U.S.-Backed Pressure Tightens Economic Noose Around Iran — Banks Banned, Airlines Grounded

The United Arab Emirates and Turkey this week barred major Iranian banks from operating and grounded Iranian airlines, representing the sharpest financial squeeze on Tehran since the conflict escalated in February.

According to the Wall Street Journal, Jonathan Burke, the Treasury Department's assistant secretary for terrorist financing and a former Citigroup sanctions-compliance executive, spent two weeks this month traveling across the Middle East and Europe. He warned remaining Iranian trading partners that continued financial or aviation ties with Tehran could jeopardize their access to the U.S. financial system.

Operation Economic Outcast, the targeted sanctions initiative launched by Treasury Secretary Scott Bessent in August, has been central to the campaign. Burke's office has pushed allied regulators and central banks to sever financial and aviation links that support Iran's economy.

Recent Measures and Regional Response

Oman, the first stop on Burke's itinerary, prohibited flights by Mahan Air, the private Iranian carrier the U.S. has linked to the Islamic Revolutionary Guard Corps. Within days, Iran's paramilitary authorities moved to halt broader Iranian airline traffic.

This week, the UAE central bank barred branches of Bank Melli Iran — the country's largest state lender — from moving funds to or from Iran, citing alleged money-laundering and terrorism-financing violations, and the UAE then grounded Iranian carriers entirely. Turkey canceled Mahan Air routes and its banking regulator revoked the operating license of Bank Mellat, ending decades of service at its Istanbul branch.

Treasury officials met representatives from more than 50 countries during the recent diplomatic push; Azerbaijan and Georgia also excluded Iranian carriers. Britain's Treasury told Bloomberg it will not renew a license that allows Bank Melli's London subsidiary to operate when it expires on Oct. 22. Mahan Air continues to operate flights to China and Russia, Iran's largest remaining commercial partners.

Political Context and Reactions

The campaign has gathered momentum as Gulf states have grown increasingly hostile to Tehran following strikes and escalations that began in late February. Iranian-backed Houthi forces in Yemen have separately blockaded Saudi shipping in the Bab el-Mandeb strait, and a U.S. naval blockade of Iranian ports, first imposed in April, remains in effect.

At the U.N. General Assembly, Iranian President Masoud Pezeshkian acknowledged the economic pressure but vowed defiance: "The resistance of the Iranian people will only increase in the face of sanctions."

Iran has offered to reopen the Strait of Hormuz within a week if Washington lifts its naval blockade and eases sanctions, a proposal relayed through Qatar at the U.N. The U.S. declined that truce proposal, according to reporting.

Legal and sanctions experts say the U.S.-led push has produced rapid, tangible results. Nigel Kushner, a British lawyer who has advised companies on Iran sanctions for two decades, told the Wall Street Journal that the campaign has had "greater impact in a matter of weeks than during the lengthier campaigns" since 2010.

Reporting and attribution in this piece draw on accounts from the Wall Street Journal and Bloomberg.