THE ECONOMIST: Why an imperfect deal between US and Iran may be the only path to peace

Be grateful for small mercies. The ceasefire between America and Iran holds.

Talks that began in Islamabad last weekend may soon resume. Though the Strait of Hormuz is closed, oil markets are no more spooked than they were. And while economic damage is gradually spreading globally, a deep Hormuz-induced recession could yet be averted.

But small mercies are not enough. If they are not to return to a futile war, America and Iran will have to ensure the ceasefire produces a lasting peace, by opening the strait and settling their dispute over Iran’s nuclear programme.

That will require compromise and a willingness to grapple with complexity that has eluded both sides — especially President Donald Trump.

The search for peace starts with a reckoning of America’s leverage. Mr Trump’s imposition of his own blockade was an attempt to strengthen his hand after weeks of bombardment failed to force Iran’s capitulation.

It traps tankers taking as much as two million barrels a day of Iranian oil to market even as war raged. The idea is to use the economy to get Iran’s hardliners to give ground in talks.

It is a less harmful tactic than the many bad ideas America’s president has aired in recent weeks — bombing Iran’s power plants, sending American troops to be sitting ducks on Kharg Island or wrecking Iran’s oil industry.

Indeed, a dire economy was Iran’s greatest weakness before the war began. Mass protests were the result of fury over the currency’s collapse, energy and water shortages, joblessness and impoverishment. The regime responded by murdering demonstrators in January.

The blockade’s success, however, is highly uncertain. Such measures usually take months, even years, to force compliance.

The regime is desperate to alleviate sanctions and knows that this is its chance to strike a good deal.

That may mean it is prepared to endure the blockade for longer. Mr Trump may lose patience, especially as petrol prices surge for American consumers.

What matters most, therefore, is whether talks can produce a deal.

The first stage is reopening the strait, which should be possible for Iran and America to agree on — after all, each side knows it could force closure again.

Under no circumstance should America agree to let Iran levy tolls on ships traversing the waters. That would give it a permanent hold over the rest of the region.

There will have to be an argument in which America may have to trade the lifting of some sanctions in return for safe passage.

The second stage will be about Iran’s nuclear programme. The outlines of a deal are simple here, too: Iran must close off its path to a nuclear weapon in return for more sanctions relief. Unfortunately, everything about the details will be tricky.

The two sides do not trust each other — so neither will take bold steps, fearful that the other may not later honour its part of a deal.

A willingness to compromise may also be lacking, because both sides want to portray a total victory at the negotiating table as a substitute for the total victory they could not achieve on the field of battle.

Last, as nearly two years of negotiations for the deal with Iran in 2015 attest, nailing down the details of a nuclear programme will be fiendishly complex.

At issue is Iran’s stock of roughly 400kg of highly enriched uranium and its capacity to enrich more.

America wants the stock of uranium removed from the country and a ban on fresh enrichment. Iran wants relief from sanctions and to be able to enrich — a symbol of sovereignty that it would find hard to surrender.

Compromises are available. Iran could dilute the uranium to a low level suitable for civilian use. It could forswear enrichment for a long but limited time; or it could enrich uranium as part of a consortium.

Iran would get all sanctions lifted, but some limited Iranian financial assets held abroad could be unfrozen.

Such a deal will be complex. To be credible it needs international monitors.

Even if it is not enriching, Iran must face limits on the number and calibre of its centrifuges and on theoretical work, given that post-war Iran has even more incentive to dash for a bomb.

The danger is that Iran will drag out talks hoping to screw more out of America, but end up with nothing.

Even if the two sides reach an agreement, there will be no room for triumphalism. Iran will remain a threatening presence in the Middle East.

Its embittered, insecure regime has discovered that it can use Hormuz and regional strikes as weapons.

America has discovered that going to war with Iran is perilous. Much work will be needed to rebuild the Gulf’s security infrastructure and its economies, including in Iran.

Before America and Israel started bombing, a decent agreement may already have been within reach. It is hard to see the sum of what comes out of the fighting being any better.