United States and Iran sign a memorandum of understanding: reopening of the Strait of Hormuz and regional implications

This week, the United States and Iran will sign a memorandum of understanding (MOU) that should reopen the Strait of Hormuz and consolidate the ceasefire reached seventy days ago. This bilateral agreement will have profound implications for the countries of the Middle East and beyond.

The Gulf States

The Gulf States have eagerly awaited the end of the uncertainty caused by the poorly planned war against Iran and the reopening of the Strait of Hormuz to normal maritime traffic. These countries have been hit by Iranian missiles and drones, have suffered disruptions in oil and gas exports due to the double blockade of the strait, and have recorded casualties, in some cases even deaths, due to the war. For them, the agreement between the United States and Iran could not have come at a better time. Some members of the Gulf Cooperation Council (GCC), particularly Qatar, have played a significant role as mediators in reaching the agreement. However, the GCC states have been among the main losers of the conflict. Their projected economic growth has been revised downward, inflation has increased, and there has been a loss of confidence in their economic model. Additionally, the number of expatriate workers residing and tourists has decreased. In some cases, such as the Ras Laffan liquefied natural gas plant in Qatar, significant damage has been caused to the infrastructure on which the economy depends, and it may take years for a full recovery. The responses of the GCC states to this conflict have been varied, from total opposition to the war from the beginning (Oman and Qatar) to more ambiguous approaches (Saudi Arabia and the United Arab Emirates). However, on the eve of the signing of an initial agreement, the divergences between the GCC member states seem to have significantly reduced. Looking to the future, it is unlikely that the Gulf States will see an immediate return to normalcy. Confidence in the reliability of Washington as an ally is likely to have diminished, even though the Gulf States remain dependent on the security projection of the United States from their bases to ensure their defense. Despite the request of US President Donald Trump to expand and deepen the Abraham Accords, the GCC states are unlikely to make it a priority, given that they must deal with an Israeli government (supported by public opinion) that seems intent on undermining the agreement and reigniting the conflict. More likely is the GCC's support for the negotiation of a sustainable long-term agreement that comprehensively addresses Iran's nuclear capability and its disruptive actions in the region through proxies, i.e., a sort of Joint Comprehensive Plan of Action-plus. The acceptance of new provisions governing passage through the Strait of Hormuz may be a price that the GCC states are reluctant to pay to ensure a sustainable agreement and avoid future closures of the waterway. The Gulf States, having been so directly affected by Iran's unprecedented response to US and Israeli aggression, seem unlikely to forge close alliances with Tehran in the short term. That said, they will likely seek to increase diplomatic engagement in the hope of reducing the threat of renewed conflict.

Israel

Israel has lost the war between the United States and Iran. This is the predominant view among Israelis, only 18% of whom express support for the agreement that Trump has reached with the Iranians. Trump's enthusiasm for quickly ending the conflict and moving to an agreement with Iran has never been shared by Israeli Prime Minister Benjamin Netanyahu, who rejects the concept of accommodation with the Islamist rulers of Iran. The emerging contours of the MOU are confirming Israel's worst fears. In addition to its acquiescence to restoring passage through the Strait of Hormuz, Tehran seems to have conceded nothing tangible in exchange for Trump's commitment to withdraw US forces. Jerusalem has many concerns. On Iran's nuclear program, the alleged trigger of Operation Epic Fury, the MOU is limited to rhetorical promises, postponing the actual mechanisms to block Iran from acquiring nuclear weapons capability, without any guarantee of agreement on that most critical issue. The MOU seems to offer no treatment of Iran's arsenal of missiles, nor does it address the issue of Iranian proxies in the region. The agreement is likely to be seen as a victory for Iran, which has managed to secure the lifting of sanctions without making significant concessions. The international community, particularly the European Union, has expressed concern about the agreement's lack of verification mechanisms and the potential for Iran to continue its nuclear activities. In Israel, the agreement is likely to be met with strong criticism, both from the political opposition and from within Netanyahu's own coalition. The prime minister faces growing pressure to resign, as many Israelis blame him for the country's isolation and the perceived failure of his policies. The agreement could also have implications for the Abraham Accords, as some Arab states may reconsider their normalization agreements with Israel in light of the new dynamics in the region.

Global Effects and Future Scenarios

The agreement between the United States and Iran will not only modify regional balances but will also have significant global repercussions, influencing geopolitical, economic, and security dynamics.

Energy Markets and Trade Routes

The reopening of the Strait of Hormuz represents a crucial point for the stability of energy markets. This strategic passage, through which about 20% of the world's oil traffic passes, has seen a reduction in flow during the conflict, causing tensions in prices and concerns about global supplies. The agreement could lead to a normalization, but new provisions for the passage of ships could introduce new risk factors.

International energy companies will need to recalibrate their procurement strategies, while oil-importing countries, particularly in Asia, will closely monitor developments to ensure the continuity of supplies.

International Response and Alliances

The international community has observed with concern the escalation of the conflict. The European Union, although not directly involved, has expressed the desire to see a diplomatic solution that guarantees stability in the region. The US-Iran agreement could push the EU to review its relations with both countries, particularly in terms of economic cooperation and security.

The United Nations, through the Security Council, could be called upon to play a mediation role to ensure compliance with the terms of the agreement and prevent future escalations. However, the lack of a strong implementation mechanism could limit the effectiveness of such efforts.

Future Scenarios for the Region

The situation in Lebanon remains extremely fragile. The suspension of Hezbollah's attacks has not led to a complete cessation of hostilities, and the continued presence of Israeli forces in the south of the country fuels tensions. If the direct negotiations between Lebanon and Israel in Washington were to fail, the risk of a resumption of hostilities remains high.

In Israel, internal divisions are growing. Netanyahu faces criticism both for the management of the conflict and for the perception of a loosening of relations with the United States. If the situation were to deteriorate further, one could witness an internal political crisis, with possible consequences for regional stability.

Economic Prospects and Reconstruction

The reconstruction of damaged infrastructure in the Gulf countries and Lebanon will require significant investments. The economies of these countries have been severely affected by the conflict, and the return to normalcy will depend on the ability to attract foreign capital and reform key sectors.

International financial institutions, such as the World Bank and the International Monetary Fund, could be called upon to support these efforts, but corruption and administrative inefficiency remain significant obstacles.

The US-Iran agreement represents a step toward the stabilization of the region, but the challenges remain numerous. The ability to maintain peace will depend not only on compliance with the terms of the agreement but also on the willingness of the parties involved to engage in constructive dialogue and address the underlying issues that have fueled the conflict. The international community will need to closely monitor developments and support reconstruction and reconciliation efforts.