Once upon a time, in a time not long ago, wars were fought between nations and the winners of the wars generally extracted benefits from the victory. Those benefits might include land, money, peace, demilitarization, regime change, etc. But in the Trump Administration, we live in the upside down (without the scary aggressive beasts of Stanger Things) – win is lose, light is dark, and in our government’s case, strong is weak.

We were a party to the Islamabad MOU (yes, now our treaties are being named for Pakistan cities (you remember Islamabad, Pakistan – the same metro area that hid Osama Bin Laden for years after 9/11). Now there are various levels of diplomatic agreements – there are treaties (lengthy detailed binding contracts with consequences spelled out for breaching them), letters of intent (commitments to achieve certain objectives, a la Paris Climate Agreement), and there are memorandums of understanding (MOUs). Essentially an MOU is where both parties write down things they can agree upon, with little detail as to how those agreements will come to fruition. Think of it as the poster to your favorite music festival – you know the dates, location, and who’s playing but little else. In this MOU, we got a big title (Ceasefire!), money on the table (lots of money!), agreements to talk about certain things, and a parting of the sea – whoops, I mean the opening of the Strait of Hormuz to goods traffic (oil, fertilizer, helium – things that make the modern world go round).

Back before the upside down, there was another agreement – the JCPOA – a very detailed multilateral agreement amongst most major powers in the world and Iran. That agreement had a 15 year term with severe restrictions on nuclear enrichment with strict verifications. And while the JCPOA was only in effect for 3 years before the upside down decided that no restrictions were better than some restrictions (that would be the first Trump Administration), the agreement did the job – no highly enriched uranium in Iran – only what was needed for commercial use (nuclear power, medical, etc). In exchange for the JCPOA, Iran got access to some of its money held in foreign banks ($30-50B) – it’s own money, not someone else’s money. After the JCPOA was terminated by the US, Iran built more centrifuges to produce highly enriched uranium (just under the amount of enrichment required to create a bomb). The 2018 Trump said we could do better than the JCPOA, and he would make it happen. We should have known better…

But here we are with an MOU. There’s an agreement to cease hostilities – even on fronts where the two parties (Iran and US) have no control (Lebanon). There is an agreement to open the Strait of Hormuz to traffic (or at least there was at the time of the signing on Friday – a day later, with rocket fire from Hezbollah and Israel returning fire, the IRGC ‘closed’ the strait). You can bet that crude oil prices will be going back up tomorrow as a result. Atypical of a ceasefire (which this is – the MOU only lasts 60 days), the US agreed to pull back its forces from Iran’s ‘proximity’ within 30 days – assumably this means naval ships, but like most of the MOU’s language, what this means practically is vague. None of these items changes the situation from where we were when the war started in late February.

Also in late February, the US was negotiating directly with Iran regarding their nuclear capacity. The MOU essentially restarts that conversation, without any agreement about what outcome might prevail. The war did not inflict any more damage on the nuclear capacity of Iran than the missile strikes last summer. For a war about nuclear capability, this war accomplished nothing. The MOU does not limit the nuclear enrichment capacity of Iran – the JCPOA did. In fact, the one thing that enabled Iran to gain weapons-grade uranium enrichment capacity was President Trump pulling out of the JCPOA. Are we safer today than 100 days ago? No.

The MOU grants substantial financial opportunities to Iran. First and foremost, they are permitted to rejoin the global oil market – the US waiving any sanctions currently in place. Not only will this result in more revenue for Iran, but more revenue at market prices, as the Chinese (the primary buyer of Iranian oil under the sanctions) purchase Iranian oil at a 15 -20% discount. The ability to sell more oil and sell at market prices, even for a 60 day period (the term of the MOU), is a boon for Iran.

The other revenue opportunities for Iran are substantial, if vaguely conditioned. The US agreed to pursue sanction relief, both in the US and internationally. This will include access to banking systems and access to funds that have been unavailable to them (this could be worth $24B). After 60 days, the Iranians will be able to charge ‘fees’ for transit through the Strait of Hormuz – not tolls, which are prohibited under international law. In addition, the MOU indicates that the US will pursue a fund of at least $300B to reconstruct Iran and enhance economic development. The US has said that they will not directly contribute to the fund and that the Gulf States will (although having been bombed during the war by Iran and needing to reconstruct their own infrastructure, it would seem dubious that they will ante up for this fund). Three hundred billion is about equal to the GDP of Iran – it is an enormous sum of money. With no restrictions on the use of these funds, one can only assume that the Houthis, Hezbollah, and Hamas terrorists in the region will get a cut of this prize. The US has never been able to stop funds flowing to these organizations before, so any presumption that a new agreement with Iran can stop it now appears doubtful.

Most significant is what will not happen. Iran will not be paying the Gulf states it attacked during the war as reparations. Iran will not be discussing it’s missile program – in Trump’s new view of the world “missiles aren’t the problem” – Israel begs to differ. Iran sponsored terror groups are not discussed in the MOU (despite VP Vance’s references to ‘behavior’ based rewards from the agreement). Iran will not be paying the US and Iran will get paid – I guess we must assume that Iran won the war. Because that’s what happens in the upside down.

And the national disgrace continues…