THE massive fall in Iran’s currency after the announcement of new sanctions by the United States looks like a natural reaction to the economic strike by Washington. The Iranian Rial hit a record low of 2.02 million to the US dollar as currency markets panicked at President Mr. Donald Trump’s announcement of launching Operation Economic Outcast against Iran. More volatility is in store in the coming days even as Mr. Trump takes the economic strikes route to batter Iran’s already weaker economy. However, the important point of this economic war by the US is not the reaction by Iran but the view of the world on Mr. Trump’s sudden change in strategy.

 

In the last six months, the US-Israel and Iran war has taken multiple forms even as Washington changed its goalposts and decided to sit across the negotiations table for a peace deal. The thaw in the last few months was always fragile and given the maverick nature of the US President, a surprise was always in store. Yet, Iran has stood up to the attacks with a valiant fight, leveraging its strategic advantage of controlling the Strait of Hormuz. Now, with the US resorting to an economic war with new sanctions, there is a growing perception about Mr. Trump’s wariness of escalating a military conflict with Iran. The Operation Economic Outcast launched by Washington needs to be seen from this angle. It is clear that the US has realised the futility of continuing armed conflict with Iran as long as it blocks the Hormuz Strait and brings out its weapons stockpile to thwart US’ drone and missile strikes. With a smart strategy of targeting US allies in the Gulf region, Iran has already gained tremendous advantage in the war. Mr. Trump’s reluctance to go back to war has not come as a surprise to Iran as well the world.

 

The President has been making all sound and fury signifying nothing. Now, with the sanctions strategy, the US might choke Iran’s economy but whether the sanctions hold the power to decimate Iran is anybody’s guess. Sanctions are not new for Iran. But for a brief period of respite in 2015 during the nuclear deal with Washington, Tehran has been living with the economic excesses for decades. The new sanctions might look backbreaking for the world and its immediate effect might be felt by the common man in Iran but there is every possibility of economic war petering into a dud weapon. There is a reason to believe that the economic war launched by Mr. Trump would serve just an academic interest. The fall of Rial looks huge for the moment but given Iran’s resilience all these years, the shock is likely to be gradually absorbed. True, Iran is facing economic heat with sanctions and naval blockade by the US forces. But then, the regime had already factored in these consequences once it opted to use the Strait of Hormuz as a strategic weapon. The advantage is still working for Iran despite all efforts by the US to free the Strait.

 

While the world, too, is facing the problems of this blockade, it is unlikely that Iran would let go of its biggest advantage to shore up its economy. Mr. Trump will definitely go ahead with the Operation Economic Outcast with a new vigour. However, the world knows that it is an attempt to hide his military failure in decimating Iran. New sanctions will stretch the people in the country but given the all pervasive ideology-driven thinking of the current regime, Iran will continue to live with the setbacks. To make the economic sanctions work, the US will have to take a bigger bait of sanctioning countries like China for buying Iranian oil. Mr. Trump would put more pressure on Iran’s trading partners, however, at this moment there are no specific measures to impose secondary sanctions on consumers of Iranian oil. The economic strike, too, has come only as a warning shot instead of a full-fledged attack on the Iranian economy. It reflects the dilemma of the White House in continuing with the new strategy. Analysts feel a further setback in the strategy might force Mr. Trump to press military action. However, with elections coming up in the US, its possibility is bleak.