The memorandum of understanding signed by President Donald Trump and President Masoud Pezeshkian of Iran lays out the political, military and economic consequences of the ill-judged decision to attack Iran on 28 February.
The human cost is already clear. Thousands have been killed, many of them civilians, in Iran and Lebanon.
The US, and by extension Israel, have suffered a strategic defeat. The regime in Tehran faced its worst nightmare: a joint military operation to cripple or destroy it by the US, the world's strongest power, and Israel, the Middle East's superpower. The regime has not just survived. It has been empowered.
Its strategy of blocking the Strait of Hormuz, and with it one fifth of the world's supplies of oil and gas as well as other vital components in the global economy, has forced Trump to agree to a series of concessions that have infuriated and alarmed America's Iran hawks and the Israeli government.
The memorandum of understanding - or MOU - calls for an end to the war in Lebanon. Israel says that cannot happen. It wants a free hand in Lebanon, and that issue has the capacity to cause an even sharper rift between Israel and the US, and play into the hands of Iranian hardliners who oppose any deal with the Americans.
In return for reopening the Strait, the MOU's language says the US will lift its counter blockade of Iranian ports, waive sanctions allowing Iran to earn billions of dollars from exporting oil and start the process of returning billions more to Iran by unfreezing assets that it held abroad.
That is before they get down to the hard business of negotiating a nuclear deal. It is the price of returning to the way they were on 27 February, the day before the US and Israel launched the war. On that day the Strait of Hormuz was open for shipping and American and Iranian negotiators were discussing a nuclear deal.
The signing of the MOU means that the negotiators will go back to work and ships will be able to transit the Strait of Hormuz.
Joe Biden's Secretary of State, Antony Blinken, posted on X "the only 'achievement' of the ceasefire is the likely reopening of the Strait of Hormuz – which was open before the war started. And we will apparently pay Iran to do so."
The question of what exactly the war was for is inescapable and will not go away. It amounts to Trump's worst foreign policy blunder so far.
It might also spell the end of Israeli Prime Minister Benjamin Netanyahu's long political career. He faces elections in October, and a reckoning from Israeli voters for his part in security failures, the worst in Israel's history, that meant its vaunted military and intelligence services failed to spot the Hamas plan to invade Israel from Gaza on 7 October 2023. Netanyahu's hardline military policies and dismissal of diplomacy were designed at least in part to restore his reputation as Israel's Mr Security.
Tehran was always aware of the potential power of closing the Strait of Hormuz. So was the US military, its diplomats and spies.
But the former Supreme Leader of Iran, Ali Khamanei, a cautious, elderly man, chose not to take the risk of using the Strait as a weapon.
After Israel killed him, and his closest advisers, in the first bombing sorties of the war, his successors believed, correctly, that they were in an existential struggle and did not hesitate to close the Strait.
They have discovered the power of controlling a global economic chokehold. It is a far more usable weapon, and much cheaper, than the network of allies and proxies it spent decades and billions building in the Middle East.
Except for the Assad regime in Syria, which collapsed at the end of 2024, Iran's so-called axis of resistance survives, just about. But it has been so damaged by Israel that whether it can "resist" is a moot point.
Iran has also poured money into a nuclear programme that it continues to deny was aimed at building a weapon but undoubtedly gave Tehran an option and a threat. But it provoked a war that despite the regime's survival has done huge damage to Iran.
Closing the Strait, in contrast, was easy and had a rapid and devastating impact, spreading the pain to the Arab oil states and much of the rest of the world.
The power of the US and Israeli air forces scored a series of tactical victories. But they were not enough to avoid a strategic defeat. That was because the US-Israel strategy of regime change was based on a series of lazy and misplaced assumptions.
They assumed killing the supreme leader would cause a collapse of the regime. But over nearly half a century the Islamic Republic's institutions have been engineered to resist attempts to destroy them.
It was not like Venezuela, a corrupt Latin American dictatorship, that crumpled when its leader was abducted and put on trial in the US. The Iranian regime is undoubtedly corrupt and highly repressive – its men killed thousands of protesters in the streets of Iran in January – but it is also based on ideology, religious conviction, and a conception of national security, martyrdom and survival that grew out of the devastating war with Saddam Hussein's Iraq in the 1980s.
When they went to war President Trump said the regime in Tehran would fall. He told the Iranian people to prepare for a once-in-a-generation chance to take back their country. Not long after that he called for its unconditional surrender.
Netanyahu, who had tried and failed repeatedly to persuade Trump's predecessors in the White House to go to war against Iran, used biblical language to sum up the enormity of what he believed was about to happen: "This coalition of forces allows us to do what I have yearned to do for 40 years: smite the terror regime hip and thigh."
Neither man has delivered.
The memorandum of understanding is not a final deal. It is an agreement to talk about the biggest issue between them – Iran's nuclear programme. But it is front-loaded with key inducements for Iran. If the talks progress, the US has said it will lift sanctions.
It is all dependent on the success of 60 days of talks on a nuclear deal – that can be extended and probably will be, as the issues are complex. Neither trusts the other. Much can go wrong. Hardliners in Washington, Tehran and Israel do not want the deal to work.
Iran might overplay its hand, taking maximal positions in the forthcoming negotiation and potentially jeopardising economic gains that could rescue its broken economy.
But this agreement is way better than a war that has killed thousands and threatened a global economic recession.
If a nuclear deal is made, to the satisfaction of the US and Iran, and if both sides keep their promises, the Middle East could be transformed. That is a big if, at the other end of a long and difficult negotiation.
