US-Iran stand-off: conflicting perspectives

The impasse in the second round of peace talks stems from Iran exhibiting intransigence and the US considering these parleys as a waste of time, for Iran not conceding on the core demand of halting uranium enrichment. The US proposals envisage a concurrent two-stage process, including ending the war first; and simultaneously addressing more contentious issues, like Iran's nuclear programme. The Iranian proposition spans a sequenced framework; ending hostilities first, followed by CBMs like removing the maritime blockade, and thereafter the broader negotiations. Tehran wants removal of blockade as a precondition for further talks. Its approach comprises immediate de-escalation, while preserving the leverage (SoH) for the longer-term settlement. Contrarily, the US considers postponement of nuclear discussions a risk, which weakens its centrality. Washington also cites 'tremendous infighting and confusion' within Iranian leadership, where the IRGC/Pasdaran is considered to be calling the shots, and not the political leadership, after the killing of the country's civil and military leadership.

In a nutshell, Tehran seeks phased relief and recognition of its position, whereas Washington requires comprehensive guarantees upfront. Pakistan is trying hard to 'narrowing the differences' before a second formal meeting. However, there seems an agreement on keeping the ceasefire open-ended, allowing time to diplomats for addressing complex issues.

President Trump cancelled a planned Islamabad trip by envoys Steve Witkoff and Jared Kushner, announcing that Iran could call, once ready. Iran has, for now, shunned face-off with the US and instead prefers dealing through intermediaries, due to trust deficit and President Trump's eroding credibility. Consequently, the SoH remains closed in double blockade by US CENTCOM and IRGC, choking most of the Gulf LNG supply and around 20% of the global oil shipments, destined mainly for Asia comprising 85% of its energy needs.

In global markets, major US stock indices (S&P 500 and Nasdaq) have hit record highs, due to robust energy trading, whereas the broader global market is pressured because of supply inconsistency and risks. With global oil prices hovering over $100–$109 a barrel, companies like Exxon and Aramco have reaped hefty profits; however, gas station inflation has hit international and US consumers hard. Defence stocks have surged and companies like Lockheed Martin, Raytheon and Boeing are primary beneficiaries of this conflict. Chip stocks have registered gains for AI firms like Intel. Likewise yields on the 10-year US Treasury bonds have risen. Gold has edged higher, as investors are increasingly shifting towards safer stocks.

Against this backdrop and despite no immediate prospects of direct talks, backchannel diplomacy remains active. Iran's FM Abbas Araghchi returned to Islamabad on April 25 after visiting Oman, travelling on a Pakistani aircraft, and later meeting Gen Asim Munir. Araghchi carried written messages outlining Tehran's position on key issues, like its 'nuclear red lines and SoH'. He later travelled to St Petersburg where he met President Putin, Iran's close ally. Several regional countries are also actively involved in de-escalation. Araghchi also made separate contacts with Qatari and Saudi counterparts. GCC and Saudi Arabia want their concerns to be 'reflected' in the peace process. Turkey is also engaging the US, Iran and Oman.

President Trump has desisted from incendiary posts on social media, and has not indicated resuming hostilities; and the fragile ceasefire is so far holding. It seems that given the stakes, both sides do not want to return to a shooting war – the US for domestic political costs, due to depleting ammunition stocks, and given the world reaction; and Iran because of attrition it has suffered and the economic fallout from the maritime blockade. Although Iran publicly sticks to defiance and declares not to enter 'imposed negotiations' under threats or blockade.

As a side development, Hezbollah in Lebanon refuses to be part of the ceasefire with Israel, brokered last week in Washington. Hezbollah's five peace conditionalities include: a) halt to Israeli aggression; b) withdrawal from occupied lands; c) prisoner release; d) displaced Lebanese returning to their homes; and e) reconstruction. This seemingly is an over-ask, given the military situation on the ground, and the crushing blows suffered by Hezbollah in this war. Hezbollah, as an indispensable powerbroker, is trying to raise the 'stakes for parties mediating the conflict' and is simply bypassing the Lebanese government which is eager for a settlement with Israel. That conflict, hence, will likely complicate the US-Iran mediations.

On the Iran side, the sentiment seems more confident, hawkish and understandably angry. After absorbing and retaliating the US-Israeli onslaught for over a month, the IRGC with residual military capability could perhaps continue the combat for up to three more months. Besides, IRGC and most of the world consider restoration of peace squarely a US responsibility which, along with its protégé Israel, started this unnecessary war of choice.

Internally, IRGC is in the driving seat; however, ironically, generals are not known as great peace makers and compromisers, given their training and outlook. Their world is a binary of black and white, with lesser or no shades of grey, and that remains the hallmark of politicians. Aligning the IRGC's worldview and conflict outlook with political reality would be a tough ask and lengthy process, especially after the stalemate that the IRGC has imposed on the mighty US-Israel coalition.

Ayatullah Mojtaba Khamenei was severely wounded on the first day of the war suffering injuries to one hand and one leg and burn wounds to the face and lips. He is now awaiting a prosthetic leg. He reportedly speaks with difficulty and will eventually need to undergo plastic surgery. His own ties to the IRGC; his appointment as an IRGC favourite; his health; his reclusiveness due to security concerns; and the imperatives of regime survival bring IRGC to the forefront as a lead player in deciding strategy and resource allocation. Attacks on Israel and US interests in the Arab world besides the blockade of SoH are the Guards' strategic iterations. Additionally, the generals reckon that they have contained the threat, hence the continued defiance. It was them who agreed to the ceasefire and who prevailed upon the Iranian government in not sending their delegation for Islamabad Peace Talks 2.0. Speaker Mohammad Bagher Ghalibaf too has an IRGC background, and several Guards generals participated as delegates in Islamabad Talks 1.0. Some fringe firebrands, like the ultra-hardline Saeed Jalili, continue to influence media.

So, fingers are still crossed!