US says Hormuz to be toll-free under Iran deal

WASHINGTON – The US said on June 15 that ships will move toll-free through the Strait of Hormuz under an Iran peace deal signed by US President Donald Trump, and insisted that Tehran would have to fulfil its commitments before getting any economic benefits.

They included a possible US$300 billion (S$384.9 billion) reconstruction fund for the war-battered country, but the release of funds will be “tied to performance”, a senior Trump administration official said in a call with reporters.

Trump, US Vice-President J.D. Vance and Iranian Parliament Speaker Mohammad Bagher Ghalibaf electronically signed the so-called memorandum of understanding (MoU) on June 14, the officials said.

“The President wanted to sign it personally because he wanted to show his dedication to the process,” one of the US officials said on condition of anonymity.

But Vance admitted the brief outline deal kicks the thorniest issues – especially Iran’s nuclear programme – down the road.

“The MoU is about a page and a half, so it is a very general document,” Vance told CNN.

Vance will lead technical talks this week and attend a physical signing ceremony expected in Geneva, Switzerland. Trump’s son-in-law Jared Kushner and Middle East Special Envoy Steve Witkoff will also be present.

Trump, who is attending the G-7 summit in France, said that the text would likely be released after June 19 – but the US officials said it would be “put out in the next 24-48 hours”.

Hormuz normal in ‘couple of weeks’?

The signing will kick off a 60-day period in which Iran and the US will try to hammer out a full-scale peace deal.

“We want to put the nuclear discussions up front,” a US official said on the call.

But the bottleneck in the Strait of Hormuz is an immediate priority due to the global economic effects from the spike in oil prices.

Vance told CNBC there was an understanding with Iran that the strait would reopen “in a toll-free way for the long term, and that’s the sort of thing that we’re going to figure out in these technical negotiations”.

Trump himself said the critical strait would be “completely open” from June 19, but added that there was still “hunting” going on to ensure it was de-mined.

Shipping traffic should return to pre-war levels “over the next couple of weeks” but there had already been a “substantial increase in traffic”, the first US official said.

However, Iran’s Foreign Ministry said on June 15 that the deal would allow it to charge maritime service fees on ships transiting the Strait of Hormuz, rather than imposing “tolls”.

‘Zero’ funds released

Uncertainty also surrounds other key aspects of the deal, including Iran’s access to its frozen funds and relief from international and US sanctions.

The issue is politically sensitive for Trump because he has alleged that an Iran deal signed under Democratic president Barack Obama – which Republican Trump scrapped in 2018 – gave Tehran too much money.

“The very simple fact is zero dollars of frozen assets have been released by the United States or any other country,” the first US official said.

“We discussed the possibility of releasing frozen funds, sanctions relief, a big US$300 billion fund to rebuild their country, and all of these things are going to be tied to performance,” added the second official.

The US officials also lashed out at former mediator Oman, which sits across the Strait of Hormuz from Iran, and which Trump threatened to bomb in May.

“We were very unhappy with the job the Omanis did,” the second official said. “We felt they were very duplicitous, almost like employees of the Iranians.” AFP