It’s been only a short time since President Trump signed a fourteen-point memorandum of understanding with Iran to supposedly end the war that the US and Israel launched on 28 February.
“Supposedly” is the most definitive word we can use to describe the agreement, since Trump has insisted that the US wasn’t really at war, has vacillated between threatening genocide and accommodating Iran, because the fighting has started again, and because Israel doesn’t want to end the war at all. On 25 June, Iran attacked a ship in the Gulf, announcing that the Strait of Hormuz was closed. Within days, the US had struck Iranian infrastructure, and Trump was back to talking about being “forced to militarily complete the job” of overthrowing the Islamic Republic.
Still, the signing of the MOU with Tehran marked a defeat for Washington. For all the death and destruction it rained down on Iran, the US was surrendering and suing for “peace”. Assessing the “settlement” as a US loss is hardly controversial. A broad spectrum of opinion, from Iran hawks like neocon Robert Kagan to revolutionary socialists, considers Trump’s war to be a strategic defeat for the US.
The MOU’s terms, which may never come to fruition, show a US willing to offer multiple “carrots”, from a US$300 billion reparations fund to ending all economic sanctions, to induce the Iranian government to lift its de facto closure of the strait through which one-fifth of global petroleum transits. In a move that might also signal a US intention to blunt Iran-China relations, the US agreed for the first time in decades to allow Iran to sell oil for dollars.
The US deferred all discussions about its ostensible reasons for the war— “regime change”, Iran’s nuclear program or its support of regional allies—to an undetermined future, if they are considered all. In diplomatic practice, deferring “hard questions” to future negotiations is often a way of never resolving them.
Not that “resolving” those US-Iran frictions is anything more than US-Israel goals towards a Middle East in which Israel retains its status as the main regional power backed by the US as the main global hegemon.
Trump hopes that reopening the strait will get oil flowing again, bring down prices and redound to his political benefit. But oil analysts have thrown cold water on this scenario. Ships moving through the strait are months away from delivering their oil to market. And the war left major petroleum processing sites, including an important liquid natural gas processing site in Qatar, damaged. Qatari authorities said it might take five years to repair the damage from Iranian attacks.
The US has managed to moderate the increase in petrol prices by dumping millions of barrels from the nation’s Strategic Petroleum Reserve (SPR) onto the market. The SPR is now at its lowest level since 1983. Countries outside of North America, particularly those in Asia and Africa, have faced even bigger economic disruptions from the war.
Absent a major escalation in the war that Trump and the US appear neither prepared for nor interested in, the conflict has reached a stalemate that is unlikely to change. So, what has Trump’s fiasco in Iran revealed about global politics?
First, it challenges the US’s claim to global hegemon status, which rested on its guarantee of petroleum transit out of the Gulf. The US, as the world’s largest producer of crude oil, is not dependent on Middle East oil. Yet its traditional allies in Europe and Asia (particularly Japan) and its Chinese adversary depend far more on imported hydrocarbons from the Gulf region. So, the US “blue water” navy’s assumed guarantee of safe passage from the Gulf has been a key lever of power the US has exercised for (and over) its allies and against its adversaries.
With Iran’s closure of the strait and the US’s inability or unwillingness to forcibly open it, Iran has taken that lever out of the US’s hands. Trump was even reduced to cajoling China and the US’s (former) European allies to send warships to the Gulf to help. If the real power to control energy flows from the Gulf lies with Iran and Oman—and not the US—then the US has lost a major element of its claim to be a global superpower.
The US will try to replace the leverage it lost in the Gulf with its relatively recent role as top global oil and gas producer and exporter. But after years of tariffs and regulatory conflict, even the European Union is wary of becoming overly reliant on the US for energy.
The war also depleted the US’s expensive missile arsenal and forced it to move military assets from the Asia Pacific region to the Middle East. Iran’s drones and missiles, constructed at a fraction of the cost of US weapons, caused serious damage to major US military bases. Iran-backed Iraqi militias drove the US to abandon its Camp Victory in Iraq. The Pentagon may be trying to hide the extent of the damage to its bases in the region.
In other words, this short war against a third-rank military power revealed several underlying weaknesses behind the Pentagon’s façade.
Second, the US’s failure may change the alliances on which its power in the Middle East rested. Washington—under both the Trump and Biden administrations—has tried to push the Gulf autocracies into a working partnership with Israel and the US. Promising billions in investment, Trump has courted the Gulf petrostates to join the Abraham Accords with Israel and against Iran. Rather than accelerate the momentum towards a pan-Gulf alliance with Israel, the war split the Gulf states between the “Abraham” group led by the United Arab Emirates, and a Saudi-led group that is seeking some kind of working relationship with Iran. Already, Iran and Oman are collaborating to extract tolls from ships passing through the strait, which traverses each country’s territorial waters.
Iran’s attacks on the Gulf states punctured their belief that US protection underwrote their role as global business hubs and luxury playgrounds for the rich. Suddenly, the US presence seemed to invite the “instability” they had assumed away.
No doubt, there will be many twists and turns in the US’s future relations with the region’s petrostates. But it is hard to see relations resetting to the pre-war status quo. “The new regional order will be defined less by American primacy than by multipolarity, with China an increasingly central player and Iran an integral rather than a marginal actor”, wrote Johns Hopkins international policy experts Narges Bajoghli and Vali Nasr in Foreign Affairs Magazine.
Third, the war revealed a sharp divide between the US and its Israeli “watchdog”. For decades, Israel has considered Iran its main challenger for regional hegemony. Regime change in Iran, or turning the country into a “failed state”, has been one of Prime Minister Benjamin Netanyahu’s obsessions.
Netanyahu opposed all US diplomatic outreach to Iran, including the 2015 multilateral nuclear deal that the Obama administration completed. So, the Trump-signed MOU is a real sign of failure for Israel, whose political and military leadership opposes it. For these reasons, Israel has every incentive to try to undo the deal. If Iran succeeds in forcing the US to tie an Israeli withdrawal from Lebanon to a final agreement, then a rift between Israel and the US will open wider.
It’s too early to say if a US-Israel rift will become a permanent divide. Israel has been a cornerstone of US policy in the region for two generations; much more will need to transpire for the US to kennel its watchdog. In fact, away from the social media-driven clamour, the Pentagon may be moving to fully integrate Israel into the US military supply chain. Outside of Israeli action that might undermine the MOU, the US shows no interest in stopping the Zionist state’s quest for “Greater Israel” in the West Bank, Gaza or Syria.
Fourth, China emerges stronger from the US debacle in Iran. For the past two decades, any war Washington fights that doesn’t involve China (e.g., Iraq, Afghanistan) has tended to weaken the US. China gains strength by default. China shrewdly operated to provide Iran with logistical support for its war and facilitated its ally Pakistan’s role in the negotiations that forged a ceasefire and the MOU. The US proved its unreliability (launching the war while still negotiating for peace with Iran) and its amateurishness. China emerged as a stable player on the global stage. This can only help to boost China’s global political strength.
The fact that China has transformed itself into the world’s largest “electrostate” provides another advantage. The biggest shock to the global oil economy in 50 years will impel states to seek alternatives to oil. And those who want to produce electricity from solar, wind or hydropower will come calling to China, the world’s leader in those technologies. While the US under Trump appears to be “doubling down” on the nineteenth-century fossil-fuel economy, China is surging ahead with the energy economy of the 21st century.
It may be too facile to compare the US’s fiasco in the Gulf with the 1956 Suez crisis, when the US forced Britain, France and Israel to stop their military action against Egypt’s nationalisation of the Suez Canal. The 1956 events were a key hinge point showing that the region’s old colonial powers were spent forces, and that the US was the new imperial boss.
The US remains a power, but a diminished one. And whether Iran in 2026 proves to be the US’s 1956, it’s clear that the US can no longer enforce President George H.W. Bush’s command in the run-up to the 1991 Gulf War: “what we say goes”.
