Trump needs patience: The "severe bleeding" that could bring him victory
Iran is demanding surrender terms - but the US president is not yet returning to explicit escalation threats, claiming that it is possible to "go with the flow" until the siege and sanctions bring victory: "I control their money, I am their banker!". In the background: the currency is at a low, the economy is shrinking at the largest scale in 38 years - and the "misery index" that combines inflation and unemployment is at a peak. "We have been forgotten, we are just trying to stay alive," the Iranians cry. President Pezeshkian warned of a renewal of the protest, although in the shadow of the repression there is no sign of this: "The economy is the main battlefield."
US President Donald Trump has not abandoned the military option against Iran, and due to his unpredictable nature it is very possible that he will yet return to explicit threats against the regime of the ayatollahs, but for now at least it seems that he is adhering to a new strategy - a return to the "maximum pressure" method on Iran's economy, in order to cause it to compromise in the negotiations on an agreement to end the war. He declared that he is "keeping a low profile" and conducting "only partial" negotiations, emphasizing its poor economic situation after two wars and now also a naval siege that is choking its oil exports.
Freezing the situation on all fronts
In an interview with the conservative American television channel Real America's Voice, Trump was asked about his strategy against Iran, and detailed two "very powerful strategies" that can be taken against it: "hit them really, really hard" - an option from which he is refraining for now due to the fear of Iran's response against the oil facilities of the Gulf states and the shortage of ammunition in the US military - or "defeat them economically" through the continuation of the siege and sanctions. The president described this method as follows: "Do what I am doing now, just go with the flow and see how bad their situation is. They have 300% inflation, their currency has almost no value. They are not paying their soldiers, their soldiers are leaving. So just continue this, because it is not sustainable." He added: "We control their money. What they have, and they had a lot, we have complete control over it. I am their banker. I am their banker!".
Analysts estimate that if there is no flexibility, and if Trump eventually decides to return to an intense military move, it is likely that this will happen only after the midterm elections in the US on November 3, because a return to fighting before then will further complicate the Republicans' chances of maintaining control of Congress.
Economy in chaos
According to the International Monetary Fund, Iran's economy is expected to shrink this year by an enormous scale of 5.6% - its largest drop since 1988. The annual inflation reached 88.6%, when food prices jumped within a year by 130% and the value of the rial reached a new low. The "misery index" reached a new peak of 91.1 during the spring, more than twice the figure of last year. In the first quarter, the Islamic Republic lost 630,000 jobs in the industrial sectors, and in total the war caused the loss of a million jobs.
A central reason for the blow that the Iranian economy suffered was the loss of the ability to export oil due to the American naval siege. The revenues from oil were 11% of the total GDP of Iran, and the siege costs the Iranian economy, according to the estimate of the "Foundation for Defense of Democracies" institute, 435 million dollars every day.
"They forgot us, we are just trying to stay alive"
In the shadow of the economic distress, masses of Iranians are now making use of various credit applications that allow them to pay in installments. The labor unions claim that the government has forgotten them in the midst of the war. "The Iranian workers have been forgotten and left helpless at the mercy of fate," said Hassan Azati, head of the construction workers' union in the city of Baneh. Some are so desperate that they agreed to work as "kolbari" - a nickname for those who smuggle goods through Iran's borders.
But despite the regime being well aware of what is happening on the ground, it is not clear to what extent this pressure will cause the Islamist-extremist elements to compromise. The new secretary of the Supreme National Security Council, Mohsen Rezaei, stated: "The US is the cause of the instability. The Strait of Hormuz will not open unless the US changes its behavior and accepts Iran's conditions."
