Why Trump's return to 'maximum pressure' on Iran is doomed to fail again

The current administration's reimposition of sanctions, based on flawed assumptions about Iran's vulnerability, repeats past mistakes and won't undermine the regime

by Hadi Kahalzadeh

As Iran marks the 46th anniversary of its Islamic revolution on 11 February, tensions with the United States are once again on the rise.

President Donald Trump reignited his "maximum pressure" campaign on Iran last Thursday by signing a new presidential memorandum that tightens sanctions on Tehran, particularly targeting oil exports.

Although he claims to be "torn about" this move and has voiced a preference for reaching a deal rather than "bombing the hell out of [Iran]", it was his previous administration that unilaterally withdrew from the Iran nuclear deal, undermining the very negotiations he now claims to favour.

Meanwhile, Supreme Leader Ali Khamenei has dismissed negotiations as "not rational, intelligent or honourable".

These exchanges leave little doubt that the stand-off is far from over.

This renewed "maximum pressure" policy is grounded in a growing perception that Iran's vulnerabilities have never been greater. The fall of Syria's Assad regime, the decapitation of Hezbollah's leadership and mounting public discontent within Iran have convinced many that the Islamic Republic is on its last legs. For proponents of a more aggressive policy, it is time to tackle Iran's threat on all fronts.

This would involve forming a counter-resistance alliance through deepening Arab-Israeli partnerships under the Abraham Accords and stepping up heavy sanctions to isolate Tehran.

The maximum pressure policy rested on two flawed assumptions: first, that economic sanctions impose little or no cost on the US, and second, that sanctions alone will inevitably spark domestic unrest capable of toppling the regime or forcing a policy reversal.Compounding these mistakes, the campaign offers no meaningful incentives - essentially "all stick, no carrot" - leaving Tehran with little reason to negotiate.

In practice, these assumptions have proven false.

Cost of sanctions

Contrary to Washington's expectations, maximum pressure has been costly for the US.

Rather than curbing Iran's nuclear programme, the six-and-a-half-fold increase in sanctions designations transformed Iran into a threshold state.

Iran raised its uranium enrichment from 3.5 percent under the Joint Comprehensive Plan of Action (JCPOA) to over 60 percent, increased its enriched uranium stockpile from 200kg to 6,604kg, and doubled its installed centrifuges from 6,000 to 13,000, with 45 percent of those being advanced IR-6 centrifuge models.

As a result, Iran's breakout time for producing enough highly enriched uranium for one bomb fell from more than a year to less than a week.

In addition, rather than decreasing the risk of military confrontation, it has increased, undermining US leadership credibility.

From the attack on Saudi Arabia's Aramco facilities to the downing of US drones and missile strikes on American bases such as Ain al-Assad, the policy has failed to deter further provocations and has instead made them more likely.

US pressure has also pushed Iran closer to China and Russia, reducing Washington's leverage and complicating its strategic priorities.

Tehran's deepening ties with Beijing and Moscow include arms transfers to Russia, prolonging the war in Ukraine. At the same time, China's willingness to buy Iranian oil undermines sanctions and erodes US leadership credibility.

Meanwhile, the Houthis in Yemen, who are closely aligned with Tehran, have disrupted Red Sea shipping routes, further amplifying global trade tensions.

Flawed assumptions

Another flawed assumption is that sanctions will trigger sufficient domestic unrest to topple the regime. However, Iran's experience over three distinct phases of sanctions undermines this logic.

From 1979 to 2009, the US mainly imposed primary sanctions, which did not inflict severe harm.

In the second phase (2010-2015), almost 600 instances of sanctions with significant economic costs but limited welfare harm ultimately led to a compromise.

Despite a 17 percent economic contraction, 65 percent inflation and a 50 percent drop in crude oil exports between 2012-2013, Iran's cash transfer programme prevented widespread poverty.

Under the JCPOA, more commonly known as the Iran nuclear deal, sanctions designations decreased from 1,045 in September 2015 to 378 in March 2016.

Ironically, one of the largest waves of protests since 1979 occurred in 2017, during a period of relative economic prosperity (13 percent GDP growth, single-digit inflation, and the creation of 1.5 million jobs). In the two major protests that have taken place since 2018, neither was primarily driven by sanctions-related economic hardship.

The third round of sanctions, coinciding with the Covid-19 pandemic, caused significant hardship. The first two years of maximum pressure contracted the economy by 12 percent, inflation rose by 75 percent and poverty increased by 8 percent.

Yet, despite 1,635 sanctions designations by September 2020, no predicted mass uprising or negotiations occurred in direct response. Then-President Joe Biden continued increasing sanctions, bringing the total to 2,562 by January 2025.

A key reason sanctions failed to spur internal revolt lies in Iran's privilege-based welfare system, which insulates politically influential groups from hardship.

While sanctions exacerbate hardship, the ruling bloc, military, security forces, and skilled workers in the public sector remain relatively protected, while the 60 percent working in the informal sector bear the brunt of inflation without a cohesive platform for political action.

Iran's resilience

A high annual inflation rate of 35 to 40 percent, a public budget deficit of 20 to 25 percent and growing economic shutdowns triggered by energy shortfalls suggest the regime is more vulnerable than ever. The Iranian rial has been in free fall, plunging 33 percent against the dollar since President Trump's election in November.

However, Iranian officials' self-perception and key economic data do not support this western perception.

From March 2020 to March 2024, Iran's economy grew by about 17 percent, with 1.2 million jobs added. In 2023 alone, the central bank allocated around $68bn for imports, indicating better access to hard currency.

Iran has also constructed a global network of shadow banking to circumvent formal financial channels. Although costly, this strategy helps mitigate external pressure.

According to World Bank estimates, the poverty rate dropped from 30 percent in 2019 to 22 percent in 2023 and living standards improved by 18 percent, returning to pre-2017 levels.

These figures suggest neither prosperity nor an imminent collapse. Much like after the war with Iraq, the Islamic Republic has adapted to sanctions - often at the expense of ordinary citizens - without undermining core regime structures.

If anything, the maximum pressure policy has strengthened conservative Iranian hardliners, undermining moderate reformists. By questioning diplomacy's benefits, hardliners pushed a "resistance" strategy centred on a "resistance economy", expanding missile capabilities and regional deterrents while deepening ties with China and Russia.

Recently, a new ultra-hardliner faction advocated for a nuclear deterrent. However, this narrative has lost momentum, especially after Assad's overthrow in Syria. In response, moderate voices have regained traction.

A new opportunity

Newly elected President Masoud Pezeshkian won his election on promises of social reforms, economic revitalisation and improved ties with the West. He now appears better positioned than former President Hassan Rouhani was in 2017, evidenced by the unprecedented parliamentary endorsement of his cabinet.

Pezeshkian appointed Mohammad Javad Zarif as his deputy despite legal restrictions and suspended the controversial hijab law for the first time.

In recent months, his administration advocated direct dialogue, not only on nuclear issues but also on other US concerns. He recognises that without sanctions relief, Iran's economy has little chance of achieving genuine prosperity.

He also pushed for renewed compliance with the Financial Action Task Force (FATF) and announced plans to increase internet freedom by unblocking WhatsApp and Google Play. Although the success of these initiatives remains uncertain, Pezeshkian has secured meaningful support from Khamenei.

Rather than inching closer to negotiations, however, the new US policy appears to have reverted to a stance reminiscent of a "no negotiation, no war" approach that defined Trump's first term.

With an "all stick, no carrot" strategy offering no genuine incentives, the likelihood of serious diplomatic progress - or any breakthrough - now seems more remote than ever.Rather than tightening the economic screws to break the regime or incite mass revolt, the US should revise its theory and approach to sanctions. Offering concrete incentives could shift internal dynamics and encourage engagement.

However, Iranian officials recall a similar moment after the Iraq War in 2003, when their "grand bargain" proposal was rebuffed by the Bush administration, assuming Iran was vulnerable and not worth negotiating with.

A policy tailored to Iran's domestic realities, with credible and clearly defined incentives for cooperation, would be far more effective. This approach stands a much better chance of securing US interests or leading to a meaningful agreement than once again pursuing maximum pressure with no clear objective or strategy.

Such an approach stands a far better chance of securing US interests or leading to a meaningful agreement than pursuing maximum pressure once again with no clear objective or strategy.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Eye.

Hadi Kahalzadeh is a Research Fellow at the Crown Center for Middle East Studies at Brandeis University. He served as an economist for Iran’s Social Security Organization from 2002 to 2011. He has published extensively on Iran's political economy, development, the welfare state, and economic sanctions.