What’s happened: Millions of mourners have taken to the streets of Iran’s capital, Tehran, for the multi-day funeral procession and ceremony of its former Supreme Leader, Ali Khamenei.

• Ali Khamenei’s funeral began on 3rd July, moving from Tehran to the holy cities of Qom and Mashhad, before crossing into Iraq for stops in Najaf and Karbala.
• Delayed by four months since his elimination by Israel on 28th February 2026, his son and successor as Supreme Leader, Mojtaba Khamenei, was notably absent, which added to rumours about his poor state of health.
• Mojtaba’s three brothers, Masoud, Meysam and Mostafa were all present along with other dignitaries including former President Ahmedinejad, and General Ahmad Vahidi, commander of the IRGC as were many senior foreign dignitaries.
• Saudi Arabia’s King Salman and Crown Prince Mohammed bin Salman sent condolences which were conveyed to Iranian President Masoud Pezeshkian by the Kingdom’s Deputy Foreign Minister Waleed Elkhereiji.
• Other notable attendees included Lebanon’s Defence Minister, Pakistan’s Prime Minister and Interior Minister, Turkey’s Vice President – the only NATO member state to send a representative – India’s Deputy Foreign Minister, the Russian Security Council’s Deputy Chairman.
• The President of Tajikistan, Prime Minister of Armenia, President of Georgia, and Afghan Taliban’s Foreign Minister were also in attendance.
• Four other members of the Khamenei family killed on 28th February have also been buried in the past week including Mojtaba’s wife, son, and daughter.

Context: Ali Khamenei was eliminated by an Israeli air strike during the opening salvos of the US and Israel’s war against Iran which broke out on 28th February.

• The Iranian regime appears to be using the funeral as an opportunity to showcase an impression of a strengthened post-war self to the world post-ceasefire and MOU signing.According to the dissident news site, Iran Wire, the regime has invited and hosted 400 foreign influencers to cover the funeral, and present a more positive image of the country to global audiences, including from the UK.
• Mojtaba Khamenei was reported to have been severely injured in the air strike which eliminated his father, although no definitive proof of life has emerged or been provided. He has not been seen in public since before the war begun, and has only communicated externally in writing.
• In his absence, Iran is understood to have effectively fallen under the IRGC’s control reinforcing the relative impotence of the President, currently Masoud Pezeshkian. Negotiations with the US were led by Mohammad Bagher Ghalibaf, Speaker of the Iranian Parliament.
• Proceedings have been significantly more controlled and dignified than during the previous Supreme Leader, Ruhollah Khomeini’s funeral which took place in 1989 where the casket was damaged because of crowds of mourners attempting to touch it. Dozens were also reportedly crushed to death.
• The fact that Lebanon sent a senior government representative, Defence Minister Michel Menassa, suggests the continued influence of Iran on Lebanon. A Lebanese political source suggested this reflects no policy shift on Iran’s interference, only a desire to lower tensions and avoid burning bridges.
• Beirut wants to keep Iran from sabotaging its framework agreement with Israel. President Aoun defended the government’s decision saying, “Our diplomatic relations with Iran are ongoing and unbroken. How did other Arab and non-Arab countries participate in expressing condolences? Was it expected that Lebanon would officially be absent from this funeral?”
• The most recent round of indirect “technical” talks in Doha, between Iran and the US were described by President Trump as having been “very good” but remain inconclusive. Israel has a highly sceptical view of these talks, particularly as they fail to address the two issues of most immediate concern to Jerusalem: ballistic missiles and regional proxies such as the Houthis and Hezbollah. However, at this point, Israel appears unable to influence proceedings.
• Meanwhile, Israel’s Ambassador to the US, Yechiel Leiter, yesterday claimed that the trilateral framework signed with Lebanon had superseded the first clause of last month’s US-Iranian MOU. The US is yet to respond to these comments.
• President Trump has also said that ⁠the United ⁠States will ‌either ‌make a ‌deal with Iran or “finish the ‌job”, while reiterating the former was his preference.

Looking ahead: Khamenei is due to be buried in Mashhad on 9th July.

• US-Iran negotiations are due to resume two days later on 11th July. These talks are expected to address a range of issues including sanctions relief, unfreezing funds, and nuclear enrichment.

The MOU appears to grant Iran significant economic concessions at the outset, while deferring the most important nuclear, regional, and enforcement questions to a later agreement.

• Immediately upon signature, the United States commits to begin lifting the blockade of Iranian ports and to waive sanctions necessary to allow Iran to resume oil exports. At current prices, it is estimated that this could provide the Iranian regime with over $5 billion a month in additional revenue.

Iranian nuclear programme

• The nuclear language in the MOU is limited. Iran reaffirms that it “shall not procure or develop nuclear weapons”, but similar commitments were already made under the Non-Proliferation Treaty and the JCPOA. The MOU establishes a 60-day period to negotiate a full nuclear agreement and says that any final deal must resolve the disposition of Iran’s stockpiled enriched material, with down-blending on site under IAEA supervision.
• However, the MOU does not require all enriched uranium to be removed from Iran. Nor does it make clear whether Iran would have to dismantle its nuclear infrastructure, whether it would be permitted to retain enrichment capacity, or whether inspectors would have the “anytime, anywhere” access necessary to verify compliance.

Lebanon

• The MOU also contains language with direct implications for Israel’s freedom of action. It states that the US, Iran, and “their allies in the current war” declare the “immediate and permanent termination of military operations on all fronts, including in Lebanon.” This formulation appears to seek to bind Israel to an end to operations against Hezbollah, despite Israel not being a party to the MOU and despite ongoing threats from Hezbollah.
• This could also complicate the US-backed Israel-Lebanon ceasefire reached in early June, which stated that any cessation of hostilities must be agreed directly between Israel and Lebanon, and not through a separate track.
• It is also incredibly worrying that the US appears to have acceded to Iranian demands to link between the Islamic Republic in Iran and its proxy undermining sovereignty in Lebanon. For decades it has been a long established US position through consecutive administrations of both Democrats and Republicans that Hezbollah is a proscribed terrorist organisation responsible for the deaths of US citizens.

Financial and sanctions relief

• The MOU also states that, “upon the implementation” of the agreement, the US will make fully available for use frozen or restricted Iranian funds and assets, potentially worth up to $100 billion. However, the text does not specify what concrete steps Iran must take before gaining access to these funds.
• The agreement also allows released funds to be paid to any beneficiary designated by the Central Bank of Iran. This is significant because it appears broad enough to permit payments to entities linked to the IRGC, the Iranian military, or suppliers connected to Iran’s weapons procurement networks.
• The MOU also envisages the development, together with regional partners, of a reconstruction and economic development plan for Iran worth at least $300 billion, to be implemented under a final agreement. Given the IRGC’s extensive role in the Iranian economy, including in construction and infrastructure, it is difficult to see how such a package could avoid materially benefiting an organisation designated by the US as a terrorist group.
• Under a final agreement, the MOU calls for the complete elimination of sanctions on Iran, including UN Security Council sanctions and US primary and secondary sanctions. It does not appear to include a clear snapback mechanism should Iran violate the terms of the deal. This is especially significant because many US primary sanctions on Iran were originally imposed in response to terrorism, not only the nuclear programme. The agreement therefore appears to envisage the lifting of terrorism-related sanctions without requiring Iran to end its support for terrorist organisations.

Terrorism & proxies

• The agreement does not address Iran’s support for terrorism, nor its missile and drone programmes. This omission is particularly important because sanctions relief could give Iran the resources to rebuild its conventional military capabilities and increase funding and other support to their proxies such as Hezbollah and newly established HAYI terrorist network that operates across Europe including in the UK.

Human rights

• Finally, the MOU requires the US not to interfere in Iran’s internal affairs. This provision could be read as limiting American support for Iranian democracy, human rights, internet freedom, and broadcasting efforts. It would also mark a significant political concession to the regime at a time when Tehran continues to face domestic opposition and international criticism over its repression of protesters.

Conclusion

• Taken together, the MOU appears to front-load economic relief for Iran, postpone the hardest nuclear questions, leave Iran’s regional proxy network untouched, and risk constraining Israeli action against Hezbollah. For Israel and other regional actors concerned by Iranian power, the central question is whether the 60-day negotiating period produces a more palatable agreement.

What’s happened: The US and Iran have reached a framework agreement to end the war that began nearly four months ago on February 28. The deal is to be signed this Friday.

• The deal was announced by Pakistani Prime Minister Shehbaz Sharif, who had served as a lead mediator between the sides, and was quickly confirmed by Iranian and US officials, including President Trump.
• The text of the deal has not yet been made public. However, media reports are in general agreement about several of the key points in the agreement.
• It is widely believed that the deal will stipulate a sixty-day period for the United States and Iran to come an agreement on Iran’s nuclear programme. At the beginning of this period, the Strait of Hormuz will be reopened to shipping, and the US’s blockade of Iranian ports will also be lifted.
• The Pakistani statement on the agreement said that it included a commitment to a full ceasefire in Lebanon too, something which was not confirmed by US officials.
• The issues that are addressed upfront in the deal include:
  • An Iranian commitment not to develop nuclear weapons and to abide by the Treaty on the Non-Proliferation of Nuclear Weapons (NPT).
  • An immediate opening of the Strait of Hormuz to commercial shipping.
  • An end to the US blockade of Iranian ports.
  • A cessation of armed hostilities for the duration of the negotiation period.
• The issues that are to be addressed in the sixty-day negotiation period include:
  • Iran’s nuclear facilities.
  • Limitations on Iranian enrichment capacities. Earlier US demands were for a 20-year moratorium on all enrichment followed by a permanent cap on enrichment no higher than 3.67 per cent, a level usable for energy but not weapons. In an interview with The New York Times yesterday, Trump hinted he might be willing to accept a 15-year moratorium, but would still insist on the permanent cap.
  • The fate of Iran’s stockpile of enriched uranium, including not just the highly enriched uranium currently believed to be buried under the ruins of a nuclear facility bombed by the United States in June 2025.
  • Sanctions relief, which the United States has made no provision for in the interim agreement and will only consider as part of the larger comprehensive agreement, if one is reached.
• Issues that might overlap or for which there are conflicting reports include:
  • Billions of dollars of frozen Iranian assets, which the Iranians claimed may be, at least in part, unfrozen already during the sixty-day ceasefire period. US officials deny this, though they have in the past been keen to separate the issue of frozen assets from sanctions relief, on which they have been decidedly more insistent about not treating until after a full nuclear agreement is in place.
  • Tolls on maritime traffic through the Strait of Hormuz, about which there are entirely contradictory claims from both Washington and Tehran that are difficult to assess in the absence of any publication of an agreed text.
  • Iran’s ballistic missile programme, its support for regional proxies, and its internal repression are not treated in the interim agreement, and it is not clear which if any of these will be included in the negotiations during the sixty days of ceasefire.

Context: The announcement of an agreement came against the backdrop of a very tense day on the Israel-Lebanon front. Hezbollah launched three attack drones on Israeli communities in the north, sending residents into shelters, but ultimately causing no casualties on the Israeli side. Israel responded with a significant air strike in Beirut, eliminating three Hezbollah terrorists, including one wanted by the US for the killing of five Americans.

• The air strike was followed by an Iranian threat to launch missiles against Israel in response. Israel’s Home Front Command raised alert levels and cancelled large public gatherings.
• Ultimately, no Iranian missiles were launched. Significant US pressure on Iran not to do anything which would unravel the almost completed agreement, coupled with a vocal American condemnation of the Israeli operation in Beirut, brought the escalation to an end.
• For the US, it was a significant diplomatic test, as well as a dilemma. For most of the last two months, the US has been insisting that any Israeli response to Hezbollah fire be contained to southern Lebanon, or at the very least, be outside of Beirut. The fact that one of the Hezbollah terrorists targeted yesterday was wanted by the US itself only heightened the dilemma faced by the Trump administration.
• For Israel, it was an even more delicate and trying test. Israel does want to appear to ratify the new Iranian “equation” by which any Israeli attack in Lebanon leads to a counterattack on Israeli cities from Iran. In Jerusalem, it was understood that the Hezbollah drone attack was deliberately meant to set a diplomatic trap for Israel. If it failed to respond to the Hezbollah attack out of fear of Iranian retaliation, it was leaving itself open to an unlimited war of attrition on its north which it could not respond to. If it responded, it risked both US condemnation and a renewal of the war with Iran. Ultimately, Israel chose not accept the “equation,” and at the last minute, it was Iran that blinked.

Reactions: Vice President JD Vance, who is expected to sign the agreement this week in Switzerland on behalf of the United States, said that it would “fundamentally transform the Middle East for the next 50 years.”

• Prime Minister Starmer welcomed the agreement and offered UK support for mine clearing in the reopened Strait of Hormuz. A statement from Number 10 added that, “We are clear that toll-free freedom of navigation must now be restored in the Strait of Hormuz, to begin easing the severe economic impacts that have been felt for several months – on families here in the UK and around the world.”
• Official reactions in Israel have been muted thus far, with government officials stressing Israel’s independent authority to act both in Lebanon and in response to any Iranian attack on Israel.
• Opposition politicians condemned Netanyahu for fumbling, in their eyes, Israel’s diplomacy.
• Opposition Leader Yair Lapid tweeted that the deal “doesn’t achieve any of Israel’s war goals – the regime survives, the missile program is intact, and Iran can rebuild the nuclear programme,” and added that it was “total failure” by Netanyahu that turns Israel into a “protectorate that receives instructions regarding its national security.”
• Yair Golan, leader of the left-wing Democrats, described the US-Iran agreement as “made over the heads” of Israel’s leaders. “With one signature, tremendous military achievements achieved with the courage of our pilots and the blood of our fighters were erased, while Netanyahu stood by – weak, sick, isolated and ineffective,” he posted on social media.
• Also critical were ministers in the Government associated with the far-right. Finance Minister Smotrich called the agreement “bad for Israel and the entire free world.”
• The announcement of the Iran framework agreement coincided with a pompous celebration of Donald Trump’s birthday in the White House Gardens.

Looking ahead: The allowed sixty days for negotiating a comprehensive agreement would take the US past the World Cup and well into the midterm election season, also an election period in Israel. Trump, in multiple interviews over the past two days, has threatened that he would not hesitate to use force again if an agreement is not reached.

• Despite this, there is some scepticism about whether the US would really be able to mount a costly military operation at the end of summer as an election campaign is underway. This scepticism will surely weaken the American bargaining position in the talks.
• In an interview with The Wall Street Journal, Trump dropped an interesting hint about how he weighs his potential lever in a situation where talks do break down after sixty days. He claimed that the American naval blockade on Iranian ports had ultimately proved more successful at pushing the Iranians closer to US positions than any kinetic military action. Despite getting less attention than American or Israeli air strikes and the Iranian closure of the Straits of Hormuz, the blockade, according to Trump, was “more powerful than the hits.”  
• Beyond the concerns that Israeli officials expressed about the nuclear programme or even the ballistic missile programme or Iran’s regional proxies, there is a real apprehension that even a good agreement, accompanied by sanctions relief, could end up extending a financial lifeline to the Islamist regime only months after it appeared on the verge of collapse.
• Donald Trump is due to attend the G7 Summit in France, which starts today and runs until Wednesday. This will be the first opportunity for US G7 partners, including the UK, to be briefed on the details of the Iranian deal at the highest level.

What’s happened: The US and Iran engaged in a fresh exchange of missile fire and air strikes yesterday and overnight.

• The US launched what CENTCOM characterised as “self-defence strikes” against multiple targets in Iran, including in the southern port city of Bandar Abbas. The term “self-defence strikes” is the preferred term to describe American operations that are intended to be seen as pointed responses and not signal the end of the ceasefire in effect since April 8.
• US media reported that this wave of strikes included not just ordnance fired from aircraft but also 49 Tomahawk missiles. Among the targets reportedly hit was a large water facility on the Iranian coast of the Strait of Hormuz. The Iranians reported that water service in the region was cut off for 20,000 people. The water facility is adjacent to an underground Iranian air force base. Other targets by US forces included IRGC service units, coastal posts, and police command sites.
• Iran announced this morning that it had launched 18 attacks on US military facilities in Kuwait and Bahrain. This morning’s attacks, unlike yesterday, did not apparently include targets in Jordan.
• In the hours since this morning’s Iranian attacks, a US reprisal attack has apparently been underway, with a broader geographical range than the operations on Tuesday or Wednesday. CENTCOM reported targeting Iranian military surveillance capabilities, communication systems and air defence sites across southern Iran. An explosion was reported in Karaj, outside of Tehran, site of a major Iranian base and missile factory. There were conflicting reports of an attack on the South Pars gas facility.

Rhetoric: While previous rounds of mutual limited attacks between the US and Iran since the ceasefire went into effect have been accompanied by statements from both sides that sought to portray the operations as not signalling the imminent end of the ceasefire, today’s exchange of fire was accompanied by more bellicose statements.

• The commander of the IRGC Aerospace Force, General Majid Mousavi was quoted in Iranian state media as saying, ““You are making the holy Strait of Hormuz unsafe? We will turn the entire region into hell from across Iran. This is the response to America’s aggression in the region.”
• President Trump, too, signalled that he is running out of patience with the ceasefire and the negotiations that have not yet led to any agreement, telling US media that if an agreement was not reached soon, he would “bomb the shit out of Iran.”

Context: The possibility that the ceasefire with Iran could unravel has brought about a change in the IDF’s priorities too. The IDF has begun scaling back its operations in Lebanon to free up air forces for a potential renewal of hostilities in Iran.

• The IDF also brought home forces that were operating for 30 days in Lebanese territory north of the Litani River.
• With the soldiers safely back at base, the IDF shared with media for the first time some of the details of its operations in this sector, including the capture of a massive weapons facility, hastily abandoned by Hezbollah fighters whose units have been collapsing in the face of the Israeli onslaught. At the facility were launchers with missiles ready to be launched at Israel’s northern communities, as well as drones, anti-tank missiles, rifles, and vests, presumably for use in an October 7-style invasion of northern Israel.

Gaza: Talks continue in Egypt to reach an agreement on Hamas disarmament, in line with the comprehensive plan which ended two years of war in Gaza last October. Israel is not a participant in the talks, which are also mediated by Qatar and Turkey, along with Egypt.

• According to Arab sources, Hamas has shown some willingness to give up its “heavy weapons,” but not its “light weapons. The former category includes the missiles and rockets it uses to attack Israel. The latter category includes the rifles and other munitions it needs to maintain its domestic control of Gaza.
• The Israeli assessment is that Hamas has almost no heavy weapons left anyway, so this is at most a symbolic concession. Though Israel is not a party to the talks, it is unlikely to permit the entry into the Gaza Strip from Egypt of the so-called “technocratic committee” which is supposed to handle governance of Gaza unless there is an agreed disarmament that meets Israel’s minimal conditions.
• Without disarmament, the progress of the comprehensive agreement is stalled, and the renewal of combat becomes more likely. This is especially the case as the major international actors involved have been laying the blame for the failure on Hamas and not on Israel, and as Israel will not, in any renewed hostilities, need to avoid operating in the Hamas redoubts of the refugee camps in the centre of the Strip for fear of harming Israeli hostages — because Hamas no longer holds any.