Iran, US Signal Progress in Peace Talks as Key Issues Unresolved

(Bloomberg) — Iran said talks on a peace deal with the US focused on ensuring fighting ends on all fronts are progressing and that other key points of contention will be ironed out at a later stage.

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US President Donald Trump and Secretary of State Marco Rubio also signaled that a resolution is in sight, even as US officials have indicated that planning remains ongoing for possible fresh strikes.

“The final draft of an agreement text between Iran and the US is still under review,” with mediation efforts currently centered on finalizing a memorandum of understanding, Iranian state television cited Foreign Ministry spokesman Esmail Baghaei as saying. “Over the past week, the process has been moving toward a convergence of views.”

“There are still issues that need to be addressed through discussions with mediators,” Baghaei added. “We must wait and see where the situation will lead in the next three or four days.”

His comments are signs of potential headway being made in a renewed push by Pakistan and Persian Gulf nations to transform a fragile six-week truce into a permanent peace deal.

The Financial Times also reported Saturday that mediators believe they’re closing in on a deal to extend the ceasefire by 60 days that would include a gradual opening of the Strait of Hormuz.

Even so, it remains unclear how key differences, including the fate of Iran’s nuclear program and its calls for sanctions relief, will be addressed, with Baghaei saying those matters aren’t currently on the table. The two sides will also need to agree on how the Strait of Hormuz, a crucial passageway for global energy supplies that has remained largely shuttered since the war began on Feb. 28, should be administered.

“There’s been some progress,” and it’s possible an announcement will be made in coming days, Rubio told reporters in India on Saturday, adding that the US remains adamant that Iran can never have a nuclear weapon, must hand over its highly enriched uranium and ships must be allowed to pass freely through the strait. “The president’s preference is always to solve problems such as these through a negotiated diplomatic solution.”

Iran has rejected demands to give up its uranium and halt enrichment, while insisting that it has no intention of building an atomic bomb, and wants to levy fees on ships passing through Hormuz.

Tehran is also demanding that the US release a “significant portion” of Tehran’s assets that are blocked abroad as a first step, with a “transparent” process for unfreezing the rest, the semi-official Tasnim news agency reported.

Field Marshal Asim Munir, Pakistan’s army chief and the favored interlocutor between the US and Iran, held talks on the peace accord in Tehran on Friday and Saturday, meeting with Iranian President Masoud Pezeshkian Foreign Minister Abbas Araghchi and Mohammad Bagher Ghalibaf, the speaker of parliament.

“The engagements were held in a positive and constructive environment and contributed meaningfully towards the mediation process,” the Pakistani military press wing said in a statement on Saturday. “The intensive negotiations over the last twenty four hours have resulted in encouraging progress towards a final understanding.”

Araghchi held separate discussions with his counterparts in Oman, Turkey, Qatar and Iraq, and United Nations Secretary General António Guterres, Iran’s Foreign Ministry said.

The ceasefire was agreed six weeks ago, temporarily halting fighting that erupted when the US and Israel launched air strikes on Iran. Tehran responded with missile and drone attacks on countries in the Persian Gulf and further afield. Thousands of people were killed, the bulk of them in Iran and Lebanon.

A lasting peace deal has remained elusive so far, keeping global energy markets on edge and oil prices elevated above $100 a barrel. The United Arab Emirates has joined Qatar and Saudi Arabia in appealing to Trump to allow more time for negotiations, according to several people familiar with the matter.

Trump has veered between assurances that a peace accord was almost at hand and threats of new aerial assaults since the truce took effect. He told a rally in the state of New York on Friday the war will be over “soon” and “oil prices are going to tumble as soon as I finish up with Iran.”

Axios and CBS News reported that Trump was preparing for a possible fresh round of strikes, although he hadn’t made a final decision.

“Our armed forces, during the ceasefire period, have rebuilt themselves in a way that if Trump acts recklessly and restarts the war, the response to the US will certainly be more decisive and more bitter than the first days of the war,” state-run IRIB News cited Ghalibaf as saying after his meeting with Munir.

Opposition to renewed hostilities has heightened among Americans upset about the sharp rise in gasoline prices. Those anxieties, reflected in several polls, have resonated on Capitol Hill, months before midterm elections that will determine control of Congress.

“A deal remains more likely than escalation, though by a narrow margin,” Eurasia Group said in a note. “If a deal is reached this weekend, it would likely serve as an interim arrangement extending the ceasefire by 30 days and creating space for additional rounds of talks on outstanding issues, including Iran’s nuclear program.”

Here’s more related to the Iran war:

Inflation prospects are worsening in the absence of a Middle East peace deal and there is a strong argument in favor of the European Central Bank raising interest rates next month to preserve its credibility, according to Governing Council member Yannis Stournaras.
Iran said 25 ships crossed Hormuz in the past day after obtaining permission, the semi-official Iranian Students’ News Agency reported Saturday, citing a statement from the Islamic Revolutionary Guard Corps.
Rubio met with Indian Prime Minister Narendra Modi on Saturday, with energy security high on the agenda. The South Asian nation has been particularly hard hit by soaring oil costs and supply disruptions stemming from the war, with diesel and gasoline prices rising three times in just over a week.

–With assistance from Eric Martin, Carla Canivete, Stanley James, Sam Kim and Chris Miller.