Why the US Treasury's 'Operation Economic Outcast' Against Iran Is Doomed to Fail

US Treasury Secretary Scott Bessent spoke during a press conference to outline further sanctions against Iran at the Treasury Department in Washington on August 24, 2026. Last week, Pakistan announced that it will not comply with the latest sanctions the United States imposed on Iran and will continue trading with its neighbour, following a similar statement made by China just days prior.

The sanctions announced by US Treasury Secretary Scott Bessent under “Operation Economic Outcast” are intended to be the toughest in history, aiming for the greatest coordinated economic isolation ever seen. Earlier, President Donald Trump referred to the initiative as “ECONOMIC D-DAY” in a social media post, promising tremendous economic consequences for any nation extending Iran any type of lifeline.

With six months of US bombing and a naval blockade failing to produce a victory, the strategy has shifted to starving Iran into capitulation. However, this approach is widely viewed as illegal, cruel, and destined to fail for several key reasons, starting with the historical record showing that economic sanctions rarely bring down determined governments.

Furthermore, the basic arithmetic of the world oil market complicates the plan. US Treasury Secretary Scott Bessent proposes removing Iranian oil exports from a global market already missing a fifth of its supply due to the closure of the Strait of Hormuz, deepening the stagflationary shock for Europe, Japan, and other US allies.

China, which purchases over 80 percent of Iran’s oil exports, is the primary target of this campaign. If the US sanctions the Bank of China or the Industrial and Commercial Bank of China, Beijing is expected to restrict rare earth exports, a tactic it successfully used in April 2025 and October 2025 against American and European automakers.

Despite this history, US Treasury Secretary Scott Bessent chose this moment—just before China's expanded rare earth regime returns and weeks before Chinese leader Xi Jinping visits Washington—to issue an ultimatum. In response, Foreign Ministry Spokesperson Lin Jian stated that China firmly opposes illicit unilateral sanctions lacking UN Security Council authorization.

The criticism of US policy extends to international law, noting that Article 2(4) of the UN Charter prohibits the use of force against territorial integrity or political independence. Following Washington's withdrawal from over 60 international organizations in January 2026 and its low alignment with UN General Assembly resolutions, nations worldwide are increasingly pivoting toward new arrangements like the Mecca Agreement, alternative currencies, and open-weight AI models from China.