{"id":465960,"date":"2026-02-13T09:16:08","date_gmt":"2026-02-13T09:16:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/465960\/"},"modified":"2026-02-13T09:16:08","modified_gmt":"2026-02-13T09:16:08","slug":"us-says-it-caused-dollar-shortage-to-trigger-iran-protests-what-that-means-explainer-news","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/465960\/","title":{"rendered":"US says it caused dollar shortage to trigger Iran protests: What that means | Explainer News"},"content":{"rendered":"

United States Treasury Secretary Scott Bessent has claimed that Washington engineered a dollar shortage in Iran to send the rial into freefall and cause protests on the streets.<\/p>\n

In December and January, Iran was faced with one of the biggest antigovernment protests the country has seen since the Islamic revolution of 1979, prompted by the severe economic crisis.<\/p>\n

Protests over soaring prices in Iran began with shopkeepers in Tehran who shuttered their shops<\/a> and began demonstrating on December 28, 2025, after the rial plunged to a record low against the US dollar in late December. The protests then spread to other provinces of Iran.<\/p>\n

Supreme Leader Ayatollah Ali Khamenei\u2019s government responded with force. More than 6,800 protesters, including at least 150 children, are thought to have been killed in a sweeping crackdown by the government on the protest movement.<\/p>\n

So, how did Washington create a \u201cdollar shortage\u201d in Iran, ultimately causing the rial to tank? And what effect has that had on the Iranian people?<\/p>\n

\"iran\"People walk next to an anti-US mural on a street as protests erupt over the collapse of the currency\u2019s value in Tehran, Iran, January 2, 2026 [Majid Asgaripour\/West Asia News Agency (WANA) via Reuters]What is a \u2018dollar shortage\u2019?<\/p>\n

A \u201cdollar shortage\u201d refers to when a country does not have enough US dollars to pay for things it needs from the rest of the world.<\/p>\n

The US dollar is the main currency used in global trade, especially for oil, machinery and loan repayments, which means countries need a steady supply of it.<\/p>\n

If exports fall and sanctions block access to the US financial system, dollars can become scarce. As a result, the local currency weakens, prices of imported goods rise, and inflation worsens.<\/p>\n

In Iran, a \u201cdollar shortage\u201d was engineered by simultaneously blocking the two main channels of foreign exchange (FX) inflow: Oil exports and international banking access, said Mohammad Reza Farzanegan, an economist at Germany\u2019s Marburg University. The US did this by imposing sanctions on Iranian oil<\/a>, meaning anyone buying or selling it would be subject to punitive measures.<\/p>\n

Given Iran\u2019s dependence on oil for revenue, economic sanctions on its oil can create a severe FX constraint.<\/p>\n

\u201cBy using secondary sanctions to threaten any global entity trading in dollars with Iran, the US traps Iran\u2019s existing reserves abroad and prevents new dollars from entering the domestic market,\u201d Farzanegan told Al Jazeera.<\/p>\n

\"USUS Treasury Secretary Scott Bessent attends the 56th annual World Economic Forum (WEF) meeting in Davos, Switzerland, on January 20, 2026 [Denis Balibouse\/Reuters]What has US Treasury Secretary Scott Bessent said?<\/p>\n

Replying to a query about dealing with Iran at a Congressional hearing last week, Treasury Secretary Bessent described the US strategy to send the Iranian currency plunging.<\/p>\n

\u201cWhat we [have done] at Treasury is created a dollar shortage in the country,\u201d Bessent said, adding that the strategy came to a \u201cgrand culmination in December, when one of the largest banks in Iran went under \u2026 the Iranian currency went into freefall, inflation exploded, and hence, we have seen the Iranian people out on the street.<\/p>\n

\u201cWe have seen the Iranian leadership wiring money out of the country like crazy,\u201d Bessent added. \u201cSo the rats are leaving the ship, and that is a good sign that they know the end may be near.\u201d<\/p>\n

Before this, speaking with Fox News at the World Economic Forum last month in Davos, Bessent explained the role US sanctions played in driving the recent nationwide protests.<\/p>\n

\u201cPresident Trump ordered Treasury \u2026 to put maximum pressure on Iran, and it\u2019s worked,\u201d he said. \u201cBecause in December, their economy collapsed. They are not able to get imports, and this is why the people took to the streets.\u201d<\/p>\n

In both instances, Bessent referred to his earlier remarks at the Economic Club of New York, in March last year, when he outlined how the White House would leverage President Donald Trump\u2019s \u201cmaximum pressure\u201d campaign to collapse Iran\u2019s economy.<\/p>\n

In his address there, Bessent said the US \u201celevated a sanctions campaign against [Iran\u2019s] export infrastructure, targeting all stages of Iran\u2019s oil supply chain\u201d, coupled with \u201cvigorous government engagement and private sector outreach\u201d to \u201cclose off Iran\u2019s access to the international financial system\u201d.<\/p>\n

\"iran\"Iranian scholars stand in the Islamic seminary that was burned during Iran\u2019s protests, in Tehran, Iran, January 21, 2026 [Majid Asgaripour\/West Asia News Agency (WANA) via Reuters]What effect did the dollar shortage have in Iran?<\/p>\n

In January, the Iranian rial<\/a> was trading at 1.5 million to the dollar \u2013 a sharp decline from about 700,000 a year earlier in January 2025 and about 900,000 in mid-2025. The plummeting currency triggered steep inflation, with food prices an average of 72 percent higher than last year.<\/p>\n

In 2018, during his first presidency, Trump withdrew from the 2015 Joint Comprehensive Plan of Action, a deal between Iran and global powers limiting Tehran\u2019s nuclear programme in return for sanctions relief.<\/p>\n

Since re-election last January, President Trump has doubled down on his so-called \u201cmaximum pressure\u201d to cripple Iran\u2019s economy and corner Tehran to renegotiate its nuclear and regional policies. Last month, Trump threatened a 25 percent tariff on countries doing business with Iran.<\/p>\n

Through the rigorous blocking of Iran from the global financial system by creating a dollar shortage, the US pushed Tehran towards a severe \u201cimport compression, [and as a result, Iran] cannot pay for the intermediate goods and machinery required for domestic production\u201d, said Farzanegan, the economist.<\/p>\n

The US strategy, he said, \u201cis particularly devastating because it leverages commercial risk management against humanitarian needs\u201d. In short, Washington\u2019s strategy \u201cmakes the small Iranian market a commercial liability\u201d for any company, even if they are only dealing with medicine, for instance, Farzanegan added.<\/p>\n

A research paper published by Farzanegan and Iranian American economist Nader Habibi last year found that the size of Iran\u2019s middle class would have expanded by an annual average of approximately 17 percentage points, between 2012 and 2019, if it were not for US action.<\/p>\n

In 2019, the estimated size of loss in the middle-class share of the population in Iran was 28 percentage points, the research found.<\/p>\n

\u201cPeople lost their purchasing power, and savings were wiped out,\u201d the economist told Al Jazeera. \u201cThis is a long-term destruction of the country\u2019s human capital.\u201d<\/p>\n

Besides the US action is the existing vulnerability of Iran\u2019s economic structure, with factors like long-term mismanagement, high rates of corruption and over-reliance on oil revenues making it fragile.<\/p>\n

While the US sanctions created external shock, a lack of domestic structural reforms left the government with \u201cno fiscal space to cushion the blow\u201d.<\/p>\n

What is the US\u2019s endgame here \u2013 and will it succeed?<\/p>\n

Bessent\u2019s admission that Washington deliberately created a \u201cdollar shortage\u201d signals the US\u2019s shift towards a total economic warfare<\/a> narrative.<\/p>\n

\u201cThis is economic statecraft; no shots fired,\u201d Bessent said at the WEF in Davos last month.<\/p>\n

\u201cThis admission may complicate the US\u2019s diplomatic standing, as it confirms that the humanitarian channels for food and medicine are often rendered useless if the entire banking system is being targeted for collapse,\u201d Farzanegan said.<\/p>\n

Bruce Fein, a former US associate deputy attorney general who specialises in constitutional and international law, told Al Jazeera that this type of economic coercion is \u201cas common as the sun rising in the east and setting in the west\u201d, pointing to economic sanctions against Russia, Cuba, North Korea, China and Myanmar.<\/p>\n

However, unlike in other cases where the US has applied economic pressure, Farzanegan said Iran\u2019s case is \u201ca unique experiment due to the duration and intensity of the pressure\u201d.<\/p>\n

Unlike Russia, which has a more diversified export base and larger reserves, Iran has been facing varied forms of sanctions for decades since the supreme leader took power in 1979.<\/p>\n

\u201cIran has a sophisticated internal mechanism for sanctions circumvention that makes the \u2018dollar shortage\u2019 a game of cat-and-mouse rather than a one-time shock,\u201d the economist said.<\/p>\n

With a US armada currently stationed in the Arabian Sea, the US and Iran are in talks to defuse tensions. The US wants three key things from Iran<\/a>: To stop enriching uranium as part of its nuclear programme, to get rid of its ballistic missiles and to stop arming non-state actors in the region.<\/p>\n

Ultimately, observers say, the US wants regime change in Iran.<\/p>\n

But Fein said his experience shows that economic sanctions alone \u201cseldom, if ever, topple regimes \u2026 Regime change comes externally only with the use of military force.<\/p>\n

\u201cIran\u2019s dollar shortage will not oust the mullahs or Revolutionary Guard,\u201d he said, referring to Iran\u2019s current administrative structure.<\/p>\n

The impoverishment of Iranians will diminish, Fein told Al Jazeera, \u201crather than promote the likelihood of a successful revolution because day-to-day survival will be the priority\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"United States Treasury Secretary Scott Bessent has claimed that Washington engineered a dollar shortage in Iran to send…\n","protected":false},"author":2,"featured_media":465961,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[23,47284,4868,172380,12,101,11501,3139,801,129,3,7269,104,21,19,22,20,25,1209,24],"class_list":["post-465960","post","type-post","status-publish","format-standard","has-post-thumbnail","category-united-states","tag-america","tag-boycott","tag-business-and-economy","tag-divestment","tag-donald-trump","tag-economy","tag-explainer","tag-international-trade","tag-iran","tag-middle-east","tag-news","tag-sanctions","tag-trade-war","tag-united-states","tag-united-states-of-america","tag-unitedstates","tag-unitedstatesofamerica","tag-us","tag-us-canada","tag-usa"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/465960","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=465960"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/465960\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/465961"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=465960"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=465960"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=465960"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}