Trump finds an exit from Iran war but risks of failure remain

During the 1992 US presidential election, Democratic candidate Bill Clinton's strategist James Carville coined a phrase that captured the whole essence of bread-and-butter politics: "It's the economy, stupid." 

It's the economy that drives politics. More precisely, it's the state of people's personal finances that determines voting intentions. 

More than three decades later, listening to President Donald Trump defend his memorandum of understanding with Iran to "permanently end" the war he launched on 28 February, one could just reimagine Carville's phrase: "It's the markets, stupid."

The war has long ceased to be about overthrowing the regime, or destruction of Iran's missile production capacity or about Tehran financing militias in the region such as Hizbollah in Lebanon. For Trump, putting his signature on the MoU meant restoring market confidence, putting life back on the trading floors around the world. 

As President Trump himself pointed out, the stock markets are going back up, while prices of crude oil are heading the other way. "There is nothing as smart as the market – and the market loves it," Trump said on Wednesday while attending the G-7 summit in France. 

Nothing calms nerves in the markets - stocks, commodities, precious metals, currency - as the prospect of "peace" does. Trump probably did not think his war would throw the markets into such a spin. He expected the Iranian government to collapse from within, and the war to end quickly. 

But, as the famous phrase attributed to Scottish poet Robert Burns warned, "The best laid plans of mice and men/often go awry." And awry did go Trump and Israeli Prime Minister Benjamin Netanyahu's plans. 

Iran's Hormuz gambit

Iran not only hit back at targets in Israel and US military bases in the Persian Gulf region, they unveiled a weapon that everyone knew existed, but few believed it would be used to such devastating effect: the IRGC took control of the Strait of Hormuz, drastically reducing the flow of oil and gas out of the region. 

With one single stroke, Iran altered the strategic map of the conflict, and held the world economy to ransom.  

In the end, it was Iran's ability to retain control over the Strait - and America's inability to do anything about it - that finally convinced Trump that this was an unwinnable war. He decided to cut his losses and do what he always says he does best: strike a deal. 

Trump and Netanyahu may have planned it together, but they were not joined at the hip. The incentive to exit the war was far greater for the US president than the Israeli prime minister. So Trump basically cut Netanyahu out of the negotiations and went full pelt for a deal. 

So much so that Iranian supreme leader Mojtaba Khamenei claimed Trump had pushed for this MoU "out of desperation" and "used all kinds of leverage" to get it. 

The signing of the MoU not only ends the war, it ends the US naval blockade of Iranian ports, allowing Tehran to resume exporting oil. Iran is expected to allow passage of shipping through the Strait of Hormuz, which used to be fully open and under nobody's control before the war.  

No nuclear deal

The US is also issuing sanction waivers on all logistical and financial matters related to the sale of Iranian oil. The permanent lifting of the sanctions is expected later, on the completion of the final peace deal. 

The same goes for the return of billions of dollars worth of Iranian assets frozen in foreign banks, though some of the money may even be released to Iran at the beginning of the process. 

Crucially, the question of Iran's nuclear programme has been left largely unaddressed in the MoU. Iran's current stockpile of enriched uranium - some 450kg worth - is expected to be "downblended" from the current 60% enrichment in Iran itself. The rest will be negotiated in the days ahead.

So, what's in it for the US? President Trump is pointing to one clause in the MoU where Iran agrees never to "seek, develop or acquire" a nuclear weapon, as his principal achievement in this war. However, this is a rather hollow "victory." 

The MoU actually uses the phrase "Iran reaffirms .." rather than "Iran agrees …" This wording makes it clear that Iran's position not to "seek, develop or acquire" a nuclear weapon is nothing new. The same language was used in the Joint Comprehensive Plan of Action (JCPOA), the nuclear deal negotiated by the Obama administration in 2015 and signed by China, Russia, the UK, Germany, France, the US and the EU, along with Iran. 

Netanyahu under pressure

While the MoU ends the war between the US and Iran, in no way does it guarantee peace. For one thing, Israel is supremely peeved at what many commentators in Tel Aviv are viewing as a "betrayal" by Trump. 

The interest of the two leaders, which was in unison at the beginning of the war, diverged once it became clear there'd be no military breakthrough. 

For Netanyahu, the war had to continue until the Iranian regime's destruction, but he could not continue the attacks without US participation. Nor could he defend Israel from Iranian retaliation without the US holding his hands. 

Trump, on the other hand, felt the heavy pressure of global markets and discontent at home. His party faces crucial mid-term elections for control of Congress in November,  and he needs peace in the Gulf and stability in the markets to reassure the US electorate, who have been against this war from the very beginning. 

There are voices in Israel, including some senior ministers who are calling for a "victory" in Lebanon to compensate for what has undoubtedly been a strategic defeat for Israel. 

For Iran, Lebanon remains a "red line." Recent attacks by Israel may even have contributed to the postponement of the planned start of negotiations between the US and Iran in Switzerland. 

However, yet another ceasefire in Lebanon announced on Friday could pave the way for US-Iran negotiations to begin. Even then, dangers remain.

'Smell the reality'

With parliamentary elections in Israel due before the end of October, Netanyahu cannot afford to appear to be a weak leader. He has based his entire political career on the premise that he is the man to bring down the Islamic regime in Iran, and thus remove what Israel sees as a threat to its very existence. 

Netanyahu's failure in the war has allowed his opponents to pile on the pressure. The leader of Israel's opposition Yair Lapid was scathing. 

"Netanyahu promised us a historic victory - and we got a crisis with the Americans, money for the Revolutionary Guards, ballistic missiles aimed at Israel, and Israel waiting in the corridor like a scolded child," Lapid said on 16 June.

At the moment, Israel appears to have little choice but to, like a scolded child, accept what the grown-ups in the room are saying. As US Vice President JD Vance said, Israelis "need to wake up and smell the reality." 

This is not to suggest Israel is helpless. Far from it. Israel has enormous leverage in the US - in Congress, the media and pressure groups - to influence the US as it negotiates the final peace deal with Iran. But evidence so far suggests that the Trump administration will resist Israeli attempts to derail the negotiations. 

Ominously, both the US and Iran have set their stalls out in case the deal falls through. 

Fall guys ready

President Trump has already threatened to return to "shooting" and dropping bombs "in the middle of their head" if Iran does not behave. Vice President JD Vance has become the face of the deal from the US side. Cynics might say this would allow the president to throw his deputy under the bus should things go wrong. 

Similarly, Iranian leader Mojtaba Khamenei, while approving the MoU, also distanced himself from any possible failure, by putting all the responsibility squarely on the head of President Masoud Pezeshkian. 

In a message published by the Iranian media on Thursday, Khamenei said he held a "different view," but granted his permission for the MoU on the basis of the commitment Pezeshkian gave him "regarding the safeguarding of the rights of the Iranian nation and the Resistance Front, and his explicit acceptance of that responsibility.."

By "Resistance Front," Khamenei most likely means Hizbollah, the Houthis of Yemen, the PMF militias of Iraq, Hamas, etc. 

Mojtaba Khamenei added one more warning: "However, it's self-evident that the in-person negotiations in the future will not mean acceptance of the enemy's position." 

Clearly, Iran's top leader - no doubt with the full backing of the IRGC - is drawing a line beyond which Iranian negotiators in the Swiss mountains will not be allowed to go. The prospects for peace may just hang on this line.

The writer is a journalist and a podcaster.