Iran has received Washington’s formal response to its latest proposal for ending the seven-month conflict and reopening the Strait of Hormuz. The contents have not been disclosed, but the diplomacy has moved beyond public insults. The obstacle now appears to be one of the oldest problems in diplomacy: neither side wants to surrender its leverage first.
For months the Strait of Hormuz has been simultaneously a shipping route, an economic weapon and a bargaining chip. Iran’s ability to disrupt one of the world’s most important energy corridors has imposed enormous costs far beyond the Middle East, while the American blockade and sanctions regime has imposed equally severe pressure upon Iran itself.
That mutual pain has finally produced something approaching a negotiating process.
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Iran last week put forward a seven-day proposal under which it said the Strait of Hormuz could be reopened and normal maritime passage restored if Washington accepted a series of conditions. Those included lifting the American blockade of Iranian ports, easing restrictions on Iranian oil exports, releasing frozen Iranian assets and establishing a ceasefire framework.
The proposal also envisaged the resumption of negotiations over Iran’s nuclear programme.
President Donald Trump publicly rejected the Iranian offer, describing it as unacceptable. It would have been reasonable at that point to conclude that the initiative was finished.
It wasn’t.
Qatar continued carrying messages between Washington and Tehran, with Pakistan also involved in the diplomatic effort. Iranian Foreign Minister Abbas Araghchi subsequently received American feedback through Qatari mediators and returned to Tehran with Washington’s response.
Iran has now formally acknowledged receiving it.
The contents remain undisclosed, which makes extravagant predictions particularly unhelpful. What is known is that the central disagreement appears to concern sequencing rather than simply whether the individual elements of an arrangement can be discussed.
That may sound procedural. It is actually the heart of the problem.
Iran wants relief from the economic pressure being imposed by the United States before surrendering its principal leverage over international shipping. Washington wants the Strait reopened and Iranian concessions secured before giving up the pressure that brought Tehran to the negotiating table.
Both positions make perfect strategic sense.
They are also mutually incompatible unless somebody moves first or both sides move together.
This is why a phased agreement has become increasingly important. Instead of requiring one side to surrender its leverage in advance, Washington and Tehran could take reciprocal steps according to an agreed timetable. Iran could progressively restore maritime passage while the United States simultaneously relaxed specified elements of its blockade and sanctions.
The seven-day proposal attempts to create precisely that sequence. The attraction is that each side receives something while retaining sufficient leverage to respond if the other fails to perform.
There is precedent for caution. An earlier understanding reached in June produced only a brief ceasefire before the conflict resumed. Neither side therefore enters the present negotiations with much reason to trust the other.
There is also considerable domestic politics involved.
Iran’s economy has been badly damaged by war, sanctions and the American blockade, creating powerful incentives for Tehran to obtain relief. But Iranian leaders must avoid appearing to capitulate after months of conflict and considerable national sacrifice.
President Trump faces his own political calculations. Allowing Iran significant sanctions relief without obtaining visible concessions would be attacked domestically as rewarding Tehran. The administration has simultaneously continued imposing additional sanctions even while diplomatic messages have been travelling between the two governments.
That combination of negotiation and pressure is not contradictory. It is how coercive diplomacy frequently works.
Each side is attempting to improve the agreement available at the table by making the alternative to agreement sufficiently unpleasant.
The involvement of Qatar may consequently prove critical. Doha has relationships that allow it to communicate with parties that often cannot communicate effectively with each other. Pakistan provides another channel and carries particular significance because of its developing security relationship with Saudi Arabia and Turkey.
The Gulf states have an enormous interest in making the negotiations work. They opposed the escalation into war, have suffered attacks and disruption themselves and have watched the world’s most important energy-producing region become increasingly difficult and expensive to operate.
Sri Lanka has an interest too.
Every additional week of instability around Hormuz affects oil prices, freight, insurance and eventually the cost of living thousands of kilometres away.
There is still no peace agreement. There is not even evidence yet that Washington and Tehran have accepted the same negotiating formula.
But there is something that did not exist several days ago.
An Iranian proposal went to Washington. Washington answered. And Tehran is considering the answer. After seven months of war, even that is movement.
