The fallacy of US delusions about Iran’s economic collapse

“Iran is absolutely not sanctionable,” Mortaza Zamanian, Iran’s deputy economy minister, declared this week as Tehran moved to keep foreign trade flowing despite Washington’s latest campaign targeting Iranian commerce and economic infrastructure.

Zamanian cited Iran’s extensive borders, established commercial routes and longstanding trading relationships, saying that they make it impossible for external pressure simply to switch off the country’s economy.

His remarks came as Washington intensified its economic terrorism against Iranian oil, shipping, aviation, finance, technology and foreign companies supporting those sectors.

US Treasury Secretary Scott Bessent said that Iran would probably make its final oil deliveries to China within two weeks, after which, he asserted, “they will have nothing.”

That prediction deserves comparison with history, because American administrations have imposed increasingly severe sanctions since 1979 while repeatedly expecting economic pressure eventually to produce decisive Iranian economic collapse.

The economy did not disappear under those campaigns; instead, Iran developed domestic industries, expanded regional commerce, strengthened Asian trade and accumulated extensive experience operating outside Western financial systems.

The proposition that an economy which has absorbed American sanctions for almost half a century will suddenly become economically empty within two weeks therefore indicates the depth of delusion among the current US leadership.  

Iran enters the current confrontation with a large domestic market, substantial productive capacity, enormous energy resources and deeply established commercial relationships extending across neighboring countries and wider Eurasian markets.

The World Bank describes Iran as relatively diversified for an oil-exporting economy, with substantial manufacturing, agricultural and service activity supported by a large population and significant domestic consumption.

That domestic market sustains production across food, pharmaceuticals, construction materials, steel, petrochemicals, machinery and consumer goods, meaning Iranian production does not depend entirely upon continuous access to Western consumers.

Iran has also developed major industrial capabilities suited to its own resources and infrastructure, including steel, refining, petrochemicals, cement, power generation, construction, food processing and pharmaceutical manufacturing.

These capabilities have continued developing despite restrictions on Western investment and technology, demonstrating that Iranian industrial activity does not depend upon permanent participation by Western companies.

Iran’s prolonged exposure to sanctions has produced accumulated technical and commercial knowledge, giving Iranian companies decades of experience managing restricted supply chains and unreliable access to foreign suppliers.

When foreign manufacturers withdraw, Iranian companies have learned to redesign equipment, substitute components, develop domestic suppliers and cooperate with businesses from countries willing to maintain commercial relationships.

Academic research has documented this process, showing that sanctions can simultaneously restrict foreign technology while encouraging domestic technological development and adaptation within affected Iranian industrial sectors.

The resulting knowledge extends beyond individual companies, because engineers, technicians, procurement specialists and managers have accumulated practical experience managing shortages, substitution and alternative sourcing.

Iranian manufacturers therefore do not design procurement systems around the assumption that every international supplier will remain available indefinitely, making adaptation part of ordinary commercial planning.

Iran’s geography provides another economic advantage, because the country borders Turkey, Iraq, Armenia, Azerbaijan, Turkmenistan, Afghanistan and Pakistan while possessing coastlines reaching the Persian Gulf and the Sea of Oman.

Those borders connect Iranian commerce with the Caucasus, Central Asia, South Asia, the Persian Gulf, Turkey and Iraq, while transportation corridors also connect Iran with Russia and wider Eurasian markets.

Financial sanctions can make transactions more difficult, but they cannot physically relocate Iran or eliminate its access to neighboring markets, suppliers, transportation routes and established regional trading relationships.

Iran has consequently developed commercial links involving Iraq, Turkey, the United Arab Emirates, Afghanistan, Pakistan, the Caucasus, Central Asia and China through years of sustained economic interaction.

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The World Bank has documented Iran’s increasing trade orientation toward neighboring countries and China as sanctions restricted conventional international relationships, making this regional pivot an established economic feature.

China adds another dimension because it combines enormous industrial capacity with sustained demand for Iranian energy while supplying machinery, manufactured products and industrial inputs required throughout Iran’s domestic economy.

The US-China Economic and Security Review Commission identifies China as Iran’s largest trading partner and estimates that China imported approximately 1.4 million barrels of Iranian crude daily during 2025.

Chinese independent refiners have continued purchasing Iranian crude through commercial arrangements designed to reduce their exposure to American financial restrictions and sanctions enforcement.

That relationship demonstrates why Iran does not require unrestricted access to every Western market when Chinese demand and extensive regional commerce provide alternative markets for Iranian commodities.

Iran’s energy resources provide enormous economic depth, with the World Bank ranking the country second globally in proven natural-gas reserves and fourth globally in proven crude-oil reserves.

Those resources provide export potential while also supplying abundant domestic energy and petrochemical feedstocks supporting manufacturing, electricity generation, transportation and numerous energy-intensive industrial activities.

Iran has consequently developed a substantial downstream economy converting hydrocarbons into refined products, petrochemicals and industrial inputs rather than depending exclusively upon crude-oil exports.

The World Bank has noted that sanctions encouraged additional processing of hydrocarbons into petrochemicals, illustrating how restrictions contributed to changes within Iran’s export structure.

Iran has also developed financial mechanisms outside conventional Western banking, including bilateral currency arrangements, exchange houses, barter, intermediary companies and indirect settlement channels supporting international commercial activity.

The World Bank has documented growing use of bilateral currency exchange, barter and indirect payment mechanisms as Iranian trade shifted increasingly toward neighboring countries and China.

These arrangements provide alternative methods for exchanging value when conventional dollar-based transactions become unavailable or prohibitively difficult.

Their existence helps explain why Washington increasingly targets third-country banks, intermediaries and commercial facilitators, because Iranian commerce extends through extensive international networks beyond domestic financial institutions.

Against this background, Bessent’s prediction assumes that eliminating a major source of oil revenue would effectively remove the broader economic foundations supporting Iran’s productive system and commercial institutions.

Iran’s economic structure is considerably broader, because oil exports represent one component of national activity alongside manufacturing, agriculture, services, domestic consumption and regional commerce.

The World Bank estimates that Iran’s economy contracted during the Iranian year ending March 2026, while simultaneously describing adaptation through changing trade patterns and alternative payment mechanisms.

Economic contraction, however, is fundamentally different from the disappearance of productive capacity, infrastructure, commercial institutions and domestic relationships sustaining millions of Iranian consumers and businesses.

American sanctions have repeatedly targeted Iranian banking, oil exports, investment, technology, shipping and foreign companies, yet Iran has retained its industrial base and redirected substantial trade toward neighboring countries.

Washington possesses powerful financial tools, but financial restrictions cannot physically eliminate Iran’s factories, oilfields, farms, engineers, consumers, ports, borders or commercial relationships accumulated over decades.

The central question is therefore whether American pressure can erase the productive, geographical, resource and commercial foundations Iran has accumulated across nearly half a century of economic adaptation.

Nothing in Iran’s economic history demonstrates that those foundations can disappear within two weeks, particularly while the country retains domestic production, regional markets, energy resources and established commercial relationships.

Iran therefore enters the present confrontation with domestic capabilities, energy resources, industrial capacity, geographic advantages and international relationships capable of keeping its economy operating despite intensified American terrorism.

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