The aviation sanctions form a significant part of the Trump Administration's ”Operation Economic Outcast,” which the White House has described as “an unprecedented campaign to sever every remaining economic lifeline sustaining the Islamic Republic of Iran.” As negotiations have stalled, and with the U.S. and Iran engaged in active hostilities once more, the economic pressure is intended to push Tehran into a deal to end the war.
The measures build on OFAC’s April and July actions “targeting persons servicing Mahan Air’s domestic and international flights,” Treasury Secretary Scott Bessent said.
The OFAC also suspended three Iran-related aviation authorizations that “allowed for overflights, and for non-U.S. airlines to fly U.S.-origin or U.S.-controlled commercial aircraft into Iran.”
Here’s what to know about the latest sanctions, how they extend beyond the borders of Iran, and the economic pressure mounting against Tehran.
The U.S. Treasury has accused Iran of using front companies and other pass-through entities in third countries in an attempt to evade aviation links back to Tehran and has extended sanctions to nine internationally-based entities it alleges have aided these efforts.
Four cargo providers and general sales agents were also sanctioned, accused of servicing Mahan Air and coordinating shipments on behalf of the airline. Two are based in Turkey, one in Kazakhstan, and one in Malaysia.
With the reliance on foreign entities to maintain Iran’s aging fleet, the measures targeting companies outside of Iran will likely damage Tehran’s aviation capabilities, she says, as it will “restrict Iran's ability to rely on those regional hubs” and could prompt “international carriers [to] further reduce or suspend Iranian services.”
U.S. issues warning to anyone doing business with Iran amid effort to choke Tehran off from global economy
The U.S. Treasury has vowed to isolate any international entity that continues to show support to Mahan Air. “Let this be a warning to anyone doing business with Iran’s remaining airlines, all of which we sanctioned,” Bessent said. “You are at risk of being cut off from the global financial system.”
On. Aug. 28, the U.S. moved to cut off Egyptian Banque Misr's UAE-located branches from the dollar-based financial system. Banque Misr said it is reviewing the notice from the U.S. Treasury and will communicate with the department “to obtain further information and maintain ongoing cooperation.”
The sanctions were significant, marking the first time a bank in a NATO ally had been hit under the current economic campaign, experts told Reuters.
The charges—referred to by Turkish President Recep Tayyip Erdoğan as “ugly”—dragged on for years, before a settlement was reached in March. Halkbank was barred from entering transactions that benefit Iran and had to hire a compliance monitor to review its sanctions and anti-money-laundering programs.
Republican Sen. Rick Scott of Florida earlier this week said “Turkey is not our friend” as he showed support for the sanctions targeting firms in the country. “Bessent had to crack down on them for actively funding Iranian terrorists,” he claimed.
"A lot of these smaller, more boutique firms… They're more informal. They tend to continue their trade ties or banking ties with Iran. The UAE has done, or well, they're trying to do a good job of severing these ties with Iran, but other states in the region, like Iraq and Azerbaijan and Turkey, are continuing to trade with Iran,” says Roush. “Iran is an important trading partner for them, and I think it's going to take a significant amount of diplomatic pressure to impose some kind of a full blockade of Iran.”
How Iran has responded to the aviation sanctions
Abbas Araghchi, Iran’s Foreign Minister, dismissed the effectiveness of the “economic D-Day” campaign.
But experts say the ramped up economic pressure campaign will undoubtedly impact Iran in some way.
Furthermore, Iran is already feeling the economic impact of the conflict and the U.S. naval blockade on its ports in the Strait of Hormuz.
“Ultimately, the Iranian people are likely to suffer, because the regime will continue its predatory practice of absorbing the economic resources of the country and channeling it toward its military efforts,” concludes Roush.
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