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strikeApr 15, 2026

From dropping bombs to pressuring banks: US pivots to economic warfare on Iran

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WASHINGTON (AP) — If the U.S. and Iran aren’t able to soon come to a deal to end the war or extend the ceasefire that expires next week, the Trump administration is setting the stage to shift its war campaign toward a more economic-focused effort aimed at choking Tehran into submission rather than relying on bombs alone. Treasury Secretary Scott Bessent told reporters at a White House briefing Wednesday that the U.S. plans to ramp up economic pain on Iran, and said the new moves will be the “financial equivalent” of a bombing campaign. The threat of secondary economic sanctions on countries doing business with people, firms, and ships under Iranian control — including allies like the United Arab Emirates and competitors like China — represents an escalation of sanctions that the U.S. is already employing. Bessent said the administration has “told companies, we have told countries that if you are buying Iranian oil, that if Iranian money is sitting in your banks, we are now willing to apply secondary sanctions, which is a very stern measure. And the Iranians should know that this is going to be the financial equivalent of what we saw in the kinetic activities.” The Treasury Department warns China, Hong Kong, the UAE and Oman The warning comes the day after the Treasury Department sent a letter to financial institutions in China, Hong Kong, the UAE, and Oman, threatening to levy secondary sanctions for doing business with Iran, and accusing those countries of allowing Iranian illicit activities to flow through their financial institutions. It's part of an economic playbook that President Donald Trump still can use to pressure Iran to accept U.S. proposals to limit its nuclear ambitions, a person familiar with the administration's thinking told The Associated Press. The person spoke on the condition of anonymity because they were not authorized to discuss private discussions on the record. Privately, the argument being made to Trump is that the Iranians think they can weather the storm — but if they cannot pay their loyalists, that could pressure Iran to the table. And some in the administration believe there are still more economic targets that can be hit that would put the economic hurt on Iran, including bonyads, the charitable trusts that account for a significant percentage of the Iranian economy. Bessent told reporters that two Chinese banks have received warnings about handling Iranian money. Trump is preparing to visit Beijing next month for talks with Chinese President Xi Jinping. Bessent also said that Iran’s Gulf neighbors are now willing to look at freezing Iranian money in their banks because of Iran's aggression during the war. More sanctions could be ineffective or risk blowback, say experts and lawmakers Still, Massachusetts Sen. Elizabeth Warren, the top Democrat on the Banking Committee, argued that any new economic sanctions would be effectively offset by the financial windfall that Iran was seeing in the aftermath of the war. “Instead of circumstances where we can keep sanctions on Iran and constrict their economy, the blockade in the Strait of Hormuz — combined with the sharply rising price of oil — has helped Iran’s economy,” Warren said, adding, “What Secretary Bessent is trying to do is mop up the mess that Donald Trump has created by initiating this war.” Daniel Pickard, a sanctions attorney, said imposing secondary sanctions could result in “diplomatic and economic blowback” from allies that could hurt efforts to build coalitions against Tehran. “A lot of our trading partners have been outspoken in regard to their opposition to the conflict in Iran," Pickard said. “Most economic sanctions professionals would agree that when you get more people on the team, the chances of your economic sanctions being effective or greater." On Wednesday, the U.S. imposed sanctions on an oil smuggling network connected to the deceased senior Iranian security official Ali Shamkhani, who was a close adviser to the former Supreme Leader of Iran. Sanctions include dozens of individuals, companies, and vessels involved in secretly transporting and selling Iranian and Russian oil through front companies, many of which are in the UAE. “Treasury will continue to cut off Iran’s illicit smuggling and terror proxy networks," Bessent said in a statement. "Financial institutions should be on notice that Treasury will leverage all tools and authorities, including secondary sanctions, against those that continue to support Tehran’s terrorist activities. The administration believes the momentum has shifted Trump administration officials have also signaled growing confidence that the ceasefire and a blockade of shipments from Iranian ports in the Strait of Hormuz have shifted momentum in Trump’s favor. Iran has endured tens of billions of dollars in damage during the bombardment to the country's infrastructure — including setbacks to its oil industry, the heart of its fragile and long-isolated economy — that could take years to repair. Vice President JD Vance on Tuesday said Trump “doesn’t want to make, like, a small deal. He wants to make the grand bargain.” "That’s the trade that he’s offering,” Vance said. “If you guys commit to not having a nuclear weapon, we are going to make Iran thrive.” The president's deputy chief of staff, Stephen Miller, offered a more caustic assessment of the moment, suggesting that Trump had “played the checkmate move" on Iran by implementing the blockage in the strait. “If Iran chooses the path of a deal that's great for the world, that's great for everybody. If Iran chooses the path of economic strangulation by blockade, then the world will pass Iran by,” Miller said in a Fox News appearance Tuesday evening. "New energy routes will be established. New supply chains will be established. Other nations throughout the region — throughout the world, and especially America — will power the world and Iran will become a footnote.” Some Republicans are skeptical that more sanctions will work Some Republicans believe that any tactic to exert more pressure on Tehran is worth trying. “I would support anything,” said Sen. Thom Tillis, R-N.C. “If the administration came up with the ideas, I would support all of the above. More pressure, the better.” Others were skeptical, noting that Tehran was already facing a litany of economic penalties that had little impact on its behavior. “I’m not sure if it’s sanctions that’ll do it. I think we’re putting some pretty heavy sanctions on right now,” said Sen. Mike Rounds, R-S.D., a member of the Banking and Armed Services Committees. “I personally am just not optimistic that we actually can fix this thing without a regime change.” Trita Parsi, executive vice president of the Quincy Institute, a think tank that has been critical of Trump's decision to launch the war, says that Trump had been “politically cornered and strategically constrained" before he announced the ceasefire. But now, Parsi argues, Trump may have altered the difficult dynamic and created a situation where “Iran now appears to need an agreement more than the United States does.” “The window now open offers Tehran a chance to convert battlefield leverage into lasting strategic gain," Parsi wrote in a new analysis. "To let it close would mean forfeiting not just incremental progress, but the possibility of reshaping its economic and geopolitical position. By contrast, the United States, having already secured a tenuous exit ramp through the ceasefire, has less at stake in the short term.”

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  • FATIMA HUSSEIN, AAMER MADHANI, WILL WEISSERT and SEUNG MIN KIM, Associated PressBy FATIMA HUSSEIN, AAMER MADHANI, WILL WEISSERT and SEUNG MIN KIM, Associated Press

    WASHINGTON (AP) — If the U.S. and Iran aren’t able to soon come to a deal to end the war or extend the ceasefire that expires next week, the Trump administration is setting the stage to shift its war campaign toward a more economic-focused effort aimed at choking Tehran into subm

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The ministry said Japan would strengthen its defense capabilities based on lessons from the US-Iran war, including by using defense equipment also operated by allies and like-minded partners to help ensure rapid supplies from other countries. It also stressed the need to maintain sufficient missile stockpiles and be prepared to quickly increase defense equipment production in an emergency, according to its first report analyzing the Iran war since February.

The US-Israeli war against Iran began on Feb. 28, with attacks targeting military, nuclear and infrastructure sites across the country. Iran responded with missile and drone strikes against Israel and US military facilities across the region. READ: EU joins US-led campaign to isolate Iran financially: Treasury chief Bessent Washington and Tehran signed a memorandum of understanding on June 18 concerning freedom of navigation through the Strait of Hormuz, but its implementation has stalled amid disagreements over security arrangements in the strait.

The Japanese report also said the country should take its own geographical characteristics into account when developing combat strategies, including the fact that it is surrounded by sea. The report noted the US use of AI to accelerate decision-making and operations, citing attacks on around 1,000 targets within 24 hours, while also highlighting the risk of AI making incorrect judgments.

“It is important to establish a process that maximizes the benefits of AI while ensuring appropriate human involvement,” the ministry said. The report comes ahead of a planned revision of Japan’s key security documents by the end of this year.

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A major offensive by Yemen's Houthis to seize control of the gateway to the Red Sea has left more than 120 people dead, sources told AFP Friday, the country's deadliest clashes in years. Fighting erupted on Thursday, after the Iran-backed Houthis launched a ground assault along with rocket and drone attacks near coastal areas, vying for control of the narrow Bab al-Mandab strait at the Red Sea's southern entrance.

Yemen, embroiled in more than a decade of civil conflict, in July became the latest country to be drawn into the Middle East war as the Houthis upended a 2022 truce with the Saudi-backed government. Since then, the Houthis have imposed a maritime blockade of Saudi Arabia and repeatedly attacked its ships in the Red Sea -- a vital alternative route for oil exports after Iran all but halted Gulf shipments by blockading the Strait of Hormuz.

The rebels are now trying to tighten their hold over the Red Sea, one of the world's busiest shipping lanes, which they have disrupted with attacks on passing vessels since the Gaza war broke out in 2023. The Houthi offensive aims to cut off the government-held port city of Mokha, under fire for weeks, and advance towards areas bordering the Bab al-Mandab, military sources told AFP.

The rebels have seized elevated sites overlooking government positions near the Red Sea and the city of Taiz further inland, a military source and a Taiz official told AFP, requesting anonymity. The Houthis could target ships from these elevated positions, they said.

The toll rose to 129 on Friday, according to an AFP tally compiled from several sources, up from an earlier count of 81. A Yemeni military official speaking on condition of anonymity told AFP that 66 of his men had been killed, while medical and military sources close to the Houthis said at least 62 militants had died.

Another medical source said a civilian had also been killed. Although the Houthis do not control areas bordering Bab al-Mandab, they hold the key port city of Hodeida north of Mokha. "They are going for Bab al-Mandab," said Mohammed al-Basha, of the US-based risk advisory Basha Report.

The Houthis want to control the hills overlooking Bab al-Mandab and Mokha before attacking the coast, a Yemeni official in Aden, the government's base since it was ousted from the rebel-held capital, Sanaa, in 2014. The government has sent reinforcements to Taiz from Aden on Saudi orders, he said.

"The Houthis feel that if they capture Bab al-Mandab or Mokha port they will be in a better position of power to negotiate with the government and the Saudis," Basha added. With Iran's closure of Hormuz, the Bab al-Mandab chokepoint has gained increased importance as a transit route for oil from Saudi Arabia, the world's biggest exporter of crude.

The narrow waterway connects the Red Sea -- and, via the Suez Canal, the Mediterranean -- to the Indian Ocean. In July, a fragile truce between the Houthis and the government fell apart after the rebels welcomed an Iranian plane to Sanaa, setting off a spate of attacks.

They later announced a maritime blockade of Saudi Arabia and began hitting its ships and territory.

Location: Tyre
strikeUnverifiedUSIsraelIranUNRussiaChina
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If passed, the resolution would follow up on one adopted on June 12 of last year declaring Iran in breach of its non-proliferation obligations for not fully cooperating with an investigation into uranium traces found at undeclared sites. Israel started bombing Iran's nuclear facilities the next day, soon joined by the U.

S. Iran's uranium-enrichment plants were destroyed or badly damaged. Iran has not let International Atomic Energy Agency inspectors return to the bombed sites since then or verify what remains of its stocks of enriched uranium, some of which was enriched to up to 60% purity, a short step from weapons grade.

FRESH DIPLOMATIC ESCALATION A resolution by the IAEA's 35-nation board reporting Iran to the Security Council would also be the culmination of a standoff over IAEA access to those sites, since the board has passed two resolutions in the past year demanding Iran declare its enriched uranium stocks and grant the IAEA full access to verify them.

"(The board) requests the (IAEA) Director General to transmit this resolution and the previously adopted resolutions ... to all Members of the Agency and to the Security Council and the General Assembly of the United Nations," said the latest resolution draft seen by Reuters.

It also "reiterates its call upon Iran to urgently remedy its non-compliance with its Safeguards Agreement by taking all steps deemed necessary by the Agency and the Board, so that the Director General can provide the necessary assurances regarding the correctness and completeness of Iran's declarations".

The draft has not yet been formally submitted to the board and negotiations over the exact wording are ongoing, diplomats said. Whenever the four powers have submitted a draft resolution on Iran in recent years, it has passed. Concrete action by the Security Council against Iran is unlikely since Tehran's allies Russia and China are permanent, veto-wielding members.

IAEA CONCERNS OVER ENRICHMENT Iran has often retaliated following IAEA board resolutions against it by escalating its nuclear activities or scaling back cooperation with the IAEA, but its options for both are currently extremely limited. It is unclear what other repercussions there might be on Tehran's conflict with the U.

S. As a party to the nuclear Non-Proliferation Treaty (NPT), Iran has the right to develop nuclear technology, including enrichment, for peaceful purposes. Iran says it would never produce nuclear weapons. It is, however, the only country to enrich to 60% without making a bomb.

The IAEA has said the amount it has enriched to that level is of serious concern. The IAEA estimates Iran had 440.9 kg of uranium enriched to that level before its sites were bombed. That is enough, if enriched further, for 10 nuclear weapons, according to an IAEA yardstick.

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The US and its allies Britain, France and Germany are pushing other countries on the UN nuclear watchdog's board to pass a resolution next week reporting Iran to the UN Security Council for the first time in 20 years, diplomats said on Friday. If passed, the resolution would follow up on one adopted on June 12 of last year declaring Iran in breach of its non-proliferation obligations for not fully cooperating with an investigation into uranium traces found at undeclared sites.

The US launched an air war against Tehran on February 28 in which, together with Israel, it destroyed or badly damaged Iran's uranium-enrichment facilities. Iran has not let International Atomic Energy Agency (IAEA) inspectors return to the bombed sites since then or verify what remains of its stocks of enriched uranium, some of which was enriched to up to 60% purity, a short step from weapons grade.

Resolution would be culmination of standoff over IAEA's access to nuclear sites A resolution by the IAEA's 35-nation board reporting Iran to the Security Council would also be the culmination of a standoff over IAEA access to those sites, since the board has passed two resolutions in the past year demanding Iran declare its enriched uranium stocks and grant the IAEA full access to verify them.

A draft text for the resolution has yet to be formally submitted to the board and negotiations between countries over the exact wording are ongoing, diplomats said. A draft is usually formally submitted early in the week of a board meeting. As a party to the nuclear Non-Proliferation Treaty (NPT), Iran has the right to develop nuclear technology, including enrichment, for peaceful purposes.

Iran says it would never produce nuclear weapons. It is, however, the only country to enrich to 60% without making a bomb. The amount it has enriched to that level is "a matter of serious concern" to the IAEA. The IAEA believes well over 200 kg of that highly enriched uranium has survived the bombardments and is held in a tunnel complex at Isfahan and at the Natanz facility.

Location: Jerusalem