An Elusive Peace: the Iran War Staggers On

Wars are easy to start, harder to end.

Are the US and Iran any closer to a full peace agreement, much less a settlement — or is a return to all-out war inevitable?

On the one hand, President Donald Trump has told multiple reporters in recent days that Iran has effectively agreed to all US conditions and that talks are going well, with Vice President JD Vance set to head out to Pakistan for more talks. On the other hand, after briefly declaring it reopened last week, Iran once again declared the Strait of Hormuz closed, firing on ships transiting the waterway over the weekend, and the US continues to maintain a partial blockade on Iranian ports, seizing an Iranian vessel on Sunday while Iran has in turned captured three (as of this writing).

We are literally at a, “I’m going to blockade the Straits of Hormuz,” followed by an “Oh yeah? I’m going to blockade your blockade!” moment.

As for the peace talks, it’s unclear if Iranian negotiators will even be there to meet Vance and company in Islamabad at some as yet undetermined point in time.

There may actually also be a third option: The current status quo — definitely not peace, but not quite a return to war either — could simply continue for the time being. Call it a kind of ‘Cold Peace.’ At the moment, that’s an outcome that both the US and Iran would probably prefer over making what each would inevitably view as a humiliating compromise. But the costs of that state of affairs continue to compound every day that the Strait of Hormuz remains closed and the region remains under the threat of a return to war. This outcome appeared more likely after Trump announced an indefinite extension of the two-week ceasefire on Tuesday, despite previously saying he was unlikely to do so and despite the fact that the ceasefire wasn’t really holding in the first place.

In some ways, the dynamic is not all that different from what it was throughout the weeks of the US-Israeli bombing campaign: a competition to see which side can endure pain the longest. The difference in this new phase of the war is that when it stops is now primarily Iran’s decision.

The main dynamic at the moment is that the US has more than enough incentive to end the war (supply chain disruption and looming recession has a way of concentrating the mind) but isn’t sure how. Iran has the means to end the war but isn’t sure if it wants to (or can, if their government has become factionalized with no single body in total control).

Prior to the war, the US was seeking to pressure Iran to fully relinquish its nuclear program, with hawks hoping for a broader sweeping deal that also included Iran giving up its support for foreign proxy groups like Hezbollah in Lebanon and the Houthis in Yemen and accepting limits on its ballistic missile program. Trump’s most confident statements to reporters notwithstanding, the latter two goals have gone the way of the dodo. These have shrunk to a negotiation about Iran’s nuclear program and future control of the Strait of Hormuz — something that wasn’t even an issue at all before this war started.

If Iran had an actual nuclear weapon right now, it would probably not be in this situation, but it’s clear that its enrichment program did more to paint a bullseye on the country than protect it. Even before the war started, Iran was reportedly considering agreeing to major concessions on its nuclear program, including diluting its 400-kilogram stockpile of highly-enriched uranium. The US-Israeli bombing campaign may have made a nuclear deal more likely, but not quite in the way that any one could guess.

Iran now has the Strait of Hormuz, thanks to the US-Israeli attack on Iran — as leverage, which means that they have a freer hand now on making concessions on the nuclear issue, the ultimate irony. Proof once more that history is full of surprises.

Last week, Axios reported that the United States was considering a deal to release $20 billion in frozen Iranian assets in exchange for Iran turning over or diluting its 400-kilogram stockpile of highly-enriched uranium. This would be a tough deal for Trump to sell politically, though, considering that even this week he has continued to attack the Obama administration for “1.7 Billion dollars in ‘GREEN’ cash” released to Iran as part of the 2015 nuclear deal. But, if coupled with inspections and verification, it would constitute more progress on the Iranian nuclear issue than seemed possible just a few weeks ago, and Iran’s more confident position as a result of taking Hormuz is at least partially to thank for it.

The issue of the strait may be considerably more challenging to resolve than the nuclear issue. Iran’s proposal to impose tolls on ships exiting the strait will be unacceptable not only for the U.S. but for its trading partners as well. The strait is an international waterway, and Iran’s attempt to take control of it challenges the principles of free navigation that underlie the global trading system. But that doesn’t mean Iran will let go of its new economic weapon without getting something meaningful and significant in return.

The Iranian regime’s main goals in this conflict have been, first, to survive and second, to impose punitive costs on the US and its allies so severe that they wouldn’t be tempted to attack the country again in the near future (which could mean at least until the end of Trump’s term). By seizing the strait, Iran has succeeded on the second goal, perhaps even more so than expected. But an internal debate seems to have opened up over whether it’s time for Tehran to compromise and move on from the conflict or to continue to inflict punishment on its enemies. Beyond that there is opacity as to what Tehran’s Chinese and Russian allies might be counselling behind closed doors.

In an interview on Iranian state television over the weekend, parliamentary speaker Mohammad-Bagher Ghalibaf, Iran’s main negotiator with the United States, defended the talks, saying that while Iran would drive a hard bargain, U.S. military capabilities should not be underestimated, and conversely, Iran’s position should not be exaggerated. Ghalibaf was likely responding to criticism from newly ascendant hardliners within Iran’s Republican Guards Corps (IRGC) and to the large nightly rallies in Tehran by regime supporters calling on the government to not to compromise and continue the fight. The removal of former Supreme Leader Ayatollah Khamenei coupled with the enigmatic status of his son and heir have created a power vacuum in which the various factions are openly vying for dominance.

Would $20 billion — in “GREEN” cash or some other form — be enough to get Iran to part with both its uranium and its control of the strait? Perhaps. But the strait has provided Iran with a weapon of mass disruption that certainly has deterrence value. But the new hardline leaders of Iran might want to combine that with a weapon of mass destruction nonetheless.

In other words, rather than substituting an economic deterrent for a nuclear one, Iran may simply decide it should have both. In this, the North Korean example has provided them with a possible way forward: the Kim dynasty has guaranteed its continued existence by developing nuclear weapons at any cost with the end result that regime change, however desirable that may be for the populace, is unrealistic. If Kim Jong-Un could secure not one but three summits with an American president, than the Iranians could probably get Washington to back off any overt assaults at least.

Quo Vadis? If I knew, I'd Tell You

Privately, according to a few sources, Trump is concerned about the prospect of using military force to reopen the strait, telling aides that US troops sent to occupy the strategic Kharg Island would be “sitting ducks” for Iranian reprisals and comparable to Jimmy Carter’s failed rescue of US hostages in Iran in 1979. Despite Defense Secretary Pete Hegseth’s warning that the US is “locked and loaded” to follow through on Trump’s pre-ceasefire threat to destroy Iran’s electricity grid, a return to full-scale combat like we saw in March seems unlikely.

Even if the ceasefire does formally end at some point, that doesn’t necessarily mean the U.S. will resume airstrikes against Iran or that Iran will resume its missile and drone strikes against the Gulf states. The strait may simply remain mostly closed, with periodic skirmishes, a situation analogous to the 1980s “Tanker War” in the strait that went on for years on the sidelines of that decade’s Iran-Iraq war. While Ronald Reagan did occasionally bait the Iranians into actions which allowed him to give them the occasional bloody nose militarily, the Gulf’s oil did flow (occasionally fitfully) both countries were able to avoid actual open hostilities.

The difference today is that the Tanker War never disrupted more than 2 percent of the ships passing through the strait. The current crisis is affecting more than 90 percent.

Trump has so far benefited from the fact that the US is less exposed to the shortages and disruptions caused by the strait’s closure than other regions, particularly in East Asia. In addition the stock and oil futures markets have been volatile but less affected than one might expect. But a world where Europe is running out of jet fuel in a matter of weeks is not one that’s going to leave the U.S. economy indefinitely unaffected. Energy Secretary Chris Wright is already saying US gas prices are likely to remain above $3 a gallon until after 2027 — after this year’s midterm elections. The relatively bullish markets are responding to expectations of an imminent deal, but they are likely to change if the administration appears to have settled for a permanently closed strait or even an Iranian toll booth.

For all their newfound bravado, Iran’s rulers also badly need time and money to reconstitute their regime, replenish their defensive arsenal, and begin the process of rebuilding what the U.S. and Israel have destroyed for, despite whatever else they might say, their ability to wage war and export militarism has been savagely curtailed.

Both sides therefore have an incentive to prevent the strait crisis from escalating further. But the two sides’ positions are still far apart, and as long as the crisis continues, the risk of miscalculation is very real. Though the 1980s Tanker War may have been on a far smaller scale than the current crisis, it notably included an infamous incident of a US warship accidentally shooting down an Iranian civilian airliner, killing nearly 300 people. This war has already included a notable example of faulty US targeting leading to a mass tragedy when instead of a military base, a missile blew up a school full of children. Such calamities, though considered ‘collateral damage’ in the ice-cold parlance of conflict, is in some ways inevitable especially when given the sheer volume of ordnance each side was shelling out.

Both the US and Iran may want to keep this next phase of the war as ‘low-intensity’ as possible, but, it's an unfortunate truism in life that we can't always get what we want.