ISLAMABAD/TEHRAN/WASHINGTON — The United States and Iran have electronically signed the “Islamabad Memorandum of Understanding,” a 14-point framework agreement that formally ends months of military confrontation and provides for the reopening of the Strait of Hormuz.
Pakistani Prime Minister Shehbaz Sharif, who served as mediator in the negotiations, announced the signing on Thursday. The memorandum, electronically signed by U.S. President Donald Trump and Iranian President Masoud Pezeshkian, enters into force with immediate effect.
“I am honored to announce that the historic ‘Islamabad Memorandum of Understanding’ has been electronically signed today between the United States of America and the Islamic Republic of Iran,” Sharif wrote on his X page. “The ‘Islamabad Memorandum of Understanding’ shall enter into force with immediate effect and as a first step, the Islamic Republic of Iran will instantly reopen the Strait of Hormuz and the United States of America will immediately lift the naval blockade.”
Key Terms of the 14-Point Memorandum
Under the memorandum, the United States and Iran, along with their allies, commit to the “immediate and permanent termination of military operations on all fronts, including in Lebanon,” and undertake not to initiate war or use force against each other. Both sides agree to respect each other’s sovereignty and territorial integrity and refrain from interfering in each other’s internal affairs.
Strait of Hormuz: The United States will begin removing its naval blockade immediately and fully end it within 30 days. Iran will make arrangements for the safe passage of commercial vessels “with no charge, for 60 days only,” with normal traffic to be restored within 30 days following demining operations. Future administration of the strait will be determined through dialogue between Iran and Oman, in consultation with other Gulf littoral states.
Sanctions and Nuclear Issues: Iran reaffirms it will not acquire nuclear weapons. Both sides agree to negotiate the fate of enriched uranium stockpiles, with down-blending to take place under IAEA supervision. The memorandum commits the United States to ending sanctions currently imposed on Iran, and both sides will negotiate a final comprehensive agreement within a maximum of 60 days, extendable by mutual consent.
Economic Reconstruction: The memorandum includes provisions for a reconstruction and economic development plan for Iran worth at least $300 billion, to be developed by the United States together with regional partners.
Unresolved Disputes and Implementation Challenges
While the memorandum establishes a framework for de-escalation, significant disagreements remain over how key provisions will be interpreted and implemented.
Strait of Hormuz: Free Passage vs. Service Fees
The most immediate point of contention concerns the Strait of Hormuz. The memorandum explicitly states there will be “no charge” for commercial vessels for 60 days only. Beyond that period, the text leaves the “future administration” of the strait to be worked out by Iran, Oman, and other Gulf states.
Iran has offered a sharply different interpretation. According to the semi-official Fars news agency, Iran intends to levy fees on crossing vessels for security, maritime, environmental, and insurance services after the 60-day toll-free period. Iran’s Foreign Ministry has said the country will charge “maritime service fees” rather than tolls. Conversely, the U.S. side seeks permanent toll-free passage, with President Trump insisting the waterway will be “completely open, free of any toll fees.”
Sanctions Relief: Upfront Release vs. Performance-Based Lifting
A second major dispute centers on the timing and conditions for lifting sanctions and releasing frozen Iranian assets. Iranian media have reported that the memorandum includes the release of approximately $24 billion in frozen Iranian assets during the 60-day period, with half to be made available before negotiations begin.
The U.S. side has strongly rejected this interpretation. “Iran would not be provided cash in the deal,” Trump said in an interview with The Wall Street Journal. “Iran doesn’t get a dime of money unless they perform their obligations,” Vice President JD Vance told ABC. Senior U.S. officials emphasized that any sanctions relief would be gradual and conditional.
Reconstruction Fund: $300 Billion Commitment vs. No U.S. Contribution
The memorandum includes a provision for a reconstruction plan worth at least $300 billion. However, Trump has denied that the U.S. is contributing to the fund. “That’s false,” Trump said at the G7 summit. “We’re not investing. We’re not putting up ten cents… We do not have a fund.” Senior U.S. officials have stressed that the text does not explicitly commit Washington to a financial contribution, with funding expected to come from Gulf states and private investment.
Lebanon Ceasefire: Conflicting Interpretations
The memorandum states that the United States and Iran, together with their allies, declare an “immediate and permanent end to the war on all fronts, including in Lebanon.” However, Israeli Prime Minister Benjamin Netanyahu has made clear that Israeli forces will remain in southern Lebanon “as long as security needs require,” and Israeli officials have stated that Israel does not consider itself bound by the Lebanon clause. Meanwhile, Iranian officials have indicated that Israel’s withdrawal from Lebanon is part of the next stage of US-Iran negotiations.
A Framework, Not a Final Agreement
It is important to clarify that the Islamabad Memorandum of Understanding is not a final peace treaty but rather a 60-day negotiating framework.
“It’s not final. It’s a memorandum of understanding,” Trump said at the G7 summit. “If I don’t like it, if they don’t behave, we’ll go right back to dropping bombs right smack in the middle of their head,” he warned.
Under the two-phase structure, the memorandum establishes an immediate cessation of hostilities and the reopening of the Strait of Hormuz. The second phase consists of a 60-day negotiation period to finalize a comprehensive agreement covering Iran’s nuclear program and the full lifting of sanctions. As multiple analysts have noted, 60 days may be short to finalize a detailed agreement—the 2015 Joint Comprehensive Plan of Action (JCPOA) took approximately two years to negotiate.
Formal Signing and Next Steps
A formal signing ceremony is scheduled for Friday in Switzerland, where Vice President JD Vance is expected to represent the United States. Pakistan and Qatar, which served as co-mediators, will host the ceremony.
Sharif commended the mediation efforts of Qatar, Saudi Arabia, Turkey, and Egypt, expressing hope that the memorandum would serve as “an enduring foundation for greater understanding, mutual respect and shared prosperity for the complete region.”