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America has further increased economic pressure against Iran. US Treasury Secretary Scott Besant has announced the launch of ‘Operation Economic Outcast’. Under this, five important sectors to Iran’s economy have been brought under the purview of secondary sanctions. These include digital assets, technology, gold, aviation and shipping. America’s goal is to block Iran’s sources of income and limit its global economic activities. The US Treasury has also taken action against about 60 entities, people and ships.

Why is America keeping an eye on 5 sectors?

According to the US government, Iran uses digital assets and cryptocurrencies to evade sanctions and transact money. The technology sector is being monitored because advanced technology can be used in weapons programs.

Iran is using gold to reduce pressure on its currency. Regarding aviation and shipping sector, America alleges that they are used in movement of weapons, sensitive technology, cash and oil.

If you do business with Iran then action will be taken against other countries also

The impact of these sanctions cannot be limited to Iran only. If any foreign company or organization does business with Iran in these five sectors from which it gets economic benefits, then it will also be at risk of American action.

This is called secondary restriction. America can separate such institutions from its financial system. In particular, access to US banking and dollar-based transactions may be affected.

Also keep an eye on China, Türkiye and UAE

The US has not yet released the full list of countries on which further secondary sanctions may be imposed. However, the major countries doing business with Iran include China, Türkiye and the United Arab Emirates. China has been a big buyer of Iranian oil.

The UAE also maintains important trade relations with Iran. US officials have indicated that no country or company will be considered completely safe from US sanctions.

Besant said- two paths in front of Iran

Scott Besant said that America is going to put extensive pressure on Iran’s economic network. According to him, Iran now has two options. The first path is to be completely isolated from the global economy and reduced to a limited scale economy. The second path is to return to normalcy and seize the opportunity to re-engage in the global economy.

Why are companies afraid of secondary sanctions?

The greatest pressure from US sanctions comes through the dollar and the banking system. If US sanctions are imposed on a foreign company, it may be difficult for it to do business with American banks and companies.

In some cases it can even be excluded from the American financial system. It is because of this threat that Indian, Chinese, Turkish or UAE companies assess US regulations and potential risks before doing business with Iran.

Big role of dollar in world trade

The US dollar plays a very important role in the global business and financial system. According to the given data, dollars are used in about 85% of the world’s trade. The dollar’s share in the foreign exchange reserves of global central banks is said to be about 64%.

Apart from this, about 39% of the world’s loans are given in US dollars. Due to this strong position, the impact of American sanctions is not limited to American companies only.

What could be the impact on India?

US sanctions against Iran do not necessarily have a direct impact on India. However, Indian companies doing business with Iran will have to keep in mind American rules.

India and Iran have important interests in energy, ports and trade. In such a situation, new restrictions may make the business and payment process difficult in some areas.

Pressure may increase on oil purchase

If Indian companies buy crude oil from Iran, payment and trade arrangements may be affected due to US sanctions. Services to banking channels, insurance and shipping may also pose additional risks. India will have to balance between its energy needs and US sanctions in such cases.

Eye on Chabahar Port also

Iran’s Chabahar port is strategically and commercially important for India. India is interested in increasing connectivity to Central Asia through this port. The scope of US sanctions and their implementation may also impact projects to Chabahar. However, its actual impact will depend on which activities and institutions the US targets next.

Difficult if payment is made in dollars

If US financial sanctions are imposed on Indian businesses linked to Iran, transacting in dollars may become difficult. Along with this, the companies concerned may have to face risks regarding their access to the US banking system and other international financial services. This is why the fear of secondary sanctions may force many companies to distance themselves from Iran.

Diplomatic challenge before India

America may demand India to limit economic relations with Iran. However, India will take a decision based on its national interest, energy needs and strategic priorities. In such a situation, the new American policy can become not only an economic but also a diplomatic challenge for India. The most important thing at the moment is which countries and companies America takes further action against.