The US-Iran Memorandum of Understanding (MoU) have helped ease pressure on the Asian energy markets, but pended difficult issues rather than attending to these. The ceasefire agreement after 100 days stopped the war but settled the conflict into an uneasy and fragile peace. The MoU broadly defines path to future talks with no mechanism to secure lasting peace. Most seriously, the deal falls far short of US original demands thus will lead to greater pressure from the opposition on President Donald Trump to act strong. The rekindling of embers of war remain a real possibility.
The text available to public does not solve the nuclear, ballistic missile, proxy network or regional security issues that had led to the Israel-US intervention. It deferred all serious issue to a sixty-day negotiating that probably will be extended at least couple of times. However, this window provided Iran time to recover and President Trump space to focus on the US midterm election cycle.
The MoU rests on four assumptions that will determine whether it becomes a durable settlement or a mechanism for postponing the next major confrontation. The real danger is that the 60-day window is too ambitious and could fails. Even if it survives through frequent extensions, it could lead to a permanent crisis.
Assumption 1: The MoU will build Trust in US-Iran Relations: The first assumption is that 60 days can resolve what three decades of failed diplomacy to do. The reported memorandum does not appear to settle the fundamental question at the centre of the US-Iran dispute: how restrictions on Iran’s nuclear programme will be managed, under what inspection regime, and in exchange for what sanctions relief. Instead, it postpones those questions, and commits parties to further talks while leaving the substance of those talks unresolved. Can the 2015, Iran-US Joint Comprehensive Plan of Action (JCPOA) guide or form basis of new understanding?
This issues is important as in US-Iran negotiations the order is always the hardest part. Washington wants Iranian commitments first: nuclear restrictions, inspections, regional restraint and guarantees on freedom of navigation in the Strait of Hormuz. Tehran wants economic benefits first: sanctions relief, access to frozen assets, oil export waivers and relief from military pressure.
Assumption 2: A Bilateral Agreement Can Produce Regional Peace: This is the most flimsy assumption as agreements can fail when regional stakeholders with diverse interests have the capability and incentive to spoil the agreement. The most immediate question is, can the US control Israel’s freedom to attack Iran or its proxies. Similarly, Iran can not easily control over its proxies that have their own leadership, ideologies, resistance structures, economies, distinct interests and influence. The MoU offers no clear answer. Owing to lack diplomatic experience of US lead negotiators (Vance, Kushner and Witkof), the hastily crafted language of the MoU is prone to different interpretations by multiple readers.
Iran has regionalized the war by attacking multiple neighbour and inclusion of Lebanon in the framework talks. It gives Iran a sense of projection, a veto and an influence in the region. Most importantly, Tehran has achieved leverage over the Strait of Hormuz by changing the pre-war status quo by closing the Strait. It may negotiate certain sovereignty over it and charge passage fees.
Another serious concern is, who will finance Iran’s recovery and under what conditions or expectations. If the proposed $300 billion reconstruction/ investment fund is coming from the Gulf capitals, then these countries cmay demand peace guarantees.
The Gulf countries were dragged into this war and later actively involved in peace deal to end it. Yet, they became “legitimate” targets. It will be a hard sell for Vice President JD Vance to convince Gulf Arabs to finance reconstruction without strong and positive assurances of peace from Iran.
Assumption 3: Ambiguity Leading to Flexibility Tomorrow: The Washington presents the agreement as a conditional framework: Iran will receive economic benefits by complying with nuclear restrictions, inspections and reopening the Strait of Hormuz. Tehran assumes MoU a recognition of Iranian sovereignty, an end to US military presence, way to sanctions relief and economic recovery. Similar assumptions in President Trump’s Gaza Peace Plans had not produced any results during implementation phase.
The MOU may fall victim to a series of deferred negotiations, ambiguity and phased implementation that is hard to verify given Iran’s decade long experience of evading financial-trade-tech sanctions. Key issue remains nuclear talks leading to inspection, verification and compliance on enrichment that could lead to weapon. There are different timelines for sanctions relief for oil, banking access and frozen assets. Critically, Israel, Hezbollah, the Houtis and Iraqi militias are not bound by the text.
Assumption 4: Economic Recovery will lead to Freedom in Iran: The economic items of the MoU are also being interpreted differently. Some in the Middle East read it as a US defeat. The US bases its case on the need to incentivise Iran to restore freedom of passage through the Strait of Hormuz, avoid attacking regional infrastructure and enter negotiations over the nuclear.
Economic reconstruction will be under actors and networks inside Iran that control the influx of funds, distributes it, and stand to benefit from it. It can also open new fissures in Iran’s internal politics as to which sector to be prioritized for development. This may create struggle between hardliners, moderates and the military. Interestingly, this war has brought closer the clergy and the Islamic Revolutionary Guard Corps (IRGC). The reconstruction could further enrich this nexus.
There is an urgent need to carefully monitor the distribution and usage of reconstruction funds and unfrozen assets. There is strong possibility that IRGC-linked companies and politically connected intermediaries may get the lion’s share further cementing their power and control over the country. The Economic recovery can support political change only when there is verifiable accountability, transparency and a redistribution of power.
The US Strategy: The war has ended without a clear winner. Both parties claim victory but by standing up to two powers Iran has gained a respect and awe in the World. The MOU appears to reflect another Trump efforts towards giving diplomacy a chance, while keeping possible future military action as a viable option. The cession of hostilities allows Iran to claim survival, gain sanctions relief, access financial benefits and maximize its respect. US may be thinking of integrating Iran into the global economy, promoting US investment in its oil and gas sectors, and moving towards reintegration and eventual normalization of bilateral relations. US is also demanding that the defreezed assets may be used to buy soya, wheat and corn from the US farmers.
The international order restructuring is underway, and this crisis is only one part of this great shift. Washington’s may be unwillingly promoting Iran as a key player in the region, while concentrating strategic attention of its challengers China and Russia to the Middle East. In post war period, the US will remain militarily present, diplomatically valid and economically viable partner. Yet the Gulf states have initiated to diversefy defence, intelligence, energy and technology partnerships that could have long term impact on geopolitics. They have already taken over the diplomatic responsibility of the region.
Related to this is a second possibility. Having realized that the Iranian regime has not collapsed, Washington may now be attempting a different approach: to integrate Iran gradually into the global economy, encourage investment in its oil and gas sectors, and set in motion a longer process of reintegration and eventual normalization. Can he do it? Its is another matter totally.
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