For years, various Iranian businesses have used the small Caucasian republic as a conduit for various sanctions-busting schemes. The Georgian government, at the urging of the U.S. Treasury Department, cracked down on these businesses, and seems to have made a good-faith effort at enforcement, but unplugged holes undoubtedly remain. Emanuele Ottolenghi describes how the sanctions are evaded, and the significance of the problem for a prospective nuclear deal:

It looked as if Treasury’s actions constituted a textbook case in the success of the U.S. sanctions policy. By making a compelling case to a foreign ally through Treasury’s painstaking forensic work, the Obama administration had neutralized an important illicit Iranian operation there and potentially damaged others. Yet in fact the [episode] encapsulates sanctions’ main challenge. Enforcing them requires tedious bookkeeping, painstaking forensic work, and the ability to stay a step ahead of Iranian middlemen with three decades of experience circumventing embargoes. These difficulties, which are painfully obvious on the ground, suggest that President Barack Obama’s faith in “snap-back sanctions” that will penalize Iran if it violates the terms of any nuclear deal take little account of how sanctions actually work on the ground. . . .

Treasury took two years to discover, investigate, corroborate, and finally sanction the people they eventually designated as Iran’s proxies in Georgia. Even so, Treasury targeted only eight of the eighteen businesses mentioned in Georgian court proceedings. It is, of course, entirely possible that only those eight companies engaged in sanctionable activities, while all others were honest businesses. However, the pending Georgian court case against more of their companies, relatives, and business partners suggests a possible alternative explanation. It is also plausible that Treasury could not gather sufficient evidence against those companies or that it failed to identify them. If that were the case, it would expose the constraints of an effective sanctions policy.

Treasury’s actions . . . happened at the height of the sanctions regime, when compliance with U.S. sanctions among financial institutions, global businesses, and foreign governments was at its zenith. It will be much harder in a post-sanctions environment. . . . Iran’s evasive action could then start over again, at even higher stakes. . . . Unless sanctions enforcement is relentless, Western successes rarely translate into Iranian failures; just temporary setbacks.

For more than a year, the Iran-backed Houthis have been launching drones and missiles at ships traversing the Red Sea, as well as at Israeli territory, in support of Hamas. This development has drastically curtailed shipping through the Suez Canal and the Bab al-Mandeb Strait, driving up trade prices. This week, the Trump administration began an extensive bombing campaign against the Houthis in an effort to reopen that crucial waterway. Burcu Ozcelik highlights another benefit of this action:

The administration has a broader geopolitical agenda—one that includes countering China’s economic leverage, particularly Beijing’s reliance on Iranian oil. By targeting the Houthis, the United States is not only safeguarding vital shipping lanes but also exerting pressure on the Iran-China energy nexus, a key component of Beijing’s strategic posture in the region.

China was the primary destination for up to 90 percent of Iran’s oil exports in 2024, underscoring the deepening economic ties between Beijing and Tehran despite U.S. sanctions. By helping fill Iranian coffers, China aids Iran’s Islamic Revolutionary Guard Corps in financing proxies like the Houthis. Since October of last year, notable U.S. Treasury announcements have revealed covert links between China and the Houthis.

Striking the Houthis could trigger broader repercussions—not least by disrupting the flow of Iranian oil to China. While difficult to confirm, it is conceivable and has been reported, that the Houthis may have received financial or other forms of compensation from China (such as Chinese-made military components) in exchange for allowing freedom of passage for China-affiliated vessels in the Red Sea.