Bessent urges US partners to back plans to 'squash' Iran economy

US Treasury Secretary Scott Bessent has called on US allies to support Washington's efforts to cripple Iran's economy. In a CNBC interview, Bessent declared, "We are going to collapse this regime. It is time for our allies and the rest of the world to make a decision, you are either with us or against us." His comments follow President Donald Trump's assertion that any country providing lifelines to Iran's regime will face severe economic repercussions.

Bessent did not disclose the details of the measures Trump's administration is planning, but he emphasized that a pressure campaign on Iran's economy would reduce the necessity for a large-scale military escalation. The ongoing conflict between the US and Iran began in February, with both sides accusing each other of launching attacks. Since then, Iran has closed the Strait of Hormuz, a vital waterway for global oil and gas transit, leading to significant market volatility.

Despite several ceasefire agreements in April and June, the truce has been repeatedly violated, and talks have stalled. In response, Trump is reportedly preparing for the most extensive economic isolation campaign ever enacted against a nation. Bessent stated that the new economic penalties will represent "the greatest coordinated economic isolation in the history of the world."

He warned that if US trading partners continue transactions with Iran, the Treasury and government will exert full force to enforce sanctions on them.

Iran's economy has been severely impacted by decades of international sanctions, leading to widespread protests earlier this year over skyrocketing living costs and inflation. Trump had previously told demonstrators, "Help is on the way," as he encouraged them to continue protesting. In retaliation, the US imposed a blockade on Iranian ports and announced additional sanctions on foreign entities doing business with Tehran.

The June Memorandum of Understanding (MoU) between Iran and the US included a clause stipulating that the US would terminate all types of sanctions against Iran on a predetermined schedule. However, Iran's experience with sanctions suggests that the country will likely find ways to navigate the added economic pressure. While the sanctions may cause some initial impact, experts doubt they will lead to the collapse of the regime.