By Seth Cropsey
Thursday, June 25, 2026
Contrary to what many seem to think, the MOU between the
United States and Iran is not a final status agreement that will permanently
end hostilities and reshape the Middle East. It is, rather, an extension of the
April cease-fire, and includes no changes to the underlying realities that
catalyzed the U.S.-Israel-Iran war in the first place.
Americans and American allies who have supported
Washington’s struggle against the Islamic Republic must be patient. The fact is
that geopolitics will eventually drive the Middle East back to war; the U.S.
must prepare for this eventuality and develop the strategic options that
President Trump will need in the next round. Crucial to these efforts will be
maintaining Lebanon as leverage.
For all its faults, the Obama-era Iran deal was a
comprehensive agreement designed to transform the Middle East. Three-plus years
of high-level talks were needed to negotiate the Obama deal, which was preceded
by two interim agreements in 2012 and 2015. The final 2015 document — the Joint
Comprehensive Plan of Action — was 159 pages, including five annexes. The
agreement was not designed to stop Iran from obtaining nuclear weapons nor
seriously intended to curb Iranian power. Instead, the Obama administration
wanted to empower Iran as a counterweight to Israel and the Gulf States,
forcing Riyadh in particular to “share the neighborhood” with Iran. Hence the
agreement, in all its painstaking detail, accepted Iran’s ability to disperse
its nuclear program across civilian research and technical infrastructure; it
sidestepped the issues of proxy funding and missile and drone development.
The JCPOA was not simply a bad deal. It was a pernicious
one. Yet it was the foundation of a long-term strategic architecture, a true
“comprehensive” plan to redistribute geopolitical influence in the region.
By contrast, the U.S.-Iran MOU, signed remotely by
President Trump and Iranian President Masoud Pezeshkian on June 18, is neither
joint nor comprehensive. It is an interim agreement that lacks any substance
beyond its immediate purpose, which is to reopen the Strait of Hormuz to
international shipping. In pursuit of this objective, the Trump administration
will release $12 billion in frozen Iranian assets, while the Gulf States may
add several billion more — almost certainly in concert with the United States
because of the realities of sanctions implementation. Even if a subsequent $12
billion tranche (to be released after technical negotiations over the nuclear
program have progressed) is accessible, the total amount given back to Iran
will remain under $30 billion — some 20 percent of the assets Iran gained
access to under the JCPOA.
Iran has no intention of abiding by the MOU’s Clause 8,
which commits Tehran to forgoing a nuclear weapon and accepting some
international verification. But the U.S.’s commitments are equally incredulous.
Clause 7, for instance, commits America to “terminate” sanctions against Iran,
including both American-led financial sanctions and U.N. sanctions. The latter
are obviously beyond Washington’s unilateral power, while the former step is to
be undertaken on a “schedule as part of the final deal” — a timeline so vague
as to make it meaningless, much like the U.S. commitment to withdraw forces
from “the surrounding area.” Similarly, the planned $300 billion reconstruction
fund, a joint U.S.-Gulf States venture, has no formal structure. It is
impossible to generate in 60 days, despite what the MOU’s Clause 6 insists.
Just as the only clear, verifiable, actionable American
commitments in this deal are limited asset release and the end of the U.S.
blockade, the only clear, verifiable, actionable Iranian commitment is the end
of its blockade on Gulf State oil. Washington’s objective was quite
obviously the resumption of oil flows, an inexcusable mistake. Without
verifiable de-mining of the Strait of Hormuz, insurers will refuse to
underwrite shippers at reasonable costs, while even the U.S.-led Development
Finance Corporation insurance scheme is likely to be insufficient. Furthermore,
even if oil does start flowing, markets will retain significant whipsaw
potential — any cease-fire violation will trigger a speculative frenzy,
reducing the salutary effects of energy supply stabilization.
Tehran’s objectives going into the cease-fire talks were
interim sanctions relief to stabilize a battered economy and industrial base,
together with the resumption of oil revenues. These aims are an indication of
the sheer damage that Iran has suffered — more than $250 billion overall — despite pervasive criticism
of the U.S.-Israeli air campaign and subsequent U.S. blockade.
Core Iranian industries were particularly battered,
including the country’s metallurgical sector, which has been a pillar of the
Islamic Republic’s state-run economy. Bridges and roads remain badly damaged,
as are Iran’s domestic energy storage facilities. Unemployment stood at just
over 8 percent before the war; up-to-date hard data are difficult to come by, but as of early May, 135,000
jobs were lost, a million Iranians exited the labor market, and roughly 200,000
filed for unemployment support. Postwar inflation has reached more than 77 percent. Food inflation is particularly punishing, reaching between 300
and 400 percent for some items. Before the war’s outbreak, Iran had planned to
overhaul its welfare
system by converting its hidden subsidies into cash and scrapping the
artificial rial-dollar exchange rate — measures which would have intensified
inflation. These measures remain necessary to resuscitate an even more badly
damaged economy, but will be even more difficult to realize because of the
war’s impact.
All of this is to say that the wisdom of this deal is
suspect precisely because of how badly Iran has been damaged. By
belatedly choking off its oil exports, the U.S. gained a long-term stranglehold
on Iran. But now, the Iranian regime can reset and try to stabilize the
country.
At the same time, the core issues that sparked the recent
war remain unresolved. Iran’s missile and drone programs have been crippled,
but Tehran remains willing to use both programs to coerce Israel and the Gulf
States. Iranian ambitions in Lebanon persist, hence Tehran’s insistence on
including Lebanon in the U.S.-Iran cease-fire. Saudi Arabia, the UAE, Qatar,
and Oman are now attempting to limit tensions with Iran given President Trump’s
apparent unwillingness to pursue short-term military escalation. But history
and common sense indicate that the Middle Eastern balance always changes
rapidly. There is no reason to expect the Gulf States to remain docile
observers after the psychological trauma of the recent war. Nor are they flush
with enough cash to bankroll a $300 billion investment fund.
Iran will push its luck. Indeed, it already has. While
Trump decided to restrain Netanyahu in the run-up to the MOU, preventing Israel
from responding to an Iranian missile attack that was itself a response to an
Israeli strike on Beirut, he could well have chosen the other option and fully
backed an Israeli military response. The president understands that Israel must
have some freedom of action on its northern border, given Hezbollah’s
persistent attacks that show no signs of abating. And, as more Lebanon crises
occur, Iran’s roll of the dice will eventually force an Israeli response — even
without U.S. consent — that will raise the odds of a return to war.
Trump wanted a deal principally because he hates being
cornered. Thus, he refused to authorize an operation against southern Iran or a resumption of strikes
after early April. However, there is no reason to expect he will allow a vague,
unenforceable piece of paper to constrain his decision-making. The question for
U.S. policy is how to generate the flexibility Trump will require when Iran
inevitably pushes the region to the brink once again. Lebanon is key.
The U.S. must maintain enough of a deterrent to de-link
Lebanon from Iran. The MOU nominally wraps a Lebanon cease-fire into the
agreement. But Israel is not a signatory. Moreover, Israeli strikes are
justified considering Hezbollah’s persistent attacks on northern Israel;
Israeli-Hezbollah exchanges of fire are not and ought not to be relevant to the
broader cease-fire. Lebanese President Joseph Aoun understands the threat
Hezbollah poses and is willing to work with Israel and the U.S.; he went so far
as to authorize U.S.-brokered direct Israel-Lebanon talks for the first time in
decades. The political architecture in Beirut exists for a shift against Tehran
and its proxies.
The U.S. must maintain enough forces in the Middle East
to deter Iranian strikes on Israel or the Gulf States. Considering its own
fragile position, Iran is unlikely to go over the brink to defend Hezbollah. If
it does, Iran’s domestic weakness will undermine it anyway.
American policy need not return to war immediately. It
can impose attrition on Iran by pressuring Hezbollah.
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