RESOLVING THE LEDGER
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President Trump signaled on Sunday that he's prepared to allow economic pressure on Iran to mount — as opposed to ordering a new military offensive — even as the country continues to defy the U.S.
Why it matters: Only a week ago, Trump was on the verge of ordering a return to major combat operations. But in an interview with Axios, he did not make any new military threats.
Trump also didn't express any anger or frustration about the fact that Iran has been holding up an announcement on a deal with Oman to reopen the Strait of Hormuz. On Saturday, Iran issued a new list of demands to allow shipping through the strait.
What he's saying: "We are low keying it," Trump said during a brief phone call.
"We are only semi-negotiating with them. We are just watching Iran with its huge inflation and the fact they have no money."
He stressed that Iran "is in very bad shape" economically and has no money to pay its troops. The U.S. naval blockade has exacerbated the Iranian regime's economic crisis, Trump said.
At the same time, Trump said that with oil down to slightly over $75 a barrel, U.S. consumers are feeling less pain from the war.
"It will work out. It always works out. It's like a chess game," Trump said of the back-and-forth with Iran.
Driving the news: An agreement governing traffic in the Strait of Hormuz was negotiated among Iran, Oman and the U.S. and has been pending for a few days now.
As part of the new deal, Iran would be given partial control over traffic in the strait — something it didn't have before the war.
Qatari and Pakistani mediators were confident the deal would be announced Wednesday, but since then its prospects have seemed to fade.
U.S. officials also say there are growing disagreements inside the Iranian regime. One camp, led by President Masoud Pezeshkian, is extremely worried about an economic collapse and believes Iran needs to reach a deal with the U.S. Another led by the commander of the Islamic Revolutionary Guard Corps, Ahmad Vahidi, rejects any concessions.
State of play: On Saturday, the head of Iran's Supreme National Security Council, Mohammad Bagher Zolghadr, laid out new terms for reopening the strait — on top of those negotiated in the Oman agreement.
Zolghadr said in a statement that in order for the strait to reopen, the U.S. must:
"[N]ever threaten nor insult Iran in any language."
"[P]ermanently end the war against Iran and Iran's allies in Lebanon, Gaza, Yemen, and Iraq."
Lift the naval blockade and withdraw military forces from the surroundings of Iran.
He added a demand for full compensation for war damages, lifting of all sanctions and releasing all Iranian frozen funds.
Until several weeks ago, these demands were a prerequisite for a nuclear deal. Now, Iran is presenting them as conditions just for reopening the strait.
A diplomat from one of the mediating countries said Zolghadr's statement reflected the political infighting within the regime.
Behind the scenes: U.S. officials said Trump was leaning toward resuming major combat operations against Iran a week ago but was convinced to de-escalate for now.
One of the officials said the fighting allowed the Iranian regime to avoid dealing with the consequences of the war, the damage to infrastructure and the deep economic crisis that has been created.
When Iran isn't engaged in war, it is forced to confront a grim reality with no real solutions at hand, the U.S. official said.
At the same time, the U.S. official said, around 8 million barrels of oil are going out of the Gulf every night through the southern lane of the Strait of Hormuz in coordination with the U.S. military. The U.S. is going to try and get more oil out as long as there is no deal.
What to watch: ״This thing is not over. It's obviously not at the beginning. We're in the middle of the game, and we're applying a whole host of tools — diplomatic, economic, military tools — to ensure that we get the best outcome for the American people," Vice President Vance told Fox News on Saturday.
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