Memorandum of Understanding and Its Implications

The memorandum of understanding (MOU) signed by President Donald Trump and Iran’s President Masoud Pezeshkian outlines the political, military, and economic consequences of the decision to attack Iran on 28 February. The human cost is already clear. With thousands killed, many of them civilians, in Iran and Lebanon.

The US. And by extension Israel. Have suffered a strategic defeat; the government in Tehran faced its worst nightmare: a joint military operation by the US and Israel aimed at crippling or destroying it. The administration has not just survived; it has been empowered. Its strategy of blocking the Strait of Hormuz—responsible for one-fifth of the world’s oil and gas supply—has forced Trump to agree to a series of concessions that have infuriated and alarmed America’s Iran hawks and the Israeli government.

Concessions and the Path to Negotiation

In return for reopening the Strait, the MOU calls for the US to lift its counter-blockade of Iranian ports, waive sanctions allowing Iran to earn billions from oil exports, and unfreeze billions in assets held abroad. This is before they even begin the hard work of negotiating a nuclear deal. The deal aims to return to the status quo of 27 February,the day before the war began,when the Strait was open and American and Iranian negotiators were discussing a nuclear deal.

The signing of the MOU means negotiators will go back to work, and ships will be able to transit the Strait of Hormuz. Joe Biden’s Secretary of State, Antony Blinken, posted on X that the only ‘achievement’ of the ceasefire is the likely reopening of the Strait of Hormuz, which was open before the war started. He also noted that the US will apparently pay Iran to do so.

Political Repercussions and the Question of the War

The question of what exactly the war was for is inescapable and will not go away. It amounts to Trump’s worst foreign policy blunder so far. It might also spell the end of Israeli Prime Minister Benjamin Netanyahu’s long political career. He faces elections in October and a reckoning from Israeli voters for his part in security failures,the worst in Israel’s history,that allowed Hamas to invade Israel from Gaza on 7 October 2023.

Netanyahu’s hardline military policies and dismissal of diplomacy were designed at least in part to restore his reputation as Israel’s Mr. Security. Tehran was always aware of the potential power of closing the Strait of Hormuz. So was the US military, its diplomats, and spies. However, former Supreme Leader of Iran, Ali Khamanei, a cautious, elderly man, chose not to take the risk of using the Strait as a weapon.

After Israel killed Khamanei and his closest advisers in the first bombing sorties of the war, his successors believed they were in an existential struggle and did not hesitate to close the Strait. They have discovered the power of controlling a global economic chokehold. It is a far more usable weapon, and much cheaper, than the network of allies and proxies Iran spent decades and billions building in the Middle East.

Except for the Assad administration in Syria, which collapsed at the end of 2024, Iran’s so-called axis of resistance survives, just about. However, it has been so damaged by Israel that whether it can ‘resist’ is a moot point. Iran has also poured money into a nuclear programme it continues to deny was aimed at building a weapon but undoubtedly gave Tehran an option and a threat. This provoked a war that, despite the administration’s survival, has done huge damage to Iran.

Closing the Strait, in contrast, was easy and had a rapid and devastating impact, spreading the pain to the Arab oil states and much of the rest of the world. The power of the US and Israeli air forces scored a series of tactical victories, but they were not enough to avoid a strategic defeat. That was because the US-Israel strategy of administration change was based on a series of lazy and misplaced assumptions.