Less than a month after the United States and Iran signed the agreement that was supposed to end the war in West Asia and create the basis for a wider deal, American warplanes are again pounding Iran. In response, Iran is attacking US-linked targets in the Gulf nations and threatening commercial shipping. Missiles and drones are flying across the Gulf and over the Strait of Hormuz. Oil prices have jumped, and the nervousness has returned to global markets.
At the NATO summit in Ankara, which concluded yesterday, President Donald Trump appeared to pronounce the last rites. "As far as I'm concerned, it's over," he said of the understanding with Iran.
Hours later, however, Trump was telling journalists aboard Air Force One that Iranian officials had called "just a little while ago" and wanted a deal "so badly". He was not sure, he added, whether they were "worthy" of one.
Welcome back to Donald Trump's televised, open diplomacy.
The latest escalation began after attacks on three commercial ships near the Strait of Hormuz, which Washington blamed on Iran. The American response was blistering. US Central Command says it hit around 80 Iranian military targets on Tuesday, followed by approximately 90 more in the next round of strikes in the early hours of Thursday. The latest attacks, it said, were aimed at further degrading Iran's ability to threaten commercial shipping and civilian mariners in the Strait of Hormuz.
'Bullying And Breaking Promises'
Iran is equally defiant. Its parliamentary speaker and chief US negotiator, Mohammad Bagher Ghalibaf, says America has still not learnt that "bullying and breaking promises" are no longer cost-free. Iran's foreign minister has responded to Trump's insults by saying Tehran will answer not with vulgarity, but with action.
Explosions have been reported in Bahrain. Kuwait says it has intercepted missiles and drones. Qatar has issued a security alert.
This doesn't appear to be a small breach of a fragile ceasefire. West Asia is again climbing the escalation ladder. And yet, it would be premature to write the obituary of the Islamabad agreement.
Trump's latest words must, of course, be taken seriously. He is the President of the United States, which just celebrated its 250th birth anniversary with pomp and show of strength. In Ankara, he called Iran's leaders "scum" and "sick people". Talking to Tehran, he suggested, may simply be a waste of time. He has even spoken about the possibility of taking over Kharg Island, the strategic centre of Iran's oil exports.
The Trump Vocabulary
Indeed, Trump has completely changed the language of diplomacy. American presidents in the past made threats, too. They bombed countries. They imposed sanctions, and they toppled governments. But they usually chose their public words carefully. Trump does not.
Remember that extraordinary meeting with Ukrainian President Volodymyr Zelenskyy in the Oval Office last year? A diplomatic disagreement became a televised argument. The sort of language normally heard behind closed doors was suddenly being spoken in front of cameras.
Iran has been dealing with Trump long enough to understand this.
This is the same American president who has talked about regime change in Tehran and then shown a willingness to negotiate with the very same Iranian government. Even after declaring the Islamabad understanding effectively dead, Trump acknowledged that his envoy Steve Witkoff and son-in-law Jared Kushner remained involved in the diplomatic process.
Goodbye To Ceasefire?
So, is the deal really dead?
Perhaps.
But the telephone lines do not appear to have been cut yet. The same contradiction exists in Tehran. Iran says Washington has violated the agreement by restoring pressure on its oil trade and attacking Iranian territory. Tehran has also pointed to continued Israeli military action in Lebanon. Israel was to withdraw from south of Lebanon, which it has not, and continues to bomb Lebanese towns and cities. Iranian officials argue that America has failed to honour important commitments made under the memorandum.
The text of the agreement matters here. The MoU envisaged no new US sanctions while a final deal was negotiated and included waivers connected with Iranian oil exports. It also required both sides to maintain the status quo pending a final agreement. Yet Iran too has stopped short of formally burying the memorandum.
Why? Because, for all the anger, Tehran may also want to keep a small diplomatic window open. The bigger problem is that the original argument over Iran's nuclear programme has now been overtaken by another, potentially even more dangerous fight: the Strait of Hormuz.
The Hormuz Card
Iran appears to have learnt an enormous strategic lesson from the war. It has proven in recent months that Hormuz may be more useful to them than a nuclear bomb. A nuclear weapon is difficult to build. It invites international isolation. Using one would risk national destruction. Hormuz can be squeezed today. Attack three ships, and insurance premiums will rise. Tankers will hesitate to deploy. Oil prices will inevitably jump. Our governments in India and other parts of Asia will become nervous. European markets will fall.
Around a fifth of the world's oil and gas supplies pass through this narrow waterway. Iran does not need to defeat the US militarily to cause enormous global damage. It merely needs to make the Strait unpredictable. Or shut it for as long as it deems necessary.
That is an extraordinarily powerful weapon, isn't it?
It has dawned on us that Tehran now appears determined to create a new reality in Hormuz. Iranian politicians have spoken about greater control over vessels passing through the waterway. There has even been discussion of ships effectively paying for passage. Washington will never easily accept such an arrangement. Control over Hormuz would give Iran leverage not simply over America, but over the global economy.
Trump's Plan
Trump's threats against Iran's oil infrastructure, particularly Kharg Island, should be looked at in that context. Iran can store oil on land. It can fill tankers and leave them sitting offshore. But it cannot do this indefinitely. At some point, Iran has to sell its oil. The American strategy appears straightforward. Make it harder for Iran to export oil. Threaten the infrastructure that allows Tehran to earn money. Increase the economic pain.
Then wait.
The hope in Washington is that Iran eventually returns to the negotiating table on American terms. But Iran has another card. It can make the rest of the region pay the price. The attacks and threats against US military facilities in Bahrain, Kuwait, and elsewhere in the region are reminders of Tehran's ability to widen the conflict. Iran cannot match America's military strength. It does not need to. It only needs to make the war expensive, unpredictable, and regional.
A Dilemma In The Gulf
That scenario is painful for the Gulf countries, nearly all of whom are American allies and have American military bases there. Nobody in the Gulf wants another long war. The region has changed dramatically over the past decade. Saudi Arabia, the UAE, and Qatar want to talk about artificial intelligence, global finance, new cities, tourism, sport, and life after oil. Missiles flying over their capitals do not quite fit that sales pitch.
Their vulnerability is being exploited to the full by the Iranian regime. We should, therefore, expect another intense diplomatic effort. Qatar has already shown it can play such a role. Oman has decades of experience in quiet diplomacy. Pakistan's own credibility as a serious negotiator is at stake, as the final agreement, if reached, could be called 'the Islamabad Declaration'.
But bringing Washington and Tehran back to the negotiating table will be much harder this time. Shehbaz Sharif will have sleepless nights convincing the warring sides to return to negotiations. The two sides were to have another round of talks on July 11. That may not happen now. Trump says Iran cannot be trusted. Iran says America has already broken its promises.
Two Scenarios
And beneath both arguments sits Hormuz. The US appears determined to guarantee freedom of navigation. Iran appears equally determined not to surrender the strategic leverage it believes the Strait gives it. Experts fear the next phase could resemble violent tit-for-tat bombings. America attacks Iranian naval, missile, and drone infrastructure around Hormuz. Iran hits shipping and US facilities in the Gulf. This expands its target list. Iran further restricts the Strait. It continues until one side blinks. Or the Gulf states demand emergency diplomacy.
There is a possibility that controlled escalation can turn into war. Trump's volcanic language worries many people. But the military logic should worry them more. If Iran says it will close or squeeze Hormuz whenever it is attacked, and America says it will attack Iran whenever shipping is threatened, the two positions can mechanically produce escalation even if neither side wants a prolonged war.
And the global economic consequences could be severe. It will affect the Indian economy, which has proved to be quite resilient in the face of the ongoing war in the region. Experts believe India is particularly vulnerable because of its dependence on imported energy. A prolonged rise in oil prices would put pressure on the rupee, inflation, and the current account. India's growth story would not disappear. But it would become considerably more expensive.
In Europe, higher oil prices would revive inflation just as central banks are trying to bring it under control. Policymakers would face an ugly choice. Weak growth would argue for lower interest rates. An energy shock would argue against them. China, too, can ill afford another external economic shock.
It is quite ironic that the Islamabad agreement was supposed to move West Asia away from precisely this danger. Its published text promised a framework covering sanctions, oil exports, Iran's nuclear programme, and a final deal backed by a UN Security Council resolution. Less than a month later, the agreement is gasping for breath.
Even so, it is not quite dead - yet.
(Syed Zubair Ahmed is a London-based senior Indian journalist with three decades of experience with the Western media)
Disclaimer: These are the personal opinions of the author
