The Trump administration is betting that a grinding economic campaign, sanctions, a naval blockade, and a crackdown on shadow finance, can force Tehran to the table, even as a former American hostage warns that the regime's power brokers profit from the very pressure meant to weaken them.
President Trump told Axios reporter Barak Ravid in a phone interview reported August 9 that the United States is "only semi-negotiating" with Iran and is content, for now, to watch the Islamic Republic's economy deteriorate. "We are just watching Iran with its huge inflation and the fact they have no money," Trump said, describing the American posture as "low-keying it." On Truth Social the same weekend, Trump wrote that Iran had shown "51 years of bad behaviour" and shared a graphic charting the Iranian rial's steep decline under the headline "Iran has NO MONEY."
The comments amount to a public declaration that Washington sees time and money, not missiles, as its primary leverage against Tehran. And the numbers behind the strategy suggest the squeeze is real.
The Treasury Department's campaign, branded "Economic Fury," has targeted Iran's oil trade, shadow banking networks, weapons procurement operations, cryptocurrency holdings, and sanctions-evasion infrastructure. In a June 10 statement, Treasury said the effort had prevented "tens of billions of dollars" in revenue from reaching the Iranian regime and its proxies.
On July 29, the Treasury's Office of Foreign Assets Control announced it had sanctioned more than 100 vessels linked to Iran's shadow fleet since the beginning of 2026. Then on August 7, Treasury moved against cryptocurrency exchanges it said were financing the Islamic Revolutionary Guard Corps and against international currency networks allegedly moving hundreds of millions of dollars on Iran's behalf.
A Treasury spokesperson told Fox News Digital that the pressure is working. "Economic Fury has left the regime desperate for cash," the spokesperson said.
"Iran's economy is in freefall, inflation has skyrocketed, and as President Trump said on Sunday, the regime's ability to pay its troops has been decimated."
The spokesperson added that Iran is "increasingly having to invent new ways to try to evade U.S. sanctions through shadow banking networks, including through exploiting crypto," and pledged that Treasury would continue to "aggressively dismantle these networks."
A separate U.S. official, also speaking on background, framed the blockade in starker terms: "The United States is strangling what's left of Iran's economy with one of the most successful naval blockades in history, and Iran would be wise to make a deal. Otherwise, they know what will happen." The same official reaffirmed that Trump "will never allow Iran to have a nuclear weapon" but "prefers a diplomatic solution."
That diplomatic track has been anything but smooth. Earlier this year, a ceasefire collapsed after attacks in the Strait of Hormuz, and the administration has oscillated between military threats and economic leverage in the months since.
Morad Tahbaz knows the Iranian regime from the inside. The Iranian-American conservationist spent nearly six years locked in Tehran's notorious Evin Prison before his release with four other Americans in September 2023. He told Fox News Digital that sanctions, while devastating to ordinary Iranians, have created a lucrative racket for the regime's own power brokers.
"They have created a huge franchise for themselves because of these sanctions. Money can't flow freely to the Iranian government's treasury because of the sanctions. So what happens, everything is like a black market, gray market, illegal smuggling from the oil to everything else coming in and out."
Tahbaz said the people who control those opaque channels have no interest in seeing sanctions lifted. "They don't want to see the sanctions go away, because they will lose their franchise, if you will. They will lose their power, their control over the money and everything that goes along with it."
That observation cuts to a central tension in the American strategy. Sanctions are designed to starve the regime of resources and force concessions. But if regime-connected middlemen profit from the very scarcity sanctions create, the pressure falls hardest on the people Washington says it wants to help.
Tahbaz was blunt about who absorbs the damage. "And of course, the people who are hurt most by all of this are the people of Iran. They're unfortunately, very unfortunately, taking the brunt of all of these in their daily lives."
An investigation published recently by the Iranian newspaper Jahan-e Sanat described supermarket workers encountering customers who shoplifted basic groceries or ate packaged food inside stores, a snapshot of desperation in a country where the currency has cratered and inflation has run unchecked.
Tahbaz pointed to the internal factional tensions these dynamics produce. "This is the battle going on inside Iran when you hear there is tension within factions. And I think to see a solution to this war, if you will, we have to look to what's happening in Iran."
Miad Maleki, a senior fellow at the Foundation for Defense of Democracies and a former Treasury Department sanctions official, argued that Iran's economic misery did not begin with American pressure. It began with the regime's own choices. He provided Fox News Digital with Central Bank of Iran national accounts data showing that Iran's military share of total government spending rose from 16 percent in 1993 to 52 percent by 2006. Over the same period, education spending fell from 27 percent to 15 percent. Spending on health and social affairs also declined as a share of the budget.
The numbers got worse from there. By 2020, the IRGC, Iran's powerful paramilitary and political force, received approximately $6.96 billion in the national budget, according to analysis by the United States Institute of Peace's Iran Primer, based on figures from Iran's parliamentary research center. Iran's conventional military, the Artesh, received roughly $2.73 billion, less than half the IRGC's allocation.
And even those figures may understate the IRGC's true economic footprint. A 2017 American Enterprise Institute study estimated that the IRGC's so-called "gray budget", off-the-books revenue from commercial ventures and other sources, could add another 50 to 100 percent to its military outlays. The IRGC's construction arm, Khatam al-Anbiya, became a major force in the Iranian economy after the Iran-Iraq War, expanding across construction, energy, and infrastructure. The Treasury Department designated it in October 2007 as "an IRGC engineering arm used to generate income and fund the organization's operations."
Maleki's conclusion was direct: the regime broke its own economy by pouring money into the IRGC and its proxy operations while starving public services.
"The issue is not simply that Iran spends heavily on defense. It is that an oil-dependent economy repeatedly directed enormous resources toward the military and the IRGC while basic public services and ordinary households were under increasing pressure."
He rejected the regime's narrative that sanctions alone are to blame. "Sanctions and the war have accelerated Iran's economic decline, but both are consequences of the regime's own troublemaking; its nuclear brinkmanship, missile and drone attacks on tankers, and support for terror proxies, not causes imposed on an innocent bystander."
The administration has pushed back against claims that sanctions amount to collective punishment of the Iranian people. OFAC maintains standing authorizations, including General License 8A, that permit certain humanitarian trade involving agricultural products, medicine, and medical devices. Noncommercial personal remittances and communications-related software, hardware, and services are also authorized. OFAC considers additional requests on a case-by-case basis.
But the gap between what is authorized on paper and what reaches ordinary Iranians in practice has long been a point of contention. Tahbaz's testimony suggests that regime-connected brokers control the chokepoints through which goods and money flow, skimming profits from every transaction that sanctions force underground.
Maleki framed the responsibility squarely on Tehran. "It's a government's basic responsibility to provide for and serve its nation, this regime has instead served a failed revolutionary ideology that has produced nothing but suffering for ordinary Iranians." He added that the fault lies with "structural corruption, chronic economic mismanagement, and spending priorities fundamentally detached from ordinary Iranians' needs and the country's genuine economic potential."
Trump has not closed the door on negotiations entirely. The unnamed U.S. official who spoke to Fox News Digital emphasized that the president "has been consistent in saying he prefers a diplomatic solution" while retaining "all options" if Iran "continues to engage in terrorism and refuses to make a deal."
That language mirrors a pattern that has defined the administration's Iran posture for months. Trump has previously pulled back from planned military strikes to offer Tehran a narrow window for diplomacy, only to escalate pressure when those windows closed.
The administration has also rejected Iran's own diplomatic counteroffers and countered with demands of its own, signaling that any deal will be struck on American terms or not at all.
For now, the strategy is patience backed by pressure. Trump's own words suggest he believes time is on Washington's side, that an economy in freefall, a currency in collapse, and a population reduced to shoplifting groceries will eventually force the regime to choose between a deal and disintegration.
Whether that bet pays off depends on a question Morad Tahbaz raised from hard experience: whether the men who profit from Iran's misery will ever let it end.
