Iran could face economic collapse in months, US Treasury’s Bessent warns

SaveSharefacebookxwhatsapp-strokecopylinkUnited States Treasury Secretary Scott Bessent speaks at a meeting of finance ministers and central bank governors from Group of 20 (G20) countries, on August 31 in Asheville, North Carolina, the United States [Sam Wolfe/Reuters]By Al Jazeera Staff, AP and ReutersPublished On 31 Aug 202631 Aug 2026United States Treasury Secretary Scott Bessent says Iran is taking the US’s newly imposed sanctions seriously as tensions between the US and Iran reach the six-month mark.On Monday, Bessent said Iran is taking the sanctions seriously, and he told US business news network CNBC that the goal is “to create the conditions that they will want to come to the table” for negotiations.Recommended Stories list of 3 itemslist 1 of 3How has life changed for Iranians six months into the war?list 2 of 3US plans to sanction another bank to keep economic pressure on Iranlist 3 of 3Who are the economic winners and losers of the US-Israel war on Iran?end of listHis comments came on the sidelines of a meeting of Group of 20 (G20) finance ministers and central bank governors in Asheville, North Carolina in the US, amidst an economic pressure campaign the administration of US President Donald Trump has called “Operation Economic Outcast”.“I would think that they are lashing out kinetically because they are losing economically,” Bessent told reporters on Monday.Bessent said that he believes the Iranian economy could collapse “within weeks or months” and stressed that it does not have to happen. “We just have to have the regime come to their senses,” he said.Last week, the US imposed a wave of new sanctions on Iran, hitting five sectors of the nation’s economy — aviation, digital assets, gold, technology, and shipping — as it also imposed sanctions on 60 specific individuals and vessels.Bessent also touted support from trading partners, including the European Union, which he said backed the sanctions with “fulsome support”.“The EU welcomes efforts at ensuring that Iran ceases its destabilising activities and engages in peace negotiations with good faith, also through additional economic pressure, including through the US-led Operation Economic Outcast,” the European Commission said in a statement.On Sunday, Bessent told the Reuters news agency that the US would likely unveil new sanctions weekly.On the heels of imposing penalties on the United Arab Emirates branches of Egypt’s Banque Misr on Friday over alleged financial ties to Iran, Bessent said the next step may be cutting off an institution entirely from the dollar-based financial system.“You’re going to see a lot more of these every week,” Bessent said ahead of the G20 finance leaders meeting. “We’re starting with the banks, and we’re telling the banks it’s not okay to have Iranian money and to aid the regime.”Warsh remarksUS Federal Reserve Chairman Kevin Warsh, in his first international economic policy meeting since taking office in May, told the G20 opening plenary session that he was looking forward to learning more about growth prospects among member economies.Warsh’s remarks were underscored by his speech on Friday at the Federal Reserve’s Jackson Hole symposium, where he said that policymakers would “have work to do” if they lacked confidence that inflation was returning to the central bank’s two percent target.He claimed that inflation was too high, financial conditions were not restrictive, and the labour market was consistent with full employment, signalling that price stability remained the Fed’s priority.Warsh’s comments may signal a looming interest rate hike.Since the US and Israel first struck Iran on February 28, one driver of US inflation has been the energy market. In July, the price of energy overall jumped 14.7 percent from a year earlier, with petrol prices in particular up 24.6 percent over the last 12 months.The comments and growing tensions between the US and Iran are driving markets. Gold, for example, normally considered a safe investment during economic uncertainty, tumbled to a two-week low and fell 0.8 percent to $4,419.38 per ounce.Meanwhile, on Wall Street, all the major indices are trending downward. The Nasdaq is down by 0.4 percent, the S&P 500 by 0.5 percent, and the Dow Jones Industrial Average by 0.6 percent.