At the time of writing, the US-Israel war on the Islamic Republic of Iran enters its third week (day 19) with no signs of de-escalation and coming to a swift end. In fact, it seems to be spiralling out of control and intensifying into a regional war. Thus far, the war has resulted in more than 6,000 casualties, 24,000 injured (mostly in Iran), and costing more than a billion dollars a day. In terms of loss of lives, the death of its top leadership, and degradation of its military capabilities, Iran has suffered the most. However, this is one side of the coin that is always in the news and media debates. What is forgotten and rarely analysed is the cost of the economic war that is being waged by the US and its allies on Iran since decades.
Modern warfare is also about economic wars as much as it is about military ones. Iran has been subject to debilitating economic sanctions and a systematic attack on its currency, so that the entire population has to suffer for upholding the values it cherishes that facilitate the continuation of an Islamic regime that is hated by America and Israel.
Sanctions on Iran: Economic Warfare as Strategy
According to estimates, Iran has suffered around $1.2 trillion in economic damage (2011-2023) due to sanctions of which $300-450 billion is the loss in oil income alone over the past decade. In some periods, Iran’s oil exports declined from 2.5 million barrels/day to below 400,000.
Estimated losses across sectors are $150 billion (agriculture), $450 billion (industry), $600 billion (services) – showing that sanctions hit the entire economy, not just Iran’s oil industry. Some of the economic consequences of the sanctions are the unbearable inflation levels (above 40%), drop in the value of the Iranian rial (1 US$ equals 1.3 million IRR) and a steady fall in the Iranian GDP growth and GDP per capita. This resulted in a huge rise in the unemployment levels and few avenues of job creation.
One critical sector impacted by the US-led sanctions has been healthcare. According to an NDTV report, “US sanctions on Iran have impacted the country’s ability to import vital medicines and equipment by up to 70%. This has led to chronic shortages for cancer treatments, dialysis, and rare diseases. There’s fear of secondary penalties which will halt humanitarian transactions. All of these factors have impacted public health, increasing infant mortality and rates of chronic illness amid economic collapse.” All this added up to a general climate of discontent against the Iranian regime, which was one of the main objectives of the economic sanctions. Unfortunately for America, the war on Iran has reversed this and in fact re-ignited the flames of Iranian nationalism and support for the current regime.
Iran’s Counter Strategy: De-Dollarization and the Yuan Option
The American military hegemony in the world is largely based on the petrodollar system through which the US blackmails the oil producing countries in the Gulf like Saudi Arabia, the UAE and others to sell their oil in US dollars only in lieu of providing them with armaments and defence security. This keeps the demand of the US dollar high and sustains its rank as the currency of choice for any international trade.
China and other BRICS nations want to break this monopoly of the American dollar. Hence, Iran has started accepting and encouraging its oil purchasing partners to pay it in other currencies, especially the Chinese yuan. This strategy is both a necessity and caters to Iran’s long-term geopolitical calculations.
Iran is the 7th largest producer of crude oil in the world. But with sanctions restricting Iran’s access to global banking systems and dollar transactions, Tehran has turned to China. Today China makes up 85-90% of Iranian oil exports fulfilling around 10% of Chinese oil requirement. Much of this trade is settled outside the dollar system, often through smaller Chinese banks and informal financial channels. Reports indicate that China has been purchasing roughly $1.5 billion worth of Iranian oil per month in yuan, creating a parallel payment system that bypasses American financial regulation.
More recently, Iran has gone a step further by proposing that oil shipments through the strategically vital Strait of Hormuz be linked to yuan-denominated transactions, effectively tying energy flows to currency realignment. It is part of a broader global trend toward de-dollarization. Since sanctions operate under the control of the dollar system and international banking networks, shifting trade into other currencies reduces their effectiveness.
Iran’s growing alignment with China also fits into China’s larger ambition to internationalise the yuan and expand its role in global trade.
Fighting a Lonely Battle
Allah says in the Qur’an in Surah Al-Maida verse 51 – “O you who believe, do not take the Jews and the Christians as awliya (allies/protectors); they are allies of one another. And whoever among you takes them as awliya is one of them. Indeed, Allah does not guide the wrongdoing people”. It is indeed a tragedy for the Muslim Ummah that a nation (Iran) that wants to run its affairs on Islamic principles has been subjected to so much cruelty and oppression by its enemies and yet the other Muslim-majority countries are either silent bystanders or complicit in that oppression.
The Prophet ﷺ described the Ummah as one body, where if one part suffers, the rest responds with pain and concern. Yet today, this sense of Islamic brotherhood appears weakened by political interests, economic dependencies, and fear of global power structures. It almost appears to be the fulfilment of the Prophet’s ﷺ prophesy in which he said, “The people will soon summon one another to attack you as people when eating invite others to share their dish. Someone asked: Will that be because of our small numbers at that time? He replied: No, you will be numerous at that time: but you will be scum and rubbish like that carried down by a torrent, and Allah will take fear of you from the breasts of your enemy and put ‘wahn’ into your hearts. Someone asked: What is wahn, O Messenger of Allah ﷺ? He replied: Love of the world and dislike of death.” So far, Iran is fighting a lonely but steadfast battle on all fronts. It firmly believes that both time and God are on its side.