Are ‘D-Day’ Sanctions a Bridge Too Far or Not Far Enough?

On August 24, 2023, the U.S. Department of the Treasury released a series of secondary sanctions against Iran, inspired by the D-Day landings of World War II. These sanctions target Iran's digital assets, technology, gold, aviation, and shipping sectors. Treasury Secretary Scott Bessent likened the sanctions to the beginning of a campaign to "drive the enemy from its positions, including those in third countries," aiming to sever Iran's economic lifelines.

Treasury, State Department, and Department of War personnel have coordinated with international partners to ensure swift implementation of the sanctions. The Treasury stated that any country provided with a timeline to cease Iran-related activities, with consequences for non-compliant entities. Kari Heerman, a Brookings senior fellow, noted that the sanctions might deter international companies from doing business in Iran, but their immediate impact could be excessive compliance due to the new designations.

The sanctions prohibit transactions involving property, funds, goods, and services connected to designated individuals, regardless of their location. Over 60 entities, individuals, and vessels in various regions have already been sanctioned. The new sanctions focus on entities further up Iran's supply chains, avoiding major Chinese financial institutions. However, targeting a major Chinese bank could have a more significant deterrent effect but might provoke Chinese retaliation, affecting other U.S. objectives.

The Iranian rial experienced a significant drop in value shortly after the sanctions announcement, trading at around 2 million rials to a single U.S. dollar. The extent to which international trade partners respond to these sanctions will determine if the U.S. has overstepped its bounds.