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AIPROPX ReportNewsweek · 1h ago
Iran Is Facing Its Soviet Moment and Possibly Its End
Director of the Turan Research Center and Senior Fellow at the Yorktown Institute
0 Share Newsweek is a Trust Project member See more of our trusted coverage when you search. Prefer Newsweek on Google to see more of our trusted coverage when you search. On September 13, 1985, Saudi oil minister Ahmed Zaki Yamani announced that his country would stop propping up the price of crude. Prices collapsed, and the Soviet Union lost roughly $20 billion a year in hard currency—“money without which the country simply could not survive,” in the estimate of Yegor Gaidar, later Russia’s acting prime minister. Gaidar dated the collapse of the Soviet Union to that announcement.
Tehran is now in a weaker position than Moscow was in that autumn. The Islamic Republic is exporting almost no oil, its currency has lost nearly a third of its value since March, and it is rationing water and electricity to its own capital.
Treasury Secretary Scott Bessent announced a sweeping new sanctions campaign last week , Operation Economic Outcast, aimed at what remains of the regime’s revenue, with the stated objective of severing “every economic lifeline that sustains this tyrannical regime until Tehran stands alone.”
The Soviet case is the best available guide to what that kind of pressure can accomplish against a government already failing, and to how long it takes.
The pressure on Iran is already extraordinary . The rial traded at 2.02 million to the dollar on Sunday, down from 1.53 million in March, a 32 percent depreciation in under six months. Inflation is running near 90 percent by the Iranian government’s own Statistical Center, and the International Monetary Fund expects the economy to contract 5.4 percent this year.
Oil exports have stopped almost entirely: central bank governor Abdolnaser Hemmati has conceded that “we are not exporting oil,” tanker trackers have logged no Iranian supertanker crossing the Strait of Hormuz since July and floating storage has drained from 105 million barrels to fewer than 40 million.
The rest of the ledger is no better. Iranians are living with rolling blackouts and water rationing. Hezbollah is degraded, Hamas is gone, Assad has fallen, and the nuclear program is buried.
The supreme leader was killed in February and replaced by his son , a succession that satisfies no faction inside the system and commands no loyalty outside it. Four decades of regional adventurism and economic mismanagement have left the Islamic Republic weaker than at any point since 1979.
What makes this moment different is not the sanctions themselves. Washington has been designating Iranian entities for two decades with modest results. It is the architecture—three pressures applied at once, each closing an exit the others leave open. The U.S. Navy has been interdicting Iranian cargo since July, and Central Command reports redirecting 65 commercial vessels, disabling three and boarding two.
On August 19 the United Arab Emirates imposed an indefinite trade embargo after accusing Iran of firing ballistic missiles at its territory, closing the corridor through which roughly a third of Iran’s imports flowed—$21 billion in 2024, more than China and Turkey supplied combined—and through which Iranian firms had for years moved money past American sanctions.
Bessent’s designations then went after what was left: gold, aviation, shipping, digital assets. Retired general Mark Kimmitt called the Emirati embargo “even more significant than the embargo being put on by the United States.”
Any one of these Tehran could survive. Together they foreclose reconstruction. A regime cut off from the sea, from its warehouse in Dubai, and from the financial plumbing that served both cannot rebuild what the war destroyed—not the air defenses, not the missile plants, not the proxies, and not the nuclear program. That is a different objective from punishment, and it is the one worth pursuing.
What the loss of oil revenue did to Moscow is worth stating precisely, because it was not bankruptcy. The Soviet state paid its soldiers and its secret police until the end.
What it could no longer do was act. Grain production had stagnated while some 80 million people moved into the cities, and without oil revenue the Kremlin had to borrow from Western banks to feed them. “We are buying the grain because we cannot survive without it,” Soviet president Mikhail Gorbachev conceded.
When the Politburo weighed crushing Solidarity in Poland, and later reasserting control over the Baltics, its creditors made the price clear and Moscow backed down. The empire had become something the Soviet Union could not afford.
Washington saw the vulnerability and pressed it. National Security Decision Directive 66, signed in November 1982, targeted what President Ronald Reagan’s aides called Moscow’s strategic triad of technology, trade and credit, on the premise that energy exports funded everything the Kremlin did abroad.
None of which is to hand American policy total credit for 1991. Afghanistan drained Moscow’s treasury and its legitimacy, central planning had failed on its own terms long before Reagan took office in January 1981, and the nationalisms rising in the republics were beyond the Kremlin’s power to contain.
Economic pressure does not bring down a healthy regime. It adds weight to a system already under strain and narrows the choices available to the men running it.
The economic route works slowly and invisibly, which is why Washington chronically undervalues it. In 1985, Norman Podhoretz published an essay in Foreign Affairs titled “The Reagan Road to Détente,” accusing the most anti-Communist president of the century of drifting toward the accommodation with Moscow he had campaigned against.
Podhoretz, who died in New York last December at 95, was a serious man making a serious argument, but he was wrong. The campaign that was working produced no summits, no headlines, and no visible results for years.
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