President Trump threatened this week to wield an "unprecedented" level of economic warfare against Iran, and Treasury Secretary Scott Bessent vowed to "collapse" the Islamic Republic regime with the "toughest sanctions in history."

But the effectiveness of a bolstered economic campaign against Iran may rest largely on one close U.S. ally in the Persian Gulf, the United Arab Emirates.

The Emirati city of Dubai, the Middle East's leading financial center, has long had a reputation as a hub for opaque economic activity. For Iran in particular, the city has offered ways to skirt international sanctions and gain access to vital funds from its sale of oil to countries like China.

"About 80% of Iran's foreign currency exchange is done in Dubai. So Dubai has served as a major source for Iran's foreign currency," Miad Maleki, a former U.S. Treasury official, told CBS News on Friday.

"Iran's economy today runs based on this kind of scheme of selling oil to China and then either using the funds that are generated from sales of oil to China to pay for imports from China, but also moving some of those funds outside China to jurisdictions like UAE through exchange houses," he said.

Maleki said he believes "the UAE is going to be very instrumental in cutting off the regime's access to procuring foreign currencies, but also getting access to its reserves — so funds that it has generated from oil sales to China and are sitting in different banks."

He told CBS News that if new U.S. sanctions are really going to increase the pain for Iran's economy, the UAE will be a vital actor in helping to crack down on Iran's shadowy banking transactions.

U.S. targets shell companies
The U.S. Treasury has in recent weeks targeted a number of shell companies linked to the UAE. The Trump administration has said these shell companies act as a shadow banking system for the Iranian regime.

The targeted companies include Dubai-based HMS Trading FZE, which the Treasury said in a statement earlier this month, "plays a critical role in helping the Iranian regime retrieve revenue from its oil sales overseas, aiding some of Iran's most prominent exporters of petroleum."

In the Aug. 7 statement shared with CBS News, the Treasury also said Iran's Shahr Bank, which is linked to the country's powerful Islamic Revolutionary Guard Corps, had relied heavily on two Dubai-based currency exchange firms to launder money.

The Treasury said U.S. nationals were barred from doing business with all of the Dubai-based companies named in the Aug. 7 statement and that it was imposing secondary sanctions on foreign banks that knowingly do business with the Dubai-based shell companies.

A Trump administration official told CBS News on Friday that "crushing sanctions" and the U.S. naval blockade on Iran had crippled the country's economy and left it "completely broke."

"There are many levers the president can crank harder in the weeks and months ahead," the official said.

UAE says transactions "halted until further notice"
The UAE has said it is taking action against Iran. Afra Al Hameli, a spokesperson for the UAE Ministry of Foreign Affairs, announced in a social media post this week that, "all trade, commercial exchanges, and financial transactions with Iran have been halted until further notice."

"The UAE remains firmly committed to safeguarding the integrity of the international financial system," Al Hameli said.

A recent spate of new attacks by Iran may have been a motivating factor behind the Gulf state's announcement.

Emirati officials said not long before the announcement about the severed economic ties that Iran had launched two ballistic missiles at the UAE, triggering the country's air defenses for the first time in weeks, though authorities said the missiles fell into the sea.

UAE officials previously said Iran attacked an Abu Dhabi National Oil Company vessel on Saturday as it transited the Strait of Hormuz, the Reuters news agency reported, citing the state Emirates News Agency.

"I think the UAE and some of these other Gulf countries were getting a lot of hits, or they were feeling the economic effect of Iran's escalation and closure of the Strait of Hormuz. But they were kind of sitting on the side and watching how the U.S. administration might come to some kind of an agreement or deal with the regime to put an end to the hostility," Maleki said.

"I think the Emiratis are now realizing they can't just sit on the side, the economy can't continue to take this current situation … So, I think the Emiratis are becoming more proactive at this point."

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