In a significant move aimed at economically isolating Iran, the US Treasury Department has announced plans to cut off the operations of Egypt's second-largest bank, Banque Misr, in the United Arab Emirates from the US financial system. This decision targets the UAE branches of Banque Misr, blocking their access to US financial institutions. The move comes as part of a broader strategy by the Trump administration to choke off Iran's economic lifelines.
US Treasury Secretary Scott Bessent outlined the plans this week, emphasizing the goal of Iran's 'economic asphyxiation.' The decision follows six months of escalating tensions and conflict between the US and Iran, which have resulted in a stalemate. Washington has been clear in its warning that entities supporting Iran cannot continue to enjoy access to the US dollar and the global financial system.
Bessent stated that Banque Misr UAE had decided 'to find out the hard way' and that the US is taking the first step in holding it accountable for its support of the Iranian regime. The Treasury Department's action will only take effect after a month-long public comment period. Egypt's central bank has confirmed that it is in contact with US officials regarding these measures, clarifying that the sanctions are limited to transactions of Banque Misr branches in the UAE with correspondents in US dollars.
The ongoing US-Israel strikes targeting Iran since late February have led to Tehran's retaliation, blocking most traffic through the Strait of Hormuz and plunging the Middle East into war. This crucial waterway is a major route for global energy transit, causing global oil prices to surge. Bessent has vowed that the United States is declaring an 'economic D-Day' on Iran, warning of harsh consequences for countries that do not join the campaign.
The Trump administration faces challenges in targeting larger entities, particularly those in China, which is a significant buyer of Iranian oil. Before the war, Tehran exported millions of barrels of oil a day, mostly to China. Sanctions on Chinese institutions could impact the global economy and strain ties between Washington and Beijing, especially ahead of an expected visit by Chinese President Xi Jinping to the US capital in September. The Treasury Department has also announced sanctions on the manager of the Dubai branch of Iran's Bank Melli and a Hong Kong-based front company involved in laundering funds for a sanctioned Iranian exchange house.
