The US and Iran signed a Memorandum of Understanding (MoU) on 17 June. To anyone following the subsequent talks in Lucerne, hope and uncertainty feel like two sides of a spinning coin.
But why is there so much uncertainty? A few possible reasons:
This is a MoU, an instrument typically used for trade and investment deals, not for peace talks. No war in history is known to have ended with a MoU. The mediators from Pakistan and Qatar must have struggled to find an instrument that cements the April ceasefire and came up with MoU. Creative diplomacy perhaps, but it also means that the costs of defection are relatively low to the negotiating parties.
The sequence of the terms of the MoU are important. US actions come first, and then Iranian actions. While it is not stated, this kind of sequencing in a diplomatic document implies that Iran's steps are conditional to steps taken by the US.
The sequencing also suggests that the Strait of Hormuz - a 100- day old issue- is deemed more important than the 20-year-old nuclear issue! This implies that the global economic consequences of the war (because of the closure of the Strait) are the real reason to end the conflict, and take precedence over all other considerations.
Iran's commitment to never pursue nuclear weapons does feature in the MoU, but it is largely on the same lines as the JCPOA. The commitment does not come till point 8 of the 14-point MoU and says that Iran “RE"affirms that it shall not procure or develop nuclear weapons. The RE- suggests that Iran wants the US to acknowledge that it has made this commitment before. What new commitment has then been gained after the war?
The lifting of sanctions by the US is a major concession. But Iran has historically preferred the phrasing “unilateral coercive measures (UCMs)” rather than “unilateral sanctions”, so it is significant that Tehran has left out this phrasing in the MoU. It implies that Tehran is ready to use US phrasing for the economic measures taken by the US against it. But why? Perhaps Tehran is keen that the agreement - if it eventually becomes a peace treaty- gets US Congressional approval/ratification; and the phrasing will matter when it goes before Congress.
The release of USD 12 bn is small but significant. But whether it is used to buy US food produce and what kind of produce remains to be seen. (For instance, Iranians largely use soybean for animal feed. It is barely used for human consumption in Iran and may not be a national priority). So even if Iran accepts that the released funds are to be used to buy US produce, Iran can only buy so much of the produce. Iran’s entire annual consumption of Corn, Wheat and Soybean would be worth less than half of the USD 12 bn. What happens to the remainder of the money ?
Now, the meetings of “technical committees” with diplomats from either side, are the silver lining to the cloud of uncertainty. But the challenge is that both sides have their own version of Principal-Agent dilemma playing out.
On the US side, the agents/negotiators at the table may have a hard time persuading their Principal (who prides in his dealmaking abilities) that they have secured the best possible deal for him. On the Iranian side, the Principal is not clear. Is it the Supreme Leader or the President? The Leader wasn’t even keen on the negotiations and has only conditionally approved the MoU. And President Pezeshkian will find it hard to say No to anything that the negotiators at the table to, as they are led by powerful Speaker Mohammad Qalibaf who has the loyalty of the IRGC. So neither side comes to the table with a normal Principal-Agent relationship. And this may well have an impact in the implementation of the MoU.
This roller-coaster ride is likely to continue till mid-July. More to come.