the country's chief negotiator, said in a meeting with Iranian and Iraqi businessmen in Baghdad last week that Iran will not be able to sustain its security without a strong economy.
• "No matter how much military power we have," he said, "if people are hungry and we don't have financial circulation, economic growth and domestic production, we will not endure."