Treasury Secretary Urges Squashing Iran's Economy

No person affected by an economic sanctions campaign - not the Iranian pharmacist waiting on imported insulin, not the shopkeeper in Isfahan whose currency lost a third of its purchasing power last year, not even the mid-level Treasury clerk drafting the license exemptions - should fall below the floor of predictable, accountable administration. That is the standard I would apply here, and I notice the word chosen by the Treasury secretary was “squash.” Squash is not a policy term. Squash is what you do to an insect. And when a government official uses that word about an economy of ninety million people, the first question a labor administrator asks is not whether the goal is wise - it is who does the squashing, on what schedule, with what oversight, and what happens to the people underneath when the boot lands imprecisely, as boots always do.

I spent my career learning that a policy without an enforcement mechanism is not a policy, it is a mood. So let us ask what “squash” requires administratively. Sanctions regimes are not lightning bolts; they are licensing systems, and licensing systems require staff - people at the Office of Foreign Assets Control who read applications for humanitarian carve-outs, who decide whether a shipment of dialysis equipment gets a license this month or sits in a warehouse in Rotterdam for six. When a Treasury secretary asks “international partners” to support a squeeze, what he is actually asking European and Asian finance ministries to do is align their own banks’ compliance departments with an American enforcement calendar they did not set and cannot appeal. That is a real cost, paid in bank compliance officers’ salaries and in correspondent-banking relationships severed out of an abundance of caution - banks do not distinguish between a sanctioned centrifuge part and a shipment of cancer medication when the safest answer is simply to decline the transaction. I have seen this before. It is what happens whenever a strong standard is announced without a matching inspection regime: the honest actors overcomply out of fear, and the floor collapses under exactly the people the sanctions architects insist they are not targeting.

Here is my one claim, and I want to state it plainly: the word “squash” reveals that this policy has confused the target with the mechanism. The stated target is the Iranian state’s capacity to finance its military and proxy activity. The mechanism, as actually administered, falls on civilian import channels, on humanitarian exemption processing times, on the ordinary transactional plumbing that lets a country buy insulin and machine parts and grain. Those are not the same thing, and a Treasury secretary who wants allies to “squash” rather than “target” is asking for solidarity with the mechanism’s collateral reach, not merely its objective. The strongest version of the case for him says deterrence requires visible, unhedged severity - that any daylight between allies signals weakness Tehran will exploit, and that humanitarian carve-outs, however designed, become the loophole through which the whole regime leaks. I take that seriously; it is the argument every effective regulator eventually has to answer, because rigor and mercy pull against each other at the enforcement margin. My answer is not that severity is wrong. My answer is that severity without a named licensing authority, a published processing timetable, and a reporting requirement on humanitarian-exemption denial rates is not a strategy, it is a slogan dressed as one.

So the question I would put to every finance ministry being asked to sign on is the one I used to put to every employer who told me a rule was “understood”: show me the office, show me the staff, show me the appeals process, and show me what happens when a licensing officer gets it wrong three times in a row. If the United States wants allies to enforce a squeeze, it owes those allies - and it owes the pharmacist in Isfahan - an enforcement architecture as specific as the rhetoric is vivid. Absent that architecture, “squash” is not a floor. It is the sound of a floor giving way, and somebody is always standing on it when it does.