# World Watch

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USA–Iran 2.0: Inside the New Escalation and the Long Road to Hormuz Peace What "2.0" Means On February 28, 2026, the US and Israel launched major strikes on Iran, killing Supreme Leader Ali Khamenei and reigniting conflict rooted in the 2025 collapse of nuclear talks. Iran retaliated by mining and closing the Strait of Hormuz, attacking tankers, and striking regional targets. An April 7–8 ceasefire held loosely; talks in Islamabad on April 11–12 failed over Hormuz and nuclear issues, and a US naval blockade/airstrike campaign followed. On June 17, Presidents Trump and Pezeshkian signed the 14-point Islamabad Memorandum of Understanding, brokered by Pakistan with Qatari, Saudi, Turkish and Egyptian help. It called for ending strikes, reopening Hormuz toll-free for 60 days, phased sanctions relief, unfreezing roughly $12 billion in Iranian assets, and further talks on nuclear, missile and sanctions issues, with a final deal to be endorsed by the UN Security Council ( presidency.ucsb.edu ). Follow-up talks in Bürgenstock, Switzerland set up four working groups, but disputes over IAEA access, Iran's uranium stockpile, and Hormuz "service fees" persisted. On July 8, after Iran struck commercial ships and the US retaliated, Trump declared the MoU "over," though negotiators kept talking; Khamenei's state funeral paused diplomacy, and strikes and disputed tolls continued into mid-July. Key drivers: Unresolved nuclear-enrichment rights, Iran's demand for compensation and control over Hormuz shipping, deep mutual distrust after leadership decapitation, competing domestic political pressures in Washington and Tehran, and the absence of enforcement mechanisms binding either side. Why Past Understandings Failed JCPOA (2015): The Joint Comprehensive Plan of Action capped enrichment at 3.67%, limited centrifuges and stockpiles, and lifted sanctions for IAEA verification (britannica.com/event/Joint-Comprehensive-Plan-of-Action). It held roughly three years, but the US withdrew in 2018, citing sunset clauses and unaddressed missile/proxy activity (globalsecurity.org/wmd/library/news/iran/2018/iran-180508-sputnik05). Iran then breached enrichment limits, and "maximum pressure" sanctions deepened distrust rather than producing a follow-on deal. 2025 Oman-mediated talks: Renewed indirect talks in Muscat and Rome sought a JCPOA successor but collapsed by mid-2025, contributing to strikes that year and setting the stage for the 2026 war (commonslibrary.parliament.uk/research-briefings/cbp-10637). 2026 Islamabad Talks and MoU: April talks failed outright; the June MoU only froze active combat temporarily. As a non-binding memorandum rather than a treaty, it deferred the hardest issues — enrichment rights, missiles, regional militias — to a "final Deal" that never materialized (parleypolicy.com). Common failure patterns: US politics swing between engagement and pressure each administration; Iran's factions (elected government vs. Revolutionary Guard/Supreme Leader's office) send mixed signals; neither side accepts binding verification without permanent, reciprocal relief; regional flashpoints override bilateral progress; and weak enforcement made violations low-cost. Scenarios for the Strait of Hormuz 1. Managed De-escalation (most likely near-term): Both sides revive the MoU's working groups via Omani/Qatari/Pakistani mediation, restoring toll-free transit and phased sanctions relief while deferring core nuclear disputes. Requires: mutual restraint, continued oil-market pressure on both economies. Obstacles: US insistence on removing Iran's uranium stockpile; Iran's demand for Hormuz "service fees," seen by shippers and the IMO as illegitimate (foxnews.com/world/strait-hormuz-toll). CBMs: UN-monitored shipping corridors, Omani escort coordination, phased asset release tied to verified de-mining. 2. Comprehensive Deal with UNSC Backing: A binding follow-on agreement covering enrichment caps, missiles, and sanctions termination, endorsed by Security Council resolution as the MoU envisions. Requires: leadership consolidation in Tehran, US willingness to accept limited enrichment. Obstacles: precedent of unilateral US withdrawal (as with the JCPOA) undermines Iranian confidence; Israeli objections to any enrichment allowance. 3. Renewed Escalation: Intermittent strikes, GPS spoofing, and disputed tolls continue without full-scale war, keeping Hormuz shipping suppressed. Drivers: mutual distrust, hardline factions gaining leverage. Risk: accidental escalation from naval incidents. Practical CBMs across scenarios: real-time shipping-safety hotlines, third-party naval de-confliction channels, phased and reversible sanctions relief tied to verifiable steps, restored IAEA inspection access, and regional forums (Gulf Cooperation Council plus Iran) to institutionalize dialogue beyond bilateral US-Iran channels. Sources https://www.britannica.com/event/2026-Iran-war https://en.wikipedia.org/wiki/2026_Strait_of_Hormuz_crisis https://www.gibsondunn.com/us-iran-memorandum-of-understanding-prospective-sanctions-relief-commercial-opportunities-and-legal-risks/ https://www.presidency.ucsb.edu/documents/islamabad-memorandum-understanding-between-the-united-states-america-and-the-islamic https://www.npr.org/2026/07/13/nx-s1-5891746/us-iran-strait-of-hormuz-updates https://www.cnn.com/2026/07/10/world/live-news/iran-war-trump https://commonslibrary.parliament.uk/research-briefings/cbp-10637/ https://www.britannica.com/event/Joint-Comprehensive-Plan-of-Action https://www.parleypolicy.com/post/the-u-s-iran-islamabad-memorandum-of-understanding-explained https://www.foxnews.com/world/strait-hormuz-toll-would-set-dangerous-precedent-un-shipping-agency-warns