Israel‘s preemptive strikes against arch-enemy Iran, and a tacit green light by the United States to continue, have capped years of aggressive international economic sanctions. Combined with diplomacy, with recent diplomatic efforts to head off Iran’s possession of nuclear weapons, it’s all set the stage for the Iranian regime’s deep vulnerability.
This would have been unthinkable as recently as 2023, between President Donald Trump‘s first and second nonconsecutive terms. Though the Trump administration in early 2020 killed the Iranian Gen. Qassem Soleimani, the “Islamic Republic” of Iran’s so-called “Ring of Fire” was as strong as ever. Iranian proxy forces dominated the governments encircling Israel: Hezbollah in Lebanon, the Houthis in Yemen, Hamas in the Gaza Strip, and Bashar Assad’s dictatorship of Syria. This Axis of Resistance could rely on Russia for military might and China for cash.
But you know how this story goes. After Iran gave Hamas the green light to slaughter some 1,200 civilians in Israel on Oct. 7, 2023, the Jewish State has set back Hamas significantly and inflicted serious damage on Hezbollah, with Americans directly aiding in the severe degradation of the Houthis. Thanks to Hezbollah’s defeat by Israel and retreat into Lebanon, Syrian rebels were able to march to Damascus. And because Russia was slightly preoccupied by Ukraine’s fierce resilience in a war of Russian President Vladimir Putin’s own making, the best Russia could offer its decadeslong ally was a flight to Moscow.
The sheer scope of the militant remaking of the Middle East over the last year and a half cannot be overstated. Israel indeed did too much of this on its own, thanks to the fecklessness of former President Joe Biden’s administration. The country deserves gratitude from the world over. However, the economic stage for this transformation was set long before the peak of Iran’s power in 2023. And yes, one of the most crucial actors in priming the power of the purse against Iran was indeed Trump.
When Trump entered the White House for the first time, Iran was enjoying an economic boom thanks to the JCPOA brokered by former President Barack Obama. The country’s annual GDP growth boomed to the double-digits, and its daily oil exports doubled to more than 2 million barrels per day. Iran’s total exports and imports peaked in 2017 as the nation became the West’s preferred center of power in the region.
Although Saudi Arabia and, to a much lesser extent, the United Arab Emirates and Bahrain balked at the JCPOA, the rest of Iran’s neighbors were too economically intertwined with the regime to protest. Qatar, which shares the world’s largest natural gas field with Iran, was at the time almost entirely dependent on its oil and gas industry. As was Oman, which was reliant on the Strait of Hormuz to access central Asian markets, and thus, reliant on Iranian goodwill not to block the waterway.
So, all but a handful of countries had a vested interest in Iran’s economic success. However, that changed in 2017, when Trump succeeded Obama as president. And Mohammed bin Salman, an enlightened despot of a reformer, became Saudi Arabia’s crown prince and de facto power behind the throne.
MBS purged the Saudi government of various radical clerics and corrupt elites, discarding the country’s historic dependence on Islamism and oil exports for a new nationalism with Vision 2030. Trump embraced MBS, launching the Middle East Strategic Alliance to act as a sort of “Arab NATO” in theory. However, in practice, it was more of an economic engine to pivot trade away from the Iranians.
Alas, in 2018, Trump withdrew from the JCPOA and began his maximum pressure campaign against Iran. MBS simultaneously pledged a quarter-billion dollars to further industrialize the Omani Port of Duqm, with the U.S. agreeing to run the port, in turn reducing American reliance on the Strait of Hormuz. Various Sunni neighbors adopted their versions of Vision 2030, following suit in diversifying away from oil while embracing tourism and international investment.
Then, Trump got Bahrain and the UAE to normalize relations with Israel in the landmark Abraham Accords. It was widely viewed as a precursor to an inevitable economic and diplomatic integration between Israel and the rest of the Arab world.
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Excluding Iran, of course. After Trump’s maximum pressure campaign began, Iran’s annual inflation rate exploded well into the double-digits and has never recovered. American sanctions meant that Iran had to sell oil to a select few fair-weather friends, such as China, at a severe discount. And widespread poverty at home meant Iran had to pinch pennies to shore up extra stockpiles of weapons for its proxies.
A decade ago, the rest of the Middle East had nearly as much economic reason to fear Iran as it did militarily. Once upon a time, Tehran had the power to drive global oil prices and single-handedly fund its client states, and oil-reliant economies operating with few neighboring allies had very much to lose. Now that’s all ancient history.