The Memorandum of Understanding signed on 17 June by the US and Iran expired on Monday 17 August. It was billed as providing for a 60-day period of negotiations to bring an end to the war which began with a US-Israeli attack on Iran on 28 February.
The MoU, a 14-point plan mediated by negotiators from Pakistan was vague and failed to address some of the key issues in the conflict. It was always likely to fail, and it has failed.
Shortly after the US-Israeli bombing campaign began Iran effectively closed the narrow Strait of Hormuz, a shipping chokehold in the Persian Gulf. Iran attacked ships with drones and missiles and mined the usual route ships took through the passageway, declaring the Strait a “danger zone” on 9 April.
As the MoU expired US President Donald Trump, was interviewed by Fox News. Trump claimed that he was now “not in a hurry” to reach an agreement with Iran. He also said that “If Oman gets in the way [of a deal on opening the Hormuz Strait] we’ll bomb the shit out of them.”
Oman is a US ally and this is not the first time Trump, a foul-mouthed and ignorant bully, has threatened the state. In May Trump said the US would “blow up [Oman if it didn’t] behave”. Oman has been discussing with Iran how to fully reopen the Strait of Hormuz to shipping.
The normal traffic through the Strait, prior to 28 February, was around 100 ships per day, which included 20 percent of the world’s crude oil and liquefied natural gas. Following the signing of the MoU, traffic through the Strait increased somewhat. But just days later Iran’s Revolutionary Guards resumed drone strikes on shipping using routes Iran had not authorised.
Iran demanded control over the international waterway and the right to charge tolls for passage.
As of 18 August, CNN reports, 3,456 vessels have crossed through the Strait since the war began, around 20 percent of the normal volume.
Some ships are now taking a “dark” route, switching off their tracking, to avoid attacks. This invalidates the ship’s insurance. Insurance rates for passage through the Strait are now between 7.5 and 10 percent of a ship’s value (based on a VLCC, Very Large Crude Carrier), or $10-13mn, up from 0.25 percent, or $345,000 before the war (Lloyds List).
Lucrative
Iran insists ships must take the northern route through the Strait, close to its coast, and has set up the Persian Gulf Strait Authority (PGSA) to collect fees, reportedly charging $2mn to tankers. That works out at about $1 per barrel of oil. Before the war 20mn barrels of oil passed through the Strait each day, so the Iranian tariff, if it becomes established, could be very lucrative for the Iranian regime.
The US has placed sanctions on the PGSA, meaning those who pay Iran for transit may face US sanctions.
Since 17 June at least 17 ships have been attacked by Iran on the southern route through the Strait along the coast of Oman.
With no agreement between Iran and the US, the Strait remains largely shut to shipping and other key issues remain unresolved: there is no agreement on Iranian nuclear plans, or Iranian funding of regional allies and proxies, or Iranian missile production.
Israel continues to occupy southern Lebanon and has recently bombed targets in Syria. The Houthis, a militarised Shia party aligned with Iran which controls most of inhabited Yemen, has begun attacks on Saudi shipping. Iranian attacks have continued against US-aligned Arab states.
The war has resolved nothing, but has killed 9,000 people, injured 50,000 and seriously impacted on the connections and stability of world economic networks.
Solidarity opposes renewed open war, and also US plans for sanctions.
We have no sympathy for the anti-worker, misogynistic, fascistic clerical regime in Iran which in January shot-down 20,000 Iranian citizens, young pro-democracy street protesters.
Clearly we oppose arms sales to Iran. Many other goods are another matter.
Sanctions appear to offer peaceful, painless alternatives to dealing with unpleasant regimes. That’s why many on the broadly-defined left look to sanctions to solve international injustices. But the sanctions Bessent promises will not be painless for Iranian workers and the poor. And they will not “work” either.
Political goals
Yes, sanctions can do damage. But over the last hundred years sanctions have almost never worked in the sense of achieving a stated political goal, the collapse of a regime or the end of a war.
The biggest sanctions package ever assembled has damaged the Russian economy, but has not forced Russia out of Ukraine. And sanctions are not consequence-free. In the case of Russia sanctions have fractured, diminished and reconfigured the world economy and pressed Russia closer to Iran, China and North Korea.
Sanctions on Iraq in the 1990s illustrate the problem.
Saddam Hussein’s dictatorship in Iraq invaded Kuwait in August 1990. Blanket UN-agreed sanctions were imposed, but it took US-led military action to force Iraq out of Kuwait in 1991. The sanctions on Iraq continued until the regime was overthrown by invasion in 2003, but at serious human cost.
Sanctions on Iraq led to rocketing inflation, economic crisis and shortages of medicines and food. Non-military infrastructure including hospitals, the electricity grid and water supply were rapidly degraded. While the numbers are disputed, probably tens of thousands of civilians, and especially children, died as a result. The ruling elite subsisted on smuggled goods, and the state’s policy did not fundamentally change.
This is the reality of a sanctions regime. Iran has had stifling sanctions in place for years, and especially since Donald Trump pulled out of an agreement negotiated by US President Barack Obama in 2015, the Joint Comprehensive Plan of Action (JCPOA), which aimed to prevent Iran developing nuclear weapons in exchange for sanctions relief.
US-led sanctions on Iran have not changed the regime’s policies. But they have led to inflation rates of over 50 percent per year and the immiseration of those on fixed incomes, the run-down of services, especially health, lower economic growth and pressure on the currency.
Following the destruction caused by the Israeli-US bombing campaign, Iran’s economy is expected to contract by 10 percent this year and those living below the official poverty line are now estimated at 40mn people. The war pushed a further 4mn people into poverty and 2mn workers lost their jobs.
So, we oppose sanctions because of the impact on workers. Unemployment and economic chaos caused by sanctions demoralise and disorganise workers’ self-organisation.
Instead we advocate international workers’ solidarity. Workers’ solidarity is not something union and political leaders can demand of our government. It is difficult, time-consuming and complicated work we must do ourselves.
Solidarity with Iran’s working-class!
For women’s liberation!
For a secular republic and workers’ power!
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