Key Takeaways:
The Trump administration's reliance on Arab Gulf states' endorsement of the Iran Memorandum of Understanding overlooks a fundamental divergence in strategic objectives, according to analysts and former officials, as the fragile 60-day truce faces its first major test.
Vice President JD Vance has cited strong support from Gulf Arab capitals as validation of the 14-point MOU signed June 17, arguing that "the people who know the Iranians the best" should guide US policy. But critics say the Gulf states' interests — taming the Iranian regime without breaking it — diverge sharply from those of Washington, Israel and the Iranian people.
"The Islam-oriented autocratic rulers of the Gulf states fear that if the Iranian regime fell, it might be replaced by a large and powerful western-style secular democracy," John M. Ellis wrote in a Wall Street Journal letter published July 3. "Accordingly, the Gulf states want to tame the regime but not break it."
The MOU, a two-page document that halted hostilities after a three-month conflict triggered by US strikes that killed Iran's Supreme Leader Ayatollah Ali Khamenei on Feb. 28, has come under withering criticism from both Republicans and Democrats. The agreement reopened the Strait of Hormuz — which handles about 21% of global oil trade — and launched negotiations over Iran's nuclear program, sanctions relief and a permanent end to hostilities.
Divergent Gulf calculus
Former US diplomat Marc J. Sievers, who served as ambassador to Oman, said the Gulf states have historically intervened to prevent large-scale US attacks that might destroy the Iranian regime. "From day one, on February 28, the Iranians have been attacking all of their neighbors — especially the UAE, Bahrain and Kuwait — focusing on energy infrastructure, tourist centers and civilian facilities," Sievers told RFE/RL. "That shocked everyone."
The Gulf Cooperation Council initially unified in response to Iranian aggression but has since shown signs of divergence, Sievers said. Oman, which sits outside the Strait of Hormuz, has been working with Iran on regulating Gulf traffic — a source of disagreement with Washington. The UAE and Saudi Arabia have alternative pipelines that can bypass the strait, while Kuwait remains more exposed due to its geography.
The MOU's $300 billion reconstruction fund for Iran, which the US is not required to fund, has drawn particular skepticism. "I don't really see any of the Gulf states — aside from possibly Qatar — being interested in participating," Sievers said.
Nuclear pause, economic strain
For all its ambiguities, the MOU has achieved one concrete outcome: Iran's enrichment capacity has been knocked out and has not restarted, according to Brett McGurk, a former senior national security official who served under four presidents. The agreement requires Iran to maintain this status quo, making it "nearly impossible to produce a bomb," McGurk wrote.
Iran's economy is reeling. The International Monetary Fund projects a contraction of more than 6% — the steepest since the 1980s — with inflation averaging nearly 70%. Global oil prices have fallen more than 20% since the MOU was signed, easing macroeconomic pressures and reducing US gasoline prices.
But the agreement's implementation has been rocky. Iran has fired drones at commercial ships in the Strait of Hormuz, asserting its interpretation of the MOU. The US responded with strikes on Iranian targets, and Iran retaliated with attacks on US military bases in Kuwait and Bahrain — though Washington reported no casualties.
Lebanon complication
The MOU's first paragraph declares a ceasefire in Lebanon without details, creating a separate flashpoint. Iran read this to require Israel's withdrawal from southern Lebanon, where it has been since 2024 under a prior ceasefire. Israel has refused. Last week, Israel and Lebanon signed a separate agreement requiring Israeli withdrawal only after the Lebanese army can displace Hezbollah — a deal Iran says violates the MOU.
Israeli Defense Minister Israel Katz said US pressure prevented a campaign aimed at Hezbollah's collapse, warning that Iran could strike Israel in defense of its Lebanese proxy. Prime Minister Benjamin Netanyahu, during a visit to southern Lebanon, told Hezbollah and Iran to "get out of here."
What comes next
The next round of Doha talks has been postponed until after Khamenei's funeral on July 9. The negotiations, which were supposed to be direct US-Iran meetings, have devolved into Qatar-mediated shuttle diplomacy — a sign of the process's fragility.
"The prolonged stalemate in the strait was harming everyone," McGurk wrote. "The MOU allowed both sides to pull back, and breathe." But he cautioned that the agreement's incoherence has only grown in practice. "If the MOU seemed incoherent when it was first revealed, it's only become more so."
The last time the US and Iran faced a similar escalation window — the 2019-2020 tanker attacks and Soleimani killing — oil prices spiked 15% in two weeks before stabilizing. This time, the MOU has bought time, but with Iran's IRGC appearing to pursue a different agenda than its political leadership, and Gulf states pursuing their own interests, the question of who benefits most from the pause remains unanswered.
This article is for informational purposes only and does not constitute investment advice.
