Reactions in Washington and regional capitals to the collapse of the US-Iran talks in Pakistan range from resigned familiarity to genuine surprise at the sheer rigidity of Tehran's positions. Almost universally, sources I spoke with on Sunday placed the blame squarely on Iran, assessing that the hawkish wing within the Islamic Revolutionary Guard Corps dictated intransigent positions – despite Iran's vulnerable condition and the severe blows it has absorbed.
A diplomatic source familiar with the talks said they opened with a handshake between Mohammad Baqer Ghalibaf, the head of the Iranian delegation, and US Vice President JD Vance, accompanied by trays of tea, cookies, and fruit intended to set a constructive tone. The mood shifted quickly, however, as accusations flew – primarily from the Iranian side, directed at Special Envoy Steve Witkoff and senior adviser Jared Kushner, who led the negotiations before the two wars. Both men pushed back sharply, and at one point, when the shouting grew severe, the Pakistani hosts intervened and called a recess.
The opening of the economic war
Even after the delegations returned to the table, virtually no progress was made on the overwhelming majority of issues on the agenda. On the question of the Strait of Hormuz, Iran reversed its earlier agreement to fully open the strait, announcing it would do so only in exchange for a long-term ceasefire and a transit-fee payment arrangement.
On the nuclear file, the Iranians walked back previous understandings and flatly refused to halt uranium enrichment on their soil. They also opposed the entry of international bodies such as the IAEA for oversight purposes. A third issue Iran raised was the unfreezing of Iranian assets held in the US and other countries; the Americans responded that this would happen only gradually and only after specific provisions of any future agreement were implemented.
Iran chose to negotiate from a position of rigidity, even though that posture ill-suits its current circumstances – economic collapse (evidenced by its very demand to unfreeze assets), the elimination of most of its military strength, and the decimation of much of its political and military leadership. Two factors explain this: the unyielding stance of senior IRGC commanders, and the assessment that the US will not resume hostilities. According to a senior American source, the first factor justifies continued efforts to strike that same leadership on the economic level. The second factor, the source said, is simply wrong.
The economic war is now set to enter a far more intense phase – up to and including a full halt of Iranian oil exports, the regime's last remaining source of revenue – driven by the calculation that this will bring Tehran back to the negotiating table.
