Trump says he will not ease sanctions on Iran as part of a deal

US President Donald Trump told reporters on Wednesday that easing sanctions on Iran is not under consideration in the current negotiations towards a long-term end to the war, reopening the Strait of Hormuz, and paring down Iran’s nuclear capability.

This comes as Iranian parliamentary speaker Mohammad Bagher Ghalibaf has repeatedly insisted that unlocking access to his country’s money should be a confidence-building measure, if not a precondition, for talks with the US. 

Both Ghalibaf and Iran’s central bank chief travelled to Qatar on Monday to discuss the release of some $6bn that has been held in the Gulf state – on Washington’s orders – since September 2023, signalling a potential breakthrough.

Iran is desperately short of cash, and maintains it is owed up to $120bn of its own revenue that has been withheld by foreign governments and banking institutions, thanks to US sanctions steadily imposed on the country since the 1979 Islamic Revolution.

The 1996 Iran Sanctions Act expanded sanctions to those doing business with Tehran and barred it from obtaining a nuclear weapon. From 2005 onwards, a slew of US sanctions have been imposed on individuals and companies alleged to have ties to terrorist activity.

US sanctions not only prevent anyone living in the US or who is a US national from doing business in Iran, but it also denies Iran access to the US-dominated global banking system, which largely runs on dollars and utilises US transfer mechanisms such as Swift. 

Dissatisfaction

Trump, speaking during a cabinet meeting at the White House, has said he is not yet satisfied with the status of the talks. 

“I think there’s been some progress and some interest, and we’ll see over the next few hours and days whether progress could be made,” Secretary of State Marco Rubio, who was at the cabinet meeting, told reporters. 

“The bottom line is Iran’s never going to have a nuclear weapon,” he added.

But Trump’s maximalist demands may be missing the mark. Ali Vaez, project director on Iran at the International Crisis Group, says that for the Islamic Republic, “survival is victory. They have survived”. 

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“They have managed to repel an aggression by the mightiest military power in the world, that of the United States, and also the mightiest intelligence service in the world, that of Israel,” he added.

“And of course they gained a new tool of deterrence, which is the control over the Strait of Hormuz, which, although geography granted them, but they had never actually deployed it prior to this conflict.”

Trump insisted that as part of any impending deal with Iran, he does not want to see the Strait of Hormuz controlled by any one country.

“We’ll watch over it, but nobody’s going to control it. That’s part of the negotiation that we have,” he said of the waterway that was first blocked by Iran to prevent the passage of US and Israeli-linked vessels, and later counter-blocked by the US Navy to prevent Iranian oil exports.

The US president raised eyebrows when he went one step further on Wednesday. Trump said he would “blow up” Oman if it agreed to work with Iran to impose a fee for ships transiting the Strait of Hormuz as part of a settlement to end the US-Israeli war on the Islamic Republic.

“The strait is going to be open to everybody,” Trump said.

“Oman will behave just like everybody else, or we’ll have to blow them up,” he added.

‘Complete fabrication’

Earlier in the day, Iranian state TV said Tehran had received a draft of an unofficial framework for a memorandum of understanding with Washington, under which Washington would withdraw its military forces from the vicinity and lift its naval blockade if Tehran restores commercial transit through the Strait of Hormuz to pre-war levels within one month.

Traffic management and shipping routes would be overseen by Iran in coordination with Oman, state TV reported, and if a final agreement is reached within 60 days, it would be approved through a binding United Nations Security Council resolution.

In comments carried by Iran’s Mehr news agency on Wednesday, Ali Bagheri Kani, deputy secretary of Iran’s Supreme National Security Council, said that “the conditions and procedures for passing through the Strait of Hormuz will be completely different from the conditions before the conflict over Iran began”.

But the White House quickly refuted the existence of any such draft proposal, calling it a “complete fabrication”.

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Vaez, of the International Crisis Group, said he expects that any longer-term non-aggression pact between the US and Iran would likely include halting the Israeli assault on Lebanon.

“It’s very hard for the Iranians to throw Lebanon under the bus,” he said of Iran’s ally Hezbollah.

“So, at this point, including the conflict with Lebanon is important for the Iranians.”

Israel, for its part, has shown that it favours continuing the war both in Iran and Lebanon. 

“Israel, I think, is really hoping for no agreement,” Danny Citrinowicz, senior researcher at the Institute for National Security Studies, said on the discussion panel. “The last thing that Israel wants to see is an agreement between the US and Iran.”

On Monday, the US carried out what it described as “self-defence” strikes on Iranian missile sites, in spite of the Pakistan-brokered ceasefire currently in effect.

But it’s unclear how much longer Trump can sustain hostilities with Iran, given the unpopularity of the war among Americans and soaring petrol prices. 

Heavy use of key US weapons systems during the US-Israeli war on Iran, which began on 28 February, has raised concerns about whether American forces would have enough firepower in a future conflict with China.

The systems include Tomahawk cruise missiles, which strike deep inside enemy territory, along with Patriot and Thaad interceptors used to defend against missiles and drones.

“The depleted inventories have created a window of vulnerability for a potential Western Pacific conflict,” the Center for Strategic and International Studies said in a report released on Wednesday, which also considered Trump’s proposed $1.5 trillion defence budget for 2027.

“The problem today isn’t money; it’s time,” the report added.