Iran Gets Major Economic Lifeline for Minimal Concessions in Initial Deal

An initial agreement by the United States and Iran to halt their war grants Iran major economic benefits while delaying the toughest concessions that Iran would eventually have to make on its nuclear program.

The agreement lifts the U.S.-imposed naval blockade of Iranian ports and, most crucially, grants Iran waivers to export its oil before the negotiation of a final agreement on its nuclear program. That will give Iran a critical economic lifeline. In recent years, its economy has been in a tailspin, with a collapsing currency and sky-high inflation.

The one major step to be taken by Iran is reopening the Strait of Hormuz to free passage for the next 60 days, though the agreement seems to leave open the possibility of charging fees after that period.

“On balance, the memorandum appears to favor Iran,” said Nicole Grajewski, who teaches at the Center for International Studies at Sciences Po in France and studies Iran’s foreign policy. “Tehran secures movement toward sanctions relief, a pathway for the restoration of oil exports, access to economic benefits and a reduction in military pressure while making relatively limited new nuclear commitments.”

But many of the most difficult concessions that the United States sought have been postponed, she said, though it is possible a future agreement could rebalance each side’s concessions and gains.

“But judged solely on the memorandum itself, the immediate and concrete benefits accrue disproportionately to Iran,” Ms. Grajewski said.

The agreement stipulates that the United States must begin lifting its naval blockade of Iran immediately and that Iran must allow commercial traffic through the Strait of Hormuz, but it was unclear whether those steps had occurred. Nevertheless, the news that the two countries had agreed to the deal sent oil prices downward, with the average U.S. gasoline price hitting less than $4 per gallon on Thursday for the first time in months.

Critics are alarmed by the oil sales clause in particular because it also commits the United States to temporarily lifting banking restrictions to help facilitate Iran’s oil trade.

“Broadening authorization to financial transactions would crack the core architecture of U.S. oil and financial sanctions against Iran, arguably the most powerful economic leverage the U.S. holds over this regime, absent the naval blockade,” Miad Maleki, a former U.S. Treasury official and a senior fellow at the Foundation for Defense of Democracies, wrote on social media.

The Trump administration has said that the interim deal maintains the United States’ leverage over Iran and that the final one will include verification of Iran’s compliance with nuclear restrictions. It has also said that removal of all sanctions depends on a fundamental transformation of Iran’s behavior, including ending its support for militant groups abroad.

“Do they actually think we’re going to release sanctions on the Iranian system if they’re still funding a terrorist organization?” Vice President JD Vance said in an interview with New York Times Opinion published on Thursday.

But while many restrictions on Iran will remain during the interim before a full deal, the country is likely to benefit to the tune of billions of dollars from resumed oil sales.

Those who favor diplomacy with Iran praised the memorandum, saying it offered the chance for a new page in U.S.-Iran relations.

“The measures in this agreement should not be read as concessions, but rather corrections to a decades-old policy of coercion that was an abject failure and made war inevitable,” Jamal Abdi, the president of the National Iranian American Council, an advocacy group, said in a statement.

Iran’s collapsing economy has been a source of discontent for the Iranian people over the last decade. Since 2017, three large rounds of protests have kicked off over economic concerns and quickly led to protesters calling for fundamental changes to Iran’s system of governance. The last round, which began in December after a steep drop in the value of the rial, Iran’s currency, resulted in the demonstrations being brutally crushed by authorities.

Increased oil revenues would help shore up the rial’s value and ease pressure on the government’s budget, giving Iranian consumers and taxpayers some relief. But government corruption and mismanagement are also major causes of Iran’s economic woes and are likely to remain so in the immediate term.

Some analysts were puzzled over why a similar agreement could not have been made before a monthslong war that has killed Iranian civilians, destroyed parts of the country’s infrastructure and enabled Iran to exert leverage over the global economy.

“It’s difficult to escape the conclusion that these negotiations could have taken place without a three-month war,” said Holly Dagres, a senior fellow at the Washington Institute. “Much of what is outlined in the agreement — including the Strait of Hormuz, which has historically remained open — could have been addressed through diplomacy.”

And she pointed out that the agreement left the most difficult issues, including the precise limits to be imposed on Iran’s nuclear program, for later talks.

“I’m skeptical that the next 60 days of talks will produce concrete results,” she said. “This is merely kicking the can down the road.”