The art of a bad deal

Critics on the right and left are already taking aim at the war-ending Memorandum of Understanding (MOU) between the United States and Iran. First and foremost, objections focus on the extensive economic relief promised to Iran, alongside few clear concessions on the Islamic Republic’s nuclear programme. The Trump administration’s defence of the agreement has centred on the fact that it is preliminary, and a final deal will satisfy US objectives.

It is hard, however, to read the MOU without reacting to the breadth and scale of US concessions alongside still vague Iranian ones. Beyond the economic carrots the US is offering Iran just to reopen the Strait of Hormuz – restored rights to sell its oil and access to frozen funds – the MOU names longer-term benefits for Iran to be unlocked by a final agreement. Most notable among these is a $300 billion fund for Iran’s reconstruction. Many are eagerly pointing to Trump’s harsh criticism of the ‘pallets of cash’ President Obama’s nuclear deal delivered to Iran and asking how he could possibly defend the far larger sums implied in this MOU.

Eye-popping numbers aside, any agreement with Iran was always going to include economic incentives. Where this agreement fails is in what those incentives are being offered for and whom they are being offered to. Incentives at this scale should be employed against a far broader set of demands, ideally reaching beyond just constraining the Islamic Republic’s nuclear programme and attempting to reshape how it engages with the surrounding region, the US, and its own people.

First of all, every indication suggests that, even in the final deal, Trump intends to focus on denying Iran a nuclear weapon. That has been his constant refrain. Yet the United States’ war goals were always broader than that, stretching to include a cessation of Iran’s support for regional proxies and limitations on its ballistic missile and drone programmes. Given the existing obstacles to even a nuclear-only deal, we do not expect to see progress on these other files.

It is also very difficult to argue that now is the appropriate time for a carrot-forward deal. This war has only tightened the IRGC’s hold on Iran’s government and economy. Without significant political and economic reforms, massive capital flows into Iran would almost certainly run through the IRGC and associated entities (which will be even harder to head off if the US follows through on comprehensive removal of sanctions on Iran’s government).

Finally, this agreement completely ignores the plight of Iran’s people. It is easy to forget now, but, five months ago, Trump initially threatened to attack Iran on the basis of defending the Iranian people from a brutal crackdown, claiming ‘help is on its way’. In the end, anywhere from 7,000 to more than 30,000 Iranians were killed, with Trump himself citing a death toll of 32,000. That crackdown has continued quietly since January, with the Islamic Republic continuing to hold prisoner thousands of protesters, execute political prisoners, and seize assets and property from anyone they accuse of undermining the regime.

To offer, even hypothetically, mountains of cash to this regime without a reference to its recent and ongoing record of atrocities adds insult to injury for the Iranian people. Trump’s team should at least try to tie economic incentives to human rights in a final agreement. Nothing close to $300 billion should be delivered to a regime whose historical oppression of its people has only become worse in recent months.

Ideally, we would also see economic reforms that diminish or at least transform the IRGC’s role in the economy to ensure that large-scale foreign investment primarily benefits the Iranian people. Otherwise, 30 years from now, Iran could look like Russia: a corrupt security elite still in charge and the broader population continuing to languish without economic opportunity.

So why is Trump willing to pay such a historically high price for a concession that falls well below stated US objectives, fails to protect the interests of US allies, and ignores the human rights of the Iranian people?

Unfortunately, the prospects for a final deal are weak enough as it is, and additional demands will not help. Within Trump’s own cabinet, there are doubts that Iran will concede enough on the nuclear issue alone to arrive at a final agreement.

And yet, in the face of so much opposition to the MOU, Trump could eventually heed those calling for him to demand more from Iran in the next stage of talks. Obvious candidates for new demands include ending Iran’s support for Hezbollah, the Houthis and Hamas, alongside capping its missile and drone programmes. The exclusion of those items would generate a permanent Israeli objection, as their absence from the JCPOA did.

The Islamic Republic will accuse Trump of moving the goalposts each time he adds a demand, making a final deal even more elusive. How many times will we see the initial 60-day negotiating period extended before one or both sides walk away? Do we then return to war, or does Trump try to change the subject, for example, to Cuba?

Obstacles to a deal aside, even the current ceasefire is far from safe. Iran has reportedly continued to fire drones into the Strait of Hormuz every day since the MOU was announced. And Israel and Hezbollah continue to exchange blows, with Iran claiming the broader deal with the US is contingent on Lebanon’s inclusion in the ceasefire.

In his desperation to get out of this war, Trump is offering an astronomical price for an agreement that fails to deliver on US objectives. The US has neither mitigated the threat Iran poses to the Gulf and Israel, nor protected its people from future rounds of state violence and other oppression. Worst of all, under-conditioned economic incentives risk extending a long-term lifeline to a regime that just killed tens of thousands of the Iranian people.