The Peace That Was Not One; The US-Iran Memorandum Risks Permanent Crisis

More than three months after the 28 February opening of the US-Israel war with Iran, the reported US-Iran Memorandum of Understanding does not end the conflict so much as move it into a new phase. It is less a peace agreement than an agreement to negotiate one, with no clarity on the consequences of failure.

If reported versions of the text of the deal are to be believed, it resolves almost none of the nuclear, ballistic missile, proxy network or regional security questions that made direct military confrontation possible in the first place. Instead, nearly every contentious issue has been deferred into a sixty-day negotiating window that can, and likely will, be extended. It creates a politically convenient holding pattern – one that could stretch into the US midterm election cycle, when President Trump’s position on Iran may shift yet again.

If David Fromkin famously described the First World War settlement as ‘a peace to end all peace’, this agreement risks becoming something different: the peace that was not one. The greatest danger is therefore not renewed total war, although that remains possible. It is something more insidious: a state of permanent diplomatic incompletion.

The memorandum rests on four assumptions that will determine whether it becomes a durable settlement or a mechanism for postponing the next major confrontation.

Illusion One: 60 Days Can Solve 30 Years of US-Iran Animosity

The first illusion is that 60 days can resolve what three decades of failed diplomacy could not. The reported memorandum does not appear to settle the fundamental question at the centre of the US-Iran dispute: how restrictions on Iran’s nuclear programme will be managed, under what inspection regime, and in exchange for what sanctions relief. Instead, it postpones those questions, and commits parties to further talks while leaving the substance of those talks unresolved.

This matters because sequencing has always been one of the hardest problems in US-Iran diplomacy. Washington wants Iranian commitments first: nuclear restrictions, inspections, regional restraint and guarantees on freedom of navigation in the Strait of Hormuz. Tehran wants economic benefits first: sanctions relief, access to frozen assets, oil export waivers and relief from military pressure. The result is a gross sequencing problem that expects that distrustful actors will behave as if trust can be generated by an arbitrary and narrow timeline of sixty days.

The danger, and there are many built into the bedrock of the memorandum, is not only that the 60-day window fails outright. Rather, the risk is that it succeeds just enough to be extended, and then extended again, paving the way for a pattern for permanent crisis.

Illusion Two: A Bilateral Agreement Can Produce Regional Peace

Peace agreements can fail when regional stakeholders whose interests remain unresolved retain both the capability and incentive to become spoilers. The success of the MOU depends on multiple actors who are not party to it. The most immediate question is Israel. Can the US credibly restrain Israel’s operational freedom if Israel concludes that Iran or Hezbollah are exploiting the post-war period to rebuild military capabilities in Lebanon? The memorandum offers no clear answer and recent operations suggest not.

What Iran has achieved is to regionalise the war on its own terms, convincing the US to include Lebanon in the framework talks, and in doing so has demonstrated it retains a degree of power projection, veto power and influence across its sphere of influence in the region. Most directly, Tehran showed its leverage over the Strait of Hormuz. Its reopening does not restore the pre-war status quo. The post-war reality is worse, because not only has Tehran demonstrated that it can follow through on a decades-old threat to effectively close the Strait, but it may now be in a position to negotiate a permanent way to claim sovereignty over it and demand ‘fees’.

Moreover, Iran’s network of aligned armed actors – including Hezbollah, Hamas, Iraqi militias and the Houthis – are not simply instruments that can be switched off by Tehran on command. They have their own leadership structures, local incentives and political economies. Some may comply tactically. Others may hedge. Still others may test the limits of the agreement precisely because they are not formal parties to it.

The Gulf dimension raises another set of difficult questions, particularly over who is expected to finance Iran’s recovery and under what political conditions. If the proposed $300 billion reconstruction or investment fund is expected to draw on Gulf capital, the question is unavoidable: why would Gulf capitals finance Iran’s reconstruction without reciprocal political concessions, verifiable security guarantees or meaningful changes in Tehran’s regional posture?

The Gulf has an interest in avoiding another war, which is why many capitals, including Doha, were actively involved in getting this deal over the line. But does it follow that the Gulf has an interest in subsidising Iran’s recovery on terms shaped primarily by Washington and Tehran?

Illusion Three: Ambiguity Today Creates Flexibility Tomorrow

Washington appears to be presenting the agreement as a conditional framework: Iran will receive economic benefits only if it complies with nuclear restrictions, inspections and reopening the Strait of Hormuz. Tehran reads the same document as recognition of Iranian sovereignty, an end to US military pressure, a route to sanctions relief and a pathway to economic recovery. If the parties cannot agree on what they have agreed to, implementation risks becoming negotiation by another name.

The experience of President Trump’s 20-Point Gaza Peace Plan should temper expectations on Iran. On paper it provided a roadmap from ceasefire towards stabilisation in Gaza, but in practice, implementation has become paralysed because the parties attach fundamentally different meanings to the same commitments.

The Iran MOU risks repeating that pattern of deferred negotiations, ambiguity (disguised as a ‘plan’) and phased (open-ended and hard to verify) implementation. Its ambiguity may be useful in securing signatures. But what does ‘no nuclear weapon’ mean in practice if enrichment, stockpiles of highly enriched uranium, and inspections remain subject to further negotiation? What does sanctions relief mean if oil waivers, banking access and frozen assets move on different timelines? What does regional ceasefire mean if Israel is not a party, Hezbollah is not a party, and Iraqi militias are not bound by the text?

Illusion Four: Economic Recovery Produces Political Moderation Inside Iran

The question of sanctions relief and released assets is already being read across parts of the Middle East as a sign of American defeat; if not war damages, then something close to capitulation to Iran. That perception may be overstated, but Washington has done little to frame the strategic rationale for the policy. The US case appears to rest on the need to incentivise Iran to restore freedom of passage through the Strait of Hormuz, refrain from further attacks on Gulf infrastructure and enter follow-on negotiations over the nuclear file. But by offering economic relief before the hardest issues are resolved, Washington risks making de-escalation look less like leverage and more like payment for restraint.

Economic reconstruction is not politically neutral. The most important question will centre on which actors and networks inside Iran control the influx of funds, who distributes it, and who stands to benefit from it. Iran entered the war under severe economic strain. Ordinary Iranians have endured inflation, currency collapse, declining living standards and years of political repression. In theory, the post-MOU period may create openings for new forms of politics, including reformist, oppositional and civil society voices arguing that sanctions relief and reconstruction should prioritise public welfare rather than military recovery.

But those openings are precarious and should not be overstated. If anything, the war has empowered a hybrid political order in which the old clerical-revolutionary structure is increasingly fused with an emboldened Islamic Revolutionary Guard Corps (IRGC). In such a system, sanctions relief stands to enrich the networks best positioned to capture reconstruction contracts, channel investment and control access to foreign capital.

If reconstruction funds and unfrozen assets are routed through opaque channels, IRGC-linked companies and politically connected intermediaries, the result will not be moderation. To argue otherwise is to ignore that the more likely scenario is regime consolidation with better cash flow. Economic recovery can support political change only when it is accompanied by accountability, transparency and a redistribution of power.

Is There a US Strategy?

The post-1979 history of US-Iran tensions has long carried the expectation that direct confrontation, when it came, would produce a decisive outcome: either the collapse of the Islamic Republic’s coercive power or the confirmation of Iran’s ability to withstand American pressure. Neither has materialised fully or satisfactorily. Instead, the war has ended, for now, in ambiguity. There may be several tentative explanations for this and what it could mean from a ‘big picture’ perspective.

The US may be trying to buy time, avoid Great Depression-like ‘economic catastrophe’ according to Trump, and reopen the Strait as a priority. The MOU appears to reflect another Trump pivot towards giving diplomacy a chance, while keeping the threat of future military action firmly on the table. At the end of the G7 summit. Trump said, ‘We’re going bomb the hell out of them if they violate the agreement.’ For its part, an end to hostilities allows Iran to claim survival, gain sanctions relief, access financial benefits and maximise its esteem in the Global South.

At a macro-level, a broader restructuring of the international order is underway, and ending the Iran crisis is only one part of these wider tectonic shifts. Washington’s Middle East policy appears increasingly shaped by a desire to demote Iran as a central US priority, while concentrating strategic attention on major-power adversaries such as China and Russia. In this reading, Iran is no longer America’s defining problem to solve, but increasingly a Middle Eastern problem to be managed by regional actors themselves. A post-American Middle East will not emerge in the short term. The US will remain militarily present, diplomatically consequential and economically relevant. In parallel, Gulf states will continue to seek diverse defence, intelligence, energy and technology partnerships with Europe, China, Türkiye, India and others. This diversification will take time and will not produce strategic autonomy overnight.

Related to this is a second possibility. Having realised that the Iranian regime has not collapsed, Washington may now be attempting a different tack: to integrate Iran gradually into the global economy, encourage investment in its oil and gas sectors, and set in motion a longer process of reintegration and eventual normalisation. If successful, this would begin to unstick the post-1979 US-Iran problem and create a different strategic reality in the Middle East. No doubt Trump would see this as the desired end point: not merely ending the war, but claiming to have opened Iran. Whether he can set those wheels in motion is another matter entirely.

Instead, what we may end up with is an arc of perma-crisis, where the US and Iran are trapped in cycles of escalation and de-escalation, punctured by military threats and possible strikes, with little conclusive progress on the substantial issues that made the 28 February war inevitable.

© RUSI, 2026.

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