Behind the sensation of war: Will intermediary companies forge economic peace between Tehran and Tel Aviv?

In what has been described as an unprecedented escalation, Israel is preparing to impose sanctions on Iran and shift the conflict from a conventional military confrontation to an economic one – a strategy aimed at tightening the noose around Tehran’s neck by  preventing its financial institutions from circumventing international sanctions.

But is this the whole story? 

Or does the economic game, particularly between states, surpass politics in its ability to bring adversaries to the negotiating table, especially with the world’s financial wizards – the intermediating companies and countries – involved?

Israeli sanctions on Iranian entities

With these words, and just 48 hours after the ceasefire in Iran was announced, Israel’s Army Minister Israel Katz delivered a statement confirming that his ministry had responded to recommendations by the Mossad and the so-called “National Headquarters for Economic Warfare against Terrorism,” which operates under the same sovereign ministry, to begin implementing Israeli sanctions on Iranian financial institutions – including their proxies across the Middle East: Hezbollah, the Houthis, Iraqi Shia militias, and the Quds Force of Iran’s Islamic Revolutionary Guard Corps (IRGC).

The planned Israeli sanctions list includes seven Iranian entities:

1. The Central Bank of Iran, which had already been designated as a terrorist organization by the United States in September 2019.

2. Bank Shahr, designated by Washington in October 2020 for financing terrorism.

3. Bank Mellat, added to US terrorism lists in October 2018.

4. Sepehr Energy Jahan (SEJ), a financial institution affiliated with the Iranian Armed Forces General Staff. Before Israel, the US accused the same entity in February 2025 of circumventing international sanctions.

5. Majid Azami, a senior official at the Ministry of Oil and senior director at SEJ, sanctioned by Washington in November 2023.

6. Jamshid Eshaghi, a high-ranking officer in Iran’s armed forces and a senior official at SEJ, accused by the US in February 2025 of violating sanctions.

7. Elyas Niroomand Toomaj, a senior executive at SEJ, alleged by the US in February 2025 to be leading Iran’s illicit oil export activities.

Can a “mosquito bite” bring Iran to its knees? 

While the sanctions move is not, in general, unfamiliar to observers, its Israeli identity has raised questions about the tools of enforcement and the ability of Israeli institutions to implement it – especially in the absence of any (direct) economic dealings between Israel and Iran.

Such questions, and the lack of sufficient answers, led to Israeli intentions being dismissed. Former Egyptian Deputy Foreign Minister Ambassador Gamal Bayoumi described them as “a mosquito bite.” 

Bayoumi told Raseef22. 

With that said, Bayoumi did not rule out the possibility that Israel might exploit the leverage of lobbying groups over European and American governments when it comes to activating potential sanctions.

Commenting on the loophole posed by US lobbying groups in particular, economic expert Dr. Mostafa Badra told Raseef22, “the keys to this move are not in Israel’s hands, but in the hands of the United States. The latter bears the responsibility of backing Israel, and it is not unlikely that it will support its efforts to intensify sanctions on Iran – especially since the seven Iranian entities that Israel Katz has proposed for sanctioning have already been placed by the United States on its list of organizations supporting terrorism.”

“The thinking is Israeli, but the execution is American. That is, if Tel Aviv considers imposing sanctions on Iranian institutions, Washington is the one expected to carry out that goal,” he added. “After all, the US sanctions on Iran originally came from Israel’s target bank. American hegemony is primarily and ultimately responsible for advancing Israel’s economic sanctions agenda against Iran.”

Israeli threats to oil shipping tycoons

In this context, the Badra’s view aligns with the US trailing behind Israel, especially when it comes to implementing the “maximum pressure” strategy employed by Donald Trump against Iran during his first administration (January 2017 to January 2021).

In his book “Trump's Peace: The Abraham Accords And The Reshaping Of The Middle East,” Israeli journalist Barak Ravid attests to this, stating that "unlike the Obama administration, during Trump’s first term, the issue of sanctions on Iran has never been absent from the attention of Israelis – even before the Americans. This is evident in the coordination efforts of former US envoy Brian Hook with Israel.”

Ravid acknowledges that Hook, who led the economic battle against the Iranians, did not operate independently of Israeli oversight. It later became clear that he was contacting global oil shipping magnates through Israeli intermediaries, as well as captains of oil tankers, warning them of the consequences of transporting Iranian oil.

According to the Israeli journalist, Hook at one point threatened these owners that if they continued transporting Iranian oil, they would be subjected to US sanctions. On other occasions, he offered them generous financial incentives to redirect the Iranian oil shipments from pre-designated ports to alternative destinations, in order to avoid the cargo being confiscated.

Why, then, have the sanctions failed to subdue the Iranian regime? And are the prospects of the conflict shifting from an armed confrontation of the Israeli/American target bank to an economic confrontation beginning to erode?
 

Various methods of circumventing sanctions

To answer these questions, a chronological review makes it clear that the sanctions imposed on Iran have neither stopped its nuclear program, nor toppled the regime, nor even frozen Iran’s funding to any specific organization. Instead, the Iranians countered the sanctions by devising circumvention strategies, drawing on North Korea’s long-standing experience with US sanctions. One of the key weaknesses of sanctions policy, according to economic expert and former deputy director of the Al-Ahram Center for Political and Strategic Studies Dr. Magdy Sobhy, is the lack of full international cooperation required to enforce them.

“Like North Korea, Iran sees China as a fundamental pillar in circumventing sanctions. This has made the economic war between Washington and Beijing a vital lifeline for both the Chinese and the Iranians,” Sobhy told Raseef22. “Add to that (especially before the Russia–Ukraine war) were mounting Western criticisms of US sanctions policy, which many viewed as discriminatory, selective, and serving the US economy – criticism that significantly reduced the appetite for enforcing sanctions. The next step was exploiting the financial infrastructure of Gulf countries, particularly Qatar and the UAE, knowing that enforcement of US sanctions would not be feasible in these countries.”

Sobhi’s analysis aligns with a study by the Israeli Jerusalem Institute for Strategy and Security (JISS), titled “How Does Iran Overcome Economic Sanctions?” 

In this study, Dr. Udi Levi attributes Iran’s success in circumventing sanctions primarily to oil exports. He points out that “by exporting oil to countries like China, Venezuela, and India through various methods that bypass US sanctions, the Iranians were able to remain economically afloat. One of the most prominent circumvention techniques involved Iranian oil tankers transferring their cargo to foreign tankers – primarily Iraqi and Turkish – mid-sea. Everyone benefited from this method: the Iranians managed to sell their oil, the Iraqis and Turks earned hefty brokerage commissions, and the purchasing countries received oil at prices significantly below market rates.”

Safe havens for companies collaborating with Iran and its allies

The initiative launched by Israel Katz and the Mossad may well end up as mere ink on paper, once violations of sanctions by Tel Aviv and Washington themselves come into focus. When tracing how Iran and its allies have circumvented sanctions, evidence suggests that the United States and Israel themselves have, in effect, become safe havens for companies cooperating with Iran.

In an investigative report by Globes newspaper, it was revealed that Chinese companies defying Trump-era sanctions on Iran have been winning infrastructure tenders in Israel without any obstacles – from the Carmel Tunnel project and the Acre-Karmiel railway line to the construction of the future Ashdod Port and the operation of Haifa Port, not to mention the crown jewel: the Light Rail project in the Gush Dan area.

Chinese companies operating in Israel – such as CRC, CRTG, and CCECC – are part of larger Chinese state-owned groups which, in addition to other projects, are responsible for building light rail and metro lines in the city of Mashhad (Iran's second-largest city), as well as the high-speed rail line project between Tehran and Mashhad.

Beyond Chinese firms, some European companies also operate in both Iran and Israel. One example is the Swiss company SGS, a global firm specializing in the inspection and verification of shipments, goods, and products to determine their quantities. SGS has no fewer than 18 branches across Iran. According to the company’s website, SGS's representative in Israel is Gesco, which is registered on Allenby Street in Tel Aviv, as reported by the Hebrew-language newspaper.

Perhaps the most striking paradox is that Tel Aviv and Washington turn a blind eye to indirect cooperation between Israeli companies and Iran – or at the very least, its allies. According to a report by The Insider, customs data and corporate records from Russia reveal that in 2024 alone, Russia imported more than $10 million worth of precision cutting tools from Israeli companies, most of which were routed through intermediaries in China and Uzbekistan. 

These tools are widely used by Russian defense firms that produce missiles, aircraft, and radar systems – technologies supplied to Iran for its defense needs.

The main supplier of these precision cutting tools was none other than Iscar, a prominent Israeli manufacturing company under the US-based International Metalworking Companies (IMC) group.

According to the report’s findings, Vargus, another Israeli brand operating under the German Neumo Ehrenberg Group, shipped $3 million worth of precision cutting tools to Russia in 2024. A third Israeli company, Aerojet, exported nearly half a million dollars’ worth of similar tools to Moscow, mostly through a Russian company linked to the helicopter industry.

China’s calm and India’s independence: which sanctions are relevant? 

One must acknowledge how political stances often dissolve in the face of the language of interests – making the planned Israeli sanctions against Iran a failure before they are even born. China, for example, tends to adopt a calm approach when dealing with political positions. While it refuses to give up its trade flows and oil imports from Iran, it simultaneously holds on to its major projects in the United States, Israel, and the broader Middle East, according to Xu Weijun, a research associate at the Institute of Public Policy at the South China University of Technology.

Perhaps Beijing’s ambassador to Tel Aviv, Xiao Junzheng, was the clearest and most direct in outlining his country’s calm approach, when he noted in an interview with Calcalist newspaper that China’s relationship with Israel avoids the geopolitical tensions of the region. “China is Israel’s largest trade partner in Asia and its second largest globally,” he stated. “According to Chinese customs data, bilateral trade between the two countries rose from $8 billion in 2013 to $25.45 billion in 2022, before declining to $14.5 billion in 2023. Nevertheless, in 2024, Israeli imports from China peaked at $13.53 billion, a nearly 20% increase compared to 2023.”

India, too, does not recognize the language of sanctions. Despite a series of US warnings against countries maintaining trade relations with Tehran, the Indian government signed a 10-year agreement with Iran in mid-2024 to develop and operate the Iranian port of Chabahar for $370 million.

In what observers describe as “strategic independence,” India avoids confrontations with both friends and foes. Prime Minister Narendra Modi is mindful of Khamenei’s religious influence over the 15% of India’s Muslim population who belong to the Shia sect. At the same time, India deeply values its relationship with Israel, particularly over the past three decades, during which Israel has become one of its most important strategic partners.

The India-Israel partnership encompasses a broad spectrum of ties: diplomacy, counterterrorism, intelligence, defense, technology, agriculture, business, and culture. This may also explain India’s noticeable shift away from its traditional support for Palestinians in multilateral organizations and forums. Nowadays, India often abstains from voting against Israel in international forums and arenas.

Economics over politics, even among adversaries

Curiously, economic relations don’t reflect the sharpness or intensity seen in political relations. In a scene where interests override ideology, Israeli sanctions on Iran seem like just another chapter in a long series of “symbolic confrontations” that outstrip Tel Aviv’s actual ability to enforce them.

While Israel publicizes its blacklists, sanctions ultimately remain subject to White House approval, not decisions by the Israeli Defense Ministry. In the East, China maintains trade with both Israel and Iran, practicing interest-based diplomacy in quiet, calculated steps. In South Asia, India walks a tightrope between Khamenei’s turban and a weapons partnership with Tel Aviv – opening its ports to Tehran while closing off its votes against Israel at the UN.

In the Gulf, where capital, infrastructure, and financial sovereignty intersect, the cracks in the wall of sanctions remain wide open. The financial system functions more as leverage than a tool of deterrence.

So, despite Israel raising the bar in its economic threats, things behind the scenes appear far calmer than they seem on the surface.

This report was published in collaboration with Raseef22