‘Economic D-day’: how desperate is Trump to end Iran war? — The Latest

0:00This is The Guardian.

0:10It's clearly an attempt to weaken the regime. No one is above the reach of U.S. sanctions. China is a big one. It buys 80 % of the oil that Iran exports. Predicting how far Trump will go in any direction is hard. And in the past, he has walked up to the line in direct confrontations with China. No one would be surprised now to see him pulled back over this. From the Guardians today in Focus, this is The Latest with me, Lucy Hoth. The United States has announced this huge economic sanctions program called Operation Economic Outcast against countries with dealings with Iran. Julian Borgia, you're our senior international correspondent.

0:58This is quite a change in strategy, isn't it, from military strikes to a sanctions programme? What's going on? Yeah, I mean, it does look like a pivot, doesn't it? I mean, it's clear from this announcement that they're going to go ahead with this economic campaign, that they don't believe that there's a deal on the horizon, that there's no way of salvaging the deal that was done in June to open the Strait of Hormuz. But it also looks like a pivot away from military action, which has not brought the consequences, the results that the administration wanted, intended for it, and to force open the Strait of Hormuz and let the shipping and the flow of oil and gas out of the Gulf carry on.

1:42That has not worked through military means. This is a pivot with the elections coming up in November, a pivot they hope will finish the job, but will not involve more scenes on the television of bombing and bloodshed. Yeah, absolutely. And so briefly and in technical terms, what does the sanctions program involve? Because obviously, there have been for many years under the Trump administration, since he came into power initially in 2016, sanctions against Iran, but this sort of expands it to countries that have economic ties with Iran. Yeah, they call them secondary sanctions. They're the sanctions on people doing business with the main target.

2:26And so what this means is if you carry on, this is just a threat. They have not implemented these sanctions yet. There's a threat that if you don't cut your economic ties by a

2:43would be and it seems to be sort of bespoke to different countries they're dealing with. Right. But if you don't sever your ties by that deadline, then we're sanctioning you and your financial institutions will no longer be part of the dollar economy. That's what they're threatening. You mentioned this sort of bespoke timeline to cut those ties. What countries are we dealing with here? Clearly, China is the big one, but there are others too, right? Absolutely. Yeah. There's the UAE, there's Turkey, there's India. Obviously, China is a big one. It buys 80 % of the oil that Iran exports. So it is by far the biggest trading partner.

3:29And this introduces a lot of complications. And this is maybe why the US did not stipulate timelines or name the countries involved because of the sensitivity of that. They are hoping that China will buckle and bow without them having to directly confront Beijing. And whether that will work is up to question. The signals coming out from China so far have not been encouraging for Washington. Yeah. So what have those signals been? They have said, we think these are illegal sanctions. They would be illegal sanctions if applied. and we will take all necessary measures to protect our interests, leaving it open, setting down a marker that they will not be bullied on the world market.

4:18And obviously China is a key trading partner with the US as well. So how far do you think Trump is willing at this point to go in terms of putting pressure on China? I mean, it's really risky territory, isn't it? Yeah, I mean, predicting how far Trump will go in any direction. is hard. And in the past, he has walked up to the line in direct confrontations with China and generally pulled back. And no one would be surprised now to see him pulled back over this. He has a meeting with Xi Jinping coming up next month. And that could be a key summit in terms of laying the economic ground in the run up to the US election.

5:01So what's been the response from the Iranian regime to all of this? You mentioned that they have responded pretty aggressively and threatened possible strikes. Yes, they've said they will retaliate. They've been utterly defiant throughout. They say we will strike back and suggested that they might go after any other country that joins this US effort to isolate Tehran. So the message, as it has been throughout the war, has been one of defiance because it looks like the leaders who've taken over since the war began, in particular hardliners and the IRGC, believe that Iran's mistake up to now had been to appease, to bow and not to strike back hard.

5:51And they believe that the only way out of this war is to defy, to strike back. And there has been a report of a tanker being struck near the strait since the declaration by Besant. In terms of Iran's economy, I mean, obviously it has been in fairly dire straits for some time now, given the international sanctions that have been imposed on it for many years. but its economy has been further crippled since the outbreak of war at the start of this year. In terms of its reserves to withstand further expanded sanctions, how much capacity does it have? And I suppose particularly looking at oil in that regard.

6:36Well, obviously the constraint is on oil export rather than oil production. At the moment they're able to produce oil but the economy is in terrible state. that the real is going through the floor, there is inflation, and there is high unemployment. And really, it's a political question. How much can Iran and the regime in Tehran withstand? What would trigger a popular uprising? It's completely impossible to predict. There were, obviously, mass street protests before this war began in January, which were brutally suppressed. And the question is, under conditions of war, with a more hardline regime, more trigger-happy regime potentially, is there room for new popular uprisings?

7:27And it's clearly what the US and the Trump administration is counting on, that they're hanging on to this idea that the regime will collapse. And Trump put out on social media words to that effect. But it is a shot in the dark. It's impossible to predict. And the track record suggests that economic pressure has not worked in terms of weakening the regime. But you think that might be part of the White House strategy is to try and reignite some of that public anger that we saw in January. Crucially, it was shopkeepers and business owners that took to the streets in January that then sparked that mass unrest that led tragically to tens of thousands of deaths.

8:12But Trump hoping to kind of reignite public anger against the regime. Yeah, it's clearly an attempt to weaken the regime, either by draining resources from the regime itself, its ability to buy things on the market, its ability to sustain itself, get weapons and so on, but also to try and sap popular support for the regime. And clearly there is very little support, very limited support for the regime. But the question is, at what point and if that discontent turns up into an uprising that topples the regime? Yeah, and clearly history would dictate that the regime will brutally crack down on any attempted uprising.

8:56Julian, thank you so much for your time. Thank you. That's it for today. My huge thanks again to Julian Borgia, our senior international correspondent. Do keep up with all his reporting over at TheGuardian.com. And before we go, I'd really recommend listening to the most recent episode of our sister podcast, Science Weekly. Creatine has become the go-to supplement for gym bros and influencers. But does the evidence stack up? Madeleine Findlay finds out. Thanks for listening to this episode of The Latest. We'll be back with you at the same time tomorrow evening. This episode was produced by Rosie Peters-McDonald, Tiara Chiaramonte and Bryony Moore.

9:32The senior producer was Ryan Ramgobin. The executive producer was Zoe Hitch. and it was presented by me, Lucy Hoff.

9:43This is The Guardian.