How Everything That Could Go Wrong Has Gone Wrong for the US in Iran

The war has strengthened Iran's regional position, destabilised the Gulf and exposed the limits of American power - with serious consequences for India.

Author’s note: This article was originally published by NDTV on July 30, 2026, and is being republished for readers of The Sibal Brief.

A strategic miscalculation

The US war on Iran has proved an all-round disaster. American and Israeli interests in West Asia do not define the interests of virtually the rest of the world in this region. The US has in the past succeeded in controlling or eliminating all regimes that opposed Israel. But the clerical regime in Iran has been the exception, and Trump made a major strategic miscalculation in seeking regime change in Iran by force at Israel’s urging.

The ceasefire and what it conceded

The US-Iran MoU raised some hope that the war might wind down, with the worst behind all of us. The involvement of US Vice-President JD Vance also indicated seriousness on the part of the US in finding a way out of the disaster. But realists remained sceptical of success.

The interim agreement, on the face of it, conceded a lot to Iran. It included an immediate and permanent end to military operations on all fronts, including in Lebanon. This meant that, far from curbing Iran’s regional role, the inclusion of Lebanon recognised Iran’s interests. The agreement to respect Iran’s sovereignty and territorial integrity, and non-interference in its internal affairs, meant that the goal of regime change was abjured.

The nuclear issue, hitherto central for the US, was left for discussion and finalisation later. The opening of the Strait of Hormuz took precedence, although that was not the reason to go to war but, rather, its inevitable consequence. In a major reversal of earlier positions, the US agreed to Iran’s enriched uranium stockpile being down-blended in Iran itself under IAEA supervision. Even with regard to the Strait, it was agreed that Iran would conduct a dialogue with Oman to define the future administration and maritime services on the route, recognising, in other words, that the navigation of commercial ships would be subject to a new regime.

The issue of reparations was addressed by the US, which agreed with regional partners to offer a USD 300 billion plan for the reconstruction and economic development of Iran. Sanctions on the export of Iranian oil were lifted for sixty days. The US undertook to make the frozen or restricted funds and assets of Iran fully available for use upon the implementation of the MoU. A complete removal of all sanctions was envisaged as part of the final deal. The US also agreed to the withdrawal of US forces from the proximity of Iran within 30 days of the final deal.

In public statements, Trump made some astonishing remarks that reversed long-held US positions, namely, that Iran cannot be denied enrichment rights and missiles, as other countries in the region have them.

Why the framework collapsed

That this framework agreement and the ceasefire collapsed so quickly and dramatically is telling. Iran considered a ship using the southern Oman channel without consultation with it to be a violation of the MoU and attacked it. The US, in turn, also saw the Iranian action as a violation of the MoU and retaliated with attacks on Iranian infrastructure over several days. This shows how fragile the US commitment to the MoU was and raises questions about policymaking in the current US administration.

Iranian Foreign Minister Abbas Araghchi says that Iran entered talks and agreed to the MoU to avoid being accused of refusing to negotiate and thereby justifying US attacks. Iran did so knowing that the US could not be trusted to abide by the agreement, that it was essentially buying time and that it would resume military operations, for which Iran was prepared.

Hormuz and the logic of compulsion

The reasons why the US agreed to the MoU and seemingly made major concessions to roll back the conflict remain pertinent. The Strait of Hormuz cannot be opened by force. Trump acknowledged that the US was set to run out of oil reserves in four weeks, and hence the pressure to negotiate a ceasefire and let oil flow again through Hormuz. With the Strait not only closed again, but Trump announcing that the US would charge a 20% fee for letting non-Iranian oil and gas flow through it to compensate for the cost of the war, an untenable financial situation was being created for oil carriers. This would have affected the flow of energy from the Gulf and caused a further spurt in global oil prices, something that Trump had sought to avoid. Trump has been compelled to revoke the announcement.

Escalation without control

Trump’s attacks on Iran have continued, with Iran retaliating against US bases in Kuwait, Bahrain and Jordan, and threatening to attack Dubai/UAE airports and ports. The assumption that Iran’s stockpiles of missiles had been depleted has proved wrong, as Iran has apparently used even more advanced missiles - hypersonic ones - with greater accuracy, leading to US claims that China and Russia were providing it with technical support.

The US has suffered casualties in Jordan, which puts pressure on Trump to retaliate further. His rhetoric has crossed all diplomatic norms, calling the Iranians “scum”, “sick” and a “cancer”. The MoU has been repudiated, though one can assume that some channels of communication through Qatar are being kept open, especially with the IRGC leadership.

A paralysed international system

All this says a lot about the state of international relations: despite a conflict raging in an area of crucial importance for global energy resources, with dangerous choke points in the Strait of Hormuz in the Persian Gulf and Bab el-Mandab in the Red Sea controlled by Iran directly or through the Houthis, the rest of the world is unable to avert an even more serious global economic disaster in the offing.

Both China and Russia are unable to play any effective diplomatic role in defusing the conflict. The matter could be raised in the UN Security Council, but that is more to score diplomatic points than to facilitate an acceptable solution, as, in this case, a veto-wielding permanent member is involved. Russia is itself at the receiving end in the UNSC because of the Ukraine conflict. Besides, it is caught between its equities with the Gulf countries, especially the UAE and Saudi Arabia, and with Iran as well. China is embroiled in the Taiwan and South China Sea issues. Europe has distanced itself from this war, much to Trump’s frustration - a frustration he is expressing by lambasting European countries, especially Spain, as well as by spewing anger at NATO’s ingratitude.

India’s constrained choices

The Global South, which is the most vulnerable to the economic cost of high oil prices, is almost a mute spectator. Brazil is vocal against the US on the Iran issue, but India has limitations because of the need to preserve its ties with the US; its close relations with the Gulf countries, from where it receives most of its oil, gas and remittances, and where almost 10 million Indians reside; as well as its strategic longer-term equities in Iran. BRICS is unable to forge a consensus on how to politically address the issue because Iran and the UAE, both members, are unwilling to compromise.

US strategic interests in West Asia are not aligned with those of India except in the offshoots of the Abraham Accords, namely, the I2U2 (India, Israel, US, UAE) format or the IMEC (India-Middle East-Europe Corridor) supported by the US. Both these projects, especially I2U2, have been derailed by the war. In fact, the US has forced India to dilute its ties with Iran by pushing us, through the threat of secondary sanctions, to cease buying oil from it, and also by subjecting our participation in the Chabahar project to the grant of waivers. The waiver has now been rescinded. The US has attacked Chabahar - not the terminal India handles, but its Port Watchtower. Even so, the message is clear. Even though Chabahar is well outside the Strait of Hormuz, it is part of the Iranian infrastructure that the US seeks to demolish.

Any degradation of the port actually plays in favour of China’s Gwadar Project, to which the US has not objected.

The regional order after the war

The politico-military failure of the US/Israel war on Iran; Israel’s continued exercise of its own agency in the region; the remarkable defiance and resilience shown by Iran and its emergence as a powerful regional entity; the need for the Gulf countries to rework their security arrangements and reduce reliance on the US; and the roles that Pakistan (Kuwait has now ratified a defence agreement with Pakistan negotiated three years ago) and Turkey could play raise serious strategic, political, economic and security issues for India, given the vast and enduring equities we have in West Asia.