Iran does not have Hormuz control, it’s in economic ‘death spiral’, says US

Asheville: US Treasury Secretary Scott Bessent has said Iran is caught in an economic “death spiral”, arguing that financial pressure and military operations will eventually force Tehran to return to negotiations.

Bessent told reporters after the G20 finance ministers’ meeting in Asheville that the United States controlled the Strait of Hormuz and dismissed suggestions that Iran had successfully closed the strategically important waterway.

“Iran does not have control of the Strait, and they are in a death spiral. We have control of the Strait,” he said.

Bessent said limited US strikes had targeted radar equipment that Iran was attempting to reconstruct along the Strait. He also claimed that about 17 million barrels of crude had moved through the waterway during the previous day.

“That is not Iranian control of the strait,” he said.

The Treasury Secretary maintained that Iran was resorting to military action because economic restrictions were placing growing pressure on its government.

“They are panicked. They are resorting to kinetic because they are getting squeezed economically,” Bessent said.

He pointed to fuel shortages and lengthy queues inside Iran, saying the country was struggling despite possessing some of the world’s largest energy resources.

Bessent said pressure on the Iranian leadership could produce one of three outcomes: divisions within the Islamic Revolutionary Guard Corps, public resistance or negotiations with Washington.

“At a point, either the IRGC are going to turn on each other, the people are going to turn on them, or they’re going to come to the table and want to do a deal that they can stick with,” he said.

Bessent said President Donald Trump believed an earlier memorandum of understanding had failed because Iran was not prepared to reach an agreement.

“We will see when they are ready for a deal,” he said.

The Treasury secretary said Washington was working to restrict Iran’s access to dollars and disrupt channels used to convert payments received in Chinese renminbi.

“The Chinese pay the Iranians in RMB. The RMB comes back to the Gulf region,” he said.

Bessent said the United States was targeting banks, cash houses and supply networks used to convert or move those funds. He referred to action against a bank in Dubai the previous Friday but did not provide its name during the news conference.

“So when that money cannot be converted to dollars, then the regime will starve,” he said.

Bessent also cited a sharp fall in the value of Iran’s currency as evidence that Tehran was losing access to foreign exchange. He said the currency had weakened from about 800,000 to the dollar 16 months earlier to 2.1 million.

“That just means that they have no access to dollars and that they are in the death throes,” he said.

Bessent acknowledged that Iran could launch further attacks as the pressure intensified. But he predicted that its deteriorating financial position would ultimately change the government’s calculations.

“Will they lash out more kinetically? Maybe, but they will be ready for a deal,” he said.

The United States has imposed successive rounds of sanctions on Iran’s oil industry, banking system and government institutions over Tehran’s nuclear activities, ballistic missile programme and support for armed groups in the Middle East. Those measures are intended to restrict Iran’s access to international markets and foreign currency.

The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. It is a vital route for oil and liquefied natural gas shipments from Gulf producers to markets in Asia and elsewhere, making any disruption a significant risk to global energy supplies.

IANS