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 for the reason that Islamic revolution of 1979, prompted by the extreme financial disaster.
Protests over hovering costs in Iran started with shopkeepers in Tehran who shuttered their outlets and started demonstrating on December 28, 2025, after the rial plunged to a file low towards 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, finally inflicting the rial to tank? And what impact has that had on the Iranian folks?
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 international commerce, particularly for oil, equipment and mortgage repayments, which suggests nations want a gradual provide of it.
If exports fall and sanctions block entry to the US monetary system, {dollars} can grow to be scarce. Consequently, 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 principal channels of international alternate (FX) influx: Oil exports and worldwide banking entry, mentioned Mohammad Reza Farzanegan, an economist at Germany’s Marburg College. The US did this by imposing sanctions on Iranian oil, that means anybody shopping for or promoting it will be topic to punitive measures.
Given Iran’s dependence on oil for income, financial sanctions on its oil can create a extreme FX constraint.
“By utilizing secondary sanctions to threaten any international entity buying and selling in {dollars} with Iran, the US traps Iran’s current reserves overseas and prevents new {dollars} from coming into the home market,” Farzanegan advised Al Jazeera.
What has US Treasury Secretary Scott Bessent mentioned?
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 mentioned, including that the technique got here to a “grand fruits in December, when one of many largest banks in Iran went beneath … the Iranian foreign money went into freefall, inflation exploded, and therefore, we have now seen the Iranian folks out on the road.
“We now have seen the Iranian management wiring cash overseas 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 mentioned. “As a result of in December, their financial system collapsed. They don’t seem to be capable of get imports, and that is why the folks 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 handle there, Bessent mentioned the US “elevated a sanctions marketing campaign towards [Iran’s] export infrastructure, concentrating 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 % increased 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 international powers limiting Tehran’s nuclear programme in return for sanctions reduction.
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 % tariff on nations doing enterprise with Iran.
By means of the rigorous blocking of Iran from the worldwide monetary system by making a greenback scarcity, the US pushed Tehran in direction of a extreme “import compression, [and as a result, Iran] can not pay for the intermediate items and equipment required for home manufacturing”, mentioned Farzanegan, the economist.
The US technique, he mentioned, “is especially devastating as a result of it leverages business danger administration towards humanitarian wants”. In brief, Washington’s technique “makes the small Iranian market a business legal responsibility” for any firm, even when they’re solely coping with drugs, for example, Farzanegan added.
A analysis paper printed 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 dimension 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 advised Al Jazeera. “This can be a long-term destruction of the nation’s human capital.”
Moreover the US motion is the prevailing 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, a scarcity 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 direction of a complete financial warfare narrative.
“That is financial statecraft; no photographs fired,” Bessent mentioned on the WEF in Davos final month.
“This admission could complicate the US’s diplomatic standing, because it confirms that the humanitarian channels for meals and drugs are sometimes rendered ineffective if your complete banking system is being focused for collapse,” Farzanegan mentioned.
Bruce Fein, a former US affiliate deputy lawyer basic who specialises in constitutional and worldwide regulation, advised Al Jazeera that the sort of financial coercion is “as frequent because the solar rising within the east and setting within the west”, pointing to financial sanctions towards Russia, Cuba, North Korea, China and Myanmar.
Nevertheless, in contrast to in different circumstances the place the US has utilized financial stress, Farzanegan mentioned Iran’s case is “a singular experiment as a result of period and depth of the stress”.
Not like Russia, which has a extra diversified export base and bigger reserves, Iran has been going through diversified types of sanctions for many years for the reason that supreme chief took energy in 1979.
“Iran has a classy inner mechanism for sanctions circumvention that makes the ‘greenback scarcity’ a recreation of cat-and-mouse somewhat than a one-time shock,” the economist mentioned.
With a US armada at the moment stationed within the Arabian Sea, the US and Iran are in talks to defuse tensions. The US desires 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 desires regime change in Iran.
However Fein mentioned his expertise reveals that financial sanctions alone “seldom, if ever, topple regimes … Regime change comes externally solely with the usage of army drive.
“Iran’s greenback scarcity won’t oust the mullahs or Revolutionary Guard,” he mentioned, referring to Iran’s present administrative construction.
The impoverishment of Iranians will diminish, Fein advised Al Jazeera, “somewhat than promote the probability of a profitable revolution as a result of day-to-day survival would be the precedence”.
