Amid ongoing hostilities across the Middle East, the United States has intensified its campaign of economic and psychological pressure on Iran, seeking to exploit and deepen vulnerabilities within the Islamic Republic’s economy. While military movements—including the deployment of strategic bombers and carrier groups—dominate headlines, experts and regional observers emphasize that America’s main objective is to undermine Iran’s economic resilience, thereby weakening its broader strategy of regional subversion through terror proxies.
This dynamic is not lost on Iranian policymakers or their media establishment. Saadallah Zarei, a noted Iranian political analyst aligned with figures close to Supreme Leader Ali Khamenei, recently published an extended opinion piece dissecting these tactics. Zarei’s central thesis asserts that U.S. shows of military force are designed less for direct confrontation than for heightening economic uncertainty in Iran. The hoped-for outcome from Washington’s perspective is to corrode investor confidence, trigger capital flight, and ultimately degrade the regime’s ability to project power.
In Tehran, this analysis is gaining traction as sanctions and volatile markets take a mounting toll. Iran’s domestic currency, the rial, has suffered a series of sharp declines over the past decade; inflation remains stubbornly high, and youth unemployment is at a historic peak. These economic pressures coincide with the regime’s escalating commitment to funding and arming a network of proxy militant groups—most notably Hamas in Gaza, Hezbollah in Lebanon, and militias in Iraq, Syria, and Yemen. For Israel and its Western allies, Iranian regional interference is inseparable from the regime’s economic vulnerabilities: every rial funneled to foreign operations is a resource denied at home.
The regional conflict reached a turning point following the October 7, 2023, massacre—the most devastating terrorist attack against Jews since the Holocaust—committed by Hamas, with Iranian financial and military support. The nature of the attack and its aftermath have forced Israel to confront not just the direct threat from Gaza, but the overarching strategy of Iran and its so-called “axis of resistance.” Tehran, in turn, is squeezed between external sanctions and the costs of sustaining multiple conflict fronts.
Military Signaling: A Tool of Economic Warfare
The United States has repeatedly demonstrated a willingness to bolster Israel’s defensive posture through rapid military deployments—both for deterrence and to send unmistakable messages to Tehran. U.S. aircraft carriers in the eastern Mediterranean and Gulf, together with high-visibility bomber flights, have been interpreted by Iranian analysts as calculated steps meant to exaggerate the risk of imminent conflict. This psychological effect, in the eyes of decision-makers in both Israel and the U.S., is as important as the military reality: it compounds Tehran’s economic distress by worsening capital outflows and increasing uncertainty in domestic markets.
This approach is part of a longer-term strategy by both the United States and its Western allies. Since Iran’s 1979 revolution, the West has periodically employed sanctions—intensified in recent years—to undermine the Islamic Revolutionary Guard Corps’ vast economic interests and choke off funding routes to terror groups. Sanctions on oil exports, banking restrictions, and blacklisting of front companies have all been consequential. But what sets the current moment apart, as Zarei observes, is the steady drumbeat of overt military pressure paired with relentless diplomatic and financial isolation.
Israel’s Parallel Strategy: Disrupting Iran’s Economic Warfare
For Israeli defense planners, the American strategy dovetails with their own: maximize pressure on Iran’s economic infrastructure, limiting its ability to arm and direct proxies. Israeli intelligence openly highlights the role of the IRGC and its affiliates in orchestrating attacks against Israel on multiple fronts. The Iron Swords War, launched in response to the October 7 attack, is not confined to Gaza, but is part of a wider campaign to disrupt Iranian weapons transfers in Syria, thwart missile deliveries to Hezbollah in Lebanon, and expose illicit banking operations that underpin terror financing.
The burden on Iran is immense. As the regime channels resources outward, domestic discontent increases. Iranians have protested repeatedly in recent years, objecting to rising prices, stagnant wages, and a perception that the government has prioritized regional interventions over economic recovery. Despite regime assurances of resilience, the impact of both sanctions and psychological warfare is apparent, with business confidence eroded and foreign investment at a nadir.
U.S.-Iran Negotiations: Leverage Through Instability
U.S. officials, from multiple administrations, have maintained that their objective is not war, but a renewed agreement limiting Iran’s nuclear ambitions and curbing its regional aggression. Yet, as evidenced by shifting troop deployments and economic sanctions, Washington continues to escalate non-military pressure in hopes of extracting greater concessions at the negotiating table. Zarei and other Iranian commentators have called for their government not to yield to what they term American and Western “bluffs,” advocating for continued economic growth and defiance in the face of U.S. pressure.
However, the facts on the ground complicate this narrative. Iran’s currency instability, recurring unrest, and the ever-increasing cost of sustaining regional proxies all limit the regime’s options. Meanwhile, the persistence and intensity of Israeli and American countermeasures keep Iran’s leaders on the defensive—politically, militarily, and economically.
A Broader War of Attrition: Implications for Regional Security
The trajectory of U.S. pressure on Iran has immediate implications for Israeli security and the larger Middle East. The alignment between American economic measures and Israeli military strategy reflects a broader consensus that undermining Iran financially is as critical as military deterrence. The IRGC’s principal role in funding, training, and arming terror proxies highlights the interconnectedness of economic strength and regional power projection.
In this context, each public statement about American deployments, every new round of sanctions, and all successful interdictions of Iranian arms shipments serve dual purposes: raising the operational cost for Iran’s regional ambitions and reassuring Israel and its allies that the Iranian threat is being actively contained.
Conclusion: Economic Warfare as Strategic Defense
While overt military confrontation may not be imminent, the U.S.-led strategy of economic and psychological pressure against Iran remains central to regional stability. Iran’s ruling elite face mounting constraints: balancing domestic expectations, navigating economic hardship, and sustaining the costly commitment to hostile proxies intent on Israel’s destruction.
The outcome has far-reaching consequences for the region and beyond. As long as the Islamic Republic persists in its campaign of regional aggression and terror sponsorship, it will encounter increasing resistance—on the battlefield, in global markets, and within its own borders. The economic front, now more than ever, is the axis around which the struggle for the Middle East’s future is being decided.
