BESSENT'S BOMBSHELL: Iran's economy is 'collapsing' — and about to shrink more than the Soviet Union did: 'Nothing like this'

WASHINGTON – Iran is in free fall.

Treasury Secretary Scott Bessent says the Islamic Republic's economy is "collapsing" under a US financial squeeze so brutal it has no modern precedent – and he's warning the next phase will hit even harder.

"I think that the Iranians are panicked. I think the economy is collapsing," Bessent told the "Brian Kilmeade Show" as he detailed the administration's escalating economic campaign against Tehran.

Bessent put a number on the damage: a contraction of more than 25% between March 2026 and March 2027 – a collapse he says would outpace even the Soviet Union's economic free-fall after its breakup.

"I would predict that from March of '26 until March of '27, the economy would contract more than 25 percent, which is more than the Soviet Union contracted after its collapse," he said.

'Operation Economic Outcast'

At the center of the pressure campaign is an eight-week-old Treasury push dubbed Operation Economic Outcast, layered on top of a US naval blockade that has strangled Iran's lifeblood oil exports.

"Iran, for the first time, probably since oil was discovered, has no oil on the water," Bessent said. "There have been no loadings at Kharg Island. Production is starting to falter."

And the Treasury chief made clear he's just getting started.

"We've been going for eight weeks, and I can tell you the next eight weeks is going to get even more intense."

"We are seeing the regime go bankrupt."

— Treasury Secretary Scott Bessent

The campaign is aimed squarely at the foreign banking channels and shadowy money men that have kept Tehran afloat for years.

"There are numerous banks. We are tracking a large Pakistani bank. We shut the Dubai branches of an Egyptian bank. We closed a Turkish bank, the second-largest Russian bank, VTB," Bessent said, describing the discovery that VTB's branches outside Russia had been aiding the regime.

He also had a blunt message for the intermediaries – known in Iran as "trustees" – who move the government's oil money offshore.

"We are seeing the regime go bankrupt," he said. "So many of the people who are holding money outside of Iran do not want to send it back in."

Treasury is dangling rewards of up to 30% of recovered funds through its whistleblower program, and Bessent said the US is happy to unsanction individuals who flip – with Iranians at home, in the diaspora and even inside its embassies and consulates all invited to hand over information.

Washington is also tracking Tehran's scramble to move money through cryptocurrency and foreign banks.

Cops aren't showing up. Soldiers aren't getting paid.

The pain isn't staying inside the regime's accounts.

Bessent said the economic strain is now hitting ordinary Iranians and the security apparatus alike, with some military personnel going unpaid and some police officers simply not reporting for duty.

He said economic pressure is opening up fissures between Iran's politicians, the Revolutionary Guards and the supreme leader – describing some IRGC commanders as isolated from the public and oblivious to just how bad the deterioration has become.

Asked what advice he'd give Iran's people, Bessent didn't sugarcoat it: skip your taxes, stock up on heating fuel and fill your gas tank now.

"Don't pay your taxes because you're not going to get anything back from the government," he said. "You should start stocking up on heating fuel. There's going to be a big heating fuel shortage. In terms of gasoline, everyone should fill up their tanks now."

Humanitarian channels for food and medicine remain open, he said, but the government is running out of dollars to pay for imports, is printing money, is failing to pay salaries and keeps cutting social benefits.

The ground-level wreckage is already showing. Iran Air retirees say two of their own died in the past few weeks after being forced to abandon medical treatment they could no longer afford, with average monthly pensions of about $100 and 5,600 retirees scraping by on roughly $66 a month.

In cities including Tabriz and Hamedan, independent bakeries have shuttered because they have no flour to bake with.

"Our bakery is closed because we have no flour, and nobody is taking responsibility," one baker said.

No waiting out the midterms

Bessent swatted down any hope in Tehran that the US midterm elections might soften Washington's approach.

"Nothing will change in terms of President Trump's calculus, in terms of how resolute we are here at Treasury, in terms of the blockade," he said.

He insisted the US is still ready to negotiate – but only if Iran gives up any path to a nuclear weapon and stops financing armed groups across the region.

Tehran has shown no sign of bending, demanding the naval blockade be lifted before talks go anywhere, even as Qatari mediators and senior officials from Saudi Arabia, Pakistan and Turkey shuttle in and out of the country to try to de-escalate the standoff.

Asked whether sanctions plus a naval blockade have any real historical parallel, Bessent pointed to Washington's campaign against Venezuela – then made clear Iran's punishment goes far beyond it.

"There's been nothing like this," he said.