Iran Peace Talks – The Fat Lady's Still Warming Up

This past week, the Trump administration signed and released its Memorandum of Understanding (MOU) to end the War with Iran.

Ironically, despite the War’s dominance of the news cycle over the past few months, the greatest threat we face today comes not from abroad – where politically-directed economies like Iran’s have failed miserably, but rather from the rise of the socialist left here in America. If the peace agreement makes a meaningful contribution to turning back this socialist tide, it may offset legitimate concerns (more in a moment) with the MOU.

With respect to the agreements current benefits, initial signs are encouraging. Oil prices plummeted to around $75 a barrel on the news, well below the post-war peak and within striking distance of pre-war levels. If sustained, this should help bring inflation back down, which will provide a further boost to an economy finally exhibiting signs of vitality after decades of subpar growth. Indeed, these considerations and the upcoming midterms were obviously motivating forces behind the MOU.

These developments notwithstanding, however, the agreement presents a puzzling conundrum: why would a president who has long been a strident ally of Israel and who has repeatedly taken calculated military risks enter into a preliminary agreement that seems so one-sided in Iran’s favor?

Of course, one answer is that Trump just wants out and is willing to pay a heavy exit fee. But it’s also possible there is some method to the madness; or, even lacking method, that events will lead to an outcome that is dramatically different from what the preliminary terms of the MOU suggest. So, to mix theatrical metaphors: before the fat lady starts singing, let’s first look at the troubling aspects of the MOU itself and then we’ll return to the possibility that there may be more here than appears to the critical eye.

The Strait as a Bargaining Chip

In the early 2010s, the Obama administration responded to Iran’s nuclear buildup by imposing harsh sanctions. When Iran then threatened to close the Strait of Hormuz, Obama’s team entered secret negotiations that ultimately led to ending sanctions and the release of previously frozen Iranian assets.

In his first term, Trump pulled us out of the Obama deal and reimposed sanctions on Iran, which ultimately brought the country to the cusp of economic meltdown. But the current MOU curtails those sanctions, which effectively rewards Iran for shutting the Straight, much as Obama’s deal rewarded them for threatening to do so. Twice rewarded, Iran won’t be shy about using the Strait as a future bargaining chip.

Regardless of how the current negotiations go, we and our allies need to promote further energy independence both at home and abroad. Trump’s highly successful blockade is the best approach for limiting risks while dealing with Iran’s control over the Strait. But we must be prepared to absorb the extended costs associated with future shutdowns if we are going to have the will to deal with a potentially re-emboldened Iran going forward.

The Strait as a Revenue Generator

Paragraph 5 of the current MOU commits Iran to provide for the safe passage of commercial ships without charges for a period of 60 days; but then goes on to say Iran will work with Oman to define future administration of the Strait in conjunction with other Gulf States and applicable international law. Supporters of this arrangement claim that other Gulf States will not allow Iran to charge fees going forward and that international law makes such charges illegal. But it is in no way clear that other Gulf countries will be willing to stand up to a re-armed Iran should it decide to impose fees for passage.

In addition, Paragraph 14 of the MOU states that “The final deal will be endorsed by a binding resolution of the UN Security Council.” The council’s permanent members include Russia and China, both allies of Iran; and France and the United Kingdom, neither of which has the political fortitude to confront Iran and risk another closing of the Strait. If the Council blesses a deal that includes future tolls, this may well provide all the legal endorsement Iran needs to proceed with such a scheme.

It is hard to imagine the Trump administration would allow a final agreement that sets a precedent for hostile nations to charge tolls on critical waterways. Nevertheless, the language in the MOU is concerning.

Nuclear Weapons

Paragraph 8 explicitly states that Iran “reaffirms that it shall not procure or develop nuclear weapons” in exchange for our commitment to “terminate all types of sanctions”. While this sounds favorable, it leaves the details of dealing with enriched materials to be worked out. Additionally, even if we assume a satisfactory resolution of this matter, we are back to a basic problem with the Obama deal: why would we believe a terrorist regime with a long history of lying about its nuclear intentions?

These concerns are only exacerbated by Paragraph 6, which commits the United States to work with regional partners to provide $300 billion in reconstruction and development funds. Some in the administration have tried to sidestep related concerns by claiming Iran won’t receive a dime of American money for such purposes. But it hardly matters to the regime where the money comes from – the risk is in what they will do with it. J.D. Vance has claimed that no such funds will be released unless Iran abides by acceptable limitations. We can only hope that this is the case.

A Method to the Madness?

Suffice to say, the Memorandum of Understanding is troubling. But also keep in mind, this is little more than an agreement to negotiate. I noted earlier that one explanation for the MOU is that Trump wants out of Iran so badly he is willing to live with otherwise unacceptable terms. While potentially far-fetched, there is also another plausible explanation that is entirely consistent with the Trumpian character: i.e. that he was willing to give Iran what it wanted in order to get the Strait opened, with the intention of then dragging out negotiations until after the midterms before returning to a much harder line with respect to any final, legally binding, agreement; or, if needed, a return to more forceful action.

Only time will reveal whether there is method in the preliminary madness of this evolving drama – but stay tuned, it wouldn’t be the first time Trump’s critics wrote him off before the fat lady finished her warmups.

Today we face important challenges, but none that are greater than those we have overcome time and again throughout our storied history. Here’s to hoping your day is as bright as America’s future.

- Todd, June 21, 2026

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