Washington and Tehran Want a Way Out, Neither Can Pay the Price

Last Monday, an Iranian Shahed drone downed a U.S. Apache helicopter over the Strait of Hormuz. U.S. forces were able to rescue the pilots. The use of a drone such as the Shahed to bring down a military helicopter is unusual in operational terms. At the same time, Iran has not issued a clear statement explaining the circumstances of the incident: whether the helicopter posed a threat, whether Iranian forces deliberately initiated the attack, or whether the downing was accidental.

U.S. forces in the Gulf quickly responded to the Iranian attack with airstrikes on several military sites in southern Iran, including drone-control centers. Iran, in turn, struck a number of U.S. bases in the region, particularly in Kuwait and Bahrain. This round of Iranian strikes also included Azraq Air Base in Jordan, which Iran said contained hangars for U.S. F-35 fighter jets.

On Tuesday, President Donald Trump stated clearly that he would return to war unless Iran immediately signed the memorandum of understanding presented by the United States. He accused the Iranians of stalling for too long before signing the document.

What Exactly Is the Problem?

So far, no source has revealed the full reality of the negotiations. In fact, they do not appear to be negotiations in the strict sense, but rather a series of American formulas carried to Iran by mediators, with various amendments, in exchange for Iranian conditions for signing the memorandum of understanding.

Within the limits of what has appeared in reports, statements and analysis, the American offer seems to rest on two main points. The first is the full reopening of the Strait of Hormuz without restrictions, in return for ending the U.S. naval blockade on Iranian ports. The second is Iran’s initial acceptance of ending enrichment on its own soil, while postponing negotiations over the details.

Iran, by contrast, has put forward several conditions. The most important are the release of part of its frozen assets, estimated at nearly $20 billion, and an end to the war on the Lebanese front between Israel and Hezbollah.

The Iranian logic behind these two demands is clear. First, Iran is suffering severe economic pressure because of the war, and before that because of sanctions. Ending the war without recovering part of its assets, lifting sanctions, receiving compensation, or gaining revenue from the Strait of Hormuz would mean the continuation of a slow economic death for the Iranian system.

Second, abandoning Hezbollah would mean allowing Israel to isolate and confront the group alone, just as it previously isolated Hamas. In effect, Israel and the United States would be reaching a temporary ceasefire with one side of the so-called Axis of Resistance only until they are ready to finish off the next front.

The United States has a problem with both Iranian conditions. Ending the war by lifting sanctions, allowing Iranian control over Hormuz, paying compensation, or releasing frozen assets before a decisive new agreement on Iran’s nuclear program would be politically disastrous for Trump.

Trump dragged the United States into a major war in direct contradiction to his famous “America First” slogan, which was built around rejecting foreign wars. He had also withdrawn from an agreement the United States had already signed with Iran under the Obama administration. After all that, if he were to hand Iran frozen funds or any form of economic gain without a new agreement, it would amount to a theatrical political failure.

The second problem is Israel. Israel has made it clear that its war with Hezbollah is a matter of life and death. It is therefore likely to resist American pressure on this file as far as it possibly can.

Return to War

Given the complexity of the situation, the two sides may have no practical option except to return to war, each hoping that the other will suffer enough pain to make the first concession. For Trump, the war needs to be resolved before the U.S. midterm elections in November. Otherwise, he may face a major electoral defeat that could leave him exposed to an existential political threat from a large and highly motivated Democratic majority in Congress and the Senate.

For Iran, the situation is also critical. The country is approaching total economic exhaustion, especially with the disruption of its main, and almost only, source of foreign currency: oil exports to China. Trump and Netanyahu appear to be betting that continued blockade and military pressure will either bring down the Iranian regime or force a major Iranian concession, such as separating the Iranian front from the Lebanese front, or at least returning the situation to where it stood before the war began last February.

The biggest losers in this conflict remain the most economically fragile states in the region, especially Egypt and Turkey. Their economies are under intense pressure from rising oil prices and global inflation.

The Gulf states, despite being exposed to Iranian attacks and the closure of the Strait of Hormuz, may be able to compensate for some of their losses through higher oil prices. They also have financial reserves large enough to absorb the current pressure.

This is why Egypt and Turkey have become active in mediation, even indirectly. Their relations with both the United States and Iran, along with their historical and geographic positions, make it politically difficult for them to lead mediation openly. Yet they are still engaged behind the scenes.

Pakistan and Qatar, by contrast, have better channels with both sides. Like Egypt and Turkey, they are close to the United States and allied with Washington. At the same time, they maintain close contact with Iran due to geography and political necessity. Pakistan and Qatar are also less burdened by historical responsibility than Egypt and Turkey.

With the continuation of the war and the expansion of Israeli power, Egypt and Turkey appear to be facing a kind of existential anxiety. They know very well that if Israel succeeds in neutralizing Iran, it may eventually turn its attention toward them. At the same time, entering any direct confrontation with Israel now would be a losing gamble. They therefore have little choice but to wait, prepare themselves, and anticipate a confrontation that may come one day, perhaps against everyone’s wishes.