Now that the US has released the official text of the memorandum of understanding reached over the weekend with Iran, we can begin to more fairly assess its merits.
From the text, it’s remarkable how much the United States is offering for little in return. I’ve negotiated difficult agreements with Iran and this document stands out in providing Iran much of what it’s demanded in the past — and rarely gotten.
Trump appears to have determined that a deal — any deal — was a better alternative to the status quo. For its part, Iran effectively held the Strait of Hormuz hostage and demanded that the US meet its price. The tactic appears to have succeeded.
The essence of this memorandum of understanding (MOU) in practice is that Iran gets a lot now, including tens of billions of dollars, in exchange for not shooting at ships in the Strait of Hormuz.
Understanding the text
The full 14 points of the agreement can be read here . To understand how it works, we need to break out what happens immediately upon signing (now) and what is anticipated in the future. Think of the agreement as two phases. Phase 1 gets underway now and phase 2 kicks everything else to be resolved in a “final agreement” to be negotiated over the next 60 days. That 60-day period can be extended by mutual consent.
Like many deals with Iran, this text is a bit of a jigsaw puzzle with some articles referencing others — and some provisions focused on the future whereas others apply immediately.
To unlock what must happen now, go to Article 13. It states that immediately upon signing, “ Articles 4, 5, 10 and 11 ” of the MOU must be underway. So those are the articles that apply right now, and must be in effect before phase 2 talks even begin.
Let’s review them:
Article 4 and 5 (Strait of Hormuz): Under these two articles, the United States lifts its naval blockade and Iran removes obstacles (such as mines) to ensure that traffic through the Strait of Hormuz returns to pre-war levels within the next 30 days. If the agreement stopped here, it’s a good one for the US and the global economy as it solves the core problem of the strait with both countries agreeing to allow ships to transfer at pre-war levels.
But the agreement does not stop there. In fact, this is where Iranian obligations end and American obligations begin.
Article 10 (sanctions waiver): Under this article, the United States “immediately after the signing … will issue waivers for exports of Iranian crude oil, petrochemical products and their derivatives, and all related services, including banking, insurance, transportation, and the like.”
This a significant concession. On its face, it returns Iran to the status it enjoyed under the Obama-era nuclear deal (the JCPOA) with unlimited oil and petrochemical sales at market prices. Some energy experts have already assessed that this article alone would deliver $60-$70 billion a year directly to Iran.
That’s $60-$70 billion for doing nothing other than opening the Strait of Hormuz, which was open before the war.
Article 11 (frozen funds): This article is tricky, a jigsaw-within-the-jigsaw. It says: “The United States undertakes that … frozen or restricted funds and assets of the Islamic Republic of Iran will be released and made fully available.” Inside that ellipse, the text reads “in light of the progress of negotiations towards a final agreement.”
That might be read to caveat the release of funds in exchange for Iran’s performance in the 60-day talks towards a more permanent deal. But recall Article 13: those 60-day talks do not begin without “implementation” of this article on frozen funds. Thus, the frozen funds must be dealt with in some form now and perhaps even before Iran is required to meet its requirements in the strait.
Also significant, this article states that Iran’s central bank can determine the beneficiary of the funds once released. That is different from other deals with Iran — such as a hostage deal in 2023 — that made these funds available solely for non-sanctioned beneficiaries (such as humanitarian goods). I do not recall deals separate from the JCPOA that simply released Iran’s frozen assets for any beneficiary as designated by Iran. The final text released today adds a caveat for “mutually agreed procedures” to be determined, but Article 13 requires the frozen funds to be dealt with before broader talks begin. This may be an area of dispute over coming days.
Has Iran made any new commitments to the United States over the longer term in exchange for these concessions? From the text we have, it does not appear so.
Article 8 (nuclear weapons): According to the text, Iran “reaffirms that it shall not procure or develop nuclear weapons.”
Trump is touting this article as somehow preventing Iran from ever having a nuclear weapon. But the Obama-era JCPOA text was similar: “Iran reaffirms that under no circumstances will Iran ever seek, develop or acquire nuclear weapons.” So, the language on nuclear weapons is…
Read the full article at Egypt Independent →
EG