The United States and Iran have suspended armed action in the Persian Gulf and are launching negotiations that are expected to bring peace within 60 days. These are the assumptions of the memorandum signed tonight. For the first time since the beginning of the conflict, the possible of peace in the region has become real.
Donald Trump is presently in France, where he participates in the G7 summit. “I just signed that,” said the American president of journalists, leaving the palace in Versailles tonight. The American president meant a 14-point agreement between the United States and Iran. The paper provides for an immediate ceasefire in the Persian Gulf and assumes a 60-day process of seeking a peace treaty between the 2 countries.
"The memorandum between Iran and the US has already been officially finalized, as both parties have signed for it," confirmed Esmail Baghaei, spokesperson for the Iranian MFA. The paper was created in 2 languages – English and Persian. The signing ceremony of the memorandum was of a circumstantial nature, as there was no gathering of representatives of both parties. Iran's president Masud Pieszkaan signed the agreement electronically without leaving his country.
Full Block End
The memorandum sets the framework for the peace process, which is intended to bring the war to a definitive end. The paper provides for the immediate and permanent cessation of military action on all fronts, including those related to the conflict in Lebanon. Both parties undertook not to initiate fresh military operations against each other, refrain from threats of force usage and respect for common sovereignty and territorial integrity. The memorandum besides mentions the non-interference of the another party's interior affairs, which can be interpreted as the resignation of Washington from attempts to weaken or change the Iranian regime.
The paper is of a transitional nature. It envisages beginning negotiations on the final peace agreement which should be reached within 60 days, i.e. until 16 August. That period may be extended with the agreement of both parties. Pending the conclusion of the final agreement, stabilisation mechanisms are to be in place to prevent the escalation of the conflict. Iran will keep its atomic programme, while the United States has undertaken not to impose fresh sanctions and not to strengthen its military presence in the region.
Much of the memorandum was devoted to economical and commercial issues. The U.S. is to immediately start abolishing maritime blockades and another restrictions that hinder the functioning of the Iranian economy. Full completion of the lock was scheduled within 30 days, i.e. until 19 July. At the same time, the Americans are to retreat additional forces deployed in the region during the war. According to media estimates, about 50,000 troops are targeted towards the mediate East as part of the strengthening of the quotas constantly present in the Gulf States.
In return, Iran undertook to guarantee the free movement of tankers by the Ormuz Strait without charging or additional charges. This warrant is to be valid for the full 60-day period of the memorandum. In the longer term, Iran and the countries of the region are to make a fresh strategy governing shipping through strategical waters. It is to comply with global law and guarantee the safety of maritime trade on 1 of the world's most crucial energy routes.
Right to civilian programme
One of the most ambitious elements of the agreement is the announcement by the US and their partners of an global recovery and improvement plan for Iran worth at least $300 billion. Details of the programme have not yet been disclosed, but the funds would be utilized to modernise infrastructure, rebuild the economy and attract abroad investments. In parallel, Washington undertook to phase out economical sanctions and to let Iranian oil exports even before the full negotiation process was completed. Pending the full abolition of the restrictions, the U.S. Treasury Department is expected to issue peculiar exemptions allowing oil trade, handling bank transactions, insurance and transport related to the export of energy resources.
Findings on the atomic programme are besides crucial. Tehran has declared that it will not make or get atomic weapons. At the same time, the memorandum does not deprive Iran of the right to run a civilian atomic program. Stocks of enriched uranium stay a separate issue. The paper provides that the material will be subjected to appropriate procedures, at least by dilution under the supervision of the global Atomic Energy Agency. Details are to be agreed during the next circular of negotiations.
The agreement besides provides for the unlocking of frozen Iranian assets located abroad. The final procedures for releasing these funds are to be established during peace talks. According to Iranian representatives, Tehran expects access to around $24 billion in the first place, but estimates of the full value of frozen assets are importantly higher and scope as much as $100 billion.
The implementation of all provisions of the memorandum is to be supervised by a peculiar monitoring mechanism. Its task will be to monitor compliance with the ceasefire, implementation of economical arrangements and advancement in political negotiations. The Parties besides agreed that the future peace agreement would be approved in the form of a binding UN safety Council Resolution. specified a solution would give the agreement an global rank and hinder its subsequent unilateral challenge.
Escape from the spectrum of recession
Not only political and military considerations influenced the signing of the memorandum. The economical costs of the conflict besides played an increasingly crucial role. Although the Pentagon estimated direct war spending at tens of billions of dollars, American consumers felt the economical impact much more strongly. According to Moody’s Analytics calculations, the war since the end of February has cost US households around $100 billion. The main origin of problems was rising energy prices resulting from the disruption of oil transport by the Ormuz Strait.
Economists pointed out that the price increase of petrol, diesel and aviation fuel began to offset the benefits of taxation reductions introduced by the Donald Trump administration. According to Mark Zandi, the chief economist of Moody’s Analytics, as early as mid-May additional taxation returns ceased to compensate the Americans for higher energy costs. This was peculiarly acute for low- and medium-income farms where fuel spending accounts for a crucial part of the household budget.
The effects of the war were not limited to the fuel market. More costly oil has translated into an increase in airline ticket prices, higher transport costs and disruption of the supply of many natural materials and industrial products. Analysts warned that a prolonged conflict could lead to a further slowdown in the American economy and even increase the hazard of recession.
But the affirmative effects of ending fights will not only affect Americans. The signing of the memorandum was welcomed by financial markets. Oil prices have fallen to the lowest level since more than 3 months after investors considered that beginning the Ormuz Strait and returning Iranian oil to the marketplace would reduce the hazard of further disruptions in global energy supply.
