Sanctioned Afghanistan, Russia & Iran Rewrite Global Trade Rules: Is the U.S. Losing at Its Own Game?

On January 17, 2025, Vladimir Putin and Iranian President Masoud Pezeshkian signed a “comprehensive strategic partnership treaty.” This treaty covers everything from military cooperation to trade. It also includes energy and intelligence sharing. The timing—three days before Trump’s inauguration—wasn’t coincidental. It was a declaration: the era of American economic hegemony through sanctions is creating its own alternative.

Iran was the most sanctioned country in the world until Russia surpassed it following Moscow’s 2022 invasion of Ukraine. Afghanistan remains economically isolated under Taliban rule. Yet rather than capitulating, these three pariah states are pioneering what may become the template for post-American global commerce. The question isn’t whether sanctions work. The real question is whether America is winning a game. In this game, the rules are being rewritten by those it sought to exclude.

The Alliance of the Excluded

Russia’s New Imperial Mathematics

The Russian-Iranian treaty spans 20 years. It includes automatic five-year extensions. The treaty covers “all areas—from trade and military cooperation to science, education and culture.” This isn’t mere diplomatic theater. In July 2022, Iran and Gazprom signed a memorandum worth $40 billion. The agreement supports the development of the Kish Gas Field. It also supports the development of the North Pars Gas Field. Russia is quite literally building Iran’s energy future while the West tries to strangle it.

Afghanistan is landlocked and under tight financial sanctions. Despite these challenges, it has signed trade agreements with Russia. These agreements cover energy imports and wheat shipments. The Taliban governs a country where 48 percent of the population lives in poverty. They have found a partner in Moscow. Moscow is willing to provide 150,000 tons of fuel monthly. It will also provide 2 million tons of wheat at subsidized prices.

Iran’s Shadow Economy Goes Mainstream

Since the U.S. and European countries reinstated or increased sanctions, Iran has greatly increased its self-sufficiency. This is especially true in the agricultural, food, and pharmaceutical sectors. Iran is now a main exporter of dairy products to the UAE and Azerbaijan. This isn’t just import substitution—it’s economic metamorphosis under pressure.

Case Study: Iran’s Cryptocurrency Adaptation

Iran’s response to sanctions exemplifies adaptive resilience. In December 2024, authorities abruptly halted withdrawals from Iranian exchanges due to the rial’s record decline. Citizens didn’t capitulate. They innovated. The government demonstrated both control and vulnerability in restricting financial outflows. Inflation hovering around 40-50% drove more Iranians toward decentralized alternatives.

China and Iran have built a trading system. They use mostly Chinese yuan and a network of middlemen. This system avoids the dollar and exposure to U.S. regulators. Iranian oil flows to China. These flows make up over 10% of China’s crude imports. Traders rebrand them as sourced from Malaysia. The shadow economy has become very sophisticated. Traders appear “nonchalant” when shown new sanctions documents. They immediately ask for “the latest Iranian oil quotes.”

America’s Pyrrhic Victory

The Diminishing Returns of Economic Warfare

Sanctions used to be akin to a slap on the wrist, targeting foreign leaders and their inner circles. Now they are among states’ most powerful weapons for waging economic warfare. But this escalation carries costs that Washington is only beginning to understand.

The 2022 sanctions on Russia reduced its trade with sanctioning states by about 25% on average—significant, but not devastating. More troubling for American strategists: there is evidence of significant trade diversion between Russia and third countries. This trade diversion has mitigated the negative primary trade effects of the sanctions. It may even eliminate these effects.

Addressing the Hawks: Why “Maximum Pressure” Misses the Point

Critics argue that sanctions simply need more time and enforcement to work. Treasury Secretary Scott Bessent’s goal to “collapse Iran’s already buckling economy” reflects this thinking. But this misses the fundamental shift: each round of sanctions teaches targets how to build better alternatives.

The counterargument that sanctions prevented worse outcomes—nuclear weapons, territorial expansion, proxy conflicts—contains an uncomfortable assumption. It assumes that American economic dominance is the natural order and not a historical anomaly. When Iran’s Foreign Minister Abbas Araghchi indicates willingness to negotiate, it comes with a condition. He will not negotiate in the current context of maximum pressure. He’s not capitulating to American demands; rather, he’s articulating the terms of a multipolar world.

Recent U.S. sanctions are “tangling, not stopping” China’s trade with Iran, as costs rise and traders find increasingly sophisticated workarounds. One trader dealing in Iranian oil mentioned an encounter with a Chinese refinery operator. The operator “appeared nonchalant” when shown the latest sanctions document. They “carried on asking for the latest Iranian oil quotes.”

The Infrastructure of Defiance

Building the Post-Dollar World

The real threat to American power isn’t sanctions evasion—it’s sanctions alternative. BRICS members are making incremental progress on financial infrastructure. They aim to avoid direct confrontation with the United States. Additionally, they are creating mechanisms for countries like Russia to evade sanctions. These mechanisms allow others to evade the implications of secondary sanctions.

For the first time, the U.S. Special Inspector General for Afghanistan Reconstruction made a suggestion. Congress may want to examine returning nearly $4 billion held in the Afghan Fund to U.S. government custody. The Fund has yet to make a single disbursement. Meanwhile, Iran’s Foreign Minister Abbas Araghchi met with Taliban officials in Kabul in January. They discussed border tensions, Afghan refugees, and water rights. America holds Afghanistan’s money hostage while Iran builds actual relationships.

The Price of Playing God

When Economic Weapons Become Recruitment Tools

US leaders were struck by hubris after early sanctions successes against North Korea, Iran, and Russia. They believed they wielded immense, unchallengeable power. That hubris is now creating exactly what sanctions were meant to prevent: a coordinated challenge to American economic primacy.

The U.S. chose not to target Chinese banks facilitating Russian sanctions evasion in 2024. This suggests an awareness that pushing too hard could backfire. However, this situation will probably change. Trump seeks to address what he perceives as economic imbalances caused by China’s trade practices. The restraint was temporary; the escalation inevitable.

Trump’s “maximum pressure” campaign aims to “collapse Iran’s already buckling economy.” Treasury Secretary Scott Bessent openly admits that mass civilian suffering is integral to sanctions policy. Iran’s Foreign Minister Abbas Araghchi showed a willingness to talk. However, he refuses to engage “in the current context of maximum pressure sanctions and military threats.”

Afghanistan: The Laboratory of Sanctions Failure

Afghanistan’s economy grew 2.7% in 2024, driven largely by regional investments in infrastructure, despite continued isolation from the international system. The Taliban have been written off as medieval extremists. However, they are proving surprisingly adept at twenty-first-century statecraft. They are building trade relationships while Washington freezes bank accounts.

Iran’s representative to the UN highlighted an influx of 6 million Afghan refugees. This situation costs Iran over $10 billion annually. He asked where international support is for countries bearing this burden. While America debates the morality of recognizing the Taliban, Iran and Russia are solving practical problems and building influence.

The Strategic Checkmate

When Sanctions Become Recruitment

The uncomfortable truth is that American sanctions are working exactly as designed—and that’s the problem. The projects would provide mechanisms for countries such as Russia to evade sanctions. They would also allow others to evade secondary sanctions implications. This would inevitably diminish the effectiveness of the U.S. economic statecraft toolkit.

Case Study: Afghanistan’s Surprising Resilience

Afghanistan offers the most telling example of sanctions’ unintended consequences. Despite losing access to the international banking system and almost all foreign development aid, Afghanistan’s economy grew 2.7% in 2024, driven largely by regional investments in infrastructure. The Taliban, written off as medieval extremists, are proving surprisingly adept at twenty-first-century statecraft.

Iran hosts 6 million Afghan refugees at an annual cost exceeding $10 billion, while Pakistan struggles with similar burdens. America’s sanctions regime has created a humanitarian crisis. Neighboring countries must solve this crisis. This situation builds Iran and Pakistan’s influence. It also diminishes America’s moral authority.

The Sanctions-to-Alternatives Pipeline

New U.S. sanctions targeted 143 oil tankers. They handled more than 530 million barrels of Russian crude in 2024. This accounted for 42% of Russia’s total seaborne crude exports. The response? China and India are turning to heavier Middle Eastern oil. They are also maximizing Canadian crude offtake. Meanwhile, Russian ESPO Blend continues flowing through alternative channels.

Each round of sanctions teaches the targets how to build better alternatives. When Washington sanctioned two small Chinese refiners for buying Iranian oil, it created operational difficulties. It also demonstrated to other “teapots” exactly what they need to avoid. The sanctions regime has become a graduate course in sanctions evasion.

The Coming Multipolarity

Beyond Dollar Dominance

President Donald Trump has threatened tariffs against dedollarization attempts. However, BRICS members will make incremental progress on financial infrastructure. They aim to avoid direct confrontation with the United States. The challenge isn’t dramatic—it’s gradual, systematic, and probably irreversible.

A free trade deal between Iran and the Russian-led Eurasian Economic Union went into effect in May 2025. It cuts tariffs to boost trade between two heavily sanctioned economies. What began as punishment is becoming the foundation for a parallel economic system.

The Historical Precedent Problem

Skeptics might argue that previous challenges to American economic hegemony—from the Soviet bloc to Japan’s rise—ultimately failed. But those challenges operated within the American-designed system, seeking to outcompete rather than replace it. Today’s alternative infrastructure explicitly bypasses American oversight, creating parallel systems rather than competing within existing ones.

The Soviet Union tried to build socialism in one country while remaining economically isolated. China’s Belt and Road Initiative builds capitalism in many countries while gradually reducing dollar dependence. The difference is strategic patience combined with systemic thinking—exactly what makes this challenge more dangerous than previous ones.

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Call to Reflection

America isn’t losing at its own game—it’s winning so decisively that its opponents have stopped playing by American rules altogether. Every successful sanctions regime teaches the world how to build alternatives to American financial hegemony. Every frozen bank account drives another country toward yuan-denominated trade. Every tanker sanctioned is another lesson in how to hide oil shipments.

Is success in the short term worth creating the infrastructure for long-term American economic irrelevance? That is the question facing Washington, not whether sanctions work. In trying to remain the indispensable nation, America may be making itself dispensable.

Questions for Strategic Thinkers:

• Can the United States adapt its strategy before its economic weapons complete the job of organizing its own opposition?
• Has America already passed the point where military dominance alone can sustain global primacy in an age of economic warfare?
• What would a post-sanctions foreign policy look like, and is Washington prepared to imagine it?
• How do we measure success when our victories create the conditions for our eventual irrelevance?

Join the Debate: The implications of this analysis extend far beyond foreign policy—they touch on the future of global capitalism, the nature of state power, and whether any nation can indefinitely maintain hegemony through coercion rather than cooperation. What strategies would you pursue if you were advising either Washington or its challengers? Share your thoughts and challenge these assumptions.