Iran, US peace deal offers mutual strategic gains

The interim deal reached by the United States and Iran to end their war will reopen the Strait of Hormuz and bring the two adversaries back to the negotiating table over Tehran’s nuclear program. It will also give Iran an immediate benefit, allowing it to sell its oil freely again, according to details released by both countries.

Besides the new oil revenue for Iran, the two sides are more or less back where they were 3½ months ago — before Israel and the US.

launched their war, which has left thousands dead across the region, triggered a global energy crisis and shaken the American economy. Iran and the US will enter a 60-day period of negotiations, and hanging over them will be the question of whether US President Donald Trump can wrest a better deal than the 2015 nuclear accord he scuttled eight years ago.

Trump signed a physical copy of the deal on Wednesday while dining with French President Emmanuel Macron at the Palace of Versailles.

In Tehran, President Masoud Pezeshkian signed the document, according to the state-run IRNA news agency, which posted an image of him holding up the deal with his signature and Trump’s.

Under the agreement, the Strait of Hormuz will reopen, and the US will lift its blockade of Iranian ports — both of which should push gas prices down.

Passage through the waterway will be toll-free for 60 days, and the deal doesn’t preclude fees after that, according to US officials who spoke on the condition of anonymity to read details of the draft, which has not yet been officially released by Washington. Iran’s closure of the strait, through which around a fifth of the world’s traded oil supplies passed before the war, proved perhaps its strongest weapon. It drove up global fuel prices, made food and other products like fertilizer more expensive, and helped push US inflation to 4 per cent ahead of this fall’s midterm congressional elections.

With the deal in place, the Islamic Republic has survived the most serious attempt ever by Israel and the United States to topple its Government, despite the thundering opening volleys of the war that killed Iran’s supreme leader and other top officials.

The deal immediately waives, but doesn’t eliminate, sanctions that Trump imposed on Iran’s oil exports, allowing it once again sell its crude on the world market and restoring a revenue stream worth billions.

Last year, Iran earned an estimated $45 billion from oil sales. But it had only one major buyer, China, and had to ship its crude through a shadow fleet of tankers to elude sanctions, eating into its profits. Under the blockade since April, its exports have nearly ground to a halt. With the waiver, Iran will likely be able to find more customers and sell its oil for higher prices.   The draft agreement calls for Iran’s highly enriched uranium to be “downblended” - or diluted - under the supervision of the International Atomic Energy Agency, without elaborating. Negotiations on any other restrictions on Tehran’s nuclear program lie ahead.

Trump withdrew from a previous nuclear deal with world powers, criticizing it for giving a huge windfall to Iran. But the interim deal outlines even more lucrative incentives if Iran reaches a new nuclear agreement. One is the eventual lifting of all international sanctions, which would seem to go further than the 2015 accord. That agreement lifted sanctions related to Iran’s nuclear program but kept others in place over what the U.S. alleged were Tehran’s support for terrorism and rights abuses.

The interim pact also promises a $300 billion fund for postwar reconstruction. It’s not clear where that money will come from - but Trump said the US would not contribute.

Text of the deal

• The United States of America and the Islamic Republic of Iran and their allies in the current war by signing this MOU declare the immediate and permanent termination of military operations on all fronts, including in Lebanon, and undertake from now on not to initiate any war or any military operation against each other and to refrain from the threat or use of force against each other and ensuring the territorial integrity and sovereignty of Lebanon. The final deal will confirm the permanent termination of the war on all fronts, including in Lebanon and other provisions of this paragraph.
• The United States of America and the Islamic Republic of Iran undertake to respect each other’s sovereignty and territorial integrity and to refrain from interfering in each other’s internal affairs.
• The United States of America and the Islamic Republic of Iran commit to negotiating and achieving the final deal in maximum 60 days, extendable with mutual consent.

• Immediately upon the signing of this MOU, the United States of America will begin the removal of its naval blockade and any disturbances or impediments against the Islamic Republic of Iran and will fully end the naval blockade within 30 days. During this period, the traffic of vessels will be in proportion to the numbers of prewar traffic being restored by the Islamic Republic of Iran. The United States of America further undertakes to remove its forces from the proximity of the Islamic Republic of Iran within 30 days after the final deal.
• Upon the signing of this MOU, the Islamic Republic of Iran will make arrangements using its best efforts for the safe passage of commercial vessels with no charge for 60 days only from the Persian Gulf to the Sea of Oman and vice versa. The traffic of commercial vessels will immediately start and, considering the needs for removing the technical and military obstacles and demining by the Islamic Republic of Iran, will be instated within 30 days. The Islamic Republic of Iran will conduct dialogue with the Sultanate of Oman to define the future administration and maritime services in the Strait of Hormuz, in discussion with other Persian Gulf littoral states, in line with the applicable international law and the sovereign rights of coastal states of the Strait of Hormuz.
• The United States of America undertakes with regional partners to develop a definitive mutually agreed plan with at least USD 300 billion for the reconstruction and economic development of the Islamic Republic of Iran. The mechanism for the implementation of this plan will be finalized as part of a final deal within 60 days. All required licenses, waivers and permissions needed for the relevant financial transactions will be granted by the United States of America.
• The United States of America undertakes to terminate all types of sanctions against the Islamic Republic of Iran, including the United Nations Security Council resolutions, IAEA Board of Governors resolutions and all unilateral U.S. sanctions, primary and secondary, in an agreed-upon schedule as part of the final deal. The Islamic Republic of Iran and the United States of America acknowledge the critical importance of the sanctions termination issue above mentioned and express their intentions to immediately address these issues in the negotiations in order to achieve mutual agreement on them.
• The Islamic Republic of Iran reaffirms that it shall not procure or develop nuclear weapons. The United States of America and the Islamic Republic of Iran have agreed to resolve the disposition of stockpile enriched material pursuant to a mechanism that will be mutually agreed upon in accordance with the schedule mentioned in Paragraph 7, with the minimum methodology to be downblending on site under the supervision of the IAEA. The two parties also agreed to discuss the issue of enrichment and other mutually agreed matters related to the Islamic Republic of Iran’s nuclear needs, based on a satisfactory framework being agreed upon in the final deal. The final deal will confirm the provisions of this paragraph. The United States of America and the Islamic Republic of Iran acknowledge the critical importance of the nuclear issues above mentioned and express their intention to immediately address these issues in the negotiations in order to achieve mutual agreement on them.
• Pending the final deal, the United States of America and the Islamic Republic of Iran agree to maintain the status quo. The Islamic Republic will maintain the current status quo of its nuclear program and the United States of America will not impose any new sanctions and will not deploy additional forces in the region.
• The United States of America undertakes that immediately upon the signing of this MOU and until the termination of sanctions the U.S. Department of Treasury will issue waivers for the export of Iranian crude oil, petroleum products and derivatives and all associated services, including banking transactions, insurances, transportation, etc.
• The United States of America undertakes to make fully available for use the frozen or restricted funds and assets of the Islamic Republic of Iran upon the implementation of this MOU. The United States of America and the Islamic Republic of Iran will mutually agree on the procedures related to the release of these funds during the negotiations. Such funds, whether retained in the original account or transferred shall be made fully usable for payment to any ultimate beneficiary designated by the Central Bank of the Islamic Republic of Iran. The United States of America undertakes to issue all necessary licenses and authorizations accordingly.
• The United States of America and the Islamic Republic of Iran agree that an executive mechanism will be established to monitor the successful implementation of this MOU and the future compliance of the final deal.
• After signing this MOU and subject to the beginning of the implementation of paragraphs 1, 4, 5, 10 and 11 of this MOU, and the continuing implementation of these measures, the United States of America and the Islamic Republic of Iran will start negotiations regarding the final deal exclusively on the other paragraphs.
• The final deal will be endorsed by binding UNSC resolution.