Geoeconomic Policies between 1995-2025, Case Study: US – Iran

Abstract

The main research question of this paper is how the geoeconomic framework explains the US geoeconomic statecraft toward Iran. The period 1995-2025 is selected, and the paper provides a brief overview of different US geoeconomic policies against Iran. The methodological framework is based on Robert D. Blackwill and Jennifer M. Harris seven geoeconomic instruments: 1)trade policy, 2)investment policy, 3)economic sanctions, 4)cyber, 5)economic assistance, 6)financial and monetary policy, and 7)energy and commodities. The paper examines each geoeconomic tool separately and links it to specific US policies toward Iran. To avoid repeating the same example, when a policy overlaps across tools, it is classified under the primary tool used. The paper draws on a range of primary sources, such as official government reports, and secondary sources, including mainstream media analyses. The paper is divided into five parts: 1)Introduction, 2)Blackwill and Harris’s Geoeconomics Framework, 3)A brief historical background of US geoeconomic policies toward Iran, 4)Implementation of Blackwill and Harris’s Geoeconomics theory in the US – Iranian case, and 5)Conclusion.

Introduction

Since the Iranian revolution in 1979, US–Iran relations have changed from cooperation to strong rivalry in the Middle East. This rivalry can be examined through many approaches, but one useful way is to focus on geoeconomic measures–that is, policies that use economic power to pressure an opponent and limit its behavior without direct conflict. In this paper, the main goal is to examine some of the US geoeconomic policies toward Iran and to explain how these policies fit within the geoeconomic framework developed by Blackwill and Harris.

Blackwill and Harris’s Geoeconomics Framework

Blackwill and Harris define geoeconomics as using economic tools to defend national interests and achieve geopolitical results, while also recognizing that other countries’ economic actions can affect a state’s geopolitical goals. They explain that geoeconomics is both a way to analyze international politics and a form of statecraft, because it shows how states use economic relationships to achieve geopolitical outcomes. In practice, the authors identify seven main geoeconomic instruments and their main aim is to evaluate each tool based on its geopolitical impact, not only its economic impact. They also argue that the effectiveness of these tools depends on “geoeconomic endowments,” such as a country’s role in global commodity flows, its importance in the international financial system, and domestic market features like market size, investment controls, and expectations of growth.

The seven tools can be summarized as follows: trade policy uses access to markets as leverage through measures such as tariffs, quotas, export controls, and embargoes. Investment policy focuses on controlling or restricting capital flows and foreign direct investment through screening, blocking, limiting ownership, and regulatory pressure. Economic sanctions aim to coerce a target by restricting access to finance, markets, and key parts of the global banking system. Cyber can function as economic pressure when cyber operations disrupt systems, impose costs, or undermine critical sectors. Economic assistance (aid) includes loans, grants, and development finance that can shape political alignment and build long-term influence; it can also indirectly pressure an adversary by strengthening partners. Financial and monetary policy uses tools such as access to liquidity, regulatory actions, reserve holdings, and exchange-rate influence to affect borrowing costs and market confidence. Finally, energy and commodities policies, uses leverage over commodity flows (especially energy) through supply cuts, pricing pressure, pipeline politics, export bans, and control of chokepoints; the authors also highlight factors such as monopoly power, monopsony power, and transit centrality as important for leverage.

A brief historical background of US geoeconomic policies toward Iran

After the fall of the pro-US Iranian regime in 1979, different US administrations used a range of geoeconomic tools against the new Iranian regime. Some of these measures appeared in 1995, the US issued Executive Order (EO) 12957, which targeted investment linked to Iran’s petroleum development. Later in the same period, the US issued EO 12959, which prohibited a wide range of transactions with Iran, including restrictions to Iranian-origin goods and services and limits on exports and related dealings, such as the export of US goods, technology, or services to Iran. Continuing in 2008, the US Department of the Treasury, through the Office of Foreign Assets Control (OFAC), revoked the authorization that had allowed certain Iran-related US-dollar transfers to pass through the US banking system (the so-called “U-turn” authorization).

Additionally in 2012, EO 13599 blocked property and interests in property of the Government of Iran and Iranian financial institutions, including the Central Bank of Iran, when these assets came under US jurisdiction. Further in 2016, reporting described a US cyber plan known as “Nitro Zeus”, presented as a contingency option in case diplomacy failed and tensions escalated. The plan reportedly involved infiltrating Iranian networks in advance so that, if ordered, the US could disrupt major infrastructure such as parts of Iran’s power grid and communications systems.

Between 2018 and 2019, using EO 13846, the US escalated what it called a “maximum pressure” campaign with measures aimed at reducing Iran’s oil-export revenue, including reimposed sanctions authorities and the ending of Significant Reduction Exception (SRE) waivers for importers of Iranian oil. Finally, the US has always provided military, humanitarian and other forms of assistance to several Middle Eastern states that are hostile to Iran, which can increase indirect strategic pressure on Iran by strengthening US partner states.

Implementation of Blackwill and Harris’s Geoeconomics theory in the US – Iranian case

In this section, Blackwill and Harris’s framework is applied to the seven geoeconomic tools and links each tool to concrete US policies toward Iran. The trade policy in the Iran case is shown mainly through EO 12959 (1995), the key point is that trade restrictions make normal economic exchange costly and legally risky. Thus, firms avoid trade when they face a high compliance burden and fear penalties, and this reduces commercial ties. By cutting trade channels, the US aimed to isolate Iran economically and increase pressure without using direct military force.

Investment policy is illustrated by EO 12957 (1995), the main idea is that investment restrictions reduce long-term capacity, because limiting capital and technology in strategic sectors can weaken future revenue potential. In simple terms, if investment and technology are blocked or discouraged, it becomes harder for Iran to develop major energy projects and benefit fully from them. The intended geopolitical outcome was to weaken Iran’s long-run economic power and reinforce Iran’s strategic isolation. Financial and monetary policy is illustrated by the 2008 US decision to revoke the “U-turn” authorization through OFAC. Since the US dollar system is central to global financial clearing, limiting Iran-linked dollar pathways increases the difficulty of payments and creates extra obstacles for international transactions. This makes banks and companies more cautious, because they do not want exposure to US financial rules and enforcement. The goal here was to deepen Iran’s financial isolation and make it harder for Iran to use normal banking channels.

Economic sanctions are shown through EO 13599 (2012), the main point here is not only that assets can be frozen, but also that sanctions increase fear and risk for third parties. More specifically, when sanctions are strong and enforcement is credible, banks and firms often stop dealing with Iranian institutions to avoid penalties. The intended objective was coercion by restricting Iran’s ability to use financial assets connected to the US system and by limiting Iran’s room to operate in the international financial system. Cyber can be seen in reporting on the US plan known as “Nitro Zeus” (2016), the idea here is that cyber can function as economic pressure when it threatens disruption to important systems and infrastructure. If Iran believes critical sectors could be disrupted, this can create deterrence and raise the expected cost of escalation. This example shows cyber can be used not only for intelligence, but also for deterrence by threatening to impose costs through disruption to critical sectors.

Energy and commodities policy is shown clearly in the 2018–2019 “maximum pressure” campaign, which targeted Iran’s oil-export revenue. The key point is that oil sales and oil-related payments were treated as a major pressure point. Therefore, when buyers, shippers, insurers, and banks face higher sanctions risk, oil trade becomes harder and Iran’s ability to receive payment is reduced, which cuts state revenue. The US aim was coercion by reducing oil-export revenue and limiting Iran’s ability to fund its regional and strategic activities. Economic assistance is applied indirectly in the Iran case because US support to regional partners can increase pressure on Iran. Israel is one example: as a long-term US ally, it has received roughly $130 billion in US assistance over the period 1948–2025, and this long-term support strengthens Israel’s defensive and offensive capabilities during periods of confrontation with Iran. In practical terms, stronger US partners can limit Iran’s room to act and increase deterrence in the region. The intended geopolitical outcome here is deterrence and containment by strengthening regional partners and indirectly increasing pressure on Iran.

Conclusion

This paper examined how US policy toward Iran fits Blackwill and Harris’s geoeconomic framework. By analyzing US measures through the seven geoeconomic tools and linking each tool to concrete policies, the paper shows that the US approach toward Iran is a clear example of geoeconomic statecraft. In this case, economic instruments were used mainly to achieve geopolitical goals, not only economic ones.

Three main patterns stand out. First, economic sanctions and financial and monetary leverage were the most important tools, because they limited Iran’s access to banking channels and increased the cost and risk of doing business with Iran. Second, energy and commodities measures, especially those targeting oil exports and oil-related payments, were a major pressure point because they aimed to reduce Iran’s state revenue. Third, trade and investment policy also played an important role by reducing normal economic exchange and limiting long-term capacity in strategic sectors (especially energy), reinforcing isolation and increasing pressure over time. Fourth, the US also used economic assistance to support regional partners and other tools, including cyber-related planning, to increase deterrence and to limit Iran’s ability to act in the region. This shows that geoeconomic pressure often works together with broader security policy. Overall, the US–Iran case shows how the seven instruments can be applied systematically to pursue geopolitical goals, which supports the usefulness of Blackwill and Harris’s framework.

Bibliography

• Blackwill, Robert D., and Jennifer M. Harris. War by Other Means: Geoeconomics and Statecraft. Cambridge, MA: Belknap Press of Harvard University Press, 2016.
• Clinton, William J. “Executive Order 12957—Prohibiting Certain Transactions With Respect to the Development of Iranian Petroleum Resources.” The American Presidency Project. March 15, 1995. https://www.presidency.ucsb.edu/documents/executive-order-12957-prohibiting-certain-transactions-with-respect-the-development-iranian.
• Clinton, William J. “Executive Order 12959—Prohibiting Certain Transactions With Respect to Iran.” Weekly Compilation of Presidential Documents 31, no. 18 (May 15, 1995): 784–86. https://www.govinfo.gov/content/pkg/WCPD-1995-05-15/pdf/WCPD-1995-05-15-Pg784.pdf.
• Katzman, Kenneth. Iran Oil Sanctions Exceptions Ended. CRS Insight IN11108. Washington, DC: Congressional Research Service, April 24, 2019. https://www.congress.gov/crs_external_products/IN/PDF/IN11108/IN11108.1.pdf.
• Obama, Barack. “Executive Order 13599—Blocking Property of the Government of Iran and Iranian Financial Institutions.” Daily Compilation of Presidential Documents (February 5, 2012): 1–3. https://www.govinfo.gov/content/pkg/DCPD-201200083/pdf/DCPD-201200083.pdf.
• Reuters. “U.S. Planned Major Cyber Attack on Iran If Diplomacy Failed: NYT.” February 17, 2016. https://www.reuters.com/world/us-planned-major-cyber-attack-on-iran-if-diplomacy-failed-nyt-idUSKCN0VP2PL/.
• Sharp, Jeremy M., Alexis Arieff, Christopher M. Blanchard, Clayton Thomas, and Jim Zanotti. U.S. Foreign Assistance to the Middle East: Historical, Recent Trends, and the FY2024 Background Request. CRS Report R46344. Washington, DC: Congressional Research Service, updated August 15, 2023. https://crsreports.congress.gov.
• Trump, Donald J. “Executive Order 13846—Reimposing Certain Sanctions With Respect to Iran.” Administration of Donald J. Trump, 2018. August 6, 2018. https://www.govinfo.gov/content/pkg/DCPD-201800524/pdf/DCPD-201800524.pdf.
• U.S. Department of State. “U.S. Security Cooperation with Israel.” Accessed April 25, 2025. https://www.state.gov/u-s-security-cooperation-with-israel.
• U.S. Department of the Treasury. “Treasury Revokes Iran’s U-Turn License.” Press release. November 6, 2008. https://home.treasury.gov/news/press-releases/hp1257.

Acknowledgment

This paper was polished using two AI-based tools, ChatGPT and Grammarly, exclusively for improving grammar, spelling, and punctuation. These tools were not used to influence the content, analysis, or conclusions of the study.