Before Donald Trump became president, he honed his hawkishness on Iran, complaining about the “plane loads of cash” it received under the 2015 nuclear deal. Now, his ability to end the war in the Middle East hinges, in large part, on how much money he gives Tehran.
“Money is a big part of this. It’s a key to any compromise from Iran’s point of view,” Alex Vatanka, a senior fellow and Iran expert at the Middle East Institute in Washington, DC, told Middle East Eye.
Some US and Arab officials tell MEE that Trump’s unwillingness to loosen the purse strings is the real reason talks between the two sides are deadlocked and potentially doomed to fail.
Iran has reportedly floated a proposal for the two sides to bypass the issue of its nuclear programme and enriched uranium in order to end the war and reopen the Strait of Hormuz, but the nuclear issue is not the biggest sticking point, some people familiar with the talks say.
“Everyone has ideas about a compromise on enrichment [of uranium], but the hardest circle to square for Trump is lifting sanctions. My understanding is that this is more sensitive than the nuclear file,” a former US official who has spoken with Gulf and US officials following the talks, told MEE.
Trump built his Iran policy over a decade by waging economic warfare on the country, using the power of the US financial system.
“Trump hasn’t helped himself,” Vatanka, at the Middle East Institute, said.
“The way he misrepresented the JCPOA from the get-go has made life harder for him now, because anything he does will be measured by what he criticised Obama for,” he added, referring to the 2015 nuclear deal by its official name, the Joint Comprehensive Plan of Action.
The JCPOA granted Iran sanctions relief in return for capping its nuclear enrichment to 3.67 percent and opening the country’s facilities up to stringent United Nations inspections. Trump unilaterally exited the deal and imposed crippling sanctions on Iran. He has shown no appetite to stop using the power of the US financial system against Iran, even amid the ceasefire.
On Friday, hours before the two sides were supposed to meet in Pakistan, the US rolled out new sanctions against a Chinese oil refinery and dozens of shipping firms and vessels that transport Iranian oil. The Islamabad talks fell through.
If the war ends with Iran in a better financial position than it started, this would be an embarrassment for the Trump administration, some diplomats say.
Barely a month before the US and Israel attacked Iran, US Treasury Secretary Scott Bessent took a victory lap at the Davos Economic Forum, recounting how sanctions sent Iran’s currency, the rial, “into free fall” and the Iranian people “out on the streets”.
“This is economic statecraft - no shots fired. And things are moving in a very positive way here,” he said.
Just as Trump is boxed into waging financial warfare, Iran’s leadership desperately needs cash, experts say.
Iran has benefited from its control of the Strait of Hormuz by selling oil at higher prices amid the war. The US blockade is impacting oil sales, but in the short term, Iran can still sell the crude it has stored on ships in East Asia.
But taking a broader view, any gain from oil sales has to be measured against the roughly $300bn in economic damages wrought by Israeli and US air strikes on the Islamic Republic.
An Iranian business newspaper reported in April that reconstruction would take at least 12 years.
“The nuclear issue is honestly Betamax now,” Alan Eyre, a former member of the US team that negotiated the Iran nuclear deal, told MEE, referring to the now obsolete 1975 video cassette player.
“Everyone is talking about what the Iranians are willing to give up. But that is largely a function of what they are willing to get,” he added. "What the Iranians want is money."
Eyre said there are four ways Iran can be compensated for a deal that reopens the Strait of Hormuz and ends with an agreement on its nuclear programme: reparations, tolling, unblocking frozen assets, and sanctions relief. Of the four, he believes a toll in the Strait of Hormuz is the likeliest path for a deal.
