United States Treasury Secretary Scott Bessent has claimed that Washington engineered a greenback scarcity in Iran to ship the rial into freefall and trigger protests on the streets.
In December and January, Iran was confronted with one of many greatest antigovernment protests the nation has seen because the Islamic revolution of 1979, prompted by the extreme financial disaster.
Protests over hovering costs in Iran started with shopkeepers in Tehran who shuttered their retailers and commenced demonstrating on December 28, 2025, after the rial plunged to a report low in opposition to the US greenback in late December. The protests then unfold to different provinces of Iran.
Supreme Chief Ayatollah Ali Khamenei’s authorities responded with drive. Greater than 6,800 protesters, together with no less than 150 youngsters, are thought to have been killed in a sweeping crackdown by the federal government on the protest motion.
So, how did Washington create a “greenback scarcity” in Iran, in the end inflicting the rial to tank? And what impact has that had on the Iranian individuals?
What’s a ‘greenback scarcity’?
A “greenback scarcity” refers to when a rustic doesn’t have sufficient US {dollars} to pay for issues it wants from the remainder of the world.
The US greenback is the primary foreign money utilized in world commerce, particularly for oil, equipment and mortgage repayments, which suggests nations want a gentle provide of it.
If exports fall and sanctions block entry to the US monetary system, {dollars} can develop into scarce. Because of this, the native foreign money weakens, costs of imported items rise, and inflation worsens.
In Iran, a “greenback scarcity” was engineered by concurrently blocking the 2 predominant channels of international alternate (FX) influx: Oil exports and worldwide banking entry, stated Mohammad Reza Farzanegan, an economist at Germany’s Marburg College. The US did this by imposing sanctions on Iranian oil, which means anybody shopping for or promoting it might be topic to punitive measures.
Given Iran’s dependence on oil for income, financial sanctions on its oil can create a extreme FX constraint.
“Through the use of secondary sanctions to threaten any world entity buying and selling in {dollars} with Iran, the US traps Iran’s present reserves overseas and prevents new {dollars} from coming into the home market,” Farzanegan informed Al Jazeera.
What has US Treasury Secretary Scott Bessent stated?
Replying to a question about coping with Iran at a Congressional listening to final week, Treasury Secretary Bessent described the US technique to ship the Iranian foreign money plunging.
“What we [have done] at Treasury is created a greenback scarcity within the nation,” Bessent stated, including that the technique got here to a “grand end result in December, when one of many largest banks in Iran went below … the Iranian foreign money went into freefall, inflation exploded, and therefore, now we have seen the Iranian individuals out on the road.
“Now we have seen the Iranian management wiring cash in another country like loopy,” Bessent added. “So the rats are leaving the ship, and that could be a good signal that they know the top could also be close to.”
Earlier than this, talking with Fox Information on the World Financial Discussion board final month in Davos, Bessent defined the position US sanctions performed in driving the current nationwide protests.
“President Trump ordered Treasury … to place most stress on Iran, and it’s labored,” he stated. “As a result of in December, their financial system collapsed. They aren’t in a position to get imports, and for this reason the individuals took to the streets.”
In each cases, Bessent referred to his earlier remarks on the Financial Membership of New York, in March final 12 months, when he outlined how the White Home would leverage President Donald Trump’s “most stress” marketing campaign to break down Iran’s financial system.
In his tackle there, Bessent stated the US “elevated a sanctions marketing campaign in opposition to [Iran’s] export infrastructure, focusing on all phases of Iran’s oil provide chain”, coupled with “vigorous authorities engagement and personal sector outreach” to “shut off Iran’s entry to the worldwide monetary system”.
What impact did the greenback scarcity have in Iran?
In January, the Iranian rial was buying and selling at 1.5 million to the greenback – a pointy decline from about 700,000 a 12 months earlier in January 2025 and about 900,000 in mid-2025. The plummeting foreign money triggered steep inflation, with meals costs a mean of 72 p.c larger than final 12 months.
In 2018, throughout his first presidency, Trump withdrew from the 2015 Joint Complete Plan of Motion, a deal between Iran and world powers limiting Tehran’s nuclear programme in return for sanctions aid.
Since re-election final January, President Trump has doubled down on his so-called “most stress” to cripple Iran’s financial system and nook Tehran to renegotiate its nuclear and regional insurance policies. Final month, Trump threatened a 25 p.c tariff on nations doing enterprise with Iran.
By way of the rigorous blocking of Iran from the worldwide monetary system by making a greenback scarcity, the US pushed Tehran in the direction of a extreme “import compression, [and as a result, Iran] can’t pay for the intermediate items and equipment required for home manufacturing”, stated Farzanegan, the economist.
The US technique, he stated, “is especially devastating as a result of it leverages industrial threat administration in opposition to humanitarian wants”. Briefly, Washington’s technique “makes the small Iranian market a industrial legal responsibility” for any firm, even when they’re solely coping with drugs, as an illustration, Farzanegan added.
A analysis paper revealed by Farzanegan and Iranian American economist Nader Habibi final 12 months discovered that the dimensions of Iran’s center class would have expanded by an annual common of roughly 17 share factors, between 2012 and 2019, if it weren’t for US motion.
In 2019, the estimated measurement of loss within the middle-class share of the inhabitants in Iran was 28 share factors, the analysis discovered.
“Individuals misplaced their buying energy, and financial savings had been worn out,” the economist informed Al Jazeera. “This can be a long-term destruction of the nation’s human capital.”
Apart from the US motion is the present vulnerability of Iran’s financial construction, with components like long-term mismanagement, excessive charges of corruption and over-reliance on oil revenues making it fragile.
Whereas the US sanctions created exterior shock, an absence of home structural reforms left the federal government with “no fiscal house to cushion the blow”.
What’s the US’s endgame right here – and can it succeed?
Bessent’s admission that Washington intentionally created a “greenback scarcity” alerts the US’s shift in the direction of a complete financial warfare narrative.
“That is financial statecraft; no photographs fired,” Bessent stated on the WEF in Davos final month.
“This admission might complicate the US’s diplomatic standing, because it confirms that the humanitarian channels for meals and drugs are sometimes rendered ineffective if the complete banking system is being focused for collapse,” Farzanegan stated.
Bruce Fein, a former US affiliate deputy legal professional normal who specialises in constitutional and worldwide regulation, informed Al Jazeera that such a financial coercion is “as frequent because the solar rising within the east and setting within the west”, pointing to financial sanctions in opposition to Russia, Cuba, North Korea, China and Myanmar.
Nonetheless, in contrast to in different instances the place the US has utilized financial stress, Farzanegan stated Iran’s case is “a novel experiment as a result of period and depth of the stress”.
In contrast to Russia, which has a extra diversified export base and bigger reserves, Iran has been going through various types of sanctions for many years because the supreme chief took energy in 1979.
“Iran has a classy inner mechanism for sanctions circumvention that makes the ‘greenback scarcity’ a sport of cat-and-mouse relatively than a one-time shock,” the economist stated.
With a US armada presently stationed within the Arabian Sea, the US and Iran are in talks to defuse tensions. The US needs three key issues from Iran: To cease enriching uranium as a part of its nuclear programme, to do away with its ballistic missiles and to cease arming non-state actors within the area.
In the end, observers say, the US needs regime change in Iran.
However Fein stated his expertise reveals that financial sanctions alone “seldom, if ever, topple regimes … Regime change comes externally solely with the usage of navy drive.
“Iran’s greenback scarcity won’t oust the mullahs or Revolutionary Guard,” he stated, referring to Iran’s present administrative construction.
The impoverishment of Iranians will diminish, Fein informed Al Jazeera, “relatively than promote the probability of a profitable revolution as a result of day-to-day survival would be the precedence”.