Since last month, we have gone from a public rejection by Iran’s Supreme Leader of a US offer to talk, to a first indirect meeting of envoys in Oman. Trump aims to resolve the nuclear situation -and more- by June and will ratchet up the pressure between now and then.
Talks announced, divisions with Israel. During an April 7th visit to the White House, Prime Minister Binyamin Netanyahu pressed Donald Trump for immediate action against Iran, including a military strike on its nuclear facilities, arguing that diplomacy would be futile. Trump, however, rejected Netanyahu’s hardline approach, opting instead to publicly announce the launch of nuclear talks with Iran starting April 12th – a move that left Netanyahu politically sidelined and visibly frustrated. The core divergence lies in their strategic outlooks: Netanyahu advocates pre-emptive military action, seeing Iran as dangerously close to nuclear breakout and diplomacy as ineffective. He even invoked the “Libya model,” urging Iran’s complete dismantlement of its nuclear program — a proposal that Tehran considers a threat to regime survival. Trump, meanwhile, is pursuing a more restrained and pragmatic approach, favouring limited diplomatic engagement and possibly a narrowly focused deal with robust verification over full dismantlement. His envoy Steve Witkoff has echoed this softer line, emphasizing containment over confrontation, and has support from isolationist Republicans like Tucker Carlson. Despite the ongoing buildup of US military assets in the region (see below), Trump appears willing to negotiate—though only for a short window. Netanyahu, tethered politically to Trump but ideologically at odds with his current posture, may be biding his time. If talks collapse, the Israeli prime minister could reclaim influence and push harder for the military solution he originally sought.
Iranian about face. Ali Khamenei’s decision to allow US-Iran nuclear talks in Oman reflects not a shift in ideology but a pragmatic move to avert war and preserve the Islamic Republic’s core strengths. Faced with a stark ultimatum from Trump—strike a deal or face military action – Khamenei is using diplomacy as a tool to de-escalate, buy time, and safeguard Iran’s strategic assets: its nuclear programme, missile arsenal, and proxy networks. This approach mirrors his long-standing playbook of tactical retreats branded as “heroic flexibility” while maintaining fundamental goals. The regime, weakened economically and politically at home, sees talks as a buffer against potential domestic collapse triggered by war. Khamenei aims to reduce tensions without making irreversible concessions—hoping to ride out Trump’s presidency, preserve Iran’s regional influence, and keep the nuclear infrastructure intact. For him, diplomacy is not a path to peace but a shield for survival.
Forces build. In a none-too-subtle move, the US deployed at least six B-2 stealth bombers to Diego Garcia, a key Indian Ocean base, widely seen as a warning to Iran. The aircraft represent nearly a third of the B-2 fleet. The deployment comes as President Trump and Defense Secretary Pete Hegseth signal possible further action against Iran and its proxies, including continued airstrikes on Houthi forces in Yemen. Satellite images show B-2s alongside fuel tankers and cargo planes, with shelters hinting at additional aircraft. Analysts say the B-2s—capable of carrying 30,000-pound bunker-busting bombs— could target not just Houthi positions, but also Iranian nuclear sites. The Pentagon also confirmed that the USS Harry S. Truman will remain in the region, with the USS Carl Vinson and additional aerial assets en route.
State media prepares the wicket. In the build-up to the talks, Iran’s state-run media urged Tehran to remain defiant, warning that any concessions would be seen as weakness. Nour News, tied to Iran’s National Security Council, warned Trump would exploit flexibility and pushed for resistance to “unreasonable demands,” framing his diplomacy as self-serving and image-driven. The outlet also highlighted divisions within Trump’s team, accusing Israel of backing pro-war voices in Washington. Kayhan, aligned with Supreme Leader Khamenei, called for full US sanctions removal as a precondition for serious talks and declared the meeting a symbolic win for Iran, expecting no breakthrough. Javan, linked to the Revolutionary Guard Corps, portrayed the US as in decline and accused Trump of seeking a superficial deal to cover strategic weaknesses. Across outlets, the message was unified: resist pressure, reject compromise, and use the talks to project strength rather than seek resolution.
US regional diplomacy. US officials met with counterparts from Saudi Arabia, the GCC, and Egypt in the week ahead of the talks. Arab partners, wary of Iranian influence, fear Washington may revive a conciliatory approach; the US likely sought to reassure them that their interests would not be compromised. Saudi Foreign Minister Prince Faisal bin Farhan met Secretary of State Rubio to discuss defense ties, threats from Iran-backed groups, and a potential Trump visit to Riyadh, while Deputy Secretary Christopher Landau met GCC chief Jasem Albudaiwi and Defense Secretary Pete Hegseth spoke with Egypt’s defense minister. These talks demonstrate a push by Washington to align regional allies, previously hostile to the JCPOA, before re-engaging Iran diplomatically.
Talks commence. The talks happened as advertised on Saturday April 12th, marking the most significant diplomatic engagement in several years. Witkoff and Foreign Minister Abbas Araghchi held over two hours of discussions, described as “constructive” and “respectful”, and agreed to continue negotiations the following week. While Trump initially claimed the talks would be direct, Iran insisted on indirect dialogue. The discussions aim to resolve growing tensions over Iran’s nuclear programme, though deep mistrust and differing expectations persist. The US is pushing for Iran to fully dismantle its uranium enrichment capabilities, while Tehran seeks a return to a JCPOA-style agreement focused on limited enrichment and sanctions relief. With Iran’s enriched uranium stockpile now exceeding 8,200kg and nearing weapons-grade levels, the stakes are high. Trust-building measures, including the possible unfreezing of $6 billion in Iranian funds held in Qatar, may influence progress. Here are some highlights from the talks:
- Both sides agreed to continue negotiations next Saturday, April 19th, though the venue will change. Direct talks were left on the table
- Talks focused strictly on Iran’s nuclear programme (and not on missiles or regional activities). This is very much in line with Iran’s wishes.
- Iranian parliamentarians stated publicly that any resulting deal must be ratified by lawmakers. While this is not binding, it emphasises that powerful domestic constituencies have significant sway on the issues under discussion
- Iranian state media reported that Trump may soon make emotional public remarks intended to sway public opinion
Market incentives. Iranian officials have floated the idea of granting American investors access to their markets as a possible incentive during ongoing nuclear negotiations, signalling a desire for broader economic engagement beyond sanctions relief. President Masoud Pezeshkian and Foreign Minister Abbas Araghchi have hinted at openness to US investment, framing it as part of a “trillion-dollar opportunity” — though this appears more strategic than substantive for now. Pezeshkian, in an effort to appeal to Trump’s transactional instincts, said “His excellency [Khamenei] has no opposition to investment by American investors in Iran. American investors: come and invest.” Despite this, significant barriers remain: a dense web of primary and secondary US sanctions currently makes any American investment in Iran illegal without specific licenses, which are highly restricted. Even if a nuclear deal is reached, domestic conditions in Iran — including a non-transparent economy dominated by regime-linked entities and the IRGC — make large-scale foreign investment unlikely. Without fundamental economic reforms and clearer legal protections, Tehran’s market access offer is more a diplomatic gesture than a realistic shift in policy.
Market reaction to talks. Tehran’s stock market rallied in anticipation of a possible easing of tensions following the readout of the talks. The rial, which a week previously hit another record low against the dollar at 1,043,000, rallied on the black market. At the time of the last successful negotiations between the US, Iran and other counterparties in 2015, the rial traded at 32,000 to the dollar.
The Trump administration has moved characteristically fast here, but beware of conflicting expectations: Iranians are masters of strategic slow-rolling which will frustrate Trump’s desire for a deal within 2-months… Iran seeks limited sanctions relief in exchange for nuclear concessions, while the US opened with calls for full dismantlement of Iran’s nuclear programme… Iran is negotiating from a position of weakness due to economic hardship, domestic unrest, and military pressure, but the US Administration is split on its objectives and red lines.
Published 14th April 2025