Operation Economic Outcast’s Success Depends on Aggressive, Sustained Enforcement

First there was the maximum pressure campaign during President Trump’s first term. Then came Operation Economic Fury in April 2026. Now, with Operation Economic Outcast, the Trump administration is launching a new campaign that, if enforced rigorously, could meaningfully curb Tehran’s sanctions evasion schemes.  

On August 24, Treasury Secretary Scott Bessent announced the launch of an “Economic D-Day” against the regime’s key enablers. He threatened that entities “enabling” Tehran’s sanctions violation schemes could “be removed from the U.S. dollar system,” and he said a financial institution could be sanctioned this week. Bessent also called for every foreign branch of Bank Melli, Iran’s state-owned bank, to be “shuttered.” But for Operation Economic Outcast to succeed, the administration’s fierce rhetoric must be met with even stronger action against Iran’s financial enablers in the weeks and months ahead.

Cutting Formal Ties Is Only the First Step in Disrupting Iranian Illicit Finance

Secretary Bessent provided few specific details on how Operation Economic Outcast will proceed, but he did establish that action must be taken to combat Bank Melli, which is sanctioned by the United States, European Union, and United Kingdom. Bank Melli — which maintains an international network that includes branches in the United Arab Emirates (UAE), Iraq, Oman, Azerbaijan, France, and Germany; subsidiaries in the United Kingdom, Hong Kong, and Russia; and a joint venture bank in Afghanistan — is Iran’s largest bank. Some of these operations, particularly in Europe, are already subject to sanctions that severely restrict their ability to conduct transactions. But revoking Bank Melli’s licenses in these jurisdictions would only be a first step in cutting off financial flows to Iran.

Just days before the announcement of Operation Economic Outcast, the UAE moved to cut direct trade and financial ties with Tehran. Despite this significant move, Dubai has long served as a permissive environment for Iranian sanctions evasion. The same problem applies across other jurisdictions where Bank Melli operates, making reductions in direct trade and financial dealings involving Iranian financial institutions an important first step. However, this step is not sufficient to degrade Iran’s vast web of opaque front companies and financial intermediaries that facilitate billions of dollars in sanctions evasion every year.

Iran’s Economic Crisis Could Rekindle Internal Turmoil

Iran’s currency plunged to a historic low of more than 2 million rials per dollar in late August, while July’s annual inflation reached 66 percent, with a point-to-point rate of 87.9 percent, and food prices rose more than 130 percent. Iranian authorities are also weighing cuts to gasoline subsidies but remain wary of how to proceed, given that the 2019 fuel-price shock triggered nationwide anti-regime protests in which security forces killed roughly 1,500 unarmed demonstrators.

Iranian parliament speaker Mohammad Bagher Ghalibaf, who has led Tehran’s delegation in talks with Washington, said on August 21 that if ordinary Iranians are struggling, the regime “will not last” because it cannot maintain security without a functioning economy. Iran’s national police chief Ahmad-Reza Radan warned on August 24 that economic decline, fuel prices, and unemployment could fuel renewed political unrest.

Strong Talk Must Be Met With Stronger Action

The list of Iran’s financial enablers is long, but none are more important than Dubai and Hong Kong. While the administration works with allies and partners to identify pathways for Iranian sanctions evasion that can be easily disrupted, Dubai and Hong Kong may require more aggressive action to achieve substantive reforms.

Section 311 of the USA PATRIOT Act allows the secretary of the Treasury to propose one or more special measures that can help produce enhanced due diligence on transactions demonstrating established typologies of Iranian sanctions evasion in these jurisdictions. Treasury could also consider adding China’s Bank of Kunlun, which Washington cut off from dollar access in 2012, to the Specially Designated Nationals List. That would produce upward pressure on Bank of Kunlun’s majority owner, the large state-run China National Petroleum Corporation, to cease its direct or indirect support for the bank and let a key conduit for Iranian sanctions evasion fail.

Janatan Sayeh is a research analyst at the Foundation for Defense of Democracies (FDD), where he focuses on Iranian domestic affairs and the Islamic Republic’s regional malign influence. Max Meizlish is a research fellow at FDD’s Center on Economic and Financial Power (CEFP). For more analysis from the authors and FDD, please subscribe HERE. Follow Max and Janatan on X @maxmeizlish and @JanatanSayeh. Follow FDD on X @FDD, @FDD_CEFP, and @FDD_Iran. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.