We flagged last week that a key rationale for Iranian Supreme Leader Ali Khamenei allowing ‘reformist’ presidential candidate Masoud Pezeshkian to win the presidency might be that his ‘softer’ credentials could counter-intuitively make the Iranian regime more secure by reducing the ‘heat’ against it, both domestically and internationally.

• With Pezeshkian’s inauguration likely coming in early August (c. 5), some observers now caution that one should limit one’s expectations for a return to a US-Iran nuclear deal anytime soon.
  • We believe that warning is entirely correct, but it is also misleading: although such an agreement indeed remains a stretch, we would argue that Khamenei’s allowing Pezeshkian to take over the reins of the presidency is yet another signal that Tehran remains primarily interested in bargaining with the US, rather than escalation – with positive implications, in the short term for instance, for Hezbollah’s (continued) restraint amid Israeli strikes.

Perhaps more surprising to some, we have long argued, and continue to expect, that this phase of US-Iran bargaining is likely to prevail even under the (non-basecase) scenario of a Trump victory, for a simple reason: like the Trump 1.0 administration, a Trump 2.0 presidency is likely to ‘listen’ to Saudi Arabia’s advice on how to conduct regional diplomacy; but unlike Riyadh’s position in 2017-2021 (which advocated for ‘maximum pressure’), Saudi messaging to a returned President Donald Trump would very likely be about ‘maintaining the peace’ in the Gulf.

• For instance, “Saudi Arabia could use ties with both Iran and the U.S. to urge them to start talks about a broader agreement that would seek to contain Iran’s regional power projection along with the nuclear program in exchange for […] allowing Saudi investment in specific segments of the Iranian economy” (thereby addressing one of Tehran’s main sources of frustration in its bilateral détente with Riyadh to date).
• And indeed, recent comments by former President Trump suggest such a prospect may not be so anathema, even to him: “The main thing is: Iran can't have a nuclear weapon. That was my main thing…It cannot have that nuclear capability. Other than that, we talk about everything”.