Iran and the United States have agreed on a memorandum of understanding to end more than three months of war, which will bring an end to fighting in West Asia. The deal will be formally signed in Switzerland on Friday.
The 14-point memorandum of understanding, although not officially announced, mentions the war in Lebanon, the Strait of Hormuz and other competing issues. Here’s what you need to know about the proposed deal:
1 – The Islamic Republic of Iran and the United States of America, together with their allies in the present war, upon the signing of this Memorandum of Understanding, declare an immediate and permanent end to the war on all fronts, including Lebanon, and undertake that from now on they will not initiate any hostile action against each other, and will refrain from the threat or use of force against each other. The final agreement shall ratify the provisions of this Article and the remaining Articles.
What does it mean: Lebanon is part of the peace agreement. This is significant because Israel has continued attacks on Lebanon despite the ceasefire, at one point even jeopardizing the peace process and earning Trump’s rebuke.
2 – The Islamic Republic of Iran and the United States undertake to respect each other’s sovereignty and territorial integrity and to refrain from interfering in each other’s internal affairs.
What does it mean: Rejects future forced regime change, which was one of the first objectives clearly stated by the US and Israel after launching the attacks on Iran. Trump had also once urged the protesters to capture power. Of course, the objectives of military action have changed several times since then.
3 – The Islamic Republic of Iran and the United States undertake to negotiate and reach a final agreement within a maximum period of 60 days, which may be extended by mutual consent.
What does it mean: Two months to prepare all the outlines of the peace agreement. During this period, Israel’s steps will be closely monitored. Jerusalem has been largely isolated from the peace process.
4 – Immediately after the signing of this Memorandum of Understanding, the United States will lift the naval blockade and cease any interference or obstruction against the Islamic Republic of Iran, and will restore traffic to its full capacity within a maximum of 30 days; The traffic of ships will be proportional to the volume of pre-war traffic from the Islamic Republic of Iran. The United States also pledges to withdraw its troops from the surrounding areas within 30 days of the final agreement.
What does it mean: The most important segment for the global economy. This allows the reopening of the Strait of Hormuz, through which one-fifth of the world’s oil and gas transited daily. It also means that energy prices will go down and the Gulf petro-states can all resume exports.
5 – Upon the signing of this Memorandum of Understanding, the Islamic Republic of Iran will take immediate steps to ensure that the movement of merchant vessels from the Persian Gulf to the Sea of ​​Oman and vice versa is resumed in pre-war volumes within 30 days, taking into account the need for the removal of technical barriers and the neutralization of mines by Iran.
What does it mean: Secures Iran’s commitment to reopen the Strait of Hormuz and remove any mines or other obstacles to commercial shipping. Cargo operators have expressed reluctance to transit the waterway until the strait is safe.
6 – The United States, together with its regional partners, undertakes to create a comprehensive plan agreed to by both sides for the rehabilitation and economic development of the Islamic Republic of Iran. While ensuring at least $300 billion of financing. The implementation mechanism of this scheme will be worked out within 60 days as part of the final agreement.
What does it mean: Iran receives at least $300 billion in financial aid. How this will be done has not yet been finalized, but Reuters reported this week that private investors will finance the initiative and that half of this commitment has already been secured.
7 – The United States, on the schedule to be agreed upon as part of the final agreement, is committed to ending all forms of sanctions currently facing the Islamic Republic of Iran, including resolutions of the United Nations Security Council and the Board of Governors of the International Atomic Energy Agency (IAEA) and all unilateral U.S. sanctions, both primary and secondary.
What does it mean: This has opened the doors to investment in Iran for the first time in decades. US sanctions have so far restricted trade and investment because most transactions are closely linked to the US currency or banking system.
8 – The Islamic Republic of Iran has reiterated that it will never produce nuclear weapons. The Islamic Republic of Iran and the United States have agreed that the fate of the enriched material and all other mutually agreed upon nuclear-related issues, including Iran’s nuclear needs, will be adequately addressed in the final agreement; The final agreement shall confirm the provisions of this Article.
What does it mean: The use of ‘repatriates’ reflects Tehran’s stance that it does not intend to build nuclear weapons – in some ways as it did in the Obama-era JCPOA nuclear deal. Then, it committed not to enrich weapons grade nuclear material. “Never produce”, while meaningfully marginal, is rhetorically an important specific commitment.
It is believed that a decision on the existing stockpiles buried after the US bombing will be subject to the final deal.
9 – The Islamic Republic of Iran and the United States agree that, until a final agreement is reached, they will maintain the status quo: Iran will maintain the status quo on its nuclear program, and the United States will not impose new sanctions on Iran or reinforce its forces in the region.
What does it mean: Both parties set specific boundaries to respect each other as the negotiation continues.
10 – United States Immediately after the signing of this Memorandum of Understanding, and until the date of lifting of sanctions, the United States Department of the Treasury will issue waivers for the export of Iranian crude oil, petrochemical products and their derivatives, and all related services of banking, insurance, transportation, and the like.
What does it mean: Iran can restart its fuel and petroleum economy, a much-needed relief from the situation before the US imposed a naval blockade of its ports. Economic difficulties were the spark that sparked nationwide protests against the ayatollah-led regime last year.
11 – The United States commits that, subject to progress in negotiations toward a final agreement, frozen or restricted funds and assets of the Islamic Republic of Iran will be released and made fully available. These funds, whether held in the Master Account or transferred, will be used for any final beneficiary payments as determined by the Central Bank of the Islamic Republic of Iran and will be fully available for use. The United States undertakes to issue all necessary permits and licenses on this basis.
What does it mean: Estimates of the total amount available to Iran vary widely, ranging from $24 billion to $100 billion, Bloomberg reports.
12 – The Islamic Republic of Iran and the United States agree that an implementation mechanism will be established to monitor the successful implementation of the final agreement and future commitments.
What does it mean: The MOU suggests that some kind of monitoring mechanism will be put in place in the future to ensure that neither party reneges.
13 – Following the signature of this Memorandum of Understanding, and upon receipt of assurances regarding the beginning of implementation of paragraphs 4, 5, 10, and 11 of this Memorandum and the continued implementation of these steps, the Islamic Republic of Iran and the United States will enter into negotiations for a final agreement with respect to the remaining paragraphs only.
What does it mean: Neither party will negotiate a final agreement – ​​including nuclear commitments, a sanctions removal program and a rehabilitation plan – until Articles 4, 5, 10 and 11 have already entered into force. Three of them are US obligations: lifting the blockade, issuing oil export exemptions, releasing frozen assets. One is from Iran: clearing the strait and removing mines.
14 – The final agreement will be approved through a binding UN Security Council resolution.
What does it mean: This may provide some geopolitical insurance for both sides. The final agreement underlying a binding UNSC resolution cannot be abrogated by either party without certain consequences. However, the JCPOA sets a cautionary precedent: UNSC Resolution 2231 endorsed that deal, yet the Trump administration was able to trigger the snapback mechanism and reimpose sanctions in 2020.
What remains unclear
israel question
While the MOU mentions a “permanent end to the war on all fronts, including Lebanon” by “the US and its allies”, it is not clear whether this means Israel will withdraw from territory it occupies in south Lebanon. Tel Aviv continues to attack Lebanon and Prime Minister Benjamin Netanyahu has publicly stated that Israel will not withdraw its troops from Lebanon. There is no mention of Israel in the MOU.
Toll or not?
There is no reference to the toll that Iran had said it would charge for ships passing through the Strait of Hormuz. Tehran has indicated it will charge ships navigation fees after a 60-day negotiation period under new US-Iran talks. Trump said this week that the strait will remain open and toll-free “permanently.” But, a day before that, a senior US official said the status of the strait would be discussed after a period of 60 days.
