THE much-awaited US-Iran Memorandum of Understanding (MoU), which would put in place a 60-day extension of the current ceasefire, will be signed in Geneva on Friday. The final text of the MoU has not been released so far and differing versions are being circulated both by the US and Iran. The possibility of a last-minute collapse still exists.
The prospect of a peace deal which could establish Iran as an influential regional power is regarded by Israel as an existential threat. It has been attempting to derail the deal by continuing its attacks against southern Lebanon and the southern suburbs of Beirut, where there is a significant Shia population and where supporters of the pro-Iran Hezbollah militant group reside.
Iran has all along insisted that any ceasefire must include cessation of hostilities in Lebanon. Iran, for the first time, responded with missile attacks on Israel in retaliation for Israeli strikes on Hezbollah targets. This reflects an important shift in the Iran-Israel equation and the regional security dynamics. Like Israel, Iran is asserting its right to intervene beyond its border to safeguard its security. It is a major strategic gain for Iran that US President Donald Trump is leaning heavily on Israel to halt attacks on Lebanon and the MoU specifically mentions that Lebanon is covered by the ceasefire.
Israel wants to prevent this and it is possible that in the days leading up to the Geneva meeting, it may ignore the US warning and resume attacks on Lebanon. This could then derail the delicately crafted agreement between Iran and the US. The signing of the MoU will be seen as a major political setback for Israeli PM Benjamin Netanyahu, and may deliver a major defeat for his Likud Party in the forthcoming elections.
The MoU is said to contain four key understandings:
One, there will be a 60-day ceasefire, including in Lebanon, with cessation of hostilities with the US and Israel, the latter to be guaranteed by the US.
Two, the Strait of Hormuz will be opened over a 30-day period, with Iran removing the mines it has planted along the main navigation channel. The US will lift its blockade of the Strait.
Three, sanctions on the sale of Iranian oil will be lifted.
Four, a substantial part of blocked Iranian funds will be released to the country. This may be as much as $24 billion in two or three tranches.
The MoU, if implemented, will be strategically beneficial to Iran.
The more fraught question of Iran’s nuclear programme, including the fate of 400 kg of uranium enriched to about 60%, will be subject to subsequent negotiations. Iran has reaffirmed its adherence to the Nuclear Non-Proliferation Treaty, under which it has foresworn ever acquiring nuclear weapons. It may be allowed to hold enriched uranium, though diluted to a much lower percentage, and there would be a resumption of strict international safeguards over its nuclear facilities under monitoring by the International Atomic Energy Agency.
From Iran’s perspective, its control over the Strait of Hormuz has proved to be a more potent weapon and leverage than its attempt to emerge as a threshold nuclear weapon state. Perhaps it will be more flexible on reaching a new nuclear deal, which is unlikely to be much different from the original Joint Comprehensive Plan of Action (JCPOA) concluded under the administration of President Obama in 2015, which Trump walked out of during his first term (January 2017 to January 2021). Like the JCPOA, subsequent negotiations will exclude Iran’s lethal ballistic missile programme. This is especially worrying for Israel and Iran’s Gulf neighbours which have been at the receiving end of repeated assaults by these missiles.
The fact that Iran can close down navigation in the Strait at will by holding out the mere threat of attacks on shipping, along with the retention of its ballistic missile capability and its return to the international oil market, will mark its emergence as one of the most powerful regional nations.
This is the reason why the Gulf states want an early end to hostilities and are engaging in quiet diplomatic engagement with Iran. Surprisingly, this includes the UAE, which in recent days has resumed contact with the Iranian government, despite its close alliance with the US and Israel. Israel had assisted the UAE in intercepting Iranian missiles and drones fired at it by installing and operating an Israeli interception facility. This diplomatic activity accords political legitimacy to the Iranian revolutionary regime and means that Israel’s determination to emerge as a regional superpower, supported by its alliance with the US, is now in a shambles.
A new regional balance of power, with Iran serving as an anchor state, is beginning to take shape. This is an extraordinary achievement for a country which lost the top rungs of its leadership and suffered immense damage to its civilian and economic infrastructure through incessant bombing campaigns. It demonstrated resilience and the capacity to inflict greater pain on its Gulf neighbours and the global economy by shutting off the Strait and attacking targets in the Gulf states, whose globally connected economies have been adversely impacted.
There are continuing disruptions in the supply not only of oil and gas but also strategic commodities such as chemical fertilisers and helium, used in the semiconductor industry. All these have served as strong bargaining levers for Iran in the negotiations over the MoU.
It is possible that hostilities may break out again and Iran would be subjected to a renewed bombing campaign. This will only serve to prolong the pain for the prosperous Gulf economies, trigger higher inflation and a possible recession in the US, besides further disrupting the global economy, which is already under strain. This will probably lead to a resumption of negotiations, with Iran in an even stronger bargaining position than before. As long as it does not indulge in overreach, Iran has every prospect of achieving its key objectives from the negotiations.
Iran deployed superior statecraft and strategic thinking, which more than made up for its military inferiority and international isolation. One should have expected no less from the heirs of a sophisticated 5,000-year-old civilisation. There are important lessons in statecraft and the art of diplomacy for countries facing an asymmetry of power.
