THE ECONOMIST: Donald Trump is stalling for time in the war with Iran

The calendar says it is July, but the headlines look like April. The war between America and Iran has paused but not ended. The Strait of Hormuz is in effect shut, but Gulf states are trying to broker a deal that would reopen it, at least temporarily.

Donald Trump has retreated from his threat to launch a “massive attack” on Iran and now claims negotiations are going well. That was the state of play for much of spring, until the warring parties signed an interim peace deal on June 17.

Under the terms of that so-called memorandum of understanding (MOU), America and Iran should be almost done negotiating a comprehensive pact to end five decades of hostility. Instead they are back to haggling over the strait.

Even if diplomats manage to find a solution, it may be only a short-term fix — a patch on a deal that was threadbare to begin with.

The MOU began to unravel on July 6, when Iran attacked several oil and gas tankers. It did so to halt growing traffic through the southern side of Hormuz, which lies in Omani territorial waters and thus diminishes Iran’s control of the waterway.

America then began almost two weeks of daily air strikes, mostly aimed at military targets and economic infrastructure in southern Iran. The regime launched missiles and drones at American bases in the Gulf and Jordan.

On July 24, though, Mr Trump abruptly halted the bombing campaign. In public, American officials say they are keen to give diplomacy a chance. Privately some also worry about a dwindling supply of air-defence interceptors and fret that limited air strikes have little value. Meanwhile, Iran has not attacked any commercial ships for almost a week, although that may simply reflect a lack of targets: the number of vessels using the southern passage through Hormuz has dropped close to zero.

Last weekend a delegation of Omani officials visited Tehran for talks. Though Iran is not speaking directly to the Americans, Oman is acting as an intermediary. It has offered Iran a proposal that includes a formal truce, perhaps lasting ten days, and a plan to reopen the strait. Iran and littoral Arab states would manage it through a joint mechanism. Ships would not pay a toll for transit, but the consortium could collect “voluntary contributions” for navigational aids, environmental services and the like, similar to what South-East Asian nations do in the Strait of Malacca.

In theory this offers everyone a face-saving compromise. Iran could say it had imposed a new arrangement on the strait, while America could say it had refused Iran’s demand for full control and mandatory fees. Gulf states would get free passage.

The trouble is that Oman has proposed a similar arrangement in the past — only for Iran to repeatedly reject it. There is no indication that it has changed its position. Indeed, diplomats briefed on the effort say Iran has not given up on the idea of levying tolls, which it hopes would serve as both a revenue stream and a show of dominance. Some also worry that Iran and the Gulf states will have different interpretations of the deal: would Iran see voluntary fees as truly voluntary, for example?

Hormuz should have been a settled issue by now. The MOU said it was to be de-mined and reopened by mid-July. Optimists hope that resolving the dispute will get the deal back on track. But large parts of the MOU already look defunct. Its first clause said that America and Iran had agreed to a “permanent” end to their war. For ever is not what it used to be: sustained fighting resumed less than three weeks later.

Another disagreement concerns tens of billions of dollars in Iranian assets frozen in foreign banks because of sanctions. Iran expected some of those funds to be released immediately, while the Trump administration insisted it would only release the money in stages if Iran complied with the deal.

The two sides should have been deep into 60 days of planned negotiations over a comprehensive deal to address America’s concerns about Iran’s nuclear programme and Iran’s demand for long-lasting sanctions relief. Instead they have barely addressed the bigger issues. There have been no high-level talks at all this month, and the 60-day deadline will arrive on August 16 (though it can be extended by mutual agreement).

If Iran does not accept the Omani proposal, Mr Trump is in a bind. Escalating the war would be risky. Accepting Iran’s control over the strait would be an embarrassment at home and an affront to his Gulf allies.

For now he seems inclined to stall for time. He bombed and threatened Iran until the price of Brent crude broke $US100 a barrel on July 23. Then he reversed himself, which sent prices plummeting (to under $US80 at the time of writing).

On July 27 he told Axios, a news site, that diplomacy would have to move quickly: “Either it goes fast or not at all.” Hours later he told reporters on Air Force One that he has “a lot of patience” for negotiations and “plenty of time” to reach a deal.

The next day he held a quiet meeting with Benjamin Netanyahu. The Israeli prime minister was in Washington for the funeral of Lindsey Graham, a hawkish Republican senator who died earlier this month. He used that as an excuse to see Mr Trump, who has dodged an in-person meeting with him for months.

But Mr Netanyahu was brought into the White House through a side entrance. Mr Trump eschewed his usual press gaggle with reporters in the Oval Office, and his spokeswoman said only that the meeting was “positive and productive”.

America and Iran have been here before. Both agreed to the MOU because the economic pain from the war, and their duelling blockades of Hormuz, was becoming intolerable. But its vague language failed to resolve any of their underlying issues — and there is little reason to hope a new deal will do the job.