No More Bombs for Iran, Economic War Instead?

Trump assembled his national security team in Washington on Monday afternoon to figure out how to respond to Iran’s latest missive delivered via Pakistan — i.e., end the blockade and then we’ll talk about other issues. The Wall Street Journal reports that Trump opted for economic warfare against Iran as it carried less risk, instead of resuming bombing or trying to exit the conflict. That’s the good news. However, President Trump also instructed White House aides to prepare for an extended blockade on Iran.

Before I explain why that is a foolish, unworkable policy that will fail, let’s look at what Secretary of the Treasury Scott Bessent had to say:

“The Treasury Department, through Economic Fury, has targeted Iran’s international shadow banking infrastructure, access to crypto, shadow fleet, weapons procurement networks, funding for terrorist proxies in the region, and independent Chinese “teapot” refineries that support Iran’s oil trade. These actions have disrupted tens of billions of dollars in revenue that would be used to fund terrorism.

Under President Trump’s’ maximum pressure campaign, Tehran’s inflation has doubled and its currency has rapidly depreciated.

Kharg Island, Iran’s primary oil export terminal, is soon nearing storage capacity, which will force the regime to reduce oil production, resulting in an additional approximately $170 million per day in lost revenue, and causing permanent damage to Iran’s oil infrastructure. Treasury will continue to exert maximum pressure and any person, vessel, or entity facilitating illicit flows to Tehran risks exposure to U.S. sanctions.”

Notwithstanding the US blockade, Iran continues to fill oil tankers that are sailing out of the Persian Gulf. Iran has continued loading oil onto tankers even as the US blocks their route out. With no large volumes clearly circumventing the blockade, the loaded crude is largely filling up tankers Iran has available in the region. At least two fully laden Iranian tankers — the Hero II and Hedy — sailed out of the Persian Gulf and past the US blockade on April 20, part of a flotilla that has ferried roughly 9 million barrels of oil to market. Most tankers hauling Iranian barrels routinely sail with their automatic position signals disabled.

Since the start of the conflict, at least 52 “ghost fleet” tankers laden with Iranian oil have left the Persian Gulf, some broadcasting their signals and others operating clandestinely. These tankers are en route to Malaysia to conduct ship-to-ship transfers with other vessels bound for China.

Here is the problem the US faces in trying to impose a blockade: If the US stops an Iranian vessel and takes control of it, then the US Navy must assign one ship to accompany it to a location the US controls. The US does not have enough US Navy ships to carry out such a mission on a broad scale. All Iran needs to do is load up 20 tankers and send them to sea simultaneously. The US may be able to stop two or three, but the rest will penetrate the blockade and arrive at their respective destinations.

What about imports for Iran? According to the Fars News Agency, Pakistan has opened six corridors with Iran to bypass the US blockade. More than 3,000 containers bound for Iran are being transited over land.

Ironically, even though it is Iran that effectively closed the Strait of Hormuz, the US bragging about its blockade of the Strait takes the onus off of Iran as the rest of the world begins to suffer a massive economic contraction from the Strait being closed.

Instead of suffering the wrath of nations deprived of oil and LNG from the Persian Gulf, Iran will buy itself some much needed support as it allows ships heading toward friendly nations to pass through the Strait in numbers that will make it impossible for the US Navy to stop them.

If my friend — Alex at Reporterfy — is correct, the global economy is going to face major headwinds that will be more damaging than the economic crisis of 2008. At that point the US will face major pressure to end the blockade, which is more symbolic that substantive, and renew negotiations with Iran. Iran for its part is not going to beg for relief… Iran has the full backing, including economic support, from Russia and China. Scott Bessent is deluding himself and misleading Trump by insisting that his version of economic warfare will force Iran, Russia and China to bend the knew to Washington. Ain’t going to happen.

If there is going to be any bending over, the US will be much like the character played by Ned Beatty in the movie, Deliverance.

https://larrycjohnson.substack.com/p/no-more-bombs-for-iran-economic-war