On the menu today: Thanks to Noah Rothman, John R. Puri, and Dan McLaughlin for writing the newsletter in my absence. I go away for a week, and the U.S. government ends up giving away the store to Tehran. There’s a lot to unpack in the U.S.-Iran memorandum of understanding, and almost all of it is bad. Read on, if you dare.
Trump’s Defeat
The U.S.-Israeli war against Iran, which began with little warning on February 28, ended with the American president signing a memorandum of understanding with the Iranians in Versailles, France — ironically, the site of the signing of the treaty that ended World War I. (I don’t know if you guys are history buffs or not, but that treaty didn’t work out so well.)
The terms of the memorandum of understanding are not quite an across-the-board surrender on the part of the United States, but they’re close. I suppose you can’t call it a wholesale surrender, in part because the U.S. government is paying retail prices in its concessions.
The Iranian regime gets to stay in power and receive a whole host of dispensations from the United States, and the U.S. gets little or nothing, and access to the Persian Gulf is now effectively controlled by Iran.
Let’s begin with the de facto U.S. reparations to the Iranian regime: “The United States of America undertakes with regional partners to develop a definitive, mutually agreed plan with at least USD 300 billion for the reconstruction and economic development of the Islamic Republic of Iran.”
In 2025, Iran spent about $23 billion on defense. As many have pointed out, money is fungible; Every dollar that the Iranian regime doesn’t have to spend on rebuilding a bridge or other destroyed infrastructure is money they can spend on ballistic missiles, drones, rebuilding their military, secret efforts of their nuclear weapons program, etc. We have promised to provide Iran with at least $300 billion — 13 times the Iranian defense budget.
President Trump spent most of his political career furiously denouncing a considerably smaller-scale release of funds to the regime under the Obama administration. For example, at the G-7 summit in 2019, Trump said, “We gave them $150 billion and $1.8 billion and we got nothing. . . . Look at what they did to John Kerry and to President Obama. Look what happened, where they’re bringing planeloads of cash, planeloads, big planes, 757s, Boeing 757s coming in loaded up with cash. What kind of a deal is that?” (The $150 billion was technically Iranian assets that had been frozen; Iran under the Shah had paid for U.S. weapons systems that were never delivered after the Iranian revolution.) If giving the Iranian regime $150 billion is the height of folly, then what would we call providing them at least twice that amount?
Entering this negotiation, the United States had three forms of leverage over Iran’s economy.
“Immediately upon the signing of this MOU, the United States of America will begin the removal of its naval blockade and any disturbances or impediments against the Islamic Republic of Iran and will fully end the naval blockade within 30 days.” Blocking any ships from leaving or entering Iranian ports removes one form of U.S. leverage.
“The United States of America undertakes to terminate all types of sanctions against the Islamic Republic of Iran, including the United Nations Security Council resolutions, IAEA Board of Governors resolutions, and all unilateral US sanctions, primary and secondary, in an agreed upon schedule as part of the final deal.” This removes the second form of our leverage. As Noah mentioned on Thursday, this deal may require the U.S. to remove the Islamic Revolutionary Guards Corps from its list of Foreign Terrorist Organizations. All is forgiven, apparently.
“Immediately upon the signing of this MOU and until the termination of sanctions, the U.S. Department of Treasury will issue waivers for the export of Iranian crude oil, petroleum products and derivatives, and all associated services, including banking transactions, insurances, transportation, etc.” This was the third form of our economic leverage. As our old friend John McCormack keeps pointing out, this provision violates U.S. law; under the Iran Nuclear Agreement Review Act of 2015, any “agreement with Iran relating to the nuclear program of Iran” must allow Congress 30 days to approve or disapprove of the deal, and under the law, “The president may not provide Iran with relief from U.S. sanctions laws during those 30 days of congressional review.” Few in the administration seem to care that this deal violates the law; will congressional Republicans?
As predicted, the mullahs entered this negotiation effectively broke. Now, “The Iranian regime may end up in a better financial situation than before the war started.”
“The Islamic Republic of Iran will conduct dialog with the Sultanate of Oman to define the future administration and maritime services in the Strait of Hormuz in discussion with other Persian Gulf littoral states in line with the applicable international law and the sovereign rights of coastal states of the Strait of Hormuz.” This wording allows the Iranian regime to charge a toll for transiting the strait for those unspecified “administration and maritime services” if they can get the Omanis to sign on.
“The Islamic Republic of Iran reaffirms that it shall not procure or develop nuclear weapons.” This means nothing. The Iranian regime has broken every treaty it has ever signed.
“The United States of America will not impose any new sanctions and will not deploy additional forces in the region.” We have effectively given the Iranian regime a veto over what U.S. forces can be deployed to the Middle East.
The U.S. and Iran have agreed to “refrain from interfering in each other’s internal affairs.” This means that the next time the regime starts slaughtering protesters in the streets, we have publicly pledged to not do anything about it. Smuggling Starlink terminals into Iran to work around the internet shutdown would technically qualify as “interfering in Iranian internal affairs.”
Without consulting Israel, the United States signed the understanding declaring a “permanent termination of military operations on all fronts, including in Lebanon” and “ensuring the territorial integrity and sovereignty of Lebanon.” The Iranian regime’s proxy terrorist group, Hezbollah, operates in Lebanon and fires rockets at Israel all the time.
Did the U.S. accomplish anything worthwhile in this war? Ayatollah Ali Khamenei, who led so many chants of the “death to America,” met death from America. The U.S. and Israel also killed around 50 high-level Iranian government and military officials during the war. We reportedly maimed his successor, Ayatollah Nepo Baby. In theory, this could have a deterrent effect on surviving Iranian leaders. In practice, we’re still waiting to see any sign of Iranian attitude adjustment.
The U.S. and its allies destroyed at least 55 Iranian aircraft and at least 28 Iranian naval ships. According to the Israelis, they and the U.S. destroyed 190 missile launchers and “neutralized” another 200.
However, we know that Iran’s Shahed drones are easy to manufacture, and cheap — as little as $7,000 each, according to one estimate contending that the conventional wisdom on their cost is wrong. And those drones made the Strait of Hormuz and the Persian Gulf too dangerous for traversing oil tankers.
Not only are Iran’s ballistic missile arsenal and its launchers at least partially intact, but the U.S. president has also explicitly stated that Iranian mullahs must be allowed to keep that arsenal in the name of self-defense. “If other countries have them, it’s a little bit unfair for them not to have some. A ballistic missile is not the same thing as what we’re talking about when we talk nuclear. But if Saudi Arabia and Qatar and they all have some, I would say in relative proportion, I think it’s okay.”
The buck stops with the president. If Vice President JD Vance has any concerns about this deal, he’s hiding them quite well, as he steps into the role of the administration’s most public cheerleader for the deal. On Tuesday, I wrote over in the Washington Post that Vance was being set up as a scapegoat for when the deal goes sour. On Wednesday, President Trump joked — “joked”? — “If it works out, I’m going to take the credit. If it doesn’t work out, I’m blaming JD. You better be careful, JD.”
But the two primary architects of the deal were the chief U.S. negotiators, Steve Witkoff and Jared Kushner. I have never been a fan of Witkoff; before Trump’s presidency, the Manhattan real estate mogul never had any experience in international diplomacy and always seemed to be in way over his head. When meeting with Vladimir Putin in February 2025, he used the Kremlin’s provided translator, who is also the chief interpreter for Sergey Naryshkin, a high-level FSB official. In a March 2025 interview, he shrugged and suggested Hamas had duped him. After meetings, Witkoff regularly repeats the Kremlin’s talking points, and in meetings with foreign officials, he almost never brings experienced diplomats, military officials, intelligence officials, or anyone else with him. An unidentified former Trump administration official characterized Witkoff as a “bumbling f***ing idiot.”
Some have questioned whether Witkoff had the technical understanding of nuclear programs to accurately assess and characterize Iran’s negotiating position and offers. This would have been mitigated if the negotiating team had included at least one expert on nuclear energy or nuclear weapons.
Kushner at least brings a bit more experience from his work on the Abraham Accords in Trump’s first term, but neither man is an Iran expert. The U.S. government has hundreds of experienced military, intelligence, diplomatic, energy, and economic professionals who have spent their whole careers focusing on Iran and its regime. As far as we can tell, with the exception of one trip to Oak Ridge National Laboratory in Tennessee, Witkoff and Kushner either never or rarely made use of those resources.
In April 2025, Witkoff did an interview with the Wall Street Journal where he insisted his experience in negotiating real estate deals meant he was better prepared to negotiate with foreign leaders than “foreign policy people” and boasted of his “natural instincts.”
As we have seen with this administration, repeatedly, personnel is policy. When you select an idiot to run the Department of Homeland Security, you get bad results at DHS. When you select someone with behavioral issues to run the Department of Labor, you get one embarrassing scandal after another. When you select a yes-woman who overpromises and underdelivers, you get a mess at the Department of Justice.
And when you select a Manhattan real estate guy who sees previous foreign policy experience as a liability to negotiate with the Iranian mullahs, you end up losing your shirt.
None of this spares the president any blame; after all, Trump’s the one who entrusted Witkoff with this duty, and Trump’s signature is the one on the memorandum. But when you have an administration thoroughly permeated by the philosophy that knowing a lot about a subject — or consulting those who do know a lot — is a weakness and a liability, you cannot be surprised when endeavors like a war against Iran go terribly awry and leave the United States in a weaker position than when it started.
By taking the Persian Gulf hostage, and with it, the world economy, Iran effectively won the war.
ADDENDUM: Well, I guess I shouldn’t have procrastinated on that profile of soon-to-depart United Kingdom Prime Minister Keir Starmer. Judging from the assessments of Andrew Roberts, Andrew Stuttaford, Andy McCarthy — man, we’ve got a lot of Andrews — Abigail Anthony, John O’Sullivan, Elliott Abrams, and Noah . . . nobody at NR is going to miss him.