U.S. and Iran Agree to Talk More

President Donald Trump announced an imminent agreement to end the Iran war, and while he’s said things like that before, Iranian officials and Pakistani mediators also say there’s a deal, so this time it’s real. The U.S. and Iran are expected to sign something on Friday. But it’s reportedly a “Memorandum of Understanding” (MOU) that agrees in principle to end hostilities and continue discussing broader issues, not any sort of comprehensive deal. Essentially, American and Iranian negotiators have reached an agreement to work towards negotiating an agreement.

The language isn’t publicly available yet, but the core reported provision is Iran reopening the Strait of Hormuz—a narrow passage at the end of the Persian Gulf by which Iran has blocked nearly 20% of the world’s oil and gas supply—and ending the U.S. blockade on Iran, as well as Israel-Hezbollah fighting in Lebanon. We’ll have to see if those things actually happen, but however it goes, the MOU displays remarkably scaled back ambitions.

Trump launched the war at the end of February talking of regime change, calling for the Iranian people to overthrow their government, and demanding “unconditional surrender.” When the initial U.S.-Israeli assault failed to achieve any of that, Trump downshifted to talk of Iran’s nuclear program, repeatedly insisting that Iran will never have nuclear weapons, lying that Iran was on the verge of getting some—which contradicted his previous lie that U.S. bombing last year “completely and totally obliterated” Iran’s nuclear capacity—and accusing war critics of wanting Iran to get the bomb. Now with the new MOU, Trump is touting a deal with de facto recognition of the Iranian regime’s sovereignty that leaves any nuclear discussions to further talks.  

That means negotiations to get this MOU have been on Iran’s terms. Instead of figuring out how Iran will make concessions to avoid further U.S. attack, talks have focused on the U.S. making concessions to get Iran to reopen Hormuz.

Trump claims the strait will reopen right away, but Iran hasn’t confirmed that part. And Trump says Hormuz will be “permanently toll free,” but the Iranians have consistently said they will charge tolls for passage in coordination with Oman. According to Iran’s semi-official Fars news agency, the MOU includes the U.S. accepting in principle that Iran will receive fees for “maritime services.” That sure sounds like a euphemism for tolls.  

The MOU not only punts on nuclear questions, but also on sanctions relief for Iran, and it would be surprising to see Iran give up both its primary source of leverage (blocking Hormuz) and its main prize for a successful defensive war (Hormuz toll revenue) without first securing serious concessions from the United States. It would be even more surprising to see Iran give up its nuclear program, considering that Trump reneged on the JCPOA—the 2015 Obama-signed agreement that verifiably restricted Iran’s nuclear program in exchange for sanctions relief—and Iran has now shown it can survive a large U.S. military attack.

This dragged out process has played to Iran’s advantage. Besides a few limited exchanges of fire the U.S. called “self-defense strikes,” Iran has avoided physical damage since the original ceasefire on April 7. To get to the current MOU took over two months, while the global supply crunch from ships stuck in the Gulf continued to mount. The U.S. blockaded Iran, which imposed some economic damage, but nothing on the strategic scale of Iran closing Hormuz.

With the MOU, the United States has agreed to extend talks for another 60 days, with Iran offering nothing concrete besides allowing ships through again—under what terms remains uncertain—and agreeing to work towards a bigger agreement. 

And all of this is conditioned on the U.S. lifting its blockade and Israel ceasing military operations in Lebanon. Israel might refrain from bombing Beirut, treating its June 13 strikes there as getting in a last shot before the agreement is finalized, but Israeli forces almost certainly won’t withdraw from the south Lebanon border areas they occupied to establish a “buffer zone” against Hezbollah. Therefore, if Iran doesn’t like how future U.S. talks are going, they can cite Israeli action in Lebanon as an excuse to walk.

Maybe talks eventually lead to a deal involving nuclear restrictions and sanctions relief, but that’s unlikely since Trump lacks credibility. And even if there is one, it will almost certainly achieve less than JCPOA. But the Iranians don’t need to agree to anything, since they survived the U.S.-Israeli assault and now have Trump touting an agreement that says nothing about the nuclear issue. Instead, the MOU merely strives to get back to the pre-war status quo, with no interstate hostilities and Hormuz open.

Throughout the conflict, the Trump White House and the Iranian regime—now more dominated by the more hardline Revolutionary Guard—have been on different wavelengths and operating on different timescales. Trump sought a quick triumph, and when he failed to achieve it, focused on getting something he could call a deal. Iran, meanwhile, aimed to survive and to establish a deterrent. They want the U.S.-Israeli attack to go down in history as a very bad idea, a cautionary tale, a DO NOT. If the war establishes that it’s a costly mistake to attack Iran, even for the world’s premier military power, then Iran has greater security, and more leverage over the Gulf region.

The first step for Iran to establish deterrence was responding to the U.S.-Israeli assault with attacks on U.S. bases and regional partners, including Arab Gulf states’ energy infrastructure, and maintaining the ability to do so despite U.S. military efforts to prevent it. Having done that, the second step is to cause major economic disruption, a memorable historical event similar to the 1973 oil embargo.

Additional stalling plays into that strategy. A large part of the world’s oil and gas supply—along with significant portions of fertilizer, sulfur, helium, and other commodities—has been kept from the market for 3.5 months. Oil prices have risen, but companies and countries have kept them from going through the roof by drawing down reserves. Except reserves are reaching record lows, and ships aren’t yet on the way to replenish them. Resources shortages will, at minimum, cause further price increases that reverberate throughout the economy. 

Even if Hormuz is fully open this Friday like Trump says, and over 100 ships transit each day like before the war—unlikely, but even if—the economic disruption will have a long, damaging tail. More likely, the opening will be gradual, delayed by confusion about the rules and worries over mines. Or it could stall out because Iran and the U.S. have a different sense of what they agreed to, with Trump failing to fully follow through on U.S. commitments as Iran sees them. Even in the best case scenario, war-caused global economic problems will likely get worse in the second half of this year, not better.

If this process goes similar to Trump’s Gaza peace deal, the MOU is the full extent of the agreement, and ambitions for anything larger will go nowhere. With Gaza, Trump and other mediators got widespread praise for their proclamation of peace, but little has been implemented, and everything left to future negotiations has remained entirely hypothetical. Israeli forces are still occupying over half of the Gaza Strip, Hamas is still the local authority there, violence is scaled back but fire hasn’t totally ceased, and barely any of the pledged reconstruction funds have been transferred, let alone spent.

The deal did, however, knock Gaza out of U.S. headlines. Maybe the MOU can do the same with Iran, and the Trump regime will find that sufficient. Though it’s less likely than with Gaza, since the U.S. was a direct combatant in Iran, and Americans will continue experiencing war-caused economic problems.    

Whatever happens with future negotiations, the war put the United States and its Arab Gulf partner in a weaker position and Iran in a stronger one. With this memorandum of understanding, the Trump government effectively acknowledges that, even if they’ll never say so directly.

But Trump got the United States into such a poor strategic situation that, at this point, accepting the failure and making concessions to move forward is probably the least bad alternative.

Featured image is Iranian Revolutionary Guard Air Force Shahed, by Morteza Salehi