WHEN word spread on June 14 that the United States and Iran had finalised a memorandum of understanding (MoU), financial markets reacted with relief. Oil prices fell. Shipping premiums dropped. The world exhaled.
That relief was premature, and the days since have made this harder to ignore.
The MoU has now been signed twice: digitally by US Vice-President JD Vance and Iran’s Parliament speaker on June 14, and again, remotely, by US President Donald Trump and Iranian President Masoud Pezeshkian on June 17, with Trump signing from a group of Seven (G7) reception in France.
A further in-person ceremony in Geneva was scheduled for June 19, but nothing happened. This is not a peace agreement, nor a nuclear deal, nor even final by its own signatory’s admission: Trump told reporters last week that if Iran fails to “behave”, the United States would resume strikes.
What it is, despite these qualifications, is the first formal architecture for ending a conflict that rattled global energy markets more severely than any confrontation in decades.
The document’s operational core, per leaked accounts of its 14 points, is narrow. Iran will clear mines from the Strait of Hormuz and permit toll-free shipping for 60 days, alongside talks on the strait’s longer-term administration.
The United States ends its naval blockade and commits to eventually withdrawing forces from near Iran. A ceasefire covers every front, including Lebanon.
On sanctions, the leaked summary states the United States will lift sanctions, release frozen assets and help build a reconstruction fund reportedly worth US$300bil or more.
That last point is where the contradictions begin. Vance has said the fund would draw on Gulf financing, not the US Treasury, and would flow only as Iran’s compliance is verified – not as an unconditional payout.
Iranian state media has claimed the draft includes US$12bil in frozen assets released upfront; US officials deny any such figure appears in their documents.
Then Trump himself complicated things further, telling reporters at the G7 that the deal does not provide immediate sanctions relief at all, promising to “clarify” the matter later.
Why did the two sides even reach this deal? Not breakthrough, but exhaustion.
Washington was consuming precision munitions at a rate that raised concerns about replenishment, while bipartisan pressure in Congress mounted to limit or end US involvement ahead of November’s midterms.
Iran’s exhaustion ran deeper still: the rial had lost more than 40% of its value since the Twelve-Day War of June 2025, nationwide protests in December 2025 underscored growing public frustration with inflation and other economic situation, adding pressure on the political leadership – pressure that can shortly change in the country’s negotiating posture.
Closing Hormuz was Iran’s most powerful weapon and its most self-defeating one. Even reopening the strait can be messier than announced.
Commercial traffic remains well below pre-war levels, as shippers await verifiable security guarantees rather than merely political statements.
The bigger threat to the whole arrangement, though, is Israel, excluded from the talks entirely and calling the outcome a strategic failure. The ceasefire covers Lebanon but requires no Israeli withdrawal from the south, and Israeli strikes there have continued since signing.
Any Israeli escalation during the negotiating window would hand Iranian hardliners every reason to walk away.
What does this mean for Indonesia?
Immediately, fiscally: Indonesia holds only around 20 days of strategic petroleum reserves, and the Hormuz closure pressed directly against a state budget built on assumptions – oil at US$70 a barrel, the rupiah at 16,500 to the dollar – that the war rendered obsolete, pushing the fiscal deficit toward and potentially beyond its 3% legal ceiling.
Twenty days of strategic reserves convert a distant war into a domestic emergency within weeks.
Indonesia imports 75% to 80% of its liquefied petroleum gas needs, a dependency that drains more than 120 trillion rupiah a year in foreign exchange even in calm times, and roughly a third of those imports come from the Middle East before the war forced Jakarta to scramble for alternatives in other countries.
Longer term, the US$300bil fund, if it ever materialises in verified tranches rather than competing claims, would mark Iran’s largest economic opening in decades – one where Indonesian construction, halal food and consumer goods exporters have real room to participate.
But Iran’s continued place on the Financial Action Task Force’s high-risk list, and the secondary sanctions exposure facing any firm touching the dollar system, mean that opening will be slow and conditional, if it comes at all.
The deeper lesson concerns leverage itself. The instrument that did the most to force this negotiation was 33km of mined water that made the global economy pay attention.
Indonesia controls comparable geography in the Lombok and Sunda Straits, holds the world’s largest nickel reserves, and carries the standing of the world’s largest Muslim-majority democracy.
Bebas aktif (free and active) has always rested on the principle of independence.
This war clarifies that the principle’s credibility depends on the material foundations beneath it – and on recognising, before the next crisis arrives, where such leverage actually lies.
After all, the Geneva ceremony, if it happens, will not end the Iran crisis. At best, it ends its most acute phase.
The harder diplomacy begins now. — The Jakarta Post/ANN
Andrew W. Mantong is a senior researcher on international relations at the Centre for Strategic and International Studies, Indonesia. The views expressed here are the writer’s own.
