The world is holding its breath with respect to the June 14 adoption of a Memorandum of Understanding (MoU) between Iran and the United States for a cessation of hostilities and a 60-day period of negotiation to iron out their thorny differences. The scepticism stems from at least two scores of premature claims by U.S. President Donald Trump. Moreover, this is only the beginning of a meandering journey pebbled with numerous obstacles. Vicious bloodletting in two wars during the past year has exacerbated instinctual mutual distrust. Hence, even this vaguely worded framework is no mean feat.
Can the world now hope for a durable resolution to this multifaceted crisis, or does the MoU merely kick the can down the road? Some contextual developments create a space for cautious optimism. The respective announcements by both Tehran and Washington are factual and measured, eschewing trenchant triumphalism and demonisation. They have emphasised the complexity of negotiations; both realise that their asymmetric wars were militarily unwinnable, and a sustainable solution would require political negotiations with the recalcitrant enemy. The twin Hormuz blockades morphed into economic attrition, and Iran’s threat of expanding the next war beyond the region, with the Houthis choking the Bab el-Mandeb strait again, was foreboding. Both sides were also facing growing domestic discontent, with their respective erratic conduct alienating supporters and neighbours. In front of the international community, both nations have lost their moral high ground, each appearing as irresponsible and vindictive.
A long road
The scope and complexity of the current issues are daunting. These include the question of U.S. sanctions, a release of over $100 billion of frozen Iranian assets, regional issues such as the crisis in Lebanon and the problem of U.S. military bases, and the demand for reparations. However, Iran’s nuclear enrichment and its assertion of sovereignty over the Strait of Hormuz are deal breakers. Since President Trump tore down the Joint Comprehensive Plan of Action (JCPOA) in 2018, he now insists on a “better” deal, requiring Iran to export enriched uranium. However, Iranian hardliners are steadfastly opposed to this diktat. Moreover, Iran’s closure of the Hormuz chokepoint has caused the “biggest energy disruption in human history”, creating havoc for the global economy. A resolution of these two contentious issues would require protracted negotiations and creativity, allowing both sides to claim victories. A $300 billion fund to reconstruct Iran with U.S. companies, a typically bizarre Trumpian transactional diplomacy, is also reportedly on the table. Here, one must also mention the various other influences in the negotiation chamber — Israel and the states of the Gulf Cooperation Council (GCC) significantly influence the thinking at the White House, while China and Russia each have an inside track in Tehran. Pakistan, the official mediator, also has its own multiple axes to grind.
Discernible undercurrents
Irrespective of largely unaltered borders and an endgame that has barely commenced, the past three years of hostilities have triggered seismic geopolitical changes in West Asia and beyond, irretrievably unhinging its longstanding strategic paradigms. While the situation is still evolving, some basic medium-to-long-term undercurrents are discernible.
First, the two Iran wars have dramatically overturned numerous basic global assumptions. It has shown the limits of American hyperpower with its penchant for military solutions, high-tech battlefield dominance, air superiority doctrine, social media-provoked mass uprising etc. Iran was able to counter this with incipient strategies; careful planning for asymmetric warfare; smart and cost-effective tactics; a resilient and coherent command structure; leveraging of geostrategic assets; resolute supply chains and defence production among others. American MAGA (Make America Great Again) hotheads and Chinese wolf-warriors may need to pull in their claws, hopefully, making the world a safer place.
Moreover, the failure of ad-hoc coercive diplomacy may bring back multilateralism. Nations are now going to fret more about choke points, preventive diplomacy, robust supply lines, and adequate strategic reserves for essential inputs. Physical security and the succession of command of the political leadership would be prioritised and ruggedised.
Second, the hobbled return to regional peace may be catastrophic for global hydrocarbon supplies as depleting strategic reserves compete with demand destruction. In the long-term, high prices and volatility would destroy demand and hasten us towards the ‘peak oil’ scenario (a hypothetical point where global crude oil demand reaches its maximum rate and begins to decline). The disruptions have underscored the indispensability of higher strategic oil reserves and clean energy.
Third, there are two regional shifts which are currently underway. While U.S.-Israel relations remain strategic, Israeli Prime Minister Benjamin Netanyahu’s mesmerisation of Mr. Trump has waned. The GCC states were traumatised by the U.S.-Israel coalition’s “wars of choice”. Apart from the collateral damage from Iranian attacks on their vital infrastructure, their exports via Hormuz also suffered. To add insult to injury, Washington neither consulted the GCC nor adequately protected them from Iranian retaliation. Moreover, the Pentagon’s failure to anticipate the Iranian regime’s staying power, Hormuz closure, or a plausible exit strategy has raised doubts about its war planning. This unsavoury experience has seriously undermined America’s credibility as a security provider for the GCC. They are likely to reassess their geostrategic alignments as they contend with a weakened but defiant Iran. Their sub-optimal past experiences with external defence tie-ups may leave them with a Hobson’s choice to shore up their defences, either individually or collectively. Given the GCC disunity, especially the Saudi-Emirati rivalry, burying their hatchets may not be easy, forcing them to accommodate and appease Iran individually. Alternatively, the Iranian grip on the Arab world’s Shia militias, particularly in Iraq, may loosen, allowing a reassertion of their Arab and tribal identities.
A more defiant Iran
Fourth, while the Iranian state has defied existential threats, it has now convulsed and radicalised. Regionally friendless, the theocratic regime is in suspended apprehension amidst escalating foreign pressure and a brewing domestic blowback. Left to themselves, the Iranian leadership would insist on a strategic deterrence based on both nuclear latency and control of the Strait of Hormuz. But they also realise that this maximalism may scupper the forthcoming negotiations. A small but significant minority of Iran’s leadership now believes that the Iranian capacity to block the Strait of Hormuz is the new and more potent deterrence than nuclear ambiguity. Instead of ensuring the Islamic Republic’s survival, Iran’s nuclear fixation has attained the opposite: entrenching Israel-U.S. enmity against it. Its direct cumulative costs are estimated at $100 billion, and if Western sanctions are factored in, costs will rise manifold. They argue that the nuclear strategy can be replaced by Iran’s real or presumptive control over Hormuz, already proven to be an effective ‘weapon of mass disruption’.
Tellingly, while Iran’s Supreme Leader Mojtaba Khamenei’s statements have frequently asserted national sovereignty over Hormuz, he has not specifically referred to the indispensability of the nuclear programme. If this incipient shift in deterrence gets traction in Tehran, it could upend Iranian and regional geopolitics.
Tehran’s control over Hormuz would be legally questionable and problematic for the global economy, especially for other littoral states. However, an innovative architecture can improve the optics, say, by creating a littoral inter-governmental Hormuz management framework, with Iran as primus inter pares.
And finally, in West Asia, those defeated on the battlefield often resort to terrorism to redeem their “lost honour”. Israel’s single-minded drive for a military solution against the ‘axis of resistance’ and the simultaneous weakening of Iran create such ‘opportunities’. The pro-Iranian militias, particularly in Iraq and Lebanon, may go deeper underground to wage their mini-wars against perceived enemies. The decline of Iran and its proxies may give a second wind to the region’s Sunni non-state actors such as the Islamic State, al-Qaeda, the Muslim Brotherhood, Hamas, Kurds, IS-Khorasan, and Jaish al-Adl.
Even if only a few of these forebodings are realised, one could ask if the botched surgery to decapitate Iran has not plunged the entire world into intensive care.
Mahesh Sachdev is a former Indian Ambassador with an interest in West Asia and oil matters
Published – June 17, 2026 12:25 am IST
