It’s certainly not diplomacy and it’s not coercion. It is war conducted by economic means, all designed to produce an economic crisis and social unrest leading to a fall of the government.

John Maynard Keynes famously wrote in The Economic Consequences of the Peace (1919): “There is no subtler, no surer means of overturning the existing basis of Society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

The United States mastered this art of destruction by weaponizing the dollar and using economic sanctions and financial policies to cause the currencies of targeted countries to collapse. On January 19, we published “The US–Israel Hybrid War Against Iran,” describing how the United States and Israel are waging hybrid wars on Venezuela and Iran through a coordinated strategy of economic sanctions, financial coercion, cyber operations, political subversion, and information warfare. This hybrid war has been designed to break the currencies of Iran and Venezuela in order to provoke internal unrest and ultimately regime change.

On January 20, just one day after our article, US Treasury Secretary Scott Bessent publicly confirmed, without qualification, apology, or ambiguity, that our description is indeed the official US policy.

In an interview at Davos, Secretary Bessent explained in detail how US Treasury sanctions were deliberately designed to drive Iran’s currency to collapse, cripple its banking system, and drive Iran’s population into the streets. This is the “maximum pressure” campaign to deny Iran access to international finance, trade, and payment systems. Bessent explained:

“President Trump ordered Treasury and our OFAC division, Office of Foreign Asset Control, to put maximum pressure on Iran. And it’s worked, because in December, their economy collapsed. We saw a major bank go under; the central bank has started to print money. There is dollar shortage. They are not able to get imports, and this is why the people took to the street.”

This is the explicit causal chain whereby US sanctions caused the currency to collapse and the banking system to fail. This monetary instability led to import shortages and economic suffering, causing the unrest. Bessent concluded by characterizing the US’ actions as “economic statecraft,” and Iran’s economic collapse as a “positive” development:

“So, this is economic statecraft, no shots fired, and things are moving in a very positive way here.”

What Secretary Bessent describes is of course not “economic statecraft” in a traditional sense. It is war conducted by economic means, all designed to produce an economic crisis and social unrest leading to a fall of the government. This is proudly hailed as “economic statecraft.”

The human suffering caused by outright war and crushing economic sanctions is not so different as one might think. Economic collapse produces shortages of food, medicine, and fuel, while also destroying savings, pensions, wages, and public services. Deliberate economic collapse drives people into poverty, malnutrition, and premature death, just as outright war does.

This pattern of suffering as the result of US sanctions is well documented. A landmark study in The Lancet by Francisco Rodríguez and colleagues shows that sanctions are significantly associated with sharp increases in mortality, with the strongest effects found for unilateral, economic, and US sanctions, and an overall death toll comparable to that of armed conflict.

Economic warfare of this kind violates the foundational principles of international law and the UN Charter. Unilateral sanctions imposed outside the authority of the UN Security Council, especially when designed to cause civilian hardship, are illegal. Hybrid warfare does not evade international law by avoiding bombing (though the US and Israel have also illegally bombed Iran, of course.) The illegality of US “economic statecraft” applies not only to Iran and Venezuela, but to dozens more countries being harmed by US sanctions.

This work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.
_______________________

Jeffrey D. Sachs, University Professor at Columbia University, is Director of the Center for Sustainable Development at Columbia University and President of the UN Sustainable Development Solutions Network. He has served as adviser to three UN Secretaries-General, and currently serves as an SDG Advocate under Secretary-General António Guterres.

Sachs has authored and edited numerous books, including three New York Times bestsellers: The End of Poverty (2005), Common Wealth: Economics for a Crowded Planet (2008), and The Price of Civilization (2011). Other books include To Move The World: JFK’s Quest for Peace (2013), The Age of Sustainable Development(2015), Building the New American Economy (2017), A New Foreign Policy: Beyond American Exceptionalism (2018), The Ages of Globalization (2020), and most recently, Ethics in Action for Sustainable Development (2022).

 

JeSybil Fares is a specialist and advisor in Middle East policy and sustainable development at SDSN