Trump's Iran Sanctions Architect: MOU is Short-Term Fix for Hormuz Strait, Weapons Extension Likely

Richard Goldberg, a senior fellow at the Foundation for Defense of Democracies and a former director at the White House National Security Council, described the recent US-Iran Memorandum of Understanding (MOU) as a "short-term prescription" aimed at ensuring the Strait of Hormuz remains open. Goldberg, who was instrumental in designing the Trump administration's "maximum pressure" campaign against Iran, believes the agreement is unlikely to culminate in a final resolution and may instead be extended indefinitely.

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It's too early to say who gained more. We haven't seen what forms of sanctions relief Iran will receive. Depending on the conditions, the funds Iran gets in hand could range from billions to millions of dollars.

In a phone interview with The Hankyoreh, Goldberg characterized the MOU as a "Hormuz for Hormuz" transaction. He explained that the US's temporary easing of oil sanctions on Iran is a concession in exchange for Iran refraining from disrupting the strait for 60 days. This, he posits, is a way to avoid shocks to the energy market, which could have been triggered if Iran had closed the strait. He noted that Iran's internal hardliners might have initially gambled on the US conceding due to fears of an energy market collapse, but the limited rise in oil prices, even with warnings from major oil companies, likely instilled some fear in Iran. The pragmatic faction within Iran, concerned about economic strain and public unrest from prolonged blockades, appears to have opted for securing cash flow through oil sales as a fallback.

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This MOU is a short-term prescription to avoid shocks to the energy market by keeping the Strait of Hormuz open. It's a 'Hormuz for Hormuz' deal.

Goldberg expressed skepticism about the proposed $300 billion reconstruction fund, calling it a "pipe dream" that is highly unlikely to materialize under the current Iranian regime, especially without a complete cessation of its support for terrorism. Regarding the control of frozen assets, he stressed that the structure of control is as crucial as the amount. While the agreement designates Iran's central bank as the final beneficiary, Goldberg anticipates the funds will not flow directly into Iran. He drew a parallel to the process involving $6 billion in frozen Iranian assets in Qatar during the Biden administration, where a third-party bank would present payment requests and invoices to the US for verification of the beneficiary, goods, and end-user before approval.

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The $300 billion reconstruction fund is a 'pipe dream' that is very unlikely to be paid out under the current Iranian regime.

Looking ahead, Goldberg sees the most probable scenario as the indefinite renewal of the MOU. A shift in this dynamic would only occur if Iran secures sufficient funds to withstand pressure or if the US and the international community reduce their reliance on the Strait of Hormuz and maintain ample oil reserves. He also assessed that Iran's threat has been downgraded from weapons of mass destruction to "piracy" due to the impact of military strikes on its centrifuge manufacturing infrastructure, research facilities, and missile production capabilities. However, Goldberg cautioned that the US does not hold a clear-cut advantage in negotiations, as any military action would risk closing the Strait of Hormuz and destabilizing the energy market, while Iran's ability to close the strait comes with the burden of economic collapse under sustained sanctions.

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The most likely scenario is that the MOU will be renewed indefinitely. The balance could only shift when Iran has enough money to withstand the 'strong pressure,' or when the US and the international community have reduced their dependence on the Strait of Hormuz and have sufficient oil reserves.