Another failed strategy?

Maleeha Lodhi Published August 31, 2026 Updated August 31, 2026 08: 13am.

Key points

• On what US Treasury Secretary Scott Bessent called Economic D-Day last week, he confirmed measures to sever Iran's "financial lifelines" and force a "regime endgame".
• PRESIDENT Donald Trump's declaration of economic war on Iran is projected to backfire just like his bombing campaign failed to force Iran to surrender.
• Alongside the financial measures Treasury Secretary Bessent cautioned the US would punish and isolate countries that continued to trade with Iran and had dealings with its financial system.
• Bessent remarked Trump would be phoning some world leaders to ask them to cease their financial interactions with Tehran.

Maleeha Lodhi Published August 31, 2026 Updated August 31, 2026 08: 13am. Join our Whatsapp Channel. Add Dawn as a trusted source.

PRESIDENT Donald Trump's declaration of economic war on Iran is projected to backfire just like his bombing campaign failed to force Iran to surrender. It additionally exposed the limits of US military options. Wrapped in hyperbolic language, his threats to impose the "toughest sanctions in history" and "the most crushing economic operation ever taken against any country" were met with defiance by Tehran. Iran's Foreign Minister Abbas Araghchi dismissed them, saying "We have seen this movie before". Iranian authorities cautioned of halting all oil flows from the Gulf and delivering an "earthquake-like" retaliation if Washington followed through.

On what US Treasury Secretary Scott Bessent called Economic D-Day last week, he confirmed measures to sever Iran's "financial lifelines" and force a "regime endgame". But earlier, Trump telephoned Pakistan's chief of defence forces, Field Marshal Asim Munir and asked him to persuade Iran to resume negotiations. FM Munir then headed to Tehran for discussions with Iranian leaders. For all his blusterous rhetoric regarding "crippling Iran" the outreach was another sign of Trump's desperation for a agreement to end the six-month-old conflict. His flailing actions indicated his growing frustration with a deeply unpopular war in his country. According to authorities, Pakistan called on Trump to allow time for diplomacy to produce results.

Even as mediation efforts obtained underway, the Trump administration went ahead with the announcement to ratchet up "unprecedented" pressure on Iran and compel it to return to the negotiating table. Iranian authorities responded by saying they were "fully prepared" to counter the sanctions. It were an "act of state and economic terrorism". Bessent widened the scope of economic sanctions against Iran but offered few details of what he called 'Operation Economic Outcast'. Sanctions targeted Iran's digital assets, technology, gold, aviation and shipping sectors. It involved action against 60 entities, individuals and vessels.

Alongside the financial measures Treasury Secretary Bessent cautioned the US would punish and isolate countries that continued to trade with Iran and had dealings with its financial system. His 'either you are with us or against us' mantra had a wearingly familiar ring. Trump had already issued the same ultimatum, threatening economic penalties against any country doing business with Iran. Tehran responded in kind. It cautioned that any state, including its neighbours, that joined US economic warfare would be treated as "an enemy".

Trump's economic warfare will be as futile as his bombing campaign to force Iran to surrender.

Bessent remarked Trump would be phoning some world leaders to ask them to cease their financial interactions with Tehran. But he named no target countries for secondary sanctions. Nor did he say what the penalties would be or specify any timeline for enforcement. No immediate action was taken against Iran's biggest trading partners. That suggested that the door to de-escalation was being kept open. In any case, it was hardly the first time the tool of sanctions was deployed. Iran has been under multiple US sanctions for four decades and survived them. It seems ready to absorb the pain from this round too. It was additionally not the first time Trump targeted Iran's trading partners. Before the war began, he confirmed tariffs on countries with business ties to Iran. The plan fizzled out and was shortly overtaken by the US-Israeli military assault on Iran.

For now, only the UAE has declared a halt to trade and financial transactions with Iran. This was before Bessent's announcement and ostensibly in response to ballistic missiles being fired at it. It iran denied. The suspension will add to Iran's troubles with its fragile economy facing high inflation and a weakening currency. But it is unclear how and the extent to which the Emirati decision will be enforced. Qatar described US sanctions as unilateral and called instead for mediation efforts.

For context, the US depends on the cooperation of other nations to achieve the goals of its punitive economic campaign. China has already pushed back saying pressure tactics won't work. After Bessent's threat, a Chinese foreign ministry spokesman remarked China "will take all necessary measures to firmly safeguard its own interests" from "illegal unilateral sanctions". Beijing cautioned of retaliation if the US imposes secondary sanctions. Washington is unlikely to go beyond threats and want a showdown with its biggest trading partner, especially with a Trump-President Xi Jinping summit coming up next month in Washington. Too much is at stake in that relationship to risk that.

Notably, the US expectation that countries will fall in line assumes they will offer preference to ingratiating themselves with Washington over their own economic interests. This will turn out to be another miscalculation. Plenty of analysts additionally see it as unsustainable and resting on mistaken assumptions. As Robert Kagan writes in The Atlantic, "nations that depend on access to the strait – Japan and South Korea, for example – will have to choose between access to a reliable energy supply and participation in American-backed sanctions". It is improbable they will choose solidarity with Trump's Washington over their economic interests. He additionally points out that "the idea that, having survived both military strikes and sanctions, Iran will now succumb to sanctions alone is deluded".

Meanwhile, mediation efforts by Pakistan and Gulf countries are intensifying and making headway, according to credible reports. This suggests the warring sides haven't given up on diplomacy. Behind the tough rhetoric of both countries, backchannel communication is aimed at getting negotiations restarted. Tehran wants the US to affirm and abide by the Memorandum of Understanding. Trump wants the Strait of Hormuz to reopen. Iran is reportedly preparing to submit its conditions for reopening the strategic waterway to mediators. The regional mediation initiative intends to first secure a ceasefire, followed by the prompt reopening of the Strait of Hormuz and the termination of the US blockade. Whether this can be achieved in coming days remains to be seen.

What seems clear is that Trump's hope that America's financial muscle will offer him victory over Iran will prove to be as futile as his apply of military might.

Meanwhile, the writer is a former ambassador to the US, UK and UN. Published in Dawn, August 31st, 2026.

For now, another failed strategy? Remains the part of the story worth watching, and further updates are likely as more details are confirmed.