Iran economic sanctions leading to extremist regime elements gaining power, dissident says - report

As the Iranian regime seeks ways to bypass US sanctions, increasing restrictions on Tehran risk extremist elements within the regime gaining power, according to a KAN News report aired on Tuesday that cited an interview with an Iranian political dissident.

According to the activist, while the public endures heavy economic pressures, it does little to affect those in leadership positions within the regime.

His remarks reflect a seemingly widespread sentiment within the Iranian population, who often assume that deepening troubles within the country would further entrench the regime.

According to KAN, Israeli authorities who are monitoring Iran's domestic developments are observing an increase in economic damage in all sectors of society, causing internal rifts among Iran's leadership.

While Iranian President Masoud Pezeshkian is showing concern for the effects on the general population, the Islamic Revolutionary Guard Corps (IRGC) has reportedly taken a considerably more aggressive stance, entrenching itself as it prepares to weather the conflict and crack down on economic protests. 

Tehran feels the pain of US sanctions, seeks alternate avenues

A day after the launch of the Trump administration's "Operation Economic Outcast" against Iran, US Treasury Secretary Scott Bessent said Tuesday evening that Iran's leadership "is admitting what the whole world can already see: the pressure is working."

"Under President Trump, the Treasury Department will continue to cut off every economic lifeline sustaining this regime, until Tehran is left completely alone," Bessent said.

"No matter how much military power we have, if the people are hungry and we lack cash flow, economic growth, and domestic production - we will not be able to hold out," Iranian Parliament Speaker Mohammad Bagher Ghalibaf stated.

Meanwhile, Iran and Oman announced that their consultations regarding the Strait of Hormuz will continue, aiming to resume navigation through the strait and formulate a mechanism to manage vessel traffic.

In a joint statement, Iran and Oman reported that negotiations between the countries focused on the importance of resuming navigation in the Strait of Hormuz, while preserving their sovereignty and rights. It was further reported that professional negotiations will continue regarding future arrangements for managing the strait, and the formulation of a mechanism for information exchange and vessel traffic management.

Iran's economic stress: 'The war must end at some point'

In the background, Washington is attempting to frame the Iranian-Omani move as a direct result of growing US economic pressure. Bessent quoted Iranian President Masoud Pezeshkian, who he said acknowledged the economic distress Iran is suffering and stated that "the war must end at some point."

Subsequently, the Iranian Foreign Ministry also addressed the sanctions, sharply attacking the decision to escalate them, saying: "American sanctions against Iran are a threat to international law and the UN Charter, and no respectable nation will accept the normalization of 'blatant lawlessness and bullying.'"

Under the framework discussed between the parties, vessels would enter the Gulf through the lane on the Iranian side and exit through the lane on the Omani side. According to previous reports, Iran is not expected to receive the mandatory fee it demanded, but "voluntary" payments for insurance, environmental protection, or safety services might be introduced.

Ceasefire violations, Hormuz frictions

Iran, on the other hand, attempted last week to distance the talks with Oman from the American track. A source close to the Iranian negotiating team told the IRGC-run Fars News Agency that "in practice, no direct negotiations took place between Iran and the United States," and that talks on exercising sovereignty in the Strait of Hormuz occurred solely with Oman.

According to the source, following the US "violation of the Islamabad Memorandum of Understanding," talks with the American side were halted.

This development follows weeks in which the Strait of Hormuz became one of the primary friction points between Tehran and Washington.

During the war between Israel and Iran, Tehran imposed a de facto blockade on the strait, and senior Iranian officials declared their intention to turn passage through it into a permanent source of revenue by levying fees on vessels. Reports later indicated that Iran and Oman were promoting a plan to collect payment from ships passing through the strait, despite public opposition from the United States.

The US administration views the Strait of Hormuz as a central pressure point on Iran. It was previously reported that the United States and Oman tried to persuade Tehran to abandon its demand to levy transit fees on vessels crossing the strait, with one lever of pressure being the potential unfreezing of a portion of roughly $100 billion in Iranian assets held abroad.

The strait is considered one of the world's most vital trade and energy routes, and Tehran views it as a strategic bargaining chip against the United States and the Gulf states. Now, as Iran and Oman continue to discuss a new management mechanism while Washington ramps up economic pressure, the central question is whether Tehran will choose a settlement that allows the resumption of navigation - or continue using the strait as a tool of leverage against the West.

Implementing new measures could lead to Iran's collapse in six to nine months

Economist Shlomo Maoz addressed potential measures against Iran, asserting that full implementation of these sanctions by the US and the West could cause Iran to completely collapse within six to nine months, in an interview with Maariv published on Wednesday.

"The strangulation will be absolute," he said, explaining that the goal is not only to hit Iran directly, but to deter other countries, companies, and international banks from maintaining ties with Tehran. "They will essentially be able to enforce this on everyone. Any country, organization, company, bank, shipping line, or airline doing business with the Iranians will be boycotted by the US. And nobody wants to mess with them, because they are effectively the largest superpower."

The logic behind the strategy relies primarily on the US's dominance in the global financial system.

Any firm choosing to continue trading with Iran risks facing US sanctions, impairing its ability to trade in US dollars, process payments, and engage with the global financial grid. "The global financial system is built on the dollar, which accounts for about 60% of world payments and transfers. Additionally, they control SWIFT, the international money transfer system."

"All payments - the trillions moving today - mostly run through this system, and the Americans previously removed Russia and Iran from SWIFT, which is why those countries are sinking. Russia is sinking too; for instance, anyone trying to send money from Israel to a relative in Russia cannot do so - the US will suffocate Iran in the exact same manner," he explained.

According to Maoz, US sanctions on Iran could evolve into a global economic war within months, extending far beyond the Islamic Republic’s borders and severely impacting countries maintaining commercial ties with it.

Maoz argues that the pressure will not remain confined to finance. "Anyone buying oil from them will be boycotted. Anyone selling them drilling equipment, for example, will be boycotted. Airlines, shipping lines, banks - there will be total strangulation here, including Arab countries that maintain good relations with Iran. They will be hurt too. It's essentially like waging a world war against them - a global economic war."

He identifies Turkey as one of the hardest-hit nations, having served as a major commercial pipeline for Iran in recent years, particularly in the gold trade. "Turkey bought gold for the Iranians," he explains. "The Iranians used oil and other payment methods to acquire gold and accumulate assets outside the Western financial system because they have no play with foreign currency."

Consequently, if the US tightens oversight on Turkish entities trading with Iran, Turkey could face a major crisis. "The primary party harmed will be Turkey," he assesses.

The key question is how Turkish President Recep Tayyip Erdoğan will react if ties with Iran become a severe economic burden. Maoz doubts Erdoğan can afford to retreat. "He is in a position where he won't step back because his economy is already collapsing. They are in deep trouble - they have no gas, no gasoline, no oil," he says.

He contends that if Turkey attempts to bypass sanctions via shell companies or alternative trade routes, it risks additional US sanctions. He highlights trade ties between Iran, Armenia, and Turkey, suggesting regional trade routes will become a primary focus of US enforcement. "In my view, Armenia, which maintains good trade relations with Iran, will also be hit by sanctions. I've personally seen massive oil trucks traveling from Iran to Armenia," he adds.

Beyond banking and international trade, Maoz highlights three sectors likely to become central battlegrounds: gold, oil, and blockchain. As Iran’s access to the traditional financial system is blocked, it will increasingly seek alternative channels for moving funds.

He ties the pressure on Iran directly to the surge in Bitcoin prices. "In my assessment, the Achilles' heel of sanctions is the crypto space. As the Americans choke Iran and restrict its access to banking and the dollar, Iran and other entities seeking to bypass sanctions will look for alternative avenues to transfer funds, and crypto could be one of them. I estimate this is one reason we are seeing a rise in Bitcoin and other cryptocurrencies," he says, noting instances where Israeli spies working for Iran were paid in cryptocurrency.

However, he acknowledges he is not a crypto expert and cannot predict how US authorities will address crypto usage. Still, he notes that the ability to track blockchain transactions could turn crypto into another arena of conflict between Iran and the West. Ultimately, he argues, economic sanctions represent a relatively cheap method for the US to exert pressure compared to a prolonged military war.

"We’ve seen in the past that sanctions and economic pressure can work," he notes. "It happened in South Africa with the apartheid regime, which eventually fell. Therefore, I believe that in Iran's case as well, if the West shows patience and persists with sanctions, economic pressure can yield a significant outcome."

"Iran will collapse within six to nine months," he concludes, emphasizing that this scenario depends on US persistence and Western alignment. "The condition is that Trump goes all the way and the rest of the Western countries fall in line."

He suggests sanctions will focus on five key sectors: maritime, aviation, communications, oil, and banking. However, he cautions that the impact will not be immediate. "There’s no button you press to make it happen instantly. It doesn’t work that way. It requires patience."

From Israel's perspective, he views this as a positive development, as economic pressure could substitute for military confrontation. "I think this is very good for Israel. Fewer wars, more economic warfare," he says.

Ultimately, the central question is not just whether Iran can survive the sanctions, but how determined the US will be to enforce them long-term - and how much countries like Turkey, China, India, and Pakistan are willing to pay to maintain ties with Tehran. If Washington builds a unified Western front, pressure on Iran will intensify, though the path forward may trigger severe economic shocks across neighboring states, starting with Turkey.