Trump's Economic Levers on Iran Risk Backfiring
US President Donald Trump is relying on economic pressure to force Iran to reopen the Strait of Hormuz, but this strategy carries significant risks. With over 6,000 sanctions in place against various sectors, including financial, energy, and cryptocurrency, Iran's economy is already reeling. Inflation has accelerated to a 53.9% pace from April 20 to May 20, compared to 36.8% over the same period last year, according to figures from the central bank.
The International Monetary Fund expects a contraction of 6% in Iran's economy this year, and the rial has sunk to an all-time low against the dollar. Despite these dire economic indicators, Tehran remains defiant, saying it will not be 'strangled' by sanctions. The question is which of Trump's remaining economic levers he will pull, and at what cost.
One option is to target Iran's shadow banking system, which relies on exchange houses and foreign companies to sell oil and other products abroad. Last week, the Treasury clamped down on crypto exchanges and clandestine currency networks, but experts question whether this will have a meaningful impact on Iran's economy.