The United States and Iran have formally activated a 60-day negotiation window after signing the Islamabad Memorandum of Understanding, a 14-point political accord that immediately ends military operations on all fronts, including Lebanon, and commits both sides to restore commercial transit through the Strait of Hormuz. President Donald Trump signed the document during a dinner with French President Emmanuel Macron at the G7 summit in Versailles, while Iranian President Masoud Pezeshkian signed from Tehran, using an electronic process that a planned follow-up meeting in Switzerland was postponed after US Vice President JD Vance cancelled his travel. The memorandum, mediated primarily by Pakistan and Qatar, is not a legally binding treaty but a framework that freezes the conflict and sets a timetable for negotiating a comprehensive final agreement.

Viewed from Washington, the Trump administration presents the accord as a strategic victory achieved without committing American funds to Iran’s reconstruction. Trump has stated that a proposed $300 billion reconstruction fund will be financed by Gulf partners, not the US Treasury, and has threatened that Iran would be “bombed like never before” if it fails to reach a broader deal. The White House insists the war, launched jointly with Israel, has destroyed Iran’s air force, navy and air defences, leaving Tehran in a position of desperation. Domestically, the agreement has drawn fire from Iran hawks who consider it more generous than the 2015 nuclear deal, while Israeli officials across the political spectrum view it as a bad bargain struck without their government’s access to the text. Vice President Vance has publicly urged Israeli leaders to respect the peace process, even as Prime Minister Benjamin Netanyahu maintains that Israeli forces will remain in a southern Lebanon security zone and that preventing an Iranian nuclear weapon remains an independent Israeli objective.

From Tehran, Supreme Leader Mojtaba Khamenei has characterised Trump’s pursuit of the memorandum as an act of desperation, revealing that he initially opposed the deal but authorised it after appeals from President Pezeshkian and the Supreme National Security Council. Foreign ministry spokesman Esmaeil Baqaei confirmed the digital signature and stressed that implementation will be more difficult than negotiation, with the 60-day clock now running on unresolved questions of uranium enrichment levels, the fate of Iran’s stockpile of highly enriched uranium, and the sequencing of sanctions relief. The memorandum reaffirms Iran’s commitment to exclusively civilian nuclear ambitions, yet defers detailed nuclear and sanctions arrangements to the coming weeks, leaving the core disputes that triggered the conflict largely untouched.

European leaders at the G7 offered cautious support, with Macron describing the step as “wise” but warning that it does not resolve everything and carries risks. Legal analysts in Italy note that the memorandum is a political accord without immediate binding force under international law, designed to create space for negotiation rather than deliver a definitive settlement. Observers in London assess the deal as a positive initial development that eases global energy market pressures, but underline that deep mutual distrust—sharpened by two American-Israeli military campaigns against Iran within a year—will test the 60-day timeline. The ceasefire is holding, tankers are beginning to transit Hormuz under US naval observation, and the two sides now face the task of converting a fragile pause into a durable architecture for verification, economic reintegration and regional security.