By Xavier Villar
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No case illustrates their true anatomy more starkly, nor reveals more clearly the imperial foundations on which they rest, than the prolonged economic siege imposed by the United States on the Islamic Republic of Iran. Far from being a mere foreign policy measure, this sanctions regime constitutes a case study in the dynamics of neocolonial discipline within a global financial system that remains deeply hierarchical. It is a practical demonstration of how, in an era of formal sovereignty, power is exercised through the conditional inclusion and exclusion of capital flows that structure national economic life. The premise of the “smart” sanction rests on the idea of administered pain, a calculated suffering intended to pressure the masses and compel the governing elite to yield. This theory, however, overlooks a fundamental structural reality.
The current global political and economic order is not a level playing field of sovereign states in competition. It is a pyramidal architecture, with its apex occupied by the ability to create and control access to U.S. dollar-denominated financial capital. This system, a legacy of Bretton Woods reinforced by the collapse of the Soviet Union and the financialization of the twenty-first century, has made the U.S. dollar and its clearing networks the lifeblood of the global economy. Controlling access to this system is not a simple foreign policy tool. It is the exercise of metapolitical authority, a sovereignty over the conditions of possibility for participation in international economic life. Within this framework, sanctions are the manifestation of that authority, a demonstration of who holds the key to the doors of global markets.
From this perspective, U.S. sanctions on Iran go beyond the stated objectives of containing its nuclear program or modifying its regional behavior. They operate as exemplary punishment for Iran’s challenge to its assigned peripheral status. Iran is not merely a “rogue” state. It is a state that, following its revolution, insisted on building a platform of political and economic sovereignty outside the parameters of the Western liberal consensus. Its resistance is therefore doubly disruptive. It challenges Washington’s political hegemony in the Middle East and, more fundamentally, calls into question the unwritten rules of the dollar-based financial system. The discipline imposed seeks not only to reverse specific policies but to reaffirm the principle that autonomy outside the imperial framework carries an existential cost. It is a lesson directed both at Tehran and at any other actor contemplating a similar path of relative disengagement.
The mechanism of asphyxiation: Financial weapons in a connected world
The core mechanism of this discipline is financial asphyxiation, a form of silent warfare in which the battlefield is composed of clearinghouses and bank ledgers. Secondary sanctions, those that threaten to cut off access to the U.S. financial system to any entity anywhere in the world that trades with Iran, constitute the ultimate weapon. They do not require naval blockades. They operate through emails and SWIFT messages. A bank in Kuala Lumpur or Frankfurt thus faces an existential choice: maintain relations with a designated Iranian entity or lose its ability to process dollar transactions, a commercial death sentence. This network effect is what transforms a unilateral U.S. measure into a quasi-global law. The “international community” frequently invoked is, in practice, the community of economic actors that cannot afford exile from the dollar system.
This architecture of coercion operates through a specialized bureaucracy, with the U.S. Treasury’s Office of Foreign Assets Control (OFAC) at its operational center. OFAC does not issue bombs. It issues lists. Inclusion on the Specially Designated Nationals (SDN) list is equivalent to a global civil financial death. Power resides not only in direct prohibition but in the paralyzing effect of regulatory risk. The threat of multibillion-dollar fines, as imposed on European banks in the past, has institutionalized overcompliance. Financial institutions, fearful of accidental violations, end up cutting ties with any company or individual with even the slightest potential connection to Iran, even when transactions might be legally permissible under humanitarian exemptions. This phenomenon amplifies the sanctions regime’s impact beyond the letter of the law, creating a risk landscape that strangles legitimate trade in essential goods.
The human cost
The humanitarian consequences of this siege, widely documented but often treated as unfortunate collateral damage, are in fact central to its disciplinary logic. Shortages of medicines and medical equipment, persistent inflation, contraction of the middle class, and the exodus of talent are not failures of a miscalibrated system. They are the predictable outcomes of a national economy under extreme stress. The official narrative in Washington maintains that sanctions target the regime, not the people. Yet by choking off oil export revenues and blocking financial transactions, the Iranian state is deprived of the resources needed to sustain essential imports and public services.
The impact is particularly acute in sectors that depend on complex, high-technology global supply chains, such as civil aviation and advanced medicine. Prohibitions on exporting spare parts and technology to Iran’s aviation sector are not merely economic pressure. They directly affect the safety of millions of civilian passengers. Similarly, barriers to accessing oncology drugs or specialized diagnostic equipment have measurable effects on mortality and morbidity rates. This calculated suffering is the vector through which pressure is intended to translate into political change. The objective, though rarely stated, is to generate social disruption of sufficient magnitude to compel internal political change, or at least to demonstrate to other observing states the prohibitive cost of deviation. It is the continuation of the colonial logic of collective punishment, now administered through digital financial systems.
Autarky: The “resistance economy” as a laboratory
Tehran’s response has taken the form of a painful and complex pursuit of autarky. The “resistance economy” promoted by the Iranian leadership constitutes a forced experiment in partial disengagement. It has stimulated the development of a more robust domestic pharmaceutical and agricultural sector, derived from technological isolation. It has encouraged barter trade and the use of local currencies in agreements with partners such as Russia and China.
This resilience, however, faces clear structural limits. Persistent technological disconnection, restricted access to foreign direct investment and international capital markets, and the sustained departure of highly qualified human resources represent significant challenges to long-term economic development. The Iranian economy has managed to adapt to a prolonged environment of external pressure, although at the cost of reduced productive capacity and accumulated tensions on overall well-being. The economic system has absorbed part of the sanctions’ impact through internal adjustments that have redistributed effects unevenly across sectors and actors. In this context, entities with greater institutional capacity, vertical integration, and experience operating under conditions of external restriction have tended to consolidate their position in strategic areas of the economy. This process has contributed to a gradual reconfiguration of internal balance, reinforcing approaches oriented toward economic security and self-sufficiency, an outcome that, from an external perspective, diverges from the stated objectives of using economic pressure as an instrument of behavioral change.
Historical continuity: From colonial extraction to financial exclusion
This dynamic suggests significant continuity with power practices inherited from earlier stages of the international system. While classical colonialism exercised control through territorial occupation and direct administration, and the Cold War order did so through military dependence or indirect interventions, contemporary forms of coercion increasingly operate through financial dependence and asymmetric integration into value chains managed from global economic centers. Formal political independence, widely consolidated in the twentieth century, is thus constrained by external economic conditions that limit the real maneuvering capacity of states. Peripheral nations participate fully in multilateral institutions, but when their strategic decisions diverge from the dominant interests of the system, they face the risk of economic isolation capable of eroding decades of accumulated development.
In this context, economic sanctions have established themselves as a particularly appropriate tool for the characteristics of the current historical moment. Their reversible nature allows for flexible management of pressure while mitigating the immediate visibility of economic and social effects. Sanctions can be intensified or relaxed gradually, preserving the appearance of negotiation while maintaining a framework of structural coercion. Significantly, their implementation relies heavily on technical, regulatory, and financial structures that are less exposed to public scrutiny than traditional military interventions. This design enables the exercise of considerable power with diffused political attribution, transferring the burden of consequences to the affected state, which is, in turn, held responsible for the social effects arising from external pressure.
The erosion of order and the emergence of counter-systems
The Iranian case raises a pressing question for the functioning of the liberal international order. What happens when instruments of economic coercion are used repeatedly and intensively, to the point of creating tension within the foundations of the system itself? The use of the dollar as an economic policy tool has accelerated the global search for alternative settlement and payment mechanisms. China’s efforts to expand the international use of the yuan through its cross-border payment system (CIPS) and currency swap agreements, Russia’s initiatives around the SPFS system, and bilateral agreements between Iran, Russia, and other partners that reduce or exclude the use of the dollar can be understood as direct responses to the vulnerabilities associated with reliance on a single dominant financial infrastructure.
Each new round of sanctions reinforces the arguments of those advocating greater diversification in the international monetary system. Europe’s attempt to establish INSTEX, a special mechanism for facilitating humanitarian trade with Iran, although limited in scope, constituted an explicit recognition of the need to explore greater strategic autonomy from dollar dominance. In this process, Iran has involuntarily become a testing ground for de-dollarization strategies, experimenting with national currency payments, goods-for-goods exchanges, and the emerging use of digital assets. From this perspective, prolonged economic pressure may contribute, in the long term, to the gradual fragmentation of the international financial system that underpins its effectiveness. The paradox is clear. Mechanisms designed to reinforce a dominant position simultaneously incentivize the development of infrastructures intended to reduce dependence on it.
Conclusion: The chronic tension of a disciplinary order
The sanctions regime against Iran is neither an isolated episode nor a temporary anomaly. It reflects a deeper logic of the contemporary international order. It reveals a system in which formal political independence remains conditioned by economic integration that can be restricted or reversed from a dominant center of power. It also demonstrates that modern conflicts can be waged without direct military presence, through the management and disruption of financial flows that sustain the functioning of modern states.
For Iran, this experience has been a prolonged lesson in the material costs of a strategy of relative autonomy. It has produced a society under persistent pressure yet capable of adaptation, a state with heightened emphasis on security, and an economy marked by structural distortions, although functioning and far from the collapse predicted by many external observers. For the United States, the process has revealed both the reach and limits of economic coercion. The capacity to generate material pressure is considerable, but the ability to induce comprehensive political transformation has proven more elusive. In this context, the Iranian population has borne a disproportionate share of the impact of a geopolitical confrontation that exceeds its daily living conditions.
Sanctions, as a central instrument of contemporary power, have demonstrated short-term effectiveness in containing and deterring. Their long-term legacy, however, may be the gradual fragmentation of the order that sustains them, by incentivizing adaptive responses and alternative architectures that quietly reconfigure global power balances.
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