The United States did not sign its Memorandum of Understanding with Iran from a position of strength. It signed because it was running out of time, and running out of options.
The trigger for all of this was the closure of the Strait of Hormuz, the narrow waterway through which a massive portion of the world’s oil supply flows. Once that closed, a dangerous chain reaction began.
The US strategic oil reserves were already sitting at roughly half capacity, leaving only about a month’s worth of supply before markets would start to panic.
-No oil flow means energy prices spike
-Spiking energy prices feed directly into inflation
-High inflation forces the Federal Reserve to raise interest rates
-Raising interest rates on a country carrying $38 to 39 trillion in debt is devastating, because even a small rate increase translates into enormous additional repayment costs.
US President Trump has said it publicly that he was haunted by the past President of the US Herbert Hoover. Herbert Hoover is associated with the Great Depression in the US, and Trump reportedly feared that a combination of high inflation and rising interest rates, triggered by a prolonged oil crisis, could produce a similarly catastrophic economic collapse.
To pull itself out of this situation, the US signed an MoU. The terms, as laid out are-
-A ceasefire and a commitment to stabilising the situation in Lebanon
-A $300 billion reconstruction fund for Iran, to be paid not by American taxpayers BUT by Gulf states
-Iran gaining the right to sell oil and gas without current restrictions, with a full removal of sanctions and unfreezing of assets promised further down the line
-The withdrawal of US naval and offensive military assets from the region
Earlier in the conflict, the US held firm red lines around two things in particular: Iran’s ballistic missile program and its nuclear enrichment activities. By the time the MoU was signed, the language around the above two had softened considerably. This as a significant backtrack.
Iran emerged from this conflict in a stronger regional position than it entered. Its influence across the Middle East has grown, and the deal it secured is substantial but having said that it is important to highlight that Iran is just another nation state, like other present muslim countries. It has mentioned the condition of ceasefire and stabilisation in Lebanon but has not put forward anything related to Palestine even though US was on the kneeling position, they could have easily laid the terms related to occupied Palestine too but they didn’t, due to its regional political dynamics and influence, it considered what was in its national interest.
For the Gulf states and Israel, the picture is more uncomfortable. The reliability of the US security umbrella is now being questioned openly. Israel in particular is unhappy with the terms and has continued military actions in Lebanon.
There is a 60-day window to convert this MoU into a formal treaty, and the path is anything but smooth.
Gulf nations like Saudi Arabia, the UAE, Qatar, and Kuwait operate on a simple cycle: they sell oil in dollars, then park those dollars into US Treasury bonds. When the Strait closed and oil exports dropped, that cycle broke. Less oil sold means fewer dollars coming in, which means fewer Treasury bonds being bought. When demand for those bonds falls, the US has to offer higher interest rates to attract other buyers, which makes its already enormous debt even more expensive to carry.
At the same time, the closure pushed oil prices up, which fed directly into inflation. That forced the Federal Reserve’s hand to raise interest rates. With $38 to 39 trillion in debt sitting even a small rate increase adds a staggering amount to what the US owes in interest payments each year. This combination, higher rates from both the bond market side and the inflation side, was pushing the US toward a genuine economic depression.
The US has long positioned itself as the military guarantor of Gulf state security. But when the Strait closed and American strategic oil reserves dropped to crisis levels, the US found itself scrambling rather than responding from a position of dominance. This exposed the limits of that security umbrella in a very public way, raising uncomfortable questions about what American protection is actually worth?
The Gulf states, who arguably suffered the most from the conflict and the closure, are now expected to pay the bill for a $300 billion reconstruction fund for Iran as part of the deal the US negotiated. The countries most harmed are being asked to pay for the recovery of the country that caused the disruption. The countries who thought have American protection were given the reality check, they have been exposed as nothing but paper tigers, and the protection they acquired by compromising Islam, be it by being allies and providing their land as military bases of US or through other means, have proved that protection is also nothing but the parable of paper tiger, and is a khasarah (loss).
The closure of strait of Hormuz has made a global impact, compelling the US to come to fear the great depression. Imagine! What the key geopolitical positions and resources the muslim lands are blessed with but the point is that they all are nation states, ruling as per their own nationalistic interests and whims, had they been ruling by Islam then the genocides, the unjust killings, the oppression wouldn’t be in the scene at the first place.
Those who say muslims can’t unite under one ruler ruling by Islam should see how much unwavering support Iran was getting due to its stand on strait of Hormuz from all across the world, despite its own grotesque, unjust, selfish nationalistic roles in Syria, Iraq and Afghanistan. The fact is that the ummah is so desperate for righteous leadership that any act, any stand of temporary bravery and courage is seen by them as revolutionary to an extent that they are ready to forgive the horrible crimes committed by the regime in the past, this is the thirst of the ummah but the issue is they are trying to quench the thirst from the sources who are like other muslim countries, invested in their own man made boundaries interests and are nothing but mirage. But this also gives another insight that the thirst for the righteous leadership in the ummah is real, that vacuum, that void needs to be fulfilled through the leadership of the one who is ruling by Islam as a whole, implementing the complete deen. And another biggest reality check all these events have provided is the exposure of paper tigers, who portray themselves as tigers but are nothing than paper.
Will end on the part of ayah 25 which I read yesterday while reading Surah Hadeed
…لَقَدْ أَرْسَلْنَا رُسُلَنَا بِٱلْبَيِّنَـٰتِ وَأَنزَلْنَا مَعَهُمُ ٱلْكِتَـٰبَ وَٱلْمِيزَانَ لِيَقُومَ ٱلنَّاسُ بِٱلْقِسْطِ ۖ
“Indeed, We sent Our messengers with clear proofs, and with them We sent down the Scripture and the balance ˹of justice˺ so that people may administer justice…”
The Meezaan of Justice was sent with clear proofs through messengers. The justice cannot be established through systems coming out of whims and desires of insaan or on the basis of the the boundaries made by insaan with regards to the identity of nations, tribe.
“Leave it for it is filth.”
– The Prophet Muhammad ﷺ on nationalism/tribalism
The Prophet ﷺ also said-
“The example of the Believer in their mutual love and mercy is like the example of a body, if one part of the body feels pain, then all the body suffers in sleeplessness and fever.”
…And when the body feels the pain and restlessness then the way forward is to diagnose the root cause of the pain and treat it.