Lars Boe

Six months ago, the United States and Israel began striking Iran. At the time, the central questions were military ones: how quickly Iranian air defenses could be degraded, how much damage could be inflicted on Tehran’s missile and nuclear infrastructure, how Iran would retaliate, and whether the confrontation would expand into a wider regional war.Six months later, the conflict has not produced the rapid conclusion many expected. Iran has survived the initial shock, the Strait of Hormuz remains central to the confrontation, diplomatic efforts have repeatedly stalled, and neither Washington nor Tehran appears prepared to make the concessions necessary to end the war. Instead, the conflict is entering a different phase. Increasingly, the most important weapons may not be aircraft, missiles or naval vessels, but sanctions, banks, oil flows and access to the U.S. dollar.That transition became particularly visible at the six-month anniversary.<figure><img src="https://app.inkly.news/media/1788053597962-1ac4hzyjbx_big.thumb.webp.5da758f91ddfda0a0ae09cdfa626103f-pYpkW6E4LqZM6rPARZo8Ehe32I4JqF.webp" alt="Banque Misr UAE Dubai"/><figcaption>Banque Misr UAE DubaiBanque Misr UAE bank / illustrative</figcaption></figure>On August 28, the U.S. Treasury targeted the United Arab Emirates branches of Banque Misr, one of Egypt’s largest financial institutions, accusing them of processing roughly $1.8 billion for more than 100 companies linked to Iran’s shadow banking system. The proposed action would cut those branches off from U.S. correspondent banking and dollar transactions. Egypt’s central bank stressed that the measures apply only to Banque Misr’s UAE operations, but the broader message from Washington was unmistakable: institutions outside Iran can also pay a substantial price for facilitating Iranian finance.This is an important evolution in the conflict.For years, sanctions against Iran have focused heavily on Iranian companies, government officials, military organizations, shipping networks and oil exports. The current strategy goes further by targeting the financial infrastructure that allows those sanctioned entities to continue operating. Treasury has already described its campaign as an effort to disrupt Iran’s ability to generate, move and repatriate revenue, while warning that foreign financial institutions facilitating Iranian commerce may themselves become targets.In other words, Washington is attempting to make doing business with Iran progressively more expensive and dangerous.That may prove especially important because the military campaign has demonstrated the limits of kinetic power alone. Iran has sustained major losses, but it has not capitulated. Earlier U.S. intelligence assessments concluded that Tehran could withstand the economic effects of the blockade for months, while repeated diplomatic initiatives have failed to produce a durable settlement. A proposed ten-day ceasefire in July was another attempt to restart negotiations, but by late August talks remained deadlocked.Iran is nevertheless showing signs of economic strain.President Masoud Pezeshkian said foreign trade has fallen by 35 percent as a result of sanctions and the blockade, while Iranian leaders have increasingly acknowledged the economic hardship facing the country. Concern over domestic cohesion has also become more visible as the government tries to prevent economic pressure from becoming political instability.This may help explain why the Treasury Department is assuming a larger role in the conflict.The objective is no longer simply to destroy Iranian military capabilities faster than they can be rebuilt. Washington is also trying to restrict the money required to rebuild them.<figure><img src="https://app.inkly.news/media/1788054245781-uae-iran-israel-us-conflict-opec-energy-oil-79wqSV23oVrolbJKefOWOimdMwuzpQ.webp" alt="30% of the world's crude oil transported by ship is carried in tankers via Hormuz, while one-fifth of the world's gas transported by ship passes through the busy strait between Iran and the Gulf state of Oman."/><figcaption>30% of the world's crude oil transported by ship is carried in tankers via Hormuz, while one-fifth of the world's gas transported by ship passes through the busy strait between Iran and the Gulf state of Oman.Fadel Senna</figcaption></figure>That strategy creates another problem, however: energy.The Strait of Hormuz has historically carried roughly one-fifth of global energy flows, and disruption surrounding the waterway has affected oil markets throughout the war. Crude prices have fallen from their earlier wartime highs, but the global energy system remains vulnerable. Emergency petroleum reserves have been heavily drawn down, alternative export routes have limited capacity, and analysts continue to warn that renewed disruption could push prices substantially higher.Washington therefore faces a difficult equation.The harder it squeezes Iran’s oil revenue and access to international markets, the greater the potential pressure on global energy supplies. Higher gasoline prices, inflation and economic disruption can eventually weaken domestic support for a prolonged conflict.That makes another development on the six-month anniversary particularly interesting.President Donald Trump announced a sweeping agreement with Venezuela involving access to more than 65 billion barrels of Venezuelan oil reserves. Under the announced arrangement, a new private-sector structure would develop 17 Venezuelan oil fields while giving the United States a majority operational stake. The agreement remains ambitious and would require enormous investment, and significant production increases could take years rather than months. Still, its strategic implications are difficult to ignore.<figure><img src="https://app.inkly.news/media/1788054567015-download-u6n0Q2dd34pZr7cojwYZT6DRIIS0Sh.webp" alt="An abandoned and inoperative oil pumpjack stands in the oil-rich Maracaibo region of western Venezuela."/><figcaption>An abandoned and inoperative oil pumpjack stands in the oil-rich Maracaibo region of western Venezuela.LA Times</figcaption></figure>Venezuelan oil cannot immediately replace disrupted Gulf supplies. But over the longer term, expanding access to alternative reserves could give Washington greater freedom to pressure oil-producing adversaries without exposing the American economy to the same degree of energy risk.The military and economic strategies are therefore beginning to converge.The United States can attack Iran’s weapons infrastructure. Treasury can attack the financial system that pays for its reconstruction. Restrictions on oil exports can reduce government revenue. Alternative sources of energy can potentially reduce the economic consequences of maintaining that pressure.If successful, the strategy could make the war increasingly difficult for Tehran to sustain even without a decisive military victory.There is, however, a major obstacle: China.Beijing remains deeply involved in Iran’s economic lifeline, particularly through oil purchases and financial networks. Washington has already targeted entities in China and Hong Kong, but imposing severe penalties on major Chinese institutions would carry risks far beyond Iran. It could collide with broader U.S.–China trade negotiations and transform a Middle Eastern economic campaign into a confrontation between the world’s two largest economies.That may become the defining question of the next phase of the war.It is one thing to sanction Iranian banks or smaller intermediaries. It is another to tell major international financial institutions that they must choose between commerce with Iran and access to the dollar-based financial system.Banque Misr may therefore matter less because of the individual bank involved than because of the precedent it represents.Six months into the war, Washington increasingly appears to be trying to defeat Iran not only by destroying what it can hit, but by making the Iranian state progressively harder to finance.The first six months were dominated by missiles, aircraft, naval operations and the Strait of Hormuz.The next six may increasingly be fought in banks, shipping companies, oil markets and Treasury offices.And unlike an airstrike, that kind of war does not necessarily require a clear beginning or end.

Six months ago, the United States and Israel began striking Iran. At the time, the central questions were military ones: how quickly Iranian air defenses could be degraded, how much damage could be inflicted on Tehran’s missile and nuclear infrastructure, how Iran would retaliate, and whether the confrontation would expand into a wider regional war.

Six months later, the conflict has not produced the rapid conclusion many expected. Iran has survived the initial shock, the Strait of Hormuz remains central to the confrontation, diplomatic efforts have repeatedly stalled, and neither Washington nor Tehran appears prepared to make the concessions necessary to end the war. Instead, the conflict is entering a different phase. Increasingly, the most important weapons may not be aircraft, missiles or naval vessels, but sanctions, banks, oil flows and access to the U.S. dollar.

That transition became particularly visible at the six-month anniversary.

On August 28, the U.S. Treasury targeted the United Arab Emirates branches of Banque Misr, one of Egypt’s largest financial institutions, accusing them of processing roughly $1.8 billion for more than 100 companies linked to Iran’s shadow banking system. The proposed action would cut those branches off from U.S. correspondent banking and dollar transactions. Egypt’s central bank stressed that the measures apply only to Banque Misr’s UAE operations, but the broader message from Washington was unmistakable: institutions outside Iran can also pay a substantial price for facilitating Iranian finance.

This is an important evolution in the conflict.

For years, sanctions against Iran have focused heavily on Iranian companies, government officials, military organizations, shipping networks and oil exports. The current strategy goes further by targeting the financial infrastructure that allows those sanctioned entities to continue operating. Treasury has already described its campaign as an effort to disrupt Iran’s ability to generate, move and repatriate revenue, while warning that foreign financial institutions facilitating Iranian commerce may themselves become targets.

In other words, Washington is attempting to make doing business with Iran progressively more expensive and dangerous.

That may prove especially important because the military campaign has demonstrated the limits of kinetic power alone. Iran has sustained major losses, but it has not capitulated. Earlier U.S. intelligence assessments concluded that Tehran could withstand the economic effects of the blockade for months, while repeated diplomatic initiatives have failed to produce a durable settlement. A proposed ten-day ceasefire in July was another attempt to restart negotiations, but by late August talks remained deadlocked.

Iran is nevertheless showing signs of economic strain.

President Masoud Pezeshkian said foreign trade has fallen by 35 percent as a result of sanctions and the blockade, while Iranian leaders have increasingly acknowledged the economic hardship facing the country. Concern over domestic cohesion has also become more visible as the government tries to prevent economic pressure from becoming political instability.

This may help explain why the Treasury Department is assuming a larger role in the conflict.

The objective is no longer simply to destroy Iranian military capabilities faster than they can be rebuilt. Washington is also trying to restrict the money required to rebuild them.

That strategy creates another problem, however: energy.

The Strait of Hormuz has historically carried roughly one-fifth of global energy flows, and disruption surrounding the waterway has affected oil markets throughout the war. Crude prices have fallen from their earlier wartime highs, but the global energy system remains vulnerable. Emergency petroleum reserves have been heavily drawn down, alternative export routes have limited capacity, and analysts continue to warn that renewed disruption could push prices substantially higher.

Washington therefore faces a difficult equation.

The harder it squeezes Iran’s oil revenue and access to international markets, the greater the potential pressure on global energy supplies. Higher gasoline prices, inflation and economic disruption can eventually weaken domestic support for a prolonged conflict.

That makes another development on the six-month anniversary particularly interesting.

President Donald Trump announced a sweeping agreement with Venezuela involving access to more than 65 billion barrels of Venezuelan oil reserves. Under the announced arrangement, a new private-sector structure would develop 17 Venezuelan oil fields while giving the United States a majority operational stake. The agreement remains ambitious and would require enormous investment, and significant production increases could take years rather than months. Still, its strategic implications are difficult to ignore.

Venezuelan oil cannot immediately replace disrupted Gulf supplies. B

Six months into the U.S.-Iran conflict, sanctions and financial warfare are replacing missiles. Can economic strangulation succeed where military force has not?

Six Months of War: Why the U.S.–Iran Conflict Is Becoming an Economic War

The U.S. is betting that financial strangulation can succeed where military force alone has not. China may be the factor that determines whether it works.

J.M. Chyno

A catastrophic flash flood and mudslide tore through northern Nepal on Wednesday, killing more than 160 people and leaving hundreds of tourists missing. The surge, which reportedly originated on the Tibetan side of the border, raced down the Bhote Koshi and Trishuli rivers, destroying villages, bridges and hydropower projects in Rasuwa and Nuwakot districts. In Tibet’s Gyirong County, Chinese state media reported at least three people dead and 265 missing.According to local reports, water levels in the Bhote Koshi basin began rising rapidly around 9:00 AM local time on August 26. The flood breached riverbanks and travelled downstream through the Bhote Koshi River into the Trishuli River, with potential impacts extending into Nuwakot and Dhading districts. There are concerns over further potential downstream impacts as sediment and boulders have run through the Bhote Koshi and Trishuli river systems. Water levels on the Trishuli River at Galchchi reportedly rose by at least nine meters within 30 minutes.<figure><img src="https://app.inkly.news/media/1787779667320-011fe138-1b24-11ee-80f6-77dd1bd93379_01a03e4e-c055-7571-acbd-6437c146117b-PcZjSZVFAXXF8BdozSwtP99FQcixxQ.jpeg" alt=""/><figcaption>Major flooding in the Rasuwa district on Wednesday Aug. 26, 2026.Screenshot from video by Upendra Mansingh/ Associated Press/ICIMoD</figcaption></figure>Climate experts at the Kathmandu-based <a href="https://www.icimod.org/press-release/major-flash-flood-sweeps-through-nepals-rasuwa-district-raising-fears-of-further-downstream-flooding/">International Centre for Integrated Mountain Development</a>, said a collapsing glacier was likely the main cause, blocking the river then releasing a sudden surge downstream. At first it was thought an earthquake was the cause of the deadly mudslide, however the United States Geological Survey recently stated that after an &quot;Additional analysis of long period seismic waves indicate that the seismic energy was instead generated by a landslide.&quot; <a href="https://edition.cnn.com/2026/08/26/weather/floods-nepal-cause-vis">Experts warn</a> it will take time to establish the exact cause of the flooding.Countries from around the world have offered assistance as the true scale of emerging disaster unfolds. Indian officials say the country has sent 10 tones of aid to Nepal to assist with the emergency response. &quot;Our thoughts are with the bereaved families and all those affected. In face of this challenge, India stands with Nepal and its people,&quot; says the country's external affairs minister, <a href="https://x.com/DrSJaishankar">Subrahmanyam Jaishankar</a>, in a post on social media platform X.<figure><img src="https://app.inkly.news/media/1787779307879-HQqD0TwaIAAVAoM-OqDrPhr4NqRNRVzUJTMP0W8EpanDoE.jfif" alt=""/><figcaption>India dispatched 10 tonnes of HADR assistance and essential medicines to support Nepal’s response to the devastating floods.X/@DrSJaishankar</figcaption></figure>The number of missing tourists, including 54 from the U.S., is now at least 579, according to the latest figures confirmed by <a href="https://x.com/NepalPoliceHQ">Nepali police</a>. Search and rescue operations in Nepal’s flood-hit areas will continue through the night, the Prime Minister’s Office said on Facebook on Wednesday. Eleven ground teams have been deployed for overnight operations. A large number of people stranded above Timure are scheduled to be airlifted on Thursday morning, and efforts will also continue to reach those trapped in tunnels at hydropower project sites, the office said. The<a href="https://x.com/NepaliArmyHQ"> Nepali Army</a> has already airlifted more than 100 people and deployed additional personnel and helicopters, with further air evacuations planned at first light.This story is developing and will be updated as more information becomes available.

A catastrophic flash flood and mudslide tore through northern Nepal on Wednesday, killing more than 160 people and leaving hundreds of tourists missing. The surge, which reportedly originated on the Tibetan side of the border, raced down the Bhote Koshi and Trishuli rivers, destroying villages, bridges and hydropower projects in Rasuwa and Nuwakot districts. In Tibet’s Gyirong County, Chinese state media reported at least three people dead and 265 missing.

According to local reports, water levels in the Bhote Koshi basin began rising rapidly around 9:00 AM local time on August 26. The flood breached riverbanks and travelled downstream through the Bhote Koshi River into the Trishuli River, with potential impacts extending into Nuwakot and Dhading districts. 

There are concerns over further potential downstream impacts as sediment and boulders have run through the Bhote Koshi and Trishuli river systems. Water levels on the Trishuli River at Galchchi reportedly rose by at least nine meters within 30 minutes.

Climate experts at the Kathmandu-based International Centre for Integrated Mountain Development, said a collapsing glacier was likely the main cause, blocking the river then releasing a sudden surge downstream. At first it was thought an earthquake was the cause of the deadly mudslide, however the United States Geological Survey recently stated that after an "Additional analysis of long period seismic waves indicate that the seismic energy was instead generated by a landslide." Experts warn it will take time to establish the exact cause of the flooding.

Countries from around the world have offered assistance as the true scale of emerging disaster unfolds. Indian officials say the country has sent 10 tones of aid to Nepal to assist with the emergency response. "Our thoughts are with the bereaved families and all those affected. In face of this challenge, India stands with Nepal and its people," says the country's external affairs minister, Subrahmanyam Jaishankar, in a post on social media platform X.

The number of missing tourists, including 54 from the U.S., is now at least 579, according to the latest figures confirmed by Nepali police. Search and rescue operations in Nepal’s flood-hit areas will continue through the night, the Prime Minister’s Office said on Facebook on Wednesday. Eleven ground teams have been deployed for overnight operations. 

A large number of people stranded above Timure are scheduled to be airlifted on Thursday morning, and efforts will also continue to reach those trapped in tunnels at hydropower project sites, the office said. The Nepali Army has already airlifted more than 100 people and deployed additional personnel and helicopters, with further air evacuations planned at first light.

This story is developing and will be updated as more information becomes available.

  

A glacial flood from Tibet killed 160+ people and left nearly 580 tourists missing in Nepal's Rasuwa and Nuwakot districts. Rescue operations continue overnight

Hundreds Missing After Catastrophic Flash Flood Devastates Nepal-Tibet Border

A glacial flood from Tibet killed 160+ people and left nearly 580 tourists missing in Nepal's Rasuwa and Nuwakot districts. Rescue operations continue overnight.

A wall of mud and water from Tibet tore through Rasuwa and Nuwakot on Wednesday, washing away villages, bridges and hydropower projects. Hundreds of tourists remain unaccounted for.

Erfan Fard

Without digression or generalization, there is no doubt that Iran’s domestic situation is deeply chaotic. Yet the U.S. intelligence community continues to suffer from one fundamental problem: it has not read the Shiite mullah’s book. Nor is it an exaggeration to say that it does not truly understand either Islamist terrorism or Shiite terrorism. The terrorist organizations within the Islamic Republic’s transnational Islamist terrorist mafia may well be studied by America’s intelligence and espionage agencies, but those institutions still fail to grasp one larger picture: a Shiite-style Islamic caliphate is among the most dangerous and brutal forms of mafia rule in the world, and Khomeinism is a combination of Nazism, Stalinism, Maoism, communism, and terrorism. The world united against communism, apartheid, and other such systems, yet when it comes to eliminating Islamist terrorism, it still stands bewildered, watching events unfold from a distance.<figure><img src="https://app.inkly.news/media/1787671135291-urn-publicid-ap-org-343d87fdb960424e9ec0f4a90dc64fcbAP_Was_There_Iran_Revolution_Anniversary_01960-kIUjx71xvfYo6GM6KOsvAhNYYEpCCx.webp" alt=""/><figcaption>Shah Mohammad Reza Pahlavi and Empress Farah walk on the tarmac at Mehrabad Airport in Tehran, Iran, to board a plane to leave the country, Jan. 16, 1979.AP photo</figcaption></figure>After 1979, the United States and the White House effectively lost their most loyal, sincere, and useful friend in the Middle East and Western Asia, while Iran fell into the trap of the former Soviet Union. When Mohammad Reza Shah Pahlavi, astonished and incredulous at the CIA’s lack of understanding, boarded the plane that took him out of Iran, the CIA itself had little interest in listening to experienced SAVAK officials who warned that Islamist and Marxist terrorists had lined up behind Khomeini at the direction of the KGB. The CIA had not even read Velayat-e Faqih—the blueprint for the religious dictatorship of a brutal Shiite mullah. Nor was it willing to listen to Mossad’s accounts, while discovering little on its own. Then came 1983 and the bombing of the U.S. Embassy in Beirut, where Robert Ames, the CIA’s highly experienced Middle East expert, was killed. Perhaps from 1980 onward, the U.S. State Department had gradually begun to recognize this cancerous growth, this horrifying tumor on the body of international relations. But by then, it was too late.None of the American presidents—Democrat or Republican—has possessed a serious intention or genuine determination to eliminate this problem, and they still do not. Even today, there is no real will for regime change in the White House. The U.S. intelligence community and the CIA are fundamentally unfamiliar with Iranian experts and analysts. And even when a friendly meeting takes place with people from the CIA or FBI—or an unfriendly encounter with DHS—the first question is: Do you have U.S. citizenship? It is an irrelevant question that obstructs the exchange of information and ideas.When George W. Bush, despite having experienced and seasoned intelligence and security advisers such as Michael Morell and an informed intelligence director such as General Hayden, became aware of the existence of this cancerous tumor, he placed the Islamic Republic inside the sinister triangle of the “Axis of Evil.” Yet once again, there was no seriousness about eliminating the central problem and bringing it to an end. From 2001 onward, both the Shiite Crescent and the Islamic Republic’s mafia-like transnational terrorist network expanded, while the terrorist Quds Force entered a new and more dangerous phase of operations beyond Iran’s borders.The Islamic Republic also invaded America through charities, religious institutions, cultural centers, and media organizations. Many mosques, universities, Persian-language media outlets inside the United States, and even affiliated lobbying groups effectively and shamelessly became propaganda megaphones for the Islamic Republic on American soil. Meanwhile, apologists and stooges received green cards, while sincere friends of the CIA ended up in the absurd and irrelevant prisons of DHS and ICE. Grotesque!It has reached the point where, in Los Angeles, a notorious and disgraced television channel – Channel one - can become a promoter of Hamas while the FBI in Los Angeles appears unconcerned. The Persian service of Voice of America becomes a gathering place for IRGC operatives, and when the CIA decides that it wants to get rid of a concerned Iranian expert, it arranges to meet him at Ben &amp; Jerry’s for ice cream—and then, nothing. Grotesque again! Perhaps he should have obtained clearance from the ice-cream shop first.<figure><img src="https://app.inkly.news/media/1787672002181-090622-iran-anti-riot-hmed-4p-OVG8BA2q3I7C7wLaJz9CtSyxkffvRd.webp" alt=""/><figcaption>Iranian anti-riot police intercept traffic during a patrol in Tehran on Monday.Ali Nazanin / AFP - Getty Images</figcaption></figure>Today, inside Iran, the ruling establishment is paralyzed, and the regime’s nightmare is a nationwide uprising by the Iranian people against the current system. In practical terms, the regime has been brought to its knees, while society is waiting for a spark to begin a nationwide uprising against a repressive, plundering, occupying regime that has put the country up for sale. That spark has nothing to do with America or Israel. The Iranian people are not asleep; Iranian society is awake and intelligent. And that is precisely the regime’s nightmare. If such an uprising occurs, Iran could enter a civil war because the religious forces and supporters of the regime would transform themselves into underground terrorist cells operating out of mosques, unwilling to surrender power peacefully. But this will undoubtedly happen. What we are witnessing now is the calm before the storm. Severe poverty, public discontent, and shortages are tightening their grip around Iran’s throat.The first stage is the transition away from the sinister mafia of the Shiite mullahs, who are the root of the promotion of ignorance and superstition in Iran. Naturally, no society reaches prosperity, freedom, or democracy through the Shiite mullah. Nor will the Iranian people climb down into a well on a rope held by people in Washington such as JD Vance, placing their hopes in endless and exhausting negotiations. Iranians understand the nature and institutional character of the Shiite mullah, but someone like Vance speaks as though, during the past forty-eight years, he has neither read a newspaper nor listened to the radio. Yet his ear is open to the Islamic Republic’s notorious lobby in Washington. Naturally, along this difficult and winding road, if Israel and the United States help the Iranian people achieve freedom, so much the better, and they deserve gratitude for it. But America and Israel will not be the variables that determine this equation.It must also be said that a strange kind of disintegration and fragmentation has emerged within Iran’s ruling establishment. The Iranian regime is deeply confused and no longer possesses the power to control an enraged society. Gradually, the world is beginning to understand that the regime in Iran is on its way out and that it must begin thinking about an alternative. But if there is no one other than Prince Reza Pahlavi to whom responsibility for Iran can be entrusted after the collapse—someone capable of preserving security during the transition, holding free elections afterward, and allowing Iranian society to vote, choose, and reclaim sovereignty over its own country—then why is the U.S. intelligence community not preparing and training cadres for the period of collapse and transition in Iran? A counterterrorism center or an intelligence community cannot be established inside Iran overnight.<figure><img src="https://app.inkly.news/media/1787671745366-csm_230218_MSC2023__PGB9798_v_1_970a285126-P2WZXbVMfKgOT3aCI3tLpx24tBBKbC.jpeg" alt=""/><figcaption>Munich Security Conference 2026, Munich, 13.02.2026securityconference</figcaption></figure>If the U.S. intelligence community believes that Reza Pahlavi is the only credible figure in the Iranian opposition and the only serious figure opposing the Iranian regime, then why conceal that reality? Unfortunately, organizations such as the CIA still do not understand the destructive mind of the Shiite mullah, and they still have not read the mullah’s book. They do not want to believe that until the final moment of this regime’s existence, destruction, terrorism, and subversion will continue. Tehran continues to move in the orbit of Moscow, Pyongyang, and Beijing, and America will have the upper hand only when it respects the wishes, needs, and thinking of Iranian society. Yet the CIA still lacks the will for regime change. Nor can an accurate analysis of Iran’s boiling society be produced from behind a desk in Langley. The cancerous tumor of the Iranian regime requires chemotherapy and surgery; such pain cannot be cured with a baby aspirin.But serious work can still be done. There is still time to think about the future. And there is still time to rid the world of a cancerous tumor.

Without digression or generalization, there is no doubt that Iran’s domestic situation is deeply chaotic. Yet the U.S. intelligence community continues to suffer from one fundamental problem: it has not read the Shiite mullah’s book. 

Nor is it an exaggeration to say that it does not truly understand either Islamist terrorism or Shiite terrorism. The terrorist organizations within the Islamic Republic’s transnational Islamist terrorist mafia may well be studied by America’s intelligence and espionage agencies, but those institutions still fail to grasp one larger picture: a Shiite-style Islamic caliphate is among the most dangerous and brutal forms of mafia rule in the world, and Khomeinism is a combination of Nazism, Stalinism, Maoism, communism, and terrorism. The world united against communism, apartheid, and other such systems, yet when it comes to eliminating Islamist terrorism, it still stands bewildered, watching events unfold from a distance.

After 1979, the United States and the White House effectively lost their most loyal, sincere, and useful friend in the Middle East and Western Asia, while Iran fell into the trap of the former Soviet Union. When Mohammad Reza Shah Pahlavi, astonished and incredulous at the CIA’s lack of understanding, boarded the plane that took him out of Iran, the CIA itself had little interest in listening to experienced SAVAK officials who warned that Islamist and Marxist terrorists had lined up behind Khomeini at the direction of the KGB. The CIA had not even read Velayat-e Faqih—the blueprint for the religious dictatorship of a brutal Shiite mullah. Nor was it willing to listen to Mossad’s accounts, while discovering little on its own. Then came 1983 and the bombing of the U.S. Embassy in Beirut, where Robert Ames, the CIA’s highly experienced Middle East expert, was killed. Perhaps from 1980 onward, the U.S. State Department had gradually begun to recognize this cancerous growth, this horrifying tumor on the body of international relations. But by then, it was too late.

None of the American presidents—Democrat or Republican—has possessed a serious intention or genuine determination to eliminate this problem, and they still do not. Even today, there is no real will for regime change in the White House. The U.S. intelligence community and the CIA are fundamentally unfamiliar with Iranian experts and analysts. And even when a friendly meeting takes place with people from the CIA or FBI—or an unfriendly encounter with DHS—the first question is: Do you have U.S. citizenship? It is an irrelevant question that obstructs the exchange of information and ideas.

When George W. Bush, despite having experienced and seasoned intelligence and security advisers such as Michael Morell and an informed intelligence director such as General Hayden, became aware of the existence of this cancerous tumor, he placed the Islamic Republic inside the sinister triangle of the “Axis of Evil.” Yet once again, there was no seriousness about eliminating the central problem and bringing it to an end. From 2001 onward, both the Shiite Crescent and the Islamic Republic’s mafia-like transnational terrorist network expanded, while the terrorist Quds Force entered a new and more dangerous phase of operations beyond Iran’s borders.

The Islamic Republic also invaded America through charities, religious institutions, cultural centers, and media organizations. Many mosques, universities, Persian-language media outlets inside the United States, and even affiliated lobbying groups effectively and shamelessly became propaganda megaphones for the Islamic Republic on American soil. Meanwhile, apologists and stooges received green cards, while sincere friends of the CIA ended up in the absurd and irrelevant prisons of DHS and ICE. Grotesque!

It has reached the point where, in Los Angeles, a notorious and disgraced television channel – Channel one - can become a promoter of Hamas while the FBI in Los Angeles appears unconcerned. The Persian service of Voice of America becomes a gathering place for IRGC operatives, and when the CIA decides that it wants to get rid of a concerned Iranian expert, it arranges to meet him at Ben & Jerry’s for ice cream—and then, nothing. Grotesque again! Perhaps he should have obtained clearance from the ice-cream shop first.

Today, inside Iran, the ruling establishment is paralyzed, and the regime’s nightmare is a nationwide uprising by the Iranian people against the current system. In practical terms, the regime has been brought to its knees, while society is waiting for a spark to begin a nationwide uprising against a repressive, plundering, occupying regime that has put the country up for sale. That spark has nothing to do with America or Israel. The Iranian people are not asleep; Iranian society is awake and intelligent. And that is precisely the regime’s nightmare. If such an uprising occurs, Iran could enter a civil war because the religious forces and supporters of the regime

The U.S. intelligence community has failed to grasp Iran's clerical regime for decades. Here's why Washington must prepare now for regime change.

The Problems of the U.S. Intelligence Community and Regime Change in Iran

The U.S. intelligence community has repeatedly failed to understand the ideological nature of Iran’s Shiite clerical regime and remains unprepared for its possible collapse. As Iran approaches a potential nationwide uprising, Washington must prepare now for regime change, and a democratic transition.


Wesley Marius

The deal has reportedly emerged from the U.S.-mediated talks in Jordan. It's expected to improve the communication between the three sides as Turkish and Israeli military activity in Syria increasingly overlaps, raising the risk that an unannounced deployment or a misread movement sets off an exchange of fire.None of the three governments have <a href="https://www.jpost.com/middle-east/iran-news/article-906316">publicly confirmed the arrangement.</a> It is also unknown whether the understanding was set down in a signed document or agreed verbally in Jordan.The move follows Israel's August 18 strike on Abu al-Duhur Airbase, where Israel claimed Syria was preparing to facilitate a Turkish deployment. Syria and Turkey denied this, saying Turkish personnel were present only for existing military cooperation and training.The dispute over that strike is the kind of gap the committee is meant to close. Three militaries read the same activity three different ways, with no shared channel to test the reading before acting on it.The committee should be viewed primarily as a deconfliction and crisis-management mechanism, not a political reconciliation agreement. It is built to manage contact between forces, not to settle the interests that put those forces close together.The development suggests all sides are actively trying to prevent miscalculation from escalating into a confrontation between Turkey and Israel. The broader competition over Syria's future remains unresolved.

The deal has reportedly emerged from the U.S.-mediated talks in Jordan. It's expected to improve the communication between the three sides as Turkish and Israeli military activity in Syria increasingly overlaps, raising the risk that an unannounced deployment or a misread movement sets off an exchange of fire.

None of the three governments have publicly confirmed the arrangement. It is also unknown whether the understanding was set down in a signed document or agreed verbally in Jordan.

The move follows Israel's August 18 strike on Abu al-Duhur Airbase, where Israel claimed Syria was preparing to facilitate a Turkish deployment. Syria and Turkey denied this, saying Turkish personnel were present only for existing military cooperation and training.

The dispute over that strike is the kind of gap the committee is meant to close. Three militaries read the same activity three different ways, with no shared channel to test the reading before acting on it.

The committee should be viewed primarily as a deconfliction and crisis-management mechanism, not a political reconciliation agreement. It is built to manage contact between forces, not to settle the interests that put those forces close together.

The development suggests all sides are actively trying to prevent miscalculation from escalating into a confrontation between Turkey and Israel. The broader competition over Syria's future remains unresolved.

Syria, Turkey, and Israel have reportedly agreed to establish a joint security committee aimed at preventing accidental military confrontation inside Syria.

Syria, Turkey and Israel Reportedly Agree to Joint Security Committee

That may be changing quickly. As the conflict with Iran approaches the six-month mark, Bessent has moved into the center of the administration’s strategy. Washington is now promising what Trump has called an “Economic D-Day,” while Bessent says the United States intends to impose unprecedented economic pressure on Iran and those continuing to support its economy. Reuters reported Thursday that Bessent described the coming measures as potentially the “toughest sanctions in history,” with the stated goal of increasing pressure without requiring another major round of military action.For service members sitting on bases across the Middle East, that raises a much more practical question:Does this mean the war is beginning to change?Who is Scott Bessent?Bessent is not a career politician. Before entering government, he spent roughly four decades in global investment management, specializing in currencies, bonds and macroeconomic trends. He founded Key Square Capital Management and previously served as Chief Investment Officer at Soros Fund Management. He also managed Soros Fund Management’s London office and taught economic history at Yale.That background matters because the Treasury Department is not simply responsible for taxes and government finances. It is also one of Washington’s most powerful national-security weapons.Through the Office of Foreign Assets Control, Treasury can freeze assets, blacklist companies, isolate banks, target shipping networks, disrupt cryptocurrency exchanges and threaten foreign companies with losing access to the U.S. financial system.<figure><img src="https://app.inkly.news/media/1787342756865-crypto-exchange-software-1030x687-aEpnT6YBFVXMCDoKbOUYg3t7wmkPFr.jpg" alt=""/><figcaption>cryptocurrency exchange trading screenempirica.</figcaption></figure>In other words, Bessent does not command bombers.He commands access to money.What Could “Economic D-Day” Actually Mean?Iran is already one of the most heavily sanctioned countries on Earth, so simply adding another list of Iranian officials would probably accomplish little.The real escalation would come from attacking the networks that allow Iran to work around those sanctions.Treasury has already been moving in that direction under its “Economic Fury” campaign. Since May, OFAC actions have targeted Iranian oil revenue, LPG-smuggling operations, weapons procurement networks, shadow banks, shipping companies, vessels and cryptocurrency exchanges. In July, Treasury sanctioned more than 50 individuals, entities and vessels connected to a major Iranian shipping network. On August 7, Treasury targeted clandestine currency networks responsible for moving hundreds of millions of dollars and separately sanctioned digital-asset exchanges accused of helping Iran move billions.The next step could be much larger.Bessent has suggested Washington could target countries, banks and companies that continue transferring money to Iran, purchasing Iranian oil or assisting ship-to-ship transfers. That means the pressure would no longer stop at Iran’s borders.A Chinese refinery buying Iranian crude, a foreign bank clearing payments, a shipping company carrying Iranian petroleum or a middleman helping disguise the origin of cargo could face a choice: continue doing business with Iran or maintain access to the American financial system.That is where U.S. economic power becomes formidable.The dollar remains central to global finance, and access to American markets is extremely valuable. Secondary sanctions therefore allow Washington to pressure companies that may have no presence in the United States but cannot afford to become financially isolated.<figure><img src="https://app.inkly.news/media/1787342452810-546401-wEvRG2c4MPy7k4cCQe0sGKIlICeXRC.jpeg" alt=""/><figcaption>A satellite image of side-by-side ships at sea, off the coast of Sohar, Oman, on June 9REUTERS</figcaption></figure>There are risks. Aggressively targeting companies in China, India or allied countries could provoke retaliation and disrupt global oil markets. Analysts also question whether another sanctions campaign can force political concessions from a country that has lived under economic restrictions for decades.Does This Mean the Military Phase Is Ending?This is probably the question many deployed service members care about most.There is not enough evidence to say that yet.The United States has reduced large-scale strikes in recent weeks, while the administration increasingly emphasizes economic pressure. Germany’s Deutschlandfunk reported on August 14 that U.S. strikes against Iran had been paused for weeks while Bessent prepared additional financial measures.But that should not be confused with a military withdrawal.Defense Secretary Pete Hegseth said only days ago that the U.S. Navy could maintain its blockade of Iran “indefinitely” by rotating ships through the region. Meanwhile, Reuters reported this week that the USS George Washington and other defense assets were being redirected toward the Middle East.Iran is also continuing to threaten escalation. On August 17, an Iranian official told Reuters that Tehran could shift toward a “fully offensive” posture and potentially attack to break the American naval blockade if diplomacy fails.So if individual units are beginning to redeploy home, that alone does not prove Washington has decided the military danger is over. Some departures may simply be normal rotations, while naval, air-defense or aviation assets remain in theater.<figure><img src="https://app.inkly.news/media/1787342595980-9866602-V8jxTQcbmW8SbuwlfsLk5g6x1kE1lw.jpg" alt=""/><figcaption>Royal Australian Navy Anzac Class frigate HMAS Perth sails alongside Nimitz-class aircraft carrier USS George Washington in the South China Sea, Aug. 11, 2026. Source - Stars and StripesAnthony Vilard/U.S. Navy</figcaption></figure>The better indicator will be what replaces those forces.If major combat formations leave without equivalent replacements, air-defense requirements decrease, naval forces begin moving elsewhere and Treasury increasingly becomes the administration’s primary instrument against Tehran, then it would become reasonable to argue that Washington is transitioning away from sustained kinetic operations.We are not clearly there yet.My PredictionMy prediction is that the United States is gradually moving toward exactly that transition.I do not believe the conflict suddenly ends next week, and I certainly would not tell anyone deployed in the region that the missile threat has disappeared. Iran still has the capability to retaliate, negotiations remain stalled and Washington intends to maintain its naval pressure.But the pattern is becoming difficult to ignore.For months, both sides have attacked, threatened retaliation, paused, negotiated, watched negotiations fail and then repeated the process. That cycle has produced enormous costs without creating a decisive outcome.“Economic D-Day” may be Washington’s attempt to break that cycle without beginning another massive round of strikes.I expect the military presence to remain strong enough to deter Iran and enforce the blockade, while Treasury increasingly becomes the main weapon. If Bessent can significantly restrict Iranian oil revenue, shadow banking, shipping and access to foreign currency, Washington may eventually gain more leverage at the negotiating table than another bombing campaign would provide.That does not mean everyone packs their bags tomorrow.But if the next several weeks bring fewer strikes, more Treasury actions and U.S. units leaving without comparable replacements arriving, I would view that as one of the strongest signs yet that this conflict is slowly moving away from the battlefield.And for thousands of American service members across the Middle East, that may be the development that matters most.

That may be changing quickly. As the conflict with Iran approaches the six-month mark, Bessent has moved into the center of the administration’s strategy. Washington is now promising what Trump has called an “Economic D-Day,” while Bessent says the United States intends to impose unprecedented economic pressure on Iran and those continuing to support its economy. Reuters reported Thursday that Bessent described the coming measures as potentially the “toughest sanctions in history,” with the stated goal of increasing pressure without requiring another major round of military action.

For service members sitting on bases across the Middle East, that raises a much more practical question:

Does this mean the war is beginning to change?

Who is Scott Bessent?

Bessent is not a career politician. Before entering government, he spent roughly four decades in global investment management, specializing in currencies, bonds and macroeconomic trends. He founded Key Square Capital Management and previously served as Chief Investment Officer at Soros Fund Management. He also managed Soros Fund Management’s London office and taught economic history at Yale.

That background matters because the Treasury Department is not simply responsible for taxes and government finances. It is also one of Washington’s most powerful national-security weapons.

Through the Office of Foreign Assets Control, Treasury can freeze assets, blacklist companies, isolate banks, target shipping networks, disrupt cryptocurrency exchanges and threaten foreign companies with losing access to the U.S. financial system.

In other words, Bessent does not command bombers.

He commands access to money.

What Could “Economic D-Day” Actually Mean?

Iran is already one of the most heavily sanctioned countries on Earth, so simply adding another list of Iranian officials would probably accomplish little.

The real escalation would come from attacking the networks that allow Iran to work around those sanctions.

Treasury has already been moving in that direction under its “Economic Fury” campaign. Since May, OFAC actions have targeted Iranian oil revenue, LPG-smuggling operations, weapons procurement networks, shadow banks, shipping companies, vessels and cryptocurrency exchanges. In July, Treasury sanctioned more than 50 individuals, entities and vessels connected to a major Iranian shipping network. On August 7, Treasury targeted clandestine currency networks responsible for moving hundreds of millions of dollars and separately sanctioned digital-asset exchanges accused of helping Iran move billions.

The next step could be much larger.

Bessent has suggested Washington could target countries, banks and companies that continue transferring money to Iran, purchasing Iranian oil or assisting ship-to-ship transfers. That means the pressure would no longer stop at Iran’s borders.

A Chinese refinery buying Iranian crude, a foreign bank clearing payments, a shipping company carrying Iranian petroleum or a middleman helping disguise the origin of cargo could face a choice: continue doing business with Iran or maintain access to the American financial system.

That is where U.S. economic power becomes formidable.

The dollar remains central to global finance, and access to American markets is extremely valuable. Secondary sanctions therefore allow Washington to pressure companies that may have no presence in the United States but cannot afford to become financially isolated.

There are risks. Aggressively targeting companies in China, India or allied countries could provoke retaliation and disrupt global oil markets. Analysts also question whether another sanctions campaign can force political concessions from a country that has lived under economic restrictions for decades.

Does This Mean the Military Phase Is Ending?

This is probably the question many deployed service members care about most.

There is not enough evidence to say that yet.

The United States has reduced large-scale strikes in recent weeks, while the administration increasingly emphasizes economic pressure. Germany’s Deutschlandfunk reported on August 14 that U.S. strikes against Iran had been paused for weeks while Bessent prepared additional financial measures.

But that should not be confused with a military withdrawal.

Defense Secretary Pete Hegseth said only days ago that the U.S. Navy could maintain its blockade of Iran “indefinitely” by rotating ships through the region. Meanwhile, Reuters reported this week that the USS George Washington and other defense assets were being redirected toward the Middle East.

Iran is also continuing to threaten escalation. On August 17, an Iranian official told Reuters that Tehran could shift toward a “fully offensive” posture and potentially attack to break the American naval blockade if diplomacy fails.

So if individual units are beginning to redeploy home, that alone does not prove Washington has decided the military danger is over. Some departures may

Treasury Secretary Scott Bessent threatens 'toughest sanctions in history' against Iran. What does 'Economic D-Day' mean for the conflict?

Scott Bessent and America’s 'Economic D-Day': Is Washington Changing the War With Iran?

For most Americans, Scott Bessent was hardly a household name. Even after becoming President Donald Trump’s Treasury Secretary in January 2025, he remained far less visible than figures at the Pentagon, State Department or White House.

SIGNED IN JUNE, THE 14-point Islamabad MoU was intended to do more than temporarily halt fighting. It established a 60-day period during which the United States and Iran would negotiate a broader agreement addressing the conflict, sanctions, Iran's nuclear program, frozen Iranian assets, the U.S. naval blockade, and the reopening of the Strait of Hormuz. It also envisioned eventual arrangements for regional maritime security and a more permanent settlement backed by the United Nations Security Council.The framework initially provided both governments with an exit from escalating military confrontation, but implementation quickly became disputed. By July, Reuters described the agreement as increasingly frayed, with vague language and unresolved disagreements over major issues, particularly Iran's nuclear program and obligations surrounding Hormuz.Those disagreements have since intensified. Iran again restricted traffic through Hormuz and resumed attacks against vessels it accuses of attempting to transit without authorization. Washington responded by reinforcing its naval blockade and increasing economic pressure. By August 14, ship tracking data cited by Reuters indicated that only two vessels passed through the Strait during the day, illustrating just how far conditions have deteriorated from the intended normalization envisioned under Islamabad. <figure><img src="https://app.inkly.news/media/1786891011280-download__1_-6qBMlalI7g9PjpdkAYbgKfoekZdzuh.webp" alt=""/><figcaption>The U.S. Navy's aircraft carrier USS Abraham Lincoln sails alongside guided-missile destroyer USS Frank E. Petersen Jr. and dry cargo ship USNS Carl Brashear in the Arabian Sea on Feb. 6.Jesse Monford/U.S. Navy via Getty Images</figcaption></figure>At the same time, neither side appears ready to formally bury the agreement.Reports this week offered conflicting accounts of what happens after August 17. Pakistani government sources told Anadolu that Washington and Tehran had agreed to extend the 60-day ceasefire period, although the length of an extension had not been determined. Tehran pushed back almost immediately. A senior Iranian source told Reuters that the two countries were not negotiating an extension. Instead, mediators were discussing a U.S. return to the existing interim agreement and a timeline for Washington to implement what Iran considers outstanding American commitments. According to that source, there had been “absolutely no progress.”That distinction is important.Iran does not appear to want the approaching deadline portrayed simply as an expiration followed by another temporary extension. Tehran increasingly appears to be arguing that the original framework remains valid but that Washington must first fulfill its side of the bargain.This position received additional political support Friday when Gholamreza Mesbahi-Moghaddam, a member of Iran's Assembly of Experts and Expediency Council, said the current moment represents the best opportunity for an agreement with the United States. More significantly, he argued that the previous Islamabad agreement should form the basis of further negotiations.His statement comes at an unusual moment. Publicly, the confrontation is becoming more severe. Washington says it can sustain its naval blockade of Iranian ports indefinitely. Defense Secretary Pete Hegseth said the Navy can rotate forces and maintain the operation for as long as necessary, while the administration has threatened additional economic pressure. Iran, meanwhile, continues using access to Hormuz as one of its strongest sources of leverage.Iran has also established demanding conditions for fully reopening the Strait, including sanctions relief, release of frozen assets, removal of the U.S. naval blockade and guarantees against further military action. Those demands remain difficult for Washington to accept in full.Yet diplomacy continues underneath the confrontation. Iran and Oman have worked on a proposed navigation arrangement through Hormuz, including agreement on the coordinates of a possible shipping route. Qatar has also reported progress among mediators, while diplomatic activity has expanded beyond traditional regional intermediaries to include European actors such as Austria and Greece.<figure><img src="https://app.inkly.news/media/1786891088274-Mideast-Iran-Italy-Nu_Horo-640x400-SfPmE8xSr8d7H63ywgbpKb3lOhfmjQ.webp" alt=""/><figcaption>Iranian Foreign Minister Mohammad Javad Zarif, right, and his Italian counterpart Paolo Gentiloni shake hands at the conclusion of their press conference, in Tehran, Iran, Saturday, Feb. 28, 2015.AP Photo/Ebrahim Noroozi)</figcaption></figure>This creates a paradox as the Islamabad deadline approaches: the security situation is deteriorating while the political case for returning to negotiations may be strengthening.The August 17 deadline therefore should not necessarily be viewed as the moment diplomacy ends. It may instead become the point at which both governments are forced to decide what version of diplomacy comes next.Washington can argue that sustained military and economic pressure brought Tehran back toward negotiations. Iranian leaders can argue that Iran survived the confrontation, maintained leverage over Hormuz and refused to negotiate from weakness. Both narratives could allow the governments to return to substantially the same negotiating framework while presenting the outcome differently to their domestic audiences.The alternative is considerably more dangerous.Without an extension, renewed commitment to the Islamabad framework or a replacement agreement, fewer restrictions remain on escalation. Commercial shipping is already under pressure, the American blockade remains in place, and both sides retain military options. The MoU may have been repeatedly violated and politically weakened, but it has continued to provide a diplomatic reference point throughout the crisis.That is why August 17 matters.The question is no longer whether the original Islamabad agreement succeeded exactly as intended. Clearly, it did not. The more important question is whether its expiration marks the end of an unsuccessful diplomatic experiment or the deadline that finally forces Washington and Tehran to determine what they are willing to concede.Recent Iranian statements suggest the agreement may not be dead at all. Instead, with the clock running out, both sides may be fighting over who gets to return to it on their own terms.

SIGNED IN JUNE, THE 14-point Islamabad MoU was intended to do more than temporarily halt fighting. It established a 60-day period during which the United States and Iran would negotiate a broader agreement addressing the conflict, sanctions, Iran's nuclear program, frozen Iranian assets, the U.S. naval blockade, and the reopening of the Strait of Hormuz. It also envisioned eventual arrangements for regional maritime security and a more permanent settlement backed by the United Nations Security Council.

The framework initially provided both governments with an exit from escalating military confrontation, but implementation quickly became disputed. By July, Reuters described the agreement as increasingly frayed, with vague language and unresolved disagreements over major issues, particularly Iran's nuclear program and obligations surrounding Hormuz.

Those disagreements have since intensified. Iran again restricted traffic through Hormuz and resumed attacks against vessels it accuses of attempting to transit without authorization. Washington responded by reinforcing its naval blockade and increasing economic pressure. By August 14, ship tracking data cited by Reuters indicated that only two vessels passed through the Strait during the day, illustrating just how far conditions have deteriorated from the intended normalization envisioned under Islamabad. 

At the same time, neither side appears ready to formally bury the agreement.

Reports this week offered conflicting accounts of what happens after August 17. Pakistani government sources told Anadolu that Washington and Tehran had agreed to extend the 60-day ceasefire period, although the length of an extension had not been determined. Tehran pushed back almost immediately. A senior Iranian source told Reuters that the two countries were not negotiating an extension. Instead, mediators were discussing a U.S. return to the existing interim agreement and a timeline for Washington to implement what Iran considers outstanding American commitments. According to that source, there had been “absolutely no progress.”

That distinction is important.

Iran does not appear to want the approaching deadline portrayed simply as an expiration followed by another temporary extension. Tehran increasingly appears to be arguing that the original framework remains valid but that Washington must first fulfill its side of the bargain.

This position received additional political support Friday when Gholamreza Mesbahi-Moghaddam, a member of Iran's Assembly of Experts and Expediency Council, said the current moment represents the best opportunity for an agreement with the United States. More significantly, he argued that the previous Islamabad agreement should form the basis of further negotiations.

His statement comes at an unusual moment. Publicly, the confrontation is becoming more severe. Washington says it can sustain its naval blockade of Iranian ports indefinitely. Defense Secretary Pete Hegseth said the Navy can rotate forces and maintain the operation for as long as necessary, while the administration has threatened additional economic pressure. Iran, meanwhile, continues using access to Hormuz as one of its strongest sources of leverage.

Iran has also established demanding conditions for fully reopening the Strait, including sanctions relief, release of frozen assets, removal of the U.S. naval blockade and guarantees against further military action. Those demands remain difficult for Washington to accept in full.

Yet diplomacy continues underneath the confrontation. Iran and Oman have worked on a proposed navigation arrangement through Hormuz, including agreement on the coordinates of a possible shipping route. Qatar has also reported progress among mediators, while diplomatic activity has expanded beyond traditional regional intermediaries to include European actors such as Austria and Greece.

This creates a paradox as the Islamabad deadline approaches: the security situation is deteriorating while the political case for returning to negotiations may be strengthening.

The August 17 deadline therefore should not necessarily be viewed as the moment diplomacy ends. It may instead become the point at which both governments are forced to decide what version of diplomacy comes next.

Washington can argue that sustained military and economic pressure brought Tehran back toward negotiations. Iranian leaders can argue that Iran survived the confrontation, maintained leverage over Hormuz and refused to negotiate from weakness. Both narratives could allow the governments to return to substantially the same negotiating framework while presenting the outcome differently to their domestic audiences.

The alternative is considerably more dangerous.

Without an extension, renewed commitment to the Islamabad framework or a replacement agreement, fewer restrictions remain on escalation. Commercial shipping is already under pressure, the American blockade remains in place, and both si

The 60-day Islamabad ceasefire deadline approaches as US-Iran talks stall over Hormuz, sanctions, and nuclear demands. What comes next?

The Deadline That Could Decide What Comes Next Between Washington and Tehran

The United States and Iran are approaching a deadline that may prove more consequential than the increasingly aggressive rhetoric coming from either capital

Iran's latest military reshuffle may look, at first glance, like another sign that Tehran is preparing for a prolonged war. Supreme Leader Mojtaba Khamenei has formally appointed six senior commanders across the country’s military establishment, including Ali Abdollahi as chief of the Armed Forces General Staff and Ahmad Vahidi as commander-in-chief of the Islamic Revolutionary Guard Corps. The appointments come after months of U.S. and Israeli strikes killed senior Iranian commanders and forced Tehran to operate with an improvised wartime leadership structure. Yet the reshuffle may reveal something more complicated than preparation for escalation. Iran appears to be reorganizing for a war it hopes to end, while ensuring it can survive if diplomacy fails.Abdollahi’s appointment is particularly significant. Before becoming chief of the General Staff, he commanded the Khatam al-Anbiya Central Headquarters, an organization responsible for coordinating operations across Iran’s armed forces. Moving him into the country’s highest uniformed position suggests that Tehran wants to improve coordination between the regular military, the Revolutionary Guard and other elements of its security structure. Months of combat have exposed the weaknesses of a system built around overlapping chains of command and competing institutions. Iran is not simply replacing commanders who were killed. It appears to be taking lessons from the war and trying to build a command structure better suited for sustained military pressure.Vahidi’s appointment carries a different message. He had already been functioning in the Revolutionary Guard’s leadership structure, but his formal elevation strengthens the organization at a moment when the IRGC remains central to Iran’s missile operations, regional influence and control of the Strait of Hormuz. Iran is effectively signaling that the Revolutionary Guard will remain at the center of its national defense strategy even if a ceasefire eventually ends large-scale fighting. The appointment does not necessarily indicate an imminent offensive. Instead, it institutionalizes the wartime leadership that emerged after Iran lost much of its previous senior command structure.The reshuffle also extends beyond the battlefield. The selection of experienced security figures for positions connected to the Basij and internal security suggests that Tehran is concerned about domestic stability as well as foreign attack. A prolonged war creates economic pressure, political frustration, intelligence vulnerabilities and the possibility of unrest. Iran therefore has to defend itself in two directions: against American and Israeli military pressure from outside, and against instability within the country. That combination helps explain why the leadership is strengthening military coordination and internal security at the same time.The War Has Entered a Different PhaseThis is happening while the war itself has entered a strange phase. The United States and Iran continue to exchange threats and occasional military actions, yet both sides are also supporting diplomatic efforts aimed at ending the conflict. Iran and Oman have spent weeks negotiating arrangements for shipping through the Strait of Hormuz, and Tehran recently described those discussions as being in their final stages. Qatar and other regional mediators have also pushed for de-escalation. At the same time, Iran insists that the Strait will remain restricted unless the United States meets political and economic conditions, including ending the war and releasing frozen Iranian assets.The result is something resembling violent negotiation. Neither side appears eager to return to the sustained level of direct strikes seen during earlier stages of the war, but neither side is willing to stop applying pressure. Washington continues its maritime blockade and enforcement operations. Iran continues to use Hormuz as leverage. Iran-aligned Houthi forces remain active around another critical shipping route near the Bab el-Mandeb Strait. Diplomats discuss an exit while military forces continue creating new reasons for retaliation.<figure><img src="https://app.inkly.news/media/1786622673078-download-yjsoJwjR9opb2Jm5IxMwlCy8RIryCc.webp" alt=""/><figcaption>The U.S. Navy's aircraft carrier USS Abraham Lincoln sails alongside guided-missile destroyer USS Frank E. Petersen Jr. and dry cargo ship USNS Carl Brashear in the Arabian Sea on Feb. 6.Jesse Monford/U.S. Navy via Getty Images</figcaption></figure>Everyone Needs a Victory Before PeaceThis creates the most dangerous problem facing both governments: the war may have reached a point where ending it requires each side to prove that it did not lose.Iran cannot simply reopen the Strait of Hormuz, stop fighting and return to the situation that existed before the conflict. Tehran has suffered major military losses and significant damage. Its government must be able to tell the Iranian population that those sacrifices produced something tangible. Control over shipping, sanctions relief, access to frozen funds or political concessions can all be presented as evidence that Iranian resistance forced Washington to negotiate.The United States faces the same political calculation from the opposite direction. After months of military operations, Washington cannot easily accept an agreement that appears to reward Iran for closing one of the world’s most important shipping routes. Any deal that looks like Tehran used military force to extract concessions could be portrayed as an Iranian victory. This is why negotiations increasingly involve questions beyond simply stopping the shooting. Compensation, sanctions, frozen assets, shipping rights and regional conflicts are being drawn into the bargaining process.That expansion of demands is dangerous. Ending wars often becomes easier when negotiators separate immediate military issues from larger political disagreements. A limited arrangement could halt attacks, reopen Hormuz and suspend the U.S. blockade while allowing disputes over sanctions, regional influence and Iran’s nuclear program to be negotiated later.Instead, the current conflict risks becoming trapped in a downward spiral in which every new concession requires another concession in return. The longer the bargaining list becomes, the greater the chance that negotiations fail because of an issue unrelated to the immediate fighting.<figure><img src="https://app.inkly.news/media/1786622776222-26int-israel-1-fwjk-superJumbo-p4t9vRVFsaU9o2KC7yTJ8TC581DdTQ.webp" alt=""/><figcaption>Israeli air defense systems were activated to intercept Iranian missiles over the Israeli city of Tel Aviv in June.Menahem Kahana/Agence France-Presse — Getty Images</figcaption></figure>The Biggest Threat May Be a Single MistakeThere is still reason for cautious optimism. Direct U.S.-Iranian military activity has decreased from the intensity seen during earlier stages of the conflict, and both governments have repeatedly continued negotiations even after new rounds of violence. Mediators have repeatedly proposed temporary ceasefires, while negotiations over Hormuz have continued despite military incidents.That suggests the war has moved from a primarily military phase into a coercive bargaining phase. The objective is increasingly not to destroy the opponent, but to create enough pressure to improve the final negotiating position.The greatest threat now may therefore be miscalculation rather than deliberate escalation. One missile striking a U.S. installation and causing heavy casualties could trigger a major American retaliation. Iran would then face pressure to respond. Another round of attacks could quickly destroy weeks of diplomatic progress.Iran’s military reshuffle should be viewed through that lens. Tehran is preparing for the possibility that negotiations fail while simultaneously strengthening its position before a potential settlement. The new commanders are not necessarily evidence that Iran has chosen endless war. They may instead be evidence that Iranian leaders understand how uncertain the next stage has become.Everyone may increasingly want this war to end. The problem is that Washington and Tehran are still trying to win the final round before admitting that it is time to stop fighting. That is what makes the current phase both hopeful and extraordinarily dangerous.

Iran's latest military reshuffle may look, at first glance, like another sign that Tehran is preparing for a prolonged war. Supreme Leader Mojtaba Khamenei has formally appointed six senior commanders across the country’s military establishment, including Ali Abdollahi as chief of the Armed Forces General Staff and Ahmad Vahidi as commander-in-chief of the Islamic Revolutionary Guard Corps. The appointments come after months of U.S. and Israeli strikes killed senior Iranian commanders and forced Tehran to operate with an improvised wartime leadership structure. Yet the reshuffle may reveal something more complicated than preparation for escalation. Iran appears to be reorganizing for a war it hopes to end, while ensuring it can survive if diplomacy fails.

Abdollahi’s appointment is particularly significant. Before becoming chief of the General Staff, he commanded the Khatam al-Anbiya Central Headquarters, an organization responsible for coordinating operations across Iran’s armed forces. Moving him into the country’s highest uniformed position suggests that Tehran wants to improve coordination between the regular military, the Revolutionary Guard and other elements of its security structure. Months of combat have exposed the weaknesses of a system built around overlapping chains of command and competing institutions. Iran is not simply replacing commanders who were killed. It appears to be taking lessons from the war and trying to build a command structure better suited for sustained military pressure.

Vahidi’s appointment carries a different message. He had already been functioning in the Revolutionary Guard’s leadership structure, but his formal elevation strengthens the organization at a moment when the IRGC remains central to Iran’s missile operations, regional influence and control of the Strait of Hormuz. Iran is effectively signaling that the Revolutionary Guard will remain at the center of its national defense strategy even if a ceasefire eventually ends large-scale fighting. The appointment does not necessarily indicate an imminent offensive. Instead, it institutionalizes the wartime leadership that emerged after Iran lost much of its previous senior command structure.

The reshuffle also extends beyond the battlefield. The selection of experienced security figures for positions connected to the Basij and internal security suggests that Tehran is concerned about domestic stability as well as foreign attack. A prolonged war creates economic pressure, political frustration, intelligence vulnerabilities and the possibility of unrest. Iran therefore has to defend itself in two directions: against American and Israeli military pressure from outside, and against instability within the country. That combination helps explain why the leadership is strengthening military coordination and internal security at the same time.

The War Has Entered a Different Phase

This is happening while the war itself has entered a strange phase. The United States and Iran continue to exchange threats and occasional military actions, yet both sides are also supporting diplomatic efforts aimed at ending the conflict. Iran and Oman have spent weeks negotiating arrangements for shipping through the Strait of Hormuz, and Tehran recently described those discussions as being in their final stages. Qatar and other regional mediators have also pushed for de-escalation. At the same time, Iran insists that the Strait will remain restricted unless the United States meets political and economic conditions, including ending the war and releasing frozen Iranian assets.

The result is something resembling violent negotiation. Neither side appears eager to return to the sustained level of direct strikes seen during earlier stages of the war, but neither side is willing to stop applying pressure. Washington continues its maritime blockade and enforcement operations. Iran continues to use Hormuz as leverage. Iran-aligned Houthi forces remain active around another critical shipping route near the Bab el-Mandeb Strait. Diplomats discuss an exit while military forces continue creating new reasons for retaliation.

Everyone Needs a Victory Before Peace

This creates the most dangerous problem facing both governments: the war may have reached a point where ending it requires each side to prove that it did not lose.

Iran cannot simply reopen the Strait of Hormuz, stop fighting and return to the situation that existed before the conflict. Tehran has suffered major military losses and significant damage. Its government must be able to tell the Iranian population that those sacrifices produced something tangible. Control over shipping, sanctions relief, access to frozen funds or political concessions can all be presented as evidence that Iranian resistance forced Washington to negotiate.

The United States faces the same political calculation from the opposite direction. After months of military operations, Washington cannot easily accept an agreem

Iran's latest military appointments signal Tehran is preparing for both diplomacy and renewed conflict as the US-Iran war enters a dangerous new phase.

Everyone Wants This War to End. Nobody Wants to Be the One Who Backs Down

Iran’s military reshuffle suggests Tehran is preparing for both possibilities: a negotiated exit and another round of war.

AFTER MONTHS OF FIGHTING, President Donald Trump increasingly appears to be looking for a way to end the conflict. Earlier in August, his position still connected two major objectives: reopening the Strait of Hormuz and addressing Iran’s nuclear program. More recent reporting suggests Trump may be willing to end the war without reaching a comprehensive nuclear agreement if Iran fully reopens the Strait.If that becomes the basis of a settlement, it raises an uncomfortable question. After months of fighting, American casualties and billions of dollars spent, what exactly did the United States accomplish? If Iran’s government remains in power, the nuclear dispute remains unresolved and Hormuz simply returns to something resembling its prewar status, then defining a clear political victory becomes difficult. A military can dominate the battlefield while still falling short of its broader strategic objectives.Iran, however, can make its own argument about what the conflict demonstrated. For decades, Tehran has threatened that any major war involving Iran could endanger shipping through the Strait of Hormuz. Before the conflict, roughly one-fifth of global petroleum consumption passed through this narrow waterway connecting the Persian Gulf with the Arabian Sea. That geography gave Iran something far more powerful than its conventional military strength alone: the ability to threaten the global economy.For years, that power remained largely theoretical. Governments knew Iran could disrupt Hormuz, military planners prepared for it and energy markets feared it. But the consequences remained something discussed in contingency plans and war games. Then Iran actually demonstrated what happens when the threat becomes reality. Shipping was disrupted, insurance concerns increased, energy markets reacted and the Strait became one of the central issues determining how the war might end.In the short term, that demonstrates extraordinary Iranian leverage. In the long term, it may prove to have been a strategic mistake.The problem with using a weapon based on dependency is that those who depend on it suddenly have a powerful incentive to remove that dependency. The war has effectively given every Gulf government, major oil importer, and energy investor a live demonstration of the vulnerability created by Hormuz. The lesson is simple: relying on one narrow maritime corridor that can become a battlefield is no longer just a theoretical risk.The response has already started. Saudi Arabia operates the East-West pipeline, which allows crude from its eastern oil-producing regions to travel toward export facilities on the Red Sea. Expanding that system would allow more Saudi oil to reach international markets without ever entering the Strait of Hormuz. The United Arab Emirates already has infrastructure connecting its oil fields to Fujairah, outside the Strait, and additional capacity could further reduce its dependence on the Persian Gulf shipping route. Oman also becomes more strategically important because its ports provide direct access to the Arabian Sea.<figure><img src="https://app.inkly.news/media/1786472563844-pipeline-13-gxSkrTx2JU8DXN6muvTW77iij2p0FV.jpg" alt=""/><figcaption>Saudi Arabia did not specify who was behind the strikes, but the kingdom has intercepted multiple missiles and drones in recent weeks that it said were launched from Iran.arabian business</figcaption></figure>None of these projects will make Hormuz irrelevant. Pipelines cost billions, take years to build, and cannot replace every type of energy shipment. Qatar’s liquefied natural gas exports, for example, cannot simply be redirected into an oil pipeline. Even with aggressive infrastructure expansion, a large amount of global energy trade will continue passing through the Strait.But Iran’s strategic power does not need to disappear completely for it to become weaker.Imagine another crisis ten or fifteen years from now. Iran again threatens to restrict Hormuz. The difference may be that Saudi Arabia can redirect several million more barrels per day toward the Red Sea. The UAE could move more crude directly to Fujairah. Additional pipelines could connect Gulf producers to ports outside the Persian Gulf. Asian and European governments may also hold larger strategic reserves or diversify suppliers because of what happened during this war.Iran could still cause economic damage, but perhaps not nearly as much.That creates the central irony of the conflict. Tehran spent decades benefiting from the world’s fear that it might close the Strait of Hormuz. Once it finally demonstrated that it was willing and capable of seriously disrupting the waterway, it gave the rest of the world the strongest possible reason to build around it.In other words, Iran may have fired its most powerful strategic weapon only to reveal exactly how that weapon can eventually be weakened.This also complicates the argument over whether Trump ultimately won the confrontation. Militarily, the United States can point to the damage inflicted on Iranian capabilities and America’s ability to project overwhelming force into the region. If Iran reopens Hormuz without gaining permanent control over international shipping or major concessions, Trump can argue that pressure forced Tehran back toward negotiations.Politically, the picture becomes far more complicated if the nuclear issue remains unresolved. If preventing Iran from developing a nuclear weapon was one of the central objectives of the confrontation, postponing that problem makes it difficult to describe the outcome as a complete American victory. The fighting may stop and economic pressure may replace military strikes, but the issue that helped drive the conflict will still exist.There is another possibility, however. America’s most important long-term strategic gain may not come from any agreement signed at the negotiating table. It may come from the economic reaction Iran unintentionally triggered across the region.Wars do more than destroy equipment. They change calculations. They influence investment decisions and convince governments to spend billions preparing for the next crisis. A pipeline constructed because of the 2026 Hormuz disruption could operate for decades. A new export terminal could outlive every political leader currently involved in the conflict. Energy contracts signed today to reduce dependence on the Persian Gulf could permanently redirect trade.<figure><img src="https://app.inkly.news/media/1786472758791-2000x1292-HTYSDLta5UupZaGwuMHwKr3Ul5G4pZ.webp" alt=""/><figcaption>Qatar, earlier this week, shut production at its Ras Laffan LNG export facility.Karim Jaafar/AFP/Getty Images</figcaption></figure>Before this war, the world knew the Strait of Hormuz was vulnerable. After this war, it understands the cost of that vulnerability.Iran’s greatest strategic weapon was never simply its missiles, drones or naval forces. It was geography. Tehran sits beside a maritime chokepoint that much of the global economy cannot easily avoid, giving Iran influence far beyond its economic or conventional military power.But geography is most powerful when there is no alternative.Iran has now given the world a powerful reason to create those alternatives.For the moment, Tehran still possesses tremendous leverage. Hormuz remains essential to global energy markets, and building enough infrastructure to bypass it will take years. But the pipelines, ports and alternative energy routes built because of this war could remain long after the missiles stop flying.Iran finally proved to the world just how powerful the Strait of Hormuz can be as a weapon. In doing so, it may also have started the process of making that weapon weaker.

AFTER MONTHS OF FIGHTING, President Donald Trump increasingly appears to be looking for a way to end the conflict. Earlier in August, his position still connected two major objectives: reopening the Strait of Hormuz and addressing Iran’s nuclear program. More recent reporting suggests Trump may be willing to end the war without reaching a comprehensive nuclear agreement if Iran fully reopens the Strait.

If that becomes the basis of a settlement, it raises an uncomfortable question. After months of fighting, American casualties and billions of dollars spent, what exactly did the United States accomplish? If Iran’s government remains in power, the nuclear dispute remains unresolved and Hormuz simply returns to something resembling its prewar status, then defining a clear political victory becomes difficult. A military can dominate the battlefield while still falling short of its broader strategic objectives.

Iran, however, can make its own argument about what the conflict demonstrated. For decades, Tehran has threatened that any major war involving Iran could endanger shipping through the Strait of Hormuz. Before the conflict, roughly one-fifth of global petroleum consumption passed through this narrow waterway connecting the Persian Gulf with the Arabian Sea. That geography gave Iran something far more powerful than its conventional military strength alone: the ability to threaten the global economy.

For years, that power remained largely theoretical. Governments knew Iran could disrupt Hormuz, military planners prepared for it and energy markets feared it. But the consequences remained something discussed in contingency plans and war games. Then Iran actually demonstrated what happens when the threat becomes reality. Shipping was disrupted, insurance concerns increased, energy markets reacted and the Strait became one of the central issues determining how the war might end.

In the short term, that demonstrates extraordinary Iranian leverage. In the long term, it may prove to have been a strategic mistake.

The problem with using a weapon based on dependency is that those who depend on it suddenly have a powerful incentive to remove that dependency. The war has effectively given every Gulf government, major oil importer, and energy investor a live demonstration of the vulnerability created by Hormuz. The lesson is simple: relying on one narrow maritime corridor that can become a battlefield is no longer just a theoretical risk.

The response has already started. Saudi Arabia operates the East-West pipeline, which allows crude from its eastern oil-producing regions to travel toward export facilities on the Red Sea. Expanding that system would allow more Saudi oil to reach international markets without ever entering the Strait of Hormuz. The United Arab Emirates already has infrastructure connecting its oil fields to Fujairah, outside the Strait, and additional capacity could further reduce its dependence on the Persian Gulf shipping route. Oman also becomes more strategically important because its ports provide direct access to the Arabian Sea.

None of these projects will make Hormuz irrelevant. Pipelines cost billions, take years to build, and cannot replace every type of energy shipment. Qatar’s liquefied natural gas exports, for example, cannot simply be redirected into an oil pipeline. Even with aggressive infrastructure expansion, a large amount of global energy trade will continue passing through the Strait.

But Iran’s strategic power does not need to disappear completely for it to become weaker.

Imagine another crisis ten or fifteen years from now. Iran again threatens to restrict Hormuz. The difference may be that Saudi Arabia can redirect several million more barrels per day toward the Red Sea. The UAE could move more crude directly to Fujairah. Additional pipelines could connect Gulf producers to ports outside the Persian Gulf. Asian and European governments may also hold larger strategic reserves or diversify suppliers because of what happened during this war.

Iran could still cause economic damage, but perhaps not nearly as much.

That creates the central irony of the conflict. Tehran spent decades benefiting from the world’s fear that it might close the Strait of Hormuz. Once it finally demonstrated that it was willing and capable of seriously disrupting the waterway, it gave the rest of the world the strongest possible reason to build around it.

In other words, Iran may have fired its most powerful strategic weapon only to reveal exactly how that weapon can eventually be weakened.

This also complicates the argument over whether Trump ultimately won the confrontation. Militarily, the United States can point to the damage inflicted on Iranian capabilities and America’s ability to project overwhelming force into the region. If Iran reopens Hormuz without gaining permanent control over international shipping or major concessions, Trump can argue that pressure forced Tehran back toward nego

Iran disrupted the Strait of Hormuz but may have triggered its own strategic decline. Explore how the war could permanently weaken Tehran's greatest leverage.

Iran Won the Strait. But Did It Lose the Future?

For months, the most visible images of the war with Iran have been missiles, drones, air-defense interceptors and burning infrastructure. Those images dominate the discussion because they are dramatic and immediate. 

For months, the conflict between the United States and Iran has been measured in missile launches, airstrikes, damaged ships and military deployments. But another front is becoming increasingly important, one where no explosions are heard and no aircraft appear on radar.It is the international financial system.The U.S. Treasury Department has intensified its campaign against the shadow banking networks Iran uses to move money around international sanctions. Treasury Secretary Scott Bessent said Friday that Iran's shadow banking system is “buckling” under the administration's Economic Fury campaign and that Tehran is running out of ways to move money.The statement is aggressive, but the strategy behind it is more consequential than the rhetoric suggests.Iran's problem is not simply whether it possesses money. Tehran continues to generate revenue through oil exports and other trade. The difficulty is converting those earnings into usable currency, transferring funds internationally and purchasing what it needs without transactions passing through institutions vulnerable to U.S. sanctions.For years, Iran has relied on exchange houses, front companies, offshore intermediaries, shadow shipping networks and increasingly cryptocurrency to bypass those restrictions. Treasury is now targeting those systems individually.In April, the United States sanctioned 35 people and entities accused of participating in Iran's shadow banking sector. Treasury said its objective was to sever the financial networks Iran relies upon to generate, move and repatriate funds.The campaign has since expanded into oil transportation, weapons procurement and cryptocurrency. Treasury says its actions have frozen nearly half a billion dollars in cryptocurrency linked to the Iranian government while also targeting vessels and companies supporting Iran's oil industry<figure><img src="https://app.inkly.news/media/1786379160673-35OBOCFYBVLVLBPSYF4CSKZVZI-z76uejzs5VqTtEoZEwzVi8khsUUiyY.webp" alt=""/><figcaption>A satellite image shows an oil slick next to the Caroline Bezengi, a sanctioned vessel off the coast of the Dhofar Governorate, Oman, July 28, 2026.Planet Labs PBC</figcaption></figure>On Friday, Washington sanctioned Dubai-based cryptocurrency exchange Shelbit, alleging it facilitated millions of dollars in transactions for Iran's Islamic Revolutionary Guard Corps and other Iranian-linked entities. The action followed a Reuters investigation into an alleged $4 billion sanctions-evasion network involving Iran's central bank and IRGC-linked actors. Shelbit has denied knowingly participating in illicit activity.This creates an unusual situation for Tehran.A government can have billions of dollars available on paper and still struggle to use them.Every intermediary introduces another vulnerability. A foreign bank, exchange house or company helping Iran move money must consider whether the transaction is worth potentially losing access to the U.S. financial system.That pressure becomes more important the longer the war continues.Sanctions will not make Iran's existing missile inventory disappear overnight. Nor will they immediately prevent Tehran from funding military operations. But prolonged restrictions can make replacing equipment, acquiring specialized components, supporting regional partners and financing government operations increasingly expensive.An airstrike destroys something immediately.Financial pressure attempts to make rebuilding it tomorrow progressively harder.Iran Has an Economic Weapon of Its Own<figure><img src="https://app.inkly.news/media/1786379430305-strait-hormuz-yR0p9Hw14KJcLXbiHTtZjDfrjE9rhg.webp" alt=""/><figcaption>At least 20 oil tankers passed through the Strait of Hormuz on Thursday, marking the highest level of tanker traffic since June 2GETTY IMAGES</figcaption></figure>Tehran, however, is not simply absorbing American pressure.Iran has turned the Strait of Hormuz into its most valuable economic bargaining chip.The disruption of shipping through the waterway has affected global energy markets and given Iran leverage far beyond what its conventional military forces could achieve alone. Tehran knows that prolonged disruption imposes costs not only on the United States, but on oil producers, shipping companies and economies around the world.In effect, both sides are now attempting to economically squeeze the other.Washington is trying to restrict Iran's ability to move money.Iran is restricting the world's ability to move energy.That helps explain why negotiations involving Iran and Oman have become so important.Iran said Saturday that an agreement with Oman concerning navigation through Hormuz was close, but warned that such an arrangement alone would not reopen the waterway. The Revolutionary Guard said reopening the strait depends instead on Washington satisfying Iranian conditions, which include sanctions relief and an end to what Tehran describes as U.S. aggression.The negotiations are already encountering significant practical problems.A proposal that could give Iran a greater role in managing shipping through Hormuz has faced resistance from the maritime industry. Shipping sources told Reuters that proposed transit fees could expose companies to U.S. sanctions and potentially invalidate insurance coverage, making portions of the plan difficult to implement even if governments agree politically.That is why announcements that a deal is “close” should be treated cautiously.A previous June memorandum envisioned reopening Hormuz and beginning to lift the U.S. blockade of Iranian ports while negotiations continued over larger disputes such as sanctions and Iran's nuclear program.The final test will not be another press conference.It will be ships moving through the strait.What Comes NextThe most realistic outcome may not be a decisive military victory for either side.Instead, both governments appear to be building leverage for a limited agreement.Iran could permit safer commercial traffic through Hormuz and reduce attacks on shipping and U.S. interests. Washington could respond by easing parts of its blockade or offering narrowly targeted economic relief. The most contentious issues, including Iran's nuclear program, missile capabilities and broader sanctions, could then be pushed into longer negotiations.Iranian officials were already considering such a strategy earlier this summer. Reuters reported in June that Tehran saw a limited agreement as a possible way to obtain financial relief, stabilize its deteriorating economy and buy time without conceding its most important strategic positions.There remains another possibility: both sides may believe time favors them.Iran appears convinced that control over Hormuz can eventually force Washington into greater concessions, even though prolonged confrontation carries substantial economic and domestic risks for Tehran.Washington, meanwhile, can continue applying financial pressure without continuously expanding military operations.That may be the most important significance of Treasury's campaign.Economic warfare provides the United States with an option between escalation and concession.My PredictionThe recent financial offensive does not suggest that Iran is about to collapse, nor does it mean the war is ending.Both countries appear to be trying to improve their negotiating positions before accepting some form of temporary settlement.Washington is tightening Iran's financial access while Tehran maintains pressure through Hormuz. Each side wants the other to feel that continuing the conflict will eventually cost more than compromise.That can create conditions for diplomacy. It can also be extremely dangerous.<figure><img src="https://app.inkly.news/media/1786379685066-iran-uss-abraham-lincoln-1-zKrAoMGU2oWb3Cxj9izqwCrVrutKCi.webp" alt=""/><figcaption>The USS Abraham Lincoln Carrier Strike Group transits the Suez Canal, May 9, 2019, en route to the U.S. Central Command regionMC3 Darion Chanelle Triplett/U.S. Navy</figcaption></figure>As negotiations continue, U.S. forces remain deployed throughout the region, commercial vessels remain exposed, and military operations have not completely stopped. The UAE accused Iran Saturday of another missile attack against an ADNOC-linked vessel in the Strait of Hormuz, illustrating how easily one incident can threaten diplomatic progress.One major attack, one ship sunk with significant casualties, or one strike killing a large number of American personnel could rapidly change the calculation on both sides.For now, the conflict appears to be moving toward a contest of economic endurance.Iran still has money. Washington's strategy is to make that money increasingly difficult to use. Tehran's answer is to make the world's most important energy corridor increasingly difficult to use in return.Whoever feels the pressure first may determine what the eventual agreement looks like.

For months, the conflict between the United States and Iran has been measured in missile launches, airstrikes, damaged ships and military deployments. But another front is becoming increasingly important, one where no explosions are heard and no aircraft appear on radar.

It is the international financial system.

The U.S. Treasury Department has intensified its campaign against the shadow banking networks Iran uses to move money around international sanctions. Treasury Secretary Scott Bessent said Friday that Iran's shadow banking system is “buckling” under the administration's Economic Fury campaign and that Tehran is running out of ways to move money.

The statement is aggressive, but the strategy behind it is more consequential than the rhetoric suggests.

Iran's problem is not simply whether it possesses money. Tehran continues to generate revenue through oil exports and other trade. The difficulty is converting those earnings into usable currency, transferring funds internationally and purchasing what it needs without transactions passing through institutions vulnerable to U.S. sanctions.

For years, Iran has relied on exchange houses, front companies, offshore intermediaries, shadow shipping networks and increasingly cryptocurrency to bypass those restrictions. Treasury is now targeting those systems individually.

In April, the United States sanctioned 35 people and entities accused of participating in Iran's shadow banking sector. Treasury said its objective was to sever the financial networks Iran relies upon to generate, move and repatriate funds.

The campaign has since expanded into oil transportation, weapons procurement and cryptocurrency. Treasury says its actions have frozen nearly half a billion dollars in cryptocurrency linked to the Iranian government while also targeting vessels and companies supporting Iran's oil industry

On Friday, Washington sanctioned Dubai-based cryptocurrency exchange Shelbit, alleging it facilitated millions of dollars in transactions for Iran's Islamic Revolutionary Guard Corps and other Iranian-linked entities. The action followed a Reuters investigation into an alleged $4 billion sanctions-evasion network involving Iran's central bank and IRGC-linked actors. Shelbit has denied knowingly participating in illicit activity.

This creates an unusual situation for Tehran.

A government can have billions of dollars available on paper and still struggle to use them.

Every intermediary introduces another vulnerability. A foreign bank, exchange house or company helping Iran move money must consider whether the transaction is worth potentially losing access to the U.S. financial system.

That pressure becomes more important the longer the war continues.

Sanctions will not make Iran's existing missile inventory disappear overnight. Nor will they immediately prevent Tehran from funding military operations. But prolonged restrictions can make replacing equipment, acquiring specialized components, supporting regional partners and financing government operations increasingly expensive.

An airstrike destroys something immediately.

Financial pressure attempts to make rebuilding it tomorrow progressively harder.

Iran Has an Economic Weapon of Its Own

Tehran, however, is not simply absorbing American pressure.

Iran has turned the Strait of Hormuz into its most valuable economic bargaining chip.

The disruption of shipping through the waterway has affected global energy markets and given Iran leverage far beyond what its conventional military forces could achieve alone. Tehran knows that prolonged disruption imposes costs not only on the United States, but on oil producers, shipping companies and economies around the world.

In effect, both sides are now attempting to economically squeeze the other.

Washington is trying to restrict Iran's ability to move money.

Iran is restricting the world's ability to move energy.

That helps explain why negotiations involving Iran and Oman have become so important.

Iran said Saturday that an agreement with Oman concerning navigation through Hormuz was close, but warned that such an arrangement alone would not reopen the waterway. The Revolutionary Guard said reopening the strait depends instead on Washington satisfying Iranian conditions, which include sanctions relief and an end to what Tehran describes as U.S. aggression.

The negotiations are already encountering significant practical problems.

A proposal that could give Iran a greater role in managing shipping through Hormuz has faced resistance from the maritime industry. Shipping sources told Reuters that proposed transit fees could expose companies to U.S. sanctions and potentially invalidate insurance coverage, making portions of the plan difficult to implement even if governments agree politically.

That is why announcements that a deal is “close” should be treated cautiously.

A previous June memorandum envisioned reopening Hormuz and beginning to lift the U.S. blockade o

The U.S. is targeting Iran's shadow banking networks, crypto exchanges, and oil shipping to cut Tehran off from its own money. Here's how it works.

Inside Washington's Campaign to Cut Iran Off From Its Own Money

The next phase of the U.S.-Iran conflict may be fought less with missiles and more through banks, shipping lanes and the financial networks that keep Tehran functioning.

A diplomatic agreement may soon declare the Strait of Hormuz open to commercial shipping. But for the companies operating the vessels, the more important question is whether they can legally and safely use it.The proposed arrangement between Iran and Oman would reportedly give Tehran authority over vessels entering the Persian Gulf, while Oman would manage outbound traffic. Iran has sought payments worth between 5 and 7 percent of a ship’s cargo value, while Oman has discussed fees of approximately 3 percent. The United States insists that passage must remain free.For a tanker carrying hundreds of millions of dollars in oil, even a small percentage would represent an enormous payment. However, the cost is only the beginning of the problem.<figure><img src="https://app.inkly.news/media/1786205591455-strait-of-hormuz-chokepoint-CqORk08sgGSpZxddQDcNs6QRgztoYj.png" alt=""/><figcaption>The Strait of Hormuz narrows to about 21 miles across, with shipping lanes roughly 2 miles wide in each direction.Insider Wire graphic</figcaption></figure>Iran established the Persian Gulf Strait Authority in May to manage traffic and collect payments. The US Treasury Department subsequently sanctioned the organization, describing it as connected to Iran’s Islamic Revolutionary Guard Corps. Treasury guidance states that US persons, American financial institutions and US-controlled foreign companies are prohibited from paying Iran for guaranteed passage through the strait. They are also prohibited from receiving safe-passage services from the Iranian government, even when no direct payment is made.That creates a problem far beyond American-owned ships. Modern vessels rarely belong to only one country. A tanker may be registered in Liberia, owned by a Greek company, managed from Singapore, insured in London, financed through an American bank and chartered by a European energy company. A payment that appears legal in one jurisdiction could still pass through a US-connected bank or involve a sanctioned entity.The Treasury Department has warned that sanctions exposure could apply not only to conventional payments, but also to digital currency, informal swaps, offsets, charitable donations or other payments made in kind.Shipping companies therefore face a difficult choice. Paying Iran could result in blocked assets or sanctions penalties. Refusing to pay could result in a vessel being denied passage, detained or exposed to military action.Insurance presents another obstacle.In July, the Lloyd’s Market Association introduced a clause allowing war-risk insurers to terminate coverage when a vessel pays a fee, toll or similar charge to cross Hormuz. According to Reuters, the clause can release insurers from their obligations involving the affected ship.A commercial tanker cannot realistically sail through a conflict zone without war-risk insurance. A major collision, missile strike, oil spill or loss of cargo could produce liabilities reaching hundreds of millions or even billions of dollars. Without insurance, shipowners, banks and charterers may refuse to authorize the voyage, regardless of what governments announce.There is also a larger dispute over international maritime law.The United Nations Convention on the Law of the Sea establishes the right of transit passage through straits used for international navigation. Coastal states may adopt reasonable safety and environmental regulations, but they must not hamper, discriminate against or suspend transit passage.The International Maritime Organization has taken an even clearer position. Its governing council stated that passage through Hormuz should remain non-discriminatory, unimpeded and free from tolls or charges. The organization also emphasized that any regional arrangement must preserve the traffic separation system adopted in 1968.Iran and Oman already helped design that system. The legal controversy is therefore not about whether they can coordinate navigation or improve safety. The controversy is whether coordination can become compulsory control and whether a service charge is simply a toll under another name.<figure><img src="https://app.inkly.news/media/1786203286527-00Biz-Iran-Insurance-01-pqcz-superJumbo-1VyHKUEYcGCwx72tdJKiAD26mx6xvx.webp" alt=""/><figcaption>The 200-foot-tall atrium in the Underwriting Room, where brokers negotiate policies for ships carrying oil, gas and other goods around the worldJoseph Horton</figcaption></figure>This is why declaring the Strait of Hormuz open may not immediately restore global shipping. A vessel could receive permission to enter but remain unable to pay the required fee, maintain insurance or satisfy the banks financing its journey.The strait may soon reopen geographically. Legally and commercially, however, it could remain closed.

A diplomatic agreement may soon declare the Strait of Hormuz open to commercial shipping. But for the companies operating the vessels, the more important question is whether they can legally and safely use it.

The proposed arrangement between Iran and Oman would reportedly give Tehran authority over vessels entering the Persian Gulf, while Oman would manage outbound traffic. Iran has sought payments worth between 5 and 7 percent of a ship’s cargo value, while Oman has discussed fees of approximately 3 percent. The United States insists that passage must remain free.

For a tanker carrying hundreds of millions of dollars in oil, even a small percentage would represent an enormous payment. However, the cost is only the beginning of the problem.

Iran established the Persian Gulf Strait Authority in May to manage traffic and collect payments. The US Treasury Department subsequently sanctioned the organization, describing it as connected to Iran’s Islamic Revolutionary Guard Corps. Treasury guidance states that US persons, American financial institutions and US-controlled foreign companies are prohibited from paying Iran for guaranteed passage through the strait. They are also prohibited from receiving safe-passage services from the Iranian government, even when no direct payment is made.

That creates a problem far beyond American-owned ships. 

Modern vessels rarely belong to only one country. A tanker may be registered in Liberia, owned by a Greek company, managed from Singapore, insured in London, financed through an American bank and chartered by a European energy company. A payment that appears legal in one jurisdiction could still pass through a US-connected bank or involve a sanctioned entity.

The Treasury Department has warned that sanctions exposure could apply not only to conventional payments, but also to digital currency, informal swaps, offsets, charitable donations or other payments made in kind.

Shipping companies therefore face a difficult choice. Paying Iran could result in blocked assets or sanctions penalties. Refusing to pay could result in a vessel being denied passage, detained or exposed to military action.

Insurance presents another obstacle.

In July, the Lloyd’s Market Association introduced a clause allowing war-risk insurers to terminate coverage when a vessel pays a fee, toll or similar charge to cross Hormuz. According to Reuters, the clause can release insurers from their obligations involving the affected ship.

A commercial tanker cannot realistically sail through a conflict zone without war-risk insurance. A major collision, missile strike, oil spill or loss of cargo could produce liabilities reaching hundreds of millions or even billions of dollars. Without insurance, shipowners, banks and charterers may refuse to authorize the voyage, regardless of what governments announce.

There is also a larger dispute over international maritime law.

The United Nations Convention on the Law of the Sea establishes the right of transit passage through straits used for international navigation. Coastal states may adopt reasonable safety and environmental regulations, but they must not hamper, discriminate against or suspend transit passage.

The International Maritime Organization has taken an even clearer position. Its governing council stated that passage through Hormuz should remain non-discriminatory, unimpeded and free from tolls or charges. The organization also emphasized that any regional arrangement must preserve the traffic separation system adopted in 1968.

Iran and Oman already helped design that system. The legal controversy is therefore not about whether they can coordinate navigation or improve safety. The controversy is whether coordination can become compulsory control and whether a service charge is simply a toll under another name.

This is why declaring the Strait of Hormuz open may not immediately restore global shipping. A vessel could receive permission to enter but remain unable to pay the required fee, maintain insurance or satisfy the banks financing its journey.

The strait may soon reopen geographically. Legally and commercially, however, it could remain closed.

A deal may reopen the Strait of Hormuz, but sanctions, insurance clauses, and maritime law could keep commercial shipping legally blocked.

Open on Paper, Closed in Practice: The Legal Trap Facing Ships in Hormuz

 A diplomatic agreement may soon declare the Strait of Hormuz open to commercial shipping