Negotiations

The negotiations between Iran and the U.S. are about to begin. The U.S. delegation has arrived to Islamabad, and It appears that Iran has the upper hand. Interestingly, they has invited China and Russia as its witnesses. The US has invited Saudi Arabia and Qatar on its side. At the same time, the US has authorized the release of $6 Bn in frozen Iranian funds with Qatar and South Korea to arrange the transfer within days. The main objective seems to be opening the strait of Hormuz and end the war. Iran is demanding (among other things) a passage fee. Legally, under UNCLOS Part III (Arts. 37-44), the applicable regime is "transit passage," not "freedom of navigation." Transit passage gives coastal states regulatory authority over sea lanes. That mean Oman and Iran have the right to control the Strait. But thats only one of the problems. The other issue is that it appears Iran has lost control of some of the mines placed in the strait. It could be a maneuver to leverage the negotiations, but it’s probably true. The important point here is that if they can reach an agreement on the strait, we may see a prolonged ceasefire, once that’s agreed, the next question is who will be the new leader of Iran. And what will be the dynamic with Israel, Hezbollah, Hamas and the Houthis. Are they going back to the ayatollahs regime or would they morph into something else? Because that has major implications in the region. And has major implications for markets. For instance, what would happen with all the monetary commitments from Middle East countries into AI data centers? How much and how soon can they go “back to normal”?

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