US and Iran sign 60-day ceasefire extension and nuclear talks memorandum

On Wednesday evening, the US and Iran signed the so-called "Islamabad Memorandum of Understanding," extending a ceasefire and beginning a 60-day phase of technical talks to resolve key points of contention.

The signing was originally scheduled for Friday in Switzerland, but pressure had grown after days of speculation about the details of the agreement. Trump signed the document at the Palace of Versailles outside Paris after attending the G7 summit hosted by France on Lake Geneva. Iranian President Masoud Pezeshkian signed it digitally from Tehran.

"There appears to be political will on both sides to continue negotiations, which is encouraging," Middle East analyst Fatemeh Aman told DW.

"At the same time, the most difficult questions have not yet been settled. For that reason, I would describe the prospects as cautiously positive, but far from certain," said Aman, who has worked at the Middle East Institute and Atlantic Council think tanks.

Iran's nuclear program remains one of the central points of contention between Washington and Tehran. Preventing Iran from producing a nuclear weapon has been presented by Trump as one of the primary aims of the attack on Iran he launched together with Israel on February 28.

The text of the MoU states that the Islamic Republic of Iran reaffirms that it has no intention of manufacturing or acquiring nuclear weapons. The Iranian leadership has consistently and officially maintained this position in the past as well.

At the same time, the agreement contains specific provisions regarding the handling of stocks of highly enriched uranium. According to the agreement, both sides intend to clarify the status of the stored enriched materials — in particular, near-weapons-grade uranium enriched to up to 60% — through a mutually agreed-upon mechanism.

The plan calls for the dilution of the stockpiles on site under the supervision of the International Atomic Energy Agency (IAEA). The details are to be set out in a final agreement.

"If the American side now believes that it can simply agree a deal with Iran because they have promised not to build the atomic bomb, then it fails to recognize that they've [the Iranian regime] often made that promise but have repeatedly undermined every agreement," Omid Nouripour, vice president of the German parliament, told DW.

It remains to be seen whether a preliminary agreement will allow enough time to fully negotiate this long-standing point of contention, which could take longer than the initial 60-day window for talks.

"The central challenge is likely to remain the balance between Iran's nuclear commitments and sanctions relief," said Aman.

"Iran will seek meaningful economic benefits and assurances that those benefits can be sustained. The United States, meanwhile, will focus on the scope of Iran's nuclear activities and the mechanisms needed to verify compliance."

The MoU also prioritizes the immediate and permanent cessation of hostilities on all fronts, including in Lebanon, by the signatories and their allies.

Following the outbreak of the Iran war and the killing of Iranian supreme leader Ayatollah Ali Khamenei, the Lebanon-based militia Hezbollah fired rockets at Israel, joining the war along with its backers in Tehran. Israel responded with airstrikes on targets in Lebanon, and occupying a strip of territory in country's south.

Israel, the US most important ally in the region, continues to view an agreement with Iran with skepticism, and is not a signatory. Preventing hostilities between Hezbollah and Israel from derailing negotiations is seen as key.

One aspect of the agreement that is set to have immediate effect is restoring shipping traffic through the Strait of Hormuz, which is a vital step to stabilizing global energy prices. The process of restoring production and shipping of oil to pre-war levels could take months.

The preliminary agreement stipulates that Iran will take immediate measures to reopen the Strait of Hormuz to global oil shipments. In return, the US will lift the blockade of Iranian ports, and Iran will once again be able to sell its oil without restrictions.

During the 60-day window, Iran has agreed to allow "safe passage of commercial vessels with no charge for 60 days only." This is to be followed by negotiations with Oman to "define the future administration" of the strait.

Before details of the agreement were made public, Vice President JD Vance had said the US was expecting the strait to be "toll free" for the "long term." This sets up another potential point of contention over Iran applying control over shipping in the future.

In addition, the US and its allies in the region are planning to establish an investment fund of approximately $300 billion for the reconstruction of Iran.

The US also intends to work toward lifting all US and UN sanctions imposed on Tehran. However, this will only apply if a final agreement on Iran's nuclear program is reached following the 60-day negotiation phase.

Vice President Vance told Fox News on June 15 that Iran could gain access to the multi-billion-dollar fund provided it fulfills the obligations set forth in the agreement. This fund could be financed by frozen Iranian assets as well as investments from other countries.

"The agreement states that they will not receive a single cent of US funds," he emphasized.

Immediately after the announcement of the preliminary agreement between the two countries, he stressed that this was not a "second nuclear deal" like the one under President Obama, which had received criticism by some Middle East countries at the time. Vance also claimed that Gulf states "love the Trump deal."

"If you now make 300 billion available to the regime, then it is a stabilizer — and not for the prosperity of people in Iran, but rather for more aggression, for more military dictatorship," Nouripour said. "If you now lift all sanctions, as has now been agreed, then it will legitimize the regime, in addition. And this is not a good day."

The support of regional actors played a decisive role in getting the MoU passed. In addition to Pakistan, Qatar, Oman, Saudi Arabia and the United Arab Emirates were also involved.

"These countries did not support the implementation of the 2015 nuclear agreement because they feared that a rapprochement between Iran and the United States could come at their expense and that Washington would neglect its traditional partners in the region," Sina Azodi, professor of Middle East politics at George Washington University, told DW.

Azodi said Arab states in the Middle East support the initial US-Iran agreement ending hostilities and allowing the region's energy industry to restart.

The analyst added that Iranian attacks on US bases and their logistical infrastructure in the region "have made it clear to the Arab states that the American presence does not offer complete protection and can sometimes even entail additional risks."

Iran has also demonstrated that it has the capacity and the will to disrupt shipping traffic and thereby interfere with oil exports, Azodi said, adding that building alternative pipelines and transport routes would take a long time and would not be a completely satisfactory solution, since such pipelines could also be hit by Iranian missiles.

"The key question now is how the implementation of this agreement will proceed in practice," he added.