18.06.2026
Art of the memorandum
The interim agreement extends the ceasefire, opens the Strait of Hormuz and, perhaps, ends the four months of conflict between the two countries. With both sides claiming victory, Yassamine Mather gives her take on the diplomacy to come
Following weeks of a highly precarious ‘neither war nor peace’ ceasefire, the United States and Iran have arrived at a Memorandum of Understanding. This has produced widely divergent reactions - both around the world and within Iran itself.
The current consensus among reliable sources indicates that this agreement initiates a strict 60-day technical negotiation period. It serves as a mechanism to extend and consolidate the pre-existing ceasefire rather than to resolve the systemic geopolitical grievances between Washington and Tehran. The core provisions that are publicly understood include:
- extension and consolidation of the active ceasefire for a duration of approximately 60 days;
- immediate reopening of the strategic Strait of Hormuz to commercial maritime traffic;
- establishment of a framework for follow-on technical talks, specifically addressing Iran’s nuclear programme.
- a structured, phased schedule for sanctions relief and the release of frozen Iranian financial assets, strictly contingent upon implementation milestones.
Global financial markets have reacted sharply to the news of the agreement, however. Because the final, legally binding details are not yet locked in, investors are hedging their bets - some are celebrating, while others are bracing themselves for bad news in the fine print.
Earlier this week, global stock markets entered ‘party mode’, rallying strongly in celebration of the US-Iran ceasefire despite the vast number of unanswered questions. On the other hand, commodity markets dropped sharply, with Brent crude oil falling to just under $80 a barrel. This price crash caught many energy experts by surprise, as they had actually predicted long-term price spikes.
Just a few weeks before the ceasefire, the interest rates (yields) on US government bonds shot up to their highest levels in decades, because investors were terrified that the war would cause massive inflation. While those interest rates have dropped a tiny bit, now that the ceasefire looks real, they are still much higher than they were before the war started.
People betting in the financial markets don’t expect the Federal Reserve to change its game plan any time soon. Most investors are completely sure that the Fed will keep interest rates exactly where they are for the next two meetings. There is still a small chance that it might raise them a little bit in October - slightly lower than a few weeks ago, but still way higher than before the war, when everyone assumed a rate hike was completely off the table.
Bond investors are still playing it safe, because inflation in the US is not just being driven by high oil prices. Companies are still hiring a ton of workers, and the cost of everyday services (like dining out or healthcare) is still stuck at a high 3% inflation rate. Because of this, it is hard for the Fed to lower interest rates, and there is still a risk they might have to raise them again.
Despite the agreement being pushed through, the text is plagued by starkly divergent interpretations by the American and Iranian media. These contradictions threaten the stability of the MoU before its implementation even fully begins.
For the Trump administration, the primary success of the deal is the unblocking of the Strait of Hormuz - a critical maritime choke-point, through which one-fifth of global oil and gas trade passes. The closure of the strait had induced severe shocks across global energy markets, though it was a direct consequence of the war initiated by the US and Israel.
Monitoring rights
The terms of reopening are already a point of friction. US officials say that the strait will be completely “open to all” commercial vessels, entirely free of restrictions, tolls or interference. Conversely, semi-official Iranian media outlets report that the agreement allows Tehran to retain monitoring rights over passing vessels and collect “service fees” - a claim that both the US government and international shipping interests dispute.
The most significant omission from the MoU is the absence of concrete requirements regarding Iran’s nuclear enrichment capabilities. Historically, the Trump administration and its negotiators maintained that any signed document must include strict, verifiable clauses to dismantle Iran’s nuclear programme. In the MoU text, however, Iran secured a major diplomatic concession: the nuclear issue has been completely deferred to the subsequent 60-day negotiation window.
The current text contains only a broad, aspirational statement, affirming that Iran will not pursue nuclear weapons. This has led to intense scrutiny of US officials by the White House press corps, who have pointed out that the 2015 Joint Comprehensive Plan of Action contained far more rigorous, legally binding restrictions. Critics argue that after executing a highly destructive military campaign, the US has accepted a deal that is substantially weaker than the accord Trump originally walked away from.
Furthermore, it is clear that Iran has no intention of compromising on its right to enrich uranium. Iranian leaders are expected to use the upcoming 60-day window to negotiate levels of enrichment, arguing that they need to keep existing enriched uranium reserves - with the calculation that Trump will be highly reluctant to resume a costly military campaign in the immediate run-up to the November midterm elections.
The potential for the agreement to be completely derailed remains exceptionally high, with the conflict in Lebanon representing the most immediate hazard. The finalisation of the MoU experienced delays precisely because of continued Israeli military operations. Internally, Iranian officials argued against signing the document on specific days to avoid offering Donald Trump a symbolic political victory. However, the formal justification provided by Tehran for delaying the declaration that they have reached a deal was the intense Israeli bombing of southern Beirut.
Iranian leaders have claimed to their domestic audience that the interim MoU explicitly contains an adjacent clause requiring a cessation of hostilities between Israel and Hezbollah. This framing has been rejected by Jerusalem, with prime minister Benjamin Netanyahu publicly refuting the existence of any such agreement.
Because Israel is not a direct party to these bilateral US-Iran negotiations, any language linking the regional ceasefire to Lebanese security remains indirect or aspirational. However, there is no doubt that Israel’s position looks deeply uneasy and most of the country’s politicians oppose the agreement, calling it a “bad deal”, because it focuses too narrowly on the Strait of Hormuz and does not address the wider issues Israel wants to focus on, especially the nuclear programme, missiles and Iran-backed regional forces.1
Israel also feels sidelined. According to the Israeli press, senior officials believe their warnings are not being heard, and that Jerusalem has very little influence over the US-Iran process, even though the outcome could affect ‘Israeli security’ directly.2
For the deal to work, Trump would have to spend a lot of political energy forcing Netanyahu to stop fighting. This might not even work, since Netanyahu is facing a tough election soon and - unlike Trump - has strong support at home to keep the war going.
The precise scope, timing and nature of the economic incentives promised to Tehran remain shrouded in ambiguity and conflicting official statements. However, according to Reuters, a new US-Iran framework agreement outlines a $300 billion ‘reconstruction and development fund’ - with over half already pledged - aimed at revitalising Iran’s energy, transport and manufacturing infrastructure. Conceived after the US rejected Iran’s initial $400 billion demand for war reparations, the fund will rely on regional contributions through loans, credit lines and direct financing.
The assumption is that Persian Gulf countries contributing to the fund will be saved from future Iranian attacks. If true, this represents an economic turning point for Iran, which has suffered from a four-decade drought in foreign investment due to sanctions. Notably, the fund operates on a separate track from sanctions-relief negotiations and will only take effect, once a final agreement is formalised, triggering a 60-day structuring period.
To manage the flow of capital without violating the political optics of the deal, Qatar has been designated as the central financial hub. Unfrozen assets will be transferred to Qatari accounts, allowing Doha to monitor and regulate Iranian expenditure.
Furthermore, unverified reports suggest that the United Arab Emirates secretly negotiated a multibillion-dollar asset release for Iran in exchange for an explicit guarantee that Iran and its allies would cease attacks on Emirati soil. Although UAE officials have formally denied these allegations, regional analysts note that Arab Gulf states are increasingly looking to establish deep economic interdependence with Iran. By entangling Tehran in regional trade, these states hope to create a powerful financial disincentive against future military aggression.
The political fallout from the announcement of the MoU has been immediate and severe within both nations, exposing deep internal divisions.
Opposition
The Iranian state apparatus has launched an aggressive domestic propaganda campaign to frame the MoU as an absolute victory over the US and Israel. State media has even publicised claims that the regime outmanoeuvred the White House by employing specialised teams of psychologists to analyse Trump’s social media posts and tweets, thereby crafting calibrated responses, designed to exploit his unpredictable decision‑making.
Despite this official narrative of triumph, the regime faces significant internal instability:
- Hardline backlash: Fringe religious and paramilitary factions have fiercely opposed the deal. Minor protests have occurred in Tehran, led by organised groups of motorcyclists who denounced the agreement as a direct betrayal of the country’s soldiers and the legacy of the late Ali Khamenei (who has been elevated to the status of a martyr).
- Government consolidation: President Masoud Pezeshkian has attempted to neutralise this opposition by stating publicly that the supreme leader’s office fully endorsed the framework. Pezeshkian admitted that, while individual factions within the government maintain serious reservations regarding specific clauses, the ‘ruling council’ has unified behind the decision.
- Public despair and deprivation: The reality for ordinary Iranian citizens is more complex and differs from the comments of both government and other commentators, who claim Iran won the war.
The combined effects of the US sanctions war and its naval counter-blockade have brought Iran’s economy to near-collapse. The population faces catastrophic hyperinflation of food prices, and severe, widespread shortages of essential commodities, such as fuel and agricultural fertilisers.
Economic hardship
While many citizens express profound relief at a temporary window to breathe, others express deep anxiety. Those who had supported foreign intervention openly admit that the war achieved nothing except economic hardship, while leaving the Iranian regime much stronger than before. For the Iranian working class prospects of long-term job losses remain the main concern. There is scepticism about how any financial gains from the lifting of sanctions will benefit the economy - as opposed to the pockets of corrupt officials and their associates.
In the US, opposition politicians and conservative factions have heavily criticised the deal, characterising it as an outright “sell-out” of American security interests. The backlash prompted prominent figures, including JD Vance, to release statements on social media urging the public to disregard reports of massive, immediate financial windfalls for Tehran, labelling such figures as highly exaggerated.
For Israel, the agreement represents a severe strategic failure. Netanyahu and his cabinet feel profoundly alienated by the fact that the final phases of these critical negotiations completely bypassed Jerusalem. The Israeli government claims that, by failing to address Iran’s long-range ballistic missile development or its extensive network of regional proxies, the US has left Israel exposed to an existential threat.
While the MoU successfully averts an immediate escalation into an all-out global conflict, it has caused substantial, long-term diplomatic damage to America’s alliance network in the Persian Gulf. Nations such as the UAE, Saudi Arabia and Qatar bore the brunt of Iranian retaliatory strikes and suffered severe disruption of maritime trade. The revelation that the Trump administration executed these high-stakes negotiations without consulting its regional partners has further undermined trust in Washington’s security guarantees.
Ultimately, the region faces a highly volatile, conditional framework rather than a durable resolution. Because every meaningful step beyond the initial opening of the Strait of Hormuz is strictly tied to future compliance and highly contested interpretations, the agreement is incredibly fragile. Rather than signalling the conclusion of the Middle Eastern crisis, this MoU marks the beginning of a dangerous and highly unpredictable diplomatic phase.