Making sense of the US attack on Larak and collapse of ‘Operation Economic Outcast’

When US treasury secretary Scott Bessent announced the sweeping “Operation Economic Outcast” to target Iran with crippling economic sanctions, it was assumed that Washington, DC, had decided to abandon a military solution to dealing with Tehran. Instead, the move appeared aimed at pressuring countries to stop trading with Iran, inflicting economic pain on its people and encouraging them to rise up in rebellion and topple the regime from within.

The US had imposed similar sanctions on Iraq ruled by Saddam Hussein but eventually had to invade Iraq with ground troops before toppling Saddam. Since the Vietnam war, US has been reluctant to send out troops on the ground and has increasingly relied on economic sanctions as a foreign policy instrument to pressurise hostile countries. The dominance of the US Dollar in the financial services allowed the US to flex its muscles against both Cuba and Venezuela. Sanctions alone, however, have never been effective in achieving foreign policy goals of the US though they have inflicted severe pain on the people.

Another reason why ‘Operation Economic Outcast’ failed to take off is because Iran has learnt to live with US sanctions. The US first imposed sanctions on Iran in 1953 when Tehran tried to nationalise the petroleum trade. Thereafter the US again imposed sanctions after the Revolution when US diplomats were taken hostage in Tehran.

President Ronald Reagan lifted the sanctions and got the hostages released. Once again the US imposed sanctions in 2004 in a bid to thwart Iran’s nuclear programme. President Obama imposed secondary sanctions in 2012 before entering into an agreement with Iran in 2015. President Trump pulled the US out of the agreement.

Having lived with sanctions intermittently for nearly five decades, Iran is by all accounts prepared to counter it. Indeed, when Bessent announced ‘Operation Economic Outcast’, Iranian foreign minister Seyed Abbas Araghchi scoffed and tweeted, “14 years ago: “Most crippling sanctions in history.” Failed. 8 years ago: “Maximum pressure.” Failed. 5 months ago: “Unconditional surrender.” Failed. Today: “Most crushing economic operation ever.” Bound to fail. We have seen this movie before. Same bull. Different bullies”.

The US attack on Larak and destruction of radar and maritime equipment is seen though as a strike to reduce Iran’s capacity to attack ships seeking a passage through the Strait of Hormuz. The US had restored some maritime traffic through the Strait along a southern route close to Oman and claimed to have cleared Iranian mines. The US has also been using smaller tankers, ship-to-ship transfers and nighttime movements to evade Iranian surveillance and strikes. Earlier U.S. attacks damaged some Iranian radars, monitoring towers, and surveillance equipment, making detection more difficult at night and creating openings that vessels have been trying to exploit.

Scott Bessent’s plan to make military action unnecessary through sanctions has failed by all accounts. Reports now suggest that the US defence department is preparing a plan for “periodic” bombings of Iran to prevent it from suppressing traffic in the Strait of Hormuz. Experts warn that to periodically bomb a country is to fight a forever war. A US official is quoted by Axios, a pro-US media outlet, as stating that US is ready to “mow the lawn.” This is akin to the Israeli strategy of never making peace, never winning the war, but to keep the war going to ensure its enemies never gain the capacity to deter Israel.

Tehran has been preparing to close the gaps, lay new mines and attack vessels using the southern route. The Larak attack is therefore said to have targeted Iranian launchers preparing to fire rockets carrying sea mines toward the strait. Iranian sources claimed that the IRGC had attacked several vessels shortly before the U.S. strike. The US is also signalling to markets and shipping companies that it can protect maritime traffic through the Strait while signalling to Tehran that U.S. restraint ahead of the midterms should not be mistaken for unwillingness to escalate.

US strategy of imposing secondary sanctions has failed because the US cannot afford an economic war with China, which has indicated that it would continue to trade with Iran. China remains the single largest buyer of Iranian oil even as Iran has progressively reduced its dependence on oil. Iran has also conveyed quite bluntly that if Iran is unable to sell its oil, it would ensure that nobody sells oil. In other words, Iran would retaliate and attack oil installations in gulf countries and shut down not just the Strait of Hormuz but also the Red Sea.

The war with Iran has diminished the United States, which went into the war with a swagger, as the ‘uber power’, confident that victory was well in sight. The six-month war since February, 2026 has exposed the military limitations of the super power. Iran’s ability to ward off the US military and wage an assymmetric war for so long would have emboldened both China and Russia. The US cutting a sorry figure in the war with Iran may even have emboldened Canadian prime minister Mark Carney to snap out of trade negotiations with Washington. The US is likely to face with more defiance, warn experts, as it grows weaker.

With the mid-term elections due in the US in November, the best-case scenario is a return to diplomacy. The worst-case scenario would be a chaotic trade war affecting global economy.