SEPTEMBER 9 — For Iran and the United States, August 24 was not so much Groundhog Day as the latest instalment in a franchise that refuses to die.

“We are launching an economic onslaught against Iran’s financial connections around the globe,” declared U.S. Treasury Secretary Scott Bessent. The objective, he said, was to sever every economic lifeline sustaining the Iranian regime.

Splendidly cinematic language. Washington was once again reaching for the economic garrotte.

But America had announced much the same thing in April, when the White House unveiled Operation Economic Fury and promised a “financial stranglehold” on Tehran. Donald Trump’s first administration had already marketed its sanctions as “maximum pressure,” with Secretary of State Mike Pompeo promising the “strongest sanctions in history.” Before him, Barack Obama had pledged “even more crippling sanctions.”

Different administrations. Different slogans. Same funeral announcement.

And yet Iran keeps declining to die on schedule.

This does not mean sanctions have failed to inflict extraordinary damage. Since Trump’s first term, Iran has suffered anaemic growth, punishing inflation, reduced investment, decaying infrastructure and slower technological adoption than comparable developing economies.

Households that once expected to become steadily more prosperous are discovering that the middle class is not a permanent address. For many, the poverty line is moving upward faster than their wages.

But there is an uncomfortable distinction between impoverishing a country and compelling its state to surrender. For the better part of a decade, Iran has demonstrated that the two are not the same.

It continued selling oil—primarily to China—through a dense ecosystem of sanctions-evasion techniques until the recent blockade. Its non-oil industries adapted as well. Currency depreciation made imported goods more expensive, reduced foreign competition and made Iranian products cheaper in regional markets.

Iran thus avoided the runaway collapse experienced by countries such as Syria and Venezuela.

Now war is applying pressures that sanctions alone could not US and Israeli airstrikes have hit critical industrial facilities, including some of Iran’s most important steel and petrochemical plants. Production outages have followed.

Maritime traffic through the Strait of Hormuz has fallen, while the US naval blockade has constrained both exports and the import of consumer goods, machinery and industrial inputs.

According to a July estimate by the International Monetary Fund, Iran’s economy is expected to contract by 5.4 percent this year, after shrinking by less than half that amount during the previous 12 months.

Year-on-year inflation rose from 52.6 per cent in December 2025 to 88.6 per cent by the beginning of summer. The rial has fallen beyond two million to the dollar.

By the standards of an economics textbook—or a particularly excitable television panel—this should be the beginning of the end.

Except the Iranian state is not an economics textbook.

Its economy is deteriorating, but that deterioration has not yet meaningfully impaired its ability to wage war. Years of sanctions have encouraged firms and state institutions to accumulate inventories, improvise supply chains and operate under conditions that would give a Western procurement manager a nervous breakdown.

More importantly, the state has become extremely accomplished at transferring economic pain downward.

Washington can squeeze Iran. Tehran, in turn, squeezes the Iranian public.

That is the machinery of Iranian resilience: not prosperity, not efficiency and certainly not public contentment. It is the ability of the state to remain standing by forcing ordinary people to crawl.

A Crisis—According to PowerPoint

Iranian leaders are not pretending that everything is going swimmingly.

“No matter how strong we are militarily, if the people are hungry and we do not have financial circulation, economic growth and domestic production, we will not endure,” warned parliamentary speaker Mohammad Bagher Ghalibaf on August 21.

Bessent cited the statement as evidence that American pressure was working.

Iranian President Masoud Pezeshkian has been similarly blunt, expressing frustration with political colleagues who insist sanctions have no effect.

“Some say sanctions have no effect at all,” he remarked. “I really don’t know what to say to those people.”

Both men are genuinely worried. Declining living standards corrode political legitimacy, even in a system that does not derive its authority primarily from popular consent.

Hungry populations are unpredictable populations.

But Washington should resist the temptation to interpret every admission of pain as a white flag being ironed backstage.

Neither Ghalibaf nor Pezeshkian is saying that Iran is about to collapse. They are protesting the social cost of a strategy that has, from the regime’s perspective, functioned largely as intended.

Their complaint is not that the state has failed to survive. It is that the state has preserved itself by sending the invoice to Iranian households.

This is where conventional assessments of sanctions become dangerously superficial.

Policymakers tend to judge economic warfare through macroeconomic indicators: GDP growth, inflation, exchange rates, trade volumes and budget deficits. These are important. But they primarily tell us about the financial value of economic activity.

They tell us how expensive bread has become. They do not necessarily tell us whether the army still has bread.

To understand whether an economy can continue functioning under coercion, one must descend from the commanding heights of the spreadsheet and examine firms, warehouses, households, credit networks, inventories and actual flows of goods.

GDP is an X-ray. It is not always a pulse.

The central problem facing any comprehensively sanctioned country is its balance of payments. If exports fall and foreign currency becomes scarce, the country eventually struggles to finance imports.

Governments have two broad choices.

The first is expansion. The state can stimulate investment and industrial production, increasing exports while manufacturing more of what the country previously imported.

Russia pursued this approach after the invasion of Ukraine triggered sweeping Western sanctions. Moscow dramatically increased government expenditure, expanded military production and created a distinct war economy.

The result was a surge in industrial activity and manufacturing employment. Labour markets tightened, real wages rose and the additional income initially softened the impact of sanctions-related inflation.

That strategy is now encountering its limits. Inflation is biting, capacity is strained and the economy is becoming increasingly distorted.

But it gave Russia the industrial muscle to continue pursuing its war aims despite American and European pressure.

Iran took the other road.

When sanctions imposed during the Obama administration pushed the country into recession in 2012, Supreme Leader Ali Khamenei called for a “resistance economy” based on domestic capabilities.

The phrase sounded magnificent. The implementation was rather less heroic.

Iran never constructed a comprehensive new industrial policy or welfare state. Instead, its policymakers tolerated inflation, maintained austerity budgets and allowed households and private firms to absorb the damage.

They avoided extensive production quotas and broad price controls. A weakening labour market allowed employers to suppress wages, placing even more pressure on household incomes.

From the perspective of public welfare, this appears to be a policy failure.

From the perspective of regime survival, it is closer to an operating system.

Tehran has deliberately accepted lower economic activity because a poorer, slower economy imports less. It has exchanged growth for endurance and prosperity for strategic time.

This is not unprecedented.

Cuba survived decades of American pressure not because its people were unaffected, but because the state rationed scarcity, controlled political organisation and repeatedly found external economic lifelines.

Japan, confronted with an American oil embargo in 1941, did not obediently abandon its strategic ambitions; the pressure accelerated its decision to confront the United States militarily.

During the Napoleonic Wars, France’s Continental System inflicted enormous disruption but never successfully strangled Britain, which redirected trade and exploited every available leak.

Economic pressure is powerful.

But it is not a law of physics.

States respond, reroute, ration, smuggle, substitute—and sometimes escalate.

The Warehouse Is a Weapon

Data from Iran’s Chamber of Commerce reveal how this adaptation works at the level of actual firms.

Between 2019 and 2023, Iran’s overall economy was contracting during roughly two-thirds of the period. Trump’s first maximum-pressure campaign, the pandemic and the unrest surrounding the “Women, Life, Freedom” protests all contributed to the decline.

Yet Iranian non-oil industries still achieved modest growth.

By the beginning of 2023, the wider economy and industrial sector were expanding together. By March 2024, living standards were beginning to recover, supported by an increase of roughly 15 percent in real incomes.

The recovery ended with the Israeli airstrikes of April 2024.

Recurring military conflict produced prolonged uncertainty and a renewed decline in industrial activity. Iranian manufacturers have now reported worsening conditions for eight consecutive months.

But declining production is not the same as immediate insolvency.

Over the past two decades, Iranian businesses have learned to keep unusually large inventories.

This protects them against sudden supply-chain disruptions. It also makes financial sense in a high-inflation economy: cash melts, while copper wire, machine parts, chemicals and finished goods sit patiently on the shelf.

According to filings by companies listed on the Tehran Stock Exchange, Iranian industries hold enough inventory to sustain operations for an average of approximately three months.

In strategically vulnerable sectors such as electrical machinery, some firms maintain inventories covering as many as 200 days.

In other words, Iran has turned the warehouse into an instrument of national security.

This has mattered enormously during the war.

As shipping through the Strait of Hormuz dwindled, Iran attempted to shift more trade overland. Trucks and railways, however, could not fully replace the container traffic moving through southern ports.

Still, firms with deep stocks of raw materials, components, semi-finished products and finished goods could continue supplying customers—at least those customers still able to pay.

There is a lesson here for Southeast Asia.

Asean economies have spent decades celebrating efficiency, just-in-time production and intricately choreographed supply chains.

All of that is marvellous until a war, pandemic, blockade or great-power tantrum removes one link from the choreography.

Then the supposedly inefficient warehouse begins to look rather clever.

For trade-dependent Asean states, strategic stockpiles are not dusty monuments to bureaucratic anxiety. Inventories of food, fuel, medicines, industrial inputs and critical components can buy something more precious than efficiency: decision-making time.

Iranian resilience is not a model Asean should copy wholesale.

But its experience is a reminder that redundancy is only wasteful when nothing goes wrong.

And something always goes wrong.

Rationing Without the Coupons

Iranian firms have survived by increasing prices to protect their margins and transfer rising costs to consumers.

Households, already battered by years of inflation, responded by buying less. When they did buy, they increasingly relied on consumer credit, buy-now-pay-later schemes and informal borrowing.

Even food retailers reported lower sales volumes.

This is the clearest evidence that Iranian welfare is deteriorating.

It also explains why senior officials can no longer ignore the suffering of ordinary people.

Yet the government has declined to impose comprehensive price controls. Such controls helped cushion households during the Iran-Iraq War four decades ago.

Today, officials are instead discussing the removal of cash transfers and energy subsidies for large parts of the population.

The result is rationing without ration cards.

When prices rise high enough, the market determines who eats less, who postpones medical care, who abandons a purchase and who borrows against a future that is already shrinking.

Economists call this “demand destruction,” which is an impressively antiseptic phrase for millions of people discovering that they can no longer afford ordinary life.

For the Iranian state, however, it creates a brutal equilibrium.

Household consumption falls. Import demand weakens. Scarce foreign currency lasts longer. The government preserves more room for its own expenditure.

Tehran has accepted inflation as the price of maintaining state capacity.

Iran remains some distance from true hyperinflation. Its monthly inflation rate is below ten percent, whereas hyperinflation is generally associated with monthly price increases exceeding 50 percent.

This distinction matters.

Conditions can become excruciating long before they become administratively impossible.

Meanwhile, weaker economic activity produces its own buffer.

Financially, Iran is considerably worse off than it was at the beginning of the war.

Functionally, however, industrial inventory levels remain around where they stood in December 2025.

Supply and demand may eventually stabilise at a much lower level of activity.

It will be a miserable equilibrium.

But miserable equilibria can be remarkably durable.

Imports remain Iran’s greatest vulnerability.

The country imported approximately $17 billion worth of goods during the first five months of the Iranian calendar year that began in March. At that rate, annual imports will total around $40 billion—down from $58 billion the previous year and $72 billion the year before that.

The decline reflects a deepening crisis.

But in the short term, importing less also reduces the pressure on Iran’s limited foreign currency.

The economy is not recovering.

It is learning how to breathe more slowly.

The Asean Mirror

Southeast Asia has seen versions of this story before, although never in precisely the same form.

During the Asian financial crisis, collapsing currencies and soaring prices produced dramatically different political outcomes across the region.

In Indonesia, economic dislocation combined with public protest, elite fragmentation and the erosion of military and political support to bring down Suharto in 1998.

Malaysia, confronted with the same regional storm, imposed capital controls and pursued a different route through the crisis.

The political system bent, argued, purged—and survived.

The lesson is not that one policy was universally correct.

It is that economic distress does not mechanically produce political collapse.

It becomes decisive when it intersects with divided elites, weakened coercive institutions, credible opposition and a loss of confidence inside the regime itself.

A currency chart does not organise a revolution.

Nor does hunger automatically unite a population.

It may produce anger, but it can also produce exhaustion, dependency, emigration or a desperate focus on daily survival.

Authoritarian systems understand this.

They do not merely suppress rebellion after it begins; they structure society so that collective action becomes dangerous, fragmented and difficult to sustain.

Myanmar offers Asean an especially uncomfortable version of the same principle: when coercive institutions remain armed, organised and economically insulated, an enormous amount of suffering can accumulate below without immediately dislodging those above.

Iranian leaders are wagering on precisely this separation between public suffering and state survival.

Trump recently asked when the Iranian people would rise up and fight.

But if they return to the streets to protest financial repression, they will again face the Islamic Republic’s extensive coercive apparatus.

Revolutions are not summoned by social media posts from foreign presidents.

For America’s economic war to succeed through sheer deprivation, it would have to asphyxiate approximately 25 million households and more than one million firms—and somehow ensure that the final molecules of oxygen do not remain concentrated around the political and military elite.

That is the fatal irony of comprehensive sanctions.

The state controls the valves.

What Asean Should Learn From Iran

Asean should not romanticise Iran’s resilience.

There is nothing admirable about preserving the state by impoverishing society.

But there are lessons worth extracting.

First, national resilience cannot be measured by GDP alone.

Governments must understand which sectors can still function, which firms possess inventories, which imports are genuinely irreplaceable and how long essential systems can operate after a disruption.

Second, extreme efficiency creates extreme fragility.

Strategic stockpiles, diversified suppliers, alternative ports, overland routes, domestic processing capacity and interoperable regional infrastructure may look expensive during peacetime.

During a crisis, they become sovereignty in physical form.

Third, economic coercion rarely produces clean political obedience.

The more pressure is applied, the more governments search for alternative currencies, buyers, routes, technologies and patrons.

In a fragmented world, Asean states should resist excessive dependence on any single market, security guarantor, payment system or logistics corridor.

This is not a call for autarky.

Vietnam’s postwar experience ultimately demonstrated the opposite: lasting resilience came through reform, diversification and international integration—not permanent economic isolation.

The correct Asean lesson is therefore not to build ten miniature resistance economies.

It is to build options.

Finally, Asean must distinguish between the resilience of a government and the resilience of a society.

Iran has constructed a system capable of keeping the state alive while households become poorer, firms become weaker and consumption collapses.

That may qualify as strategic endurance.

It should not be confused with national strength.

A truly resilient country does not merely ensure that ministers, missiles and ministries continue functioning.

It ensures that ordinary people can withstand a crisis without being sacrificed to it.

Washington’s strategy can inflict terrible damage on Iran.

It can reduce investment, destroy wealth, close factories, erode wages, empty household budgets and condemn another generation to diminished expectations.

What it has not yet demonstrated is that it can force the Islamic Republic to capitulate.

America keeps reaching for Iran’s throat.

But Tehran has spent years learning how to place its own people’s neck there first.

* This is the personal opinion of the writers or publication and does not necessarily represent the views of Malay Mail.