Fdd's overnight brief

Iran

The U.S.-Iran peace agreement includes a huge boost to Tehran’s oil industry, potentially restoring the regime’s economic lifeblood while generating more than $60 billion a year of revenue. The memorandum of understanding allows Iran to sell oil and fuel. – Wall Street Journal

President Trump on Wednesday defended his agreement to end the Iran war, saying he wanted to avoid an “economic catastrophe” that could have resulted if the conflict the U.S. launched had continued. – Wall Street Journal

Allies of the U.S. are ready to support the return of shipping through the key Strait of Hormuz waterway, NATO Secretary-General Mark Rutte said. The potential restoration of free passage through the strait on the Persian Gulf, following a peace deal reached between the U.S. and Iran, would be a “massive step forward,” Rutte said at a press conference Wednesday. – Wall Street Journal

Any agreement allowing Iran to charge fees in the Strait of Hormuz would set a “dangerous precedent” for global trade, Vincent Clerc, the chief executive of the shipping giant Maersk, said in an interview this week. – New York Times

The U.S. and Iran released the text of an interim agreement their presidents have signed to end their war on Wednesday, with U.S. President Donald Trump threatening to resume attacks and kill Iranian officials if they failed to honour their ​commitments. – Reuters

When Iranian Foreign Minister Abbas Araqchi announced the interim deal this week to end the war with the United States, he declared his country the victor. To many Iranians it does not feel that way. – Reuters

Both Iran and the U.S. can walk away from the memorandum of understanding ​they are set to sign on Friday, and upcoming talks ‌are likely to focus on the precise sequencing of the steps previewed in the preliminary accord, a senior U.S. official told reporters on Wednesday – Reuters

U.S. President Donald Trump said on Wednesday that “nobody” purposefully attacked a girls’ school in ​Iran in February, citing an investigation into the incident. – Reuters

While U.S. President Donald Trump has recently ​hailed the resumption of oil flows from Gulf allies, Iran, too, appears to be gearing up to resume exports and trading. At ‌least three tankers carrying some five million barrels of Iranian oil have sailed through the U.S. naval blockade this week, shipping data shows, despite the U.S. military saying its operations against Iran-linked shipping will stay in place until Friday. – Reuters

U.N. experts on Wednesday expressed grave concern for two Britons convicted in Iran ​of espionage who are now on hunger strike in ‌jail. Craig and Lindsay Foreman were sentenced to 10 years in prison in February on espionage charges, which they deny. – Reuters

Iran and the United States agreed in their Memorandum of Understanding (MoU) that Iran’s enriched nuclear material will not be removed from the country, with it being diluted inside Iran under the supervision of the International Atomic Energy Agency (IAEA). – Jerusalem Post

Editorial: Iran will demand more, and if Mr. Trump is as desperate to end the conflict as he’s sounded lately, he could give it. The regime held Hormuz hostage during the war. The danger here is in formalizing the extortion into a new, worse status quo. The deal also empowers Iran to “define the future administration” of Hormuz in dialogue with obsequious Oman. This is a recipe for the surrender of the Strait to the dictates of Iranian foreign policy. One sales pitch for the MOU has been that “at least it gets Hormuz open.” Does it? – Wall Street Journal

Editorial: Who is the comparable new leader in Iran? No matter what was intimated in back-channel talks, the unwillingness of Iran’s regime to put substantive nuclear commitments in the memorandum of understanding is a warning. Mr. Vance and the President seem to believe that the lure of gleaming hotels and $300 billion in investment is enough for the regime to abandon its revolutionary cause. It could have had those hotels and prosperity for decades but always chose revolution and terror. If Iran really is committed to a new direction, it shouldn’t take 60 days to find out. If the regime won’t abandon its nuclear program, it prefers revolution. – Wall Street Journal

Heyrsh Abdulrahman writes: This does not mean should be rejected outright. It does mean diplomacy should be viewed through a clear-eyed understanding of how the Islamic Republic operates. Tehran is at the table today for the same reason it has negotiated throughout its history: Pressure works. Removing that pressure too quickly risks repeating the mistakes of the past. Washington should not confuse the regime’s instinct for survival with a desire for peace. Iran may be willing to drink from another chalice of poison if circumstances demand it, but America should not mistake necessity for transformation. The should not give Tehran the breathing room it needs to recover, regroup, and return stronger than before. – Washington Examiner

Menahem Merhavy writes: Iran has therefore emerged from the war with neither victory nor defeat. It lost its old leader, its claim to strategic immunity, and much of the credibility of its proxy doctrine. It retained control of the country, preserved the regime, and demonstrated enough coercive and economic leverage to compel negotiations. But survival has only postponed the deeper reckoning. The Islamic Republic’s next challenge is no longer merely to withstand U.S. and Israeli pressure. It is to persuade its own citizens that, after all the bloodshed, sacrifice, and promised relief, the same system that led Iran into disaster can somehow be trusted to rebuild it. That may prove harder than surviving the war itself. – Foreign Policy

Michael Rubin writes: In 1988, in Iraq, Saddam Hussein’s forces killed perhaps 182,000 Kurds in the Anfal campaign. Six years later, Hutu génocidaires killed four times as many in the space of just three months. With Trump pledging non-interference in domestic affairs, the Revolutionary Guards may believe they have a green light to slaughter far more. Perhaps oil will flow for now. Extortionists seldom stop their extortion before bleeding their victims dry. But, while the price of gas may decline slightly, Trump and those supporting the interim deal may soon have a far greater problem on their hands when videos and photos of executions start flooding the airwaves. – National Security Journal

Hezbollah

Iran’s interim deal with the U.S. looks set to bolster Hezbollah’s political and financial hand in Lebanon, with Tehran promising more funding for its ally once cash starts to flow, according to four sources familiar with ties between ​Tehran and the group. – Reuters

U.S. President Donald Trump said on Wednesday he had spoken to Syria’s leader about combatting Iran-backed Hezbollah in Lebanon, a day after criticizing Israel for killing too many civilians ​and not getting the job done. – Reuters

Hezbollah chief Naim Qassem on Wednesday hailed an understanding reached between Tehran and Washington to end the regional war as a “great victory,” calling it a “pivotal point” for Lebanon. – Agence-France Presse

Five IDF soldiers were wounded in southern Lebanon when an explosive drone operated by Hezbollah hit their location on Wednesday, the IDF said in a statement. – Jerusalem Post

Ankara gave Hezbollah delegations assurances that Turkey supported the Iran-backed group’s continued role in Lebanon, and that Damascus had no plans to take action against the terrorist organization, Lebanese Member of Parliament Ali Fayyad told the Hezbollah-affiliated Al-Mayadeen last week. – Jerusalem Post

Editorial: A responsible Israeli position should be firm, not reckless. Any arrangement must include enforceable benchmarks for Hezbollah’s withdrawal and disarmament, a credible Lebanese or international mechanism on the ground, and explicit recognition that Israel retains the right to act against imminent threats. It must not allow Iran to trade Lebanon’s stability for nuclear concessions, or ask Israeli citizens to return home based on diplomatic language that Hezbollah has not implemented. – Jerusalem Post

Korean Peninsula

South Korean President Lee Jae Myung left the G7 summit in France with the souvenir of a pen from U.S. President Donald ​Trump and the promise of a golf game after a ‌dinner discussion he described as making progress over the issue of North Korea. – Reuters

North Korea has recalled its ambassador to Britain just a month after he took up the ​post, downgrading diplomatic relations in response to British sanctions ‌on a children’s camp, North Korea-focused website NK News reported. – Reuters

The governor of the Bank of Korea on Wednesday vowed to adjust policy to curb inflation, as the ​central bank said price pressures were expected to keep inflation above its ‌target through next year, even with progress toward ending the U.S. war with Iran. – Reuters

Mick Mulvaney writes: To stand up for “America First” values — which means standing up for American companies — Trump needs to say it plainly for Lee and the Korean people: The $350 billion investment framework can’t move forward in good faith while Seoul weaponizes its own system against American firms. Indeed, the massive — and unequally applied — fine against Coupang is precisely the sort of “non-tariff” barrier that Trump rightly complains about, and that the bilateral agreement is supposed to address. Friends don’t treat friends this way. But, real friends also tell each other hard truths. The truth, as Trump has said himself, is that the U.S. and Korea “really sort of need each other” — on trade, on, on shipbuilding, and on countering China and North Korea. Getting this deal back on track means Trump being Lee’s tough friend. And that starts with having Coupang’s back. – Washington Examiner

South Asia

A free trade deal between Britain ​and India will come into force next month after India said its concerns over the UK’s forthcoming steel tariff regime, ‌which threatened to delay implementation of the agreement, had been addressed. – Reuters

The European Union will formally sign its a landmark trade deal with India by the ​end of this year, European Commission President ‌Ursula von der Leyen said on Wednesday. – Reuters

Ukrainian President Volodymyr Zelenskiy said on Wednesday that ​he hoped closer ties ‌and undertaking joint projects with India would make both countries ​stronger. – Reuters

U.S. President Donald Trump said on Wednesday he had held a “very good” conversation with Indian Prime Minister Narendra Modi during the G7 summit in France and that their two countries were working on trade deals. – Reuters

Sri Lanka’s bribery ​commission has arrested Yoshitha ‌Rajapaksa, the son of former President Mahinda Rajapaksa, police ​said on Wednesday. Rajapaksa ​was arrested by the Commission ⁠to Investigate Allegations ​of Bribery and Corruption and ​he was granted bail after being presented to the Colombo ​Chief Magistrate’s Court, ​police spokesman F.U. Wootler told Reuters. – Reuters

China on Wednesday issued a joint statement with Myanmar following meetings between their leaders earlier ​this week in Beijing, saying the two ‌nations will continue to support each other in areas of core interest and major concern. – Reuters

An American scholar of Myanmar detained in China in early June had travelled to the southwestern city of Kunming ​to attend an academic workshop, a think tank that he founded said ‌on Wednesday, calling for his release. – Reuters

Sadanand Dhume writes: While India and Bangladesh continued to make deep inroads against poverty, the poverty rate in Pakistan rose from 21.9% in 2018 to 25.3% by 2023-24. The World Bank noted last year that approximately 40% of Pakistani children suffered from stunting and roughly a quarter of primary school-age children were out of school. Three-fourths of school-going children couldn’t read or understand a simple story by the end of primary school. If Pakistan’s leadership is smart, it will use this moment in the global spotlight to advance economic growth and alleviate widespread hardship. Otherwise, it risks confirming an old pattern—a ruling class that values diplomatic razzmatazz more than improving the lives of ordinary Pakistanis. – Wall Street Journal

Grace Stanhope writes: More generally, there is no shortage of fragile and post-conflict states facing Western disengagement that might be tempted by electoral support that chases form over function. Democracy is faltering worldwide, and the era of U.S. democracy export is clearly over. What is taking its place in conflict-affected situations is the performance of shadow democracy that we have seen in Myanmar: one authoritarian actor manufacturing legitimacy for another, through the invocation of a ritual that neither party believes in. While the spirit of partnership in the West wanes, collaboration between authoritarian regimes blossoms. – Foreign Policy

Europe

On Thursday, voters in Makerfield, an electoral district in northern England, will go to the polls for a special election, and the outcome of the race has the potential to reshape Britain. – New York Times

Rachel Reeves, Britain’s top financial official, has spent the past few months imploring voters and markets with a consistent message: Trust me, I have the right plan for the economy. – New York Times

Finnish lawmakers voted on Wednesday to overturn a Cold War-era total ban on nuclear weapons, which the Finnish government says will strengthen the NATO alliance but which could also risk heightening tensions with Russia. – New York Times

Prime Minister Keir Starmer said a challenge against him ‌would be bad for Britain, after former health minister Wes Streeting urged him to consider his position ahead of a likely leadership contest to avoid “uncertainty and paralysis”. – Reuters

Former Nigerian oil minister Diezani Alison-Madueke ​was found not guilty of six bribery charges by a London jury on Wednesday, after a rare corruption trial of a high-profile former energy official. – Reuters

A man who holds both British and Iranian nationality has been charged with ​an arson attack in April on a ‌memorial wall in a north London area that is home to a large Jewish community, police said on ​Wednesday. – Reuters

Denmark’s military will deploy ​a battalion of 850 troops to ‌NATO member Latvia in the autumn, taking over from a Swedish contingent ​that was stationed in ​the region, Danish Defence Minister Jeppe ⁠Bruus said on Wednesday. – Reuters

The European Parliament approved on Wednesday an overhaul of migration policy aimed at ramping up deportations and ​allowing member states to set up detention centres abroad, in what critics describe as a cruel system that weakens ‌safeguards for asylum seekers. – Reuters

Group of Seven leaders agreed on ​Wednesday to step up coordination to cut their countries’ reliance on China for critical minerals, including plans to align stockpiling ‌and launch a new platform with an expanded role for the International Energy Agency. – Reuters

The Iran war ‘s shock to global fuel prices has reinforced Europe’s stance that it must forge alternative trade and energy routes to the Strait of Hormuz. Here is a look at what the European Union is contemplating to bolster its energy security and minimize the impact of future conflicts as it turns to Gulf states and India. – Associated Press

Viktor Orban’s vast media empire, which played a key role in sustaining the Hungarian nationalist leader in power for the past 16 years, collapsed two months after a historic election defeat. – Bloomberg

The signing of the interim peace deal between the US and Iran on Friday will also be attended by representatives of Pakistan and Qatar, the Swiss government said. – Bloomberg

German Foreign Minister Johann Wadephul urged the U.S. and Iran to make public the details of their peace agreement on Wednesday, saying Berlin could only consider joining a mission to secure the Strait of Hormuz once the terms are clear. – Politico

California-based defense technology firm Shield AI has offered Poland a role in its X-BAT autonomous vertical-takeoff fighter jet program, with the country potentially hosting some of the manufacturing activities for the aircraft, according to Polish Prime Minister Donald Tusk. – Defense News

Editorial: The United Kingdom, which was America’s most trusted ally during the 20th century, is now a shameful laggard. On June 11, Defense Minister John Healey resigned from Prime Minister Keir Starmer’s government over its failure to fund the country’s military to a level at which it can be regarded as a credible defense force. These failures did not happen overnight. In his 2011 farewell speech, U.S. Secretary of Defense Bob Gates warned of a “dim, if not dismal future” for NATO if its members did not increase spending. A decade and a half later, many still have not done so, even after Russia invaded Ukraine twice. America’s defense posture is changing to face new threats, and its allies will have to change with it. Increased aid to Poland sends the right message to friend and foe alike. – Washington Examiner

Rosa Prince writes: Yet the number of illegal immigrants and asylum seekers crossing from south to north is small, likely dwarfed by those traveling in the opposite direction. Dublin has had riots, too, because of arrivals from Northern Ireland. How Western societies cope with mass immigration, including the presence of sometimes disturbed young men as refugees, is a pressing issue of our age. Those who exploit this by whipping up insecure communities, as Musk and Robinson have done, are playing with fire. Those such as the DUP who use it to plead for their own special interests are failing the communities they claim to serve. – Bloomberg

Mujtaba Rahman writes: What the next election has in store for France, then, is by no means certain. But it is already bringing the country much closer to a far-right future than any time since the end of World War II, and the possible shock waves would extend across Europe. Any RN president would, of course, be torn between compromise and feeding the expectations and prejudices of the party’s base. But at the very least, such a scenario would push France and Europe into five years of confusion and paralysis. Amid the upheaval of the postwar global order wrought by China, the United States, and Russia, that chance is something France and Europe can ill afford. – Foreign Affairs

Amélie Jaques-Apke and Lily Wojtowicz write: France should move quickly to formalize the consultation mechanisms announced on March 2, embedding them in bilateral agreements that bind future presidents rather than relying on personal diplomacy. The eight NATO allies, particularly Germany, should press Paris for clarity on what forward deployment actually entails, starting with whether warheads will accompany the French aircraft. And Washington should resist treating Macron’s initiative as a competitor to NATO. A more resilient European nuclear posture serves American interests too, especially if a future administration follows through on threats to scale back its European commitments. The worst outcome for all parties would be an advanced deterrence framework that is too developed to ignore but too fragile to trust. If a French nuclear deterrent extended to other European countries is finally going to come to fruition, there will need to be continuity between presidents, learning among allies, and — very urgently — an honest conversation about what advanced deterrence means in practice. – War on the Rocks

The Americas

Colombia is now the epicenter of unmanned aerial-vehicle warfare in the Americas. Weaponized drone attacks by armed groups here now outnumber those anywhere else in the region, including Mexico, where criminal groups were first recorded using the weapons in 2021, according to the conflict-monitoring group ACLED. – Wall Street Journal

This tropical city is known for the vibrant salsa music pulsating through its nightlife and the stately samán trees shading narrow streets. But a surge in cocaine trafficking has thrust Cali into the center of Colombia’s drug war. – Wall Street Journal

Jamaica is planning to allow the United States to transfer deported migrants through its territory before they are repatriated or sent on to third countries, the Caribbean nation said Wednesday. It was the latest in a string of deals the Trump administration has pursued to expel migrants to countries with which they do not have any connection. – New York Times

Brazilian President Luiz Inacio Lula da Silva said ​on Wednesday that U.S. President Donald Trump has the right ‌to have an electoral preference in Brazil, but warned his U.S. counterpart to “stay out” of this year’s elections. – Reuters

Brazil will end subsidies for diesel and gasoline if the price of crude oil stabilizes ​around $80 per barrel due to progress toward a U.S.-Iran deal to end their conflict, the executive secretary of the Finance Ministry, Rogerio ‌Ceron, told Reuters. – Reuters

Colombia’s National Liberation Army (ELN) rebels are willing to seek peace with whoever wins Sunday’s presidential runoff, but are also confident they can survive a renewed ​military offensive promised by the right-wing frontrunner, the commander of one of the group’s fronts told Reuters deep in the dense green jungle of Colombia’s ‌northwest. – Reuters

The United States and U.S. President Donald ​Trump have pivoted in its ‌view of the war in Ukraine, taking what other G7 leaders thought ​was a more realistic position ​regarding the conflict, Canadian Prime ⁠Minister Mark Carney said on ​Wednesday. – Reuters

At the start of this decade, Latin America was hurtling to the left. Progressives, seizing on public outrage over entrenched inequities exacerbated by the pandemic, swept to power in many of the region’s biggest economies, including Brazil, Chile, Colombia and Peru. – Associated Press

Keiko Fujimori is close to victory in her fourth bid for Peru’s presidency even as she trails in the domestic vote. As authorities tallied the last disputed ballots in recent days, the conservative candidate’s lead over leftist rival Roberto Sánchez has widened from a few hundred votes to more than 36,000. – Bloomberg

President Donald Trump is happy with Canada’s arrangement to allow a capped number of Chinese electric vehicles to be imported at a low-tariff rate, Prime Minister Mark Carney said. – Bloomberg

Arturo McFields writes: One of the most important lessons following the neutralization of the Tren de Aragua leader in the mining region of Bolivar is that eliminating cartels not only eradicates organized crime but also frees valuable productive resources that had been held captive by these criminal organizations. Security brings prosperity. The U.S. is ready to confront drug cartels, improve security and promote prosperity in the Americas. What transpired in the Venezuelan mining zone has become a strong signal for drug traffickers and corrupt politicians wanted by the U.S. justice. An explosive warning that speaks louder than diplomacy. – The Hill

Cybersecurity

Just days after the U.S. government banned foreign nationals from using Anthropic’s most powerful artificial intelligence models, executives from the top labs urged the leaders of Western democracies to work together to reap the benefits of the AI revolution. – Washington Post

Leaders from many of the world’s richest nations will be joined by executives from cutting-edge technology companies on Wednesday afternoon, as the Group of 7 nations wrestles with how to jointly approach the opportunities and dangers presented by artificial intelligence. – New York Times

European Commission President Ursula von der Leyen said on Wednesday it was in ​the mutual interest of the United States ‌and the European Union for the EU to use the best AI models, while praising U.S. moves to ensure ​artificial intelligence companies acted responsibly when introducing ​powerful new models. – Reuters

Three-quarters of cyberattacks targeting Britain’s critical infrastructure can be ​linked to hostile state actors, ‌the head of the National Cyber Security Centre, Richard Horne, said in ​a speech on Wednesday. – Reuters

U.S. President Donald ​Trump said in a Truth ‌Social post on Thursday that Apple, had agreed to work with ​Intel, to design and ​build its chips in the ⁠United States. – Reuters

French President Emmanuel Macron led talks with Group of Seven leaders and tech executives to explore how to deploy the most advanced artificial intelligence models through so-called trusted partners, after the US blocked foreign nationals from accessing the technology. – Bloomberg

Estonia plans to assign personal identification numbers to AI assistants in an effort to better control and limit the kinds of access and authority such bots possess as they carry out work on behalf of human beings and businesses. – Bloomberg

The West should come together to rein in the most capable artificial intelligence models to keep China at bay, leaders and top AI CEOs agreed in talks on Wednesday. – Politico

Italian Prime Minister Giorgia Meloni on Wednesday said her government would not take the initiative to introduce a social media ban on teens like those in the works in France, the U.K and other countries. – Politico

Britain is already fighting the opening exchanges of future conflicts in cyberspace, the country’s cyber chief warned Wednesday, as he disclosed that hostile states are responsible for three-quarters of the attacks striking the country’s critical national infrastructure. – The Record

Ukraine has been granted access to the European Union’s cybersecurity reserve, allowing Kyiv to call on EU-approved experts during major cyberattacks. – The Record