Iran and U.S. Continue Indirect Talks Amid Stalemate Over Nuclear Program and Strait of Hormuz Control

Iran has yet to respond to the latest U.S. proposal as mediators strive to bridge differences between the two nations. Both U.S. and Iranian officials identified Iran's nuclear program and control over the Strait of Hormuz as primary obstacles in the negotiations. Reports indicate that Pakistan and Qatar have drafted a revised memorandum to address these issues, with support from Saudi Arabia, Turkey, and Egypt. Iranian media reported that Iran is still reviewing the proposal and has not yet responded. The media added that Iran is discussing the Iranian text’s overarching framework, some details, and confidence-building measures as guarantees. It stated that the text has narrowed some gaps “to some extent,” but that further progress depends on whether the United States moves away from military threats.

Internal divisions within Iran's leadership have emerged regarding potential nuclear concessions, particularly the fate of its highly enriched uranium (HEU) stockpile. Two senior Iranian sources claimed that Supreme Leader Mojtaba Khamenei issued a directive to keep the HEU within the country, citing concerns over vulnerability to future U.S. and Israeli actions. However, other officials have denied the existence of such a directive, maintaining that Iran's position is to down-blend the stockpile domestically. Foreign Affairs Ministry Spokesperson Esmail Baghaei emphasized that current negotiations focus on ending the war on all fronts, including in Lebanon, and dismissed media claims about nuclear issues as speculative and lacking credibility.

Iranian officials have coalesced around demands to formalize Iranian control over Strait of Hormuz transit, in contrast to their apparent division over the nuclear file. Iran released a map of a Persian Gulf Strait Authority (PGSA)-defined maritime zone on May 20. The PGSA’s new map appears to expand Iran’s claimed management zone beyond the area Iran previously depicted on May 4. The new PGSA-defined zone runs from Kuh Mobarak in Iran to southern Fujairah in the United Arab Emirates (UAE) in the east and from the end of Gheshm Island in Iran to Umm al Qaiwain in the UAE in the west. This change lays explicit claim to control over the territorial waters of the UAE and Oman.

Iran continues to attempt to build support for its protection racket in the Persian Gulf, in which vessels must pay, coordinate with, or receive permission from Iran’s preferred mechanism to transit the Strait of Hormuz in order to avoid attacks from Iranian forces. Iranian Ambassador to France Mohammad Amin Nejad told Bloomberg on May 21 that Iran and Oman are discussing a permanent toll system to formalize control over maritime traffic through the strait. Iranian officials and state media also reported that commercial vessels coordinated with IRGC Navy forces to transit the strait, while IRGC framed this coordination as necessary for safe passage. U.S. Secretary of State Marco Rubio stated on May 21 that an Iranian toll system would be unacceptable and “would make a diplomatic deal unfeasible,” which shows that Iran’s Strait demands remain a major obstacle to any U.S.-Iran agreement.

Iran is continuing to use the ceasefire period to reconstitute its drone and missile program. Sources familiar with U.S. intelligence assessments on Iranian reconstitution told CNN on May 21 that Iran will likely be able to reconstitute damage to Iran’s defense industrial base “in a matter of months, not years,” which is “much faster” than the U.S. intelligence community estimated. This information does not clarify which elements of the defense industrial base or how specific reconstitution would result in changes to reconstitution timelines, which makes the information difficult to judge on its own merits. These timelines are impossible to evaluate without answering such questions, and the assumptions underlying these timelines should be rigorously interrogated, therefore. The officials partially attribute this to some of Iran’s defense industrial base remaining intact. Iran has reportedly been replacing missile sites, launchers, and production sites destroyed during the airstrikes. It is unclear what constitutes a ”production site” in this context. A production site could theoretically range from an entire factory complex (which would need to be rebuilt if destroyed) to a single piece of complex but rapidly replaceable machinery. The lack of clarification also makes this evaluation difficult to judge on its own merits. Iran still has 50 percent of its drone capabilities, which amounts to thousands of drones, as well as a “large percentage” of Iran’s coastal defense cruise missile stockpile left, according to these officials. Iran’s drone program is far more difficult to degrade for long periods of time compared to the ballistic missile program. The drone program relies on less complex and more easily-produced systems compared to the ballistic missile program, which requires huge facilities with extremely specialized equipment (like planetary mixers for solid fuel, for example). The officials observed that Iran has around two-thirds of its missile launchers after digging out many during the ceasefire. CNN noted that this estimation may still include buried launchers, however.