Economic D-Day?????

Bessent’s ‘economic D-Day’ against Iran begins with a ‘warning shot’

The move marks the Trump administration’s latest attempt to force an end to an increasingly unpopular war that has stretched into its sixth month.

By Michael Stratford, Megan Messerly, Nahal Toosi and Phelim Kine

Treasury Secretary Scott Bessent on Monday unveiled a sweeping new effort to economically isolate Iran, warning foreign governments and companies that they could lose access to the U.S. financial system if they continue doing business with Tehran.

The campaign, which Bessent dubbed “Operation Economic Outcast,” stopped short of immediately imposing penalties against financial institutions located in China and other countries that facilitate trade with Iran for oil and other commodities.

Instead, Bessent delivered what he called a “warning shot” to countries around the world that they should get in line behind the Trump administration’s efforts to isolate Iran or face significant financial repercussions.

Bessent and the Trump administration for days had signaled its plans to drastically step up economic pressure on Tehran, which the Treasury secretary had likened to an “economic D-Day” operation.

Pressed during a press conference Monday on why Treasury was not immediately imposing those penalties, Bessent said the U.S. wanted to give countries a “cure period” to comply. He said the clock “just started ticking.”

“We are giving everyone the opportunity to remedy bad behavior,” Bessent said. “Why would I want to blow up the global financial system?”

Bessent said Treasury expects to sanction a major foreign financial institution by the end of the week as part of the new effort.

The Treasury Department expanded its ability to penalize foreign companies that operate in or support five sectors of Iran’s economy: digital assets, technology, gold, aviation and shipping. Treasury also imposed fresh direct sanctions on dozens of people and entities tied to Iran and ended waivers that had permitted the flow of remittance payments to the country and allowed Iranians to access the U.S. cultural and academic universities.

Bessent said President Donald Trump was calling foreign leaders with “specific requests” to cut economic ties with Tehran. Officials from Treasury, the State Department and the Pentagon are also pressing their counterparts for “immediate action” to cut off economic ties to Tehran, Bessent said.

Bessent said every country had been given a deadline to shut down specific Iran-related activities identified by the U.S., though he declined to disclose the nature of those requests or the timelines.

“It’s no longer acceptable to operate in the gray spaces of this conflict,” Bessent said.

The move marks the Trump administration’s latest attempt to force an end to an increasingly unpopular war that has stretched into its sixth month. The war has disrupted global energy markets, raised the price Americans pay for gas and become a growing political liability for Republicans ahead of the midterm elections months away.

It also puts Bessent at the center of the administration’s war efforts after months of military strikes, a blockade of Iranian ports and diplomatic talks have failed to secure a lasting agreement to end the conflict.

The latest strategy could significantly raise tensions with China, which is a large buyer of Iranian oil. Treasury has already sanctioned smaller Chinese refineries, shipping companies and financial networks accused of helping Tehran sell oil.

But targeting larger Chinese banks or companies that facilitate Iran-linked transactions could provoke retaliation from Beijing as Trump prepares for expected talks with Chinese President Xi Jinping.

Asked about whether the U.S. would move forward on sanctioning Chinese banks on Monday, Bessent said that “no one is above the reach of U.S. sanctions.”

Those who have been involved in past negotiations with Iran are skeptical the announcement will move the needle with Tehran — and especially Beijing.

“The announcement itself was a nothing burger,” said Ali Vaez, the International Crisis Group’s Iran project director, who helped work to bridge differences between Iran and world powers during negotiations over the 2015 nuclear agreement. “The only thing that would make a difference at this stage is the U.S. delivering on its threats, not threatening. ”

“Doubt it,” said one person close to the White House, who was asked whether the move would help end the war with Iran and granted anonymity to speak candidly on administration policy. But “I support all non-war avenues to pressure Iran.”

A second person close to the White House, who was also granted anonymity to discuss a sensitive issue, added, “I think it has the potential to be impactful if they actually execute. However, without addressing the China angle it leaves an economic escape route for Iran.”

Bessent’s refusal to say the word “China” during a press conference despite repeated questioning about whether the threatened sanctions would hit Beijing, underscores the administration’s aim to avoid derailing Trump’s summit with Xi next month.

Beijing provides Tehran an economic lifeline by purchasing around 90 percent of Iran’s oil exports via the “shadow fleet” of vessels that sell those cargoes to small-scale “teapot refineries” in China.

The Chinese government is likely equally skeptical that the administration will apply disruptive sanctions to its Iran trade ahead of a summit at which Trump is seeking to expand U.S. agricultural exports to China while avoiding any disruption in China’s supply of rare earths.

“Beijing is betting that Washington will be reluctant to jeopardize the current leader-level dynamic by targeting major Chinese entities before the summit, and nothing Bessent said today is likely to alter that calculation,” said Craig Singleton, senior China fellow at the hawkish Foundation for Defense of Democracies think tank.

The Chinese embassy in Washington didn’t immediately respond to a request for comment.

The embassies of the United Kingdom, France, Germany, the United Arab Emirates, Iraq, Oman and Azerbaijan didn’t immediately respond to requests for comment. Those countries contain branches or subsidiaries of Iran’s Bank Melli, which Bessent on Monday demanded to be shuttered. The Washington-based Hong Kong Economic and Trade Office also didn’t immediately respond to a request for comment regarding the status of the Bank Melli in Hong Kong.

POLITICO also reached out to Persian Gulf countries, as well as countries with substantial trade with Tehran. The embassies of Saudi Arabia, Qatar, Bahrain, Kuwait, Iraq, Turkey and India didn’t immediately respond to a request for comment. The embassy of Pakistan declined to comment.

Foreign diplomats, who were granted anonymity because of the sensitivity of the issue, were even-keeled in response to the new pressure campaign. Some noted that only a few countries had trade of major significance with Iran, one of the world’s most heavily sanctioned nations.

“The risk here is that the [Iranian] regime may react in a way that will further aggravate the situation. If they feel cornered, it’s a question of survival for the Revolutionary Guard,” one European ambassador said, referring to a major Iranian military institution.

A senior European diplomat said one question is how quickly the new pressure campaign will lead to results — and what results Trump wants to see.

Such sanctions campaigns take time to bear fruit, and the effort “may not be as rapidly imposed” as the president wants, the diplomat warned.

European officials, who have been reluctant to help with Washington’s war while Trump is still ordering missile strikes against Iran, are worried that the U.S. administration will make more demands to help them out with sanctioning Tehran.

“The big question now is whether Europe will be asked to match the U.S. sanctions,” said Giuseppe Spatafora, a policy analyst at the Brussels-based EU Institute for Security Studies think tank and a former NATO official. “It could cause a repeat of the spring tensions, in which [the] U.S. got angry at Europeans for not falling in line. It also depends on how serious the U.S. sanctions will be, and whether they hit China and Russia hard.”

Vaez, the former negotiator, was skeptical that other countries would accede to the U.S.’s demands because they have their own reasons to play nice with Iran.

“Iran’s neighbors cannot afford to alienate their neighbor,” he added. “Some of them do not want the United States and Israel to succeed — a country like Turkey, for instance — because it would make them a target. They would be next on the list.”