Iran faces 'greatest financial offensive ever'

**Ed Butler** (0:01)
America's hot war with Iran is stalled. Now the economic one begins.

**Scott Bessent** (0:06)
Our objective is to sever every economic lifeline that sustains this tyrannical regime.

**Ed Butler** (0:13)
Iran is scornful.

**SPEAKER_3** (0:15)
Any kind of cooperation with America in advancing its aggressive actions against Iran will certainly have their own consequences.

**Ed Butler** (0:23)
You're listening to World Business Report from the BBC. Yes, I'm Ed Butler and today it's all about immanent trade wars. We're hearing about the latest US push to declare all-out economic misery on Iran and some of its powerful trading partners. Also in the show, Canada reflects on its new trade war with Washington, and to wrap it up, Europe may just be pondering a conflict of its own, raining down sanctions on China.
So as we've been hearing, the US Treasury Secretary Scott Bessent has announced an expansion of secondary sanctions aiming to sever Iran's links with the global economy. Mr Bessent has said that banks, businesses and countries will be put under pressure in what he called an economic D-Day. Those that don't comply, he says, would share its isolation.

**Scott Bessent** (1:22)
Our objective is to sever every economic lifeline that sustains this tyrannical regime until Tehran stands alone.
It is no longer acceptable to operate in the gray spaces of this conflict. Countries cannot claim they are blind to enabling this activity.

**Ed Butler** (1:45)
Treasury Secretary Scott Bessent, well, in response, Iran says it has a plan to counter the sanctions.
Marti Godsi is a senior economist at the Vienna Institute for International Economic Studies. I asked for his reaction to Mr. Bessent's comments.

**Mahdi Godsi** (1:59)
I think the US Department is trying to increase the efficacy of sanctions by finding the loopholes and finding the holes through which, actually, Iran's economy is breathing within the international economy. So, there are several countries that are assisting and have been assisting Iran in the past years. For instance, United Arab Emirates is one of the most famous ones. It's the second largest trading partner of Iran, including other also countries like China, Turkey, Iraq, Pakistan or any other country. So, they are trying to minimize the level of transactions between these countries and Iran by penalizing them. And I think the only benefit to these countries is to enjoy US economy.

**Ed Butler** (2:47)
So, I mean, he hasn't specified a timetable for further punitive measures. He hasn't identified individual entities that he's going after. But he says this will be done and US patience is not unlimited. Well, I suppose the first question is, how easy will it be for the US., do you think, to extend sanctions?

**Mahdi Godsi** (3:06)
So, I think the shadow network through which Iranian economy is working and operating, it's similar to what is Russian economy, that after sanctions, new countries are trying to re-import and re-export and become a new trading partner of that target country. So Iranian economy is also similar. There's a shadow barter trading system within which some entities and nodes of the network are working. So I think if they manage to find one node of this network, they manage to find other trading partners of that node.
Not only trading partner, but also financial transactions, financial exchange offices that are operating with that network. So my hunch is that because UAE already stepped aside from trading with Iran and doing financial transactions and putting a new embargo against Iran, I think because of that, there should be some threats that the US Treasury found something, found maybe broader nodes in that network.

**Ed Butler** (4:05)
So you mean they've unearthed more leads for people they can target?

**Mahdi Godsi** (4:10)
It's not going to be only people or individuals or companies. So I think they might go a bit further. So sanctioning a country is different from sanctioning a company.

**Ed Butler** (4:21)
Of course. Iran, of course, is sounding defiant. It's made several statements over the weekend. Today, it has said, we're fully prepared for the US sanctions. They cannot cut off our financial arteries. That's a quote from the Iranian economy minister. Do you think that they're anxious today?

**Mahdi Godsi** (4:36)
They could be. They don't know what is coming. And they have always been like this in the past one to two years, especially with the unannounced wars. So they are getting surprised, I think. So the issue is that they have always been in denial since President Ahmadinejad at the time of which new sanctions have been intensified against Iran. So he was arguing that sanctions would not have any effect. Since then, officials have been arguing that sanctions do not have any effect. So I think it's a rhetoric and it's just war signals that the government would like to send a signal to the society that we are in control. But I think there could be a tipping point. And that tipping point is when there could be economic collapse and they can be out of control.