US-Iran peace talks in Switzerland called off, clouding prospects for lasting truce
(Corrects headline and paragraphs 1, 5 to remove reference to talks in Geneva)
By Nandita Bose, Yomna Ehab and Jonathan Allen
US-Iran Negotiations and Regional Impact
Cancellation of Talks and Immediate Reactions
WASHINGTON/DUBAI, June 19 (Reuters) - Switzerland said U.S. talks with Iranian negotiators on a pact to end the Middle East conflict would not take place on Friday, as Vice President JD Vance dropped plans to travel to the country, adding to uncertainty whether a lasting truce can be found.
"The logistics of these negotiations have never been simple or predictable," the White House spokesperson said in a statement on Thursday night. Vance and the U.S. delegation had been ready to depart as soon as plans were finalised.
The talks, set for the mountaintop resort of Burgenstock, would not take place, Switzerland's foreign ministry confirmed, but gave no details.
There was no immediate response from Iran, which had earlier said it was ready to begin technical talks after Wednesday's 14-point accord extended a tenuous ceasefire by at least 60 days.
Iran's negotiators first needed to see signs of the U.S. implementing the interim deal, and there was no confirmation its delegation would travel to Switzerland, the semi-official Tasnim news agency said before Vance's Thursday announcement.
U.S. officials had also said they would hold a formal signing ceremony for the U.S.-Iran agreement in Switzerland, but Iran's foreign ministry had cast doubt on the plan, calling it unnecessary after both countries' presidents signed the pact.
Background of the Conflict and Economic Impact
The war, which began on February 28 with U.S. and Israel air attacks on Iran, has killed at least 7,000 people, sent energy prices soaring and shaken global markets.
Israel's Position and Continued Hostilities
ISRAEL CONTINUES FIGHT
Israel, left out of the peace talks, has distanced itself from the U.S.-Iran accord and kept up fighting against the Iranian-allied Hezbollah militant group in Lebanon, also raising questions about whether the agreement would hold.
US Domestic Politics and the Agreement
In Washington, some of U.S. President Donald Trump's Republican allies in Congress questioned whether he had conceded too much in order to end the conflict, unpopular with most Americans in the run-up to mid-term elections in November.
Trump had sworn to end the war only with Iran's "UNCONDITIONAL SURRENDER."
But the memorandum signed with Iran instead provides relief from economic sanctions, unfreezes assets worth tens of billions of dollars and immediate U.S. waivers for its exports of oil.
Iran's Response and Nuclear Program Issues
Iran's Supreme Leader Ayatollah Mojtaba Khamenei said Trump had signed the deal "out of desperation" and signalled that approaching talks over Iran's nuclear program, among Trump's stated reasons for starting the war, would not be easy.
"If the American side wants to be too demanding, we will not accept it," he said in a message.
Details of the Interim Deal
The deal gives negotiators 60 days to agree on the status of Iran's nuclear program, unless an extension is agreed, and set up a $300 billion reconstruction fund for Iran and other financial incentives.
Vance said Washington would also seek to limit Iran's long-range missiles.
Financial and Military Implications
The growing cost of the war also drew the spotlight, as the U.S. defence department told lawmakers it needed $80 billion to cover the costs and some unrelated bills, the Wall Street Journal said.
When the U.S. and Israel launched the war nearly four months ago, Trump said he aimed to destroy Iran's nuclear capabilities to ensure it could never develop such weapons.
He also sought to end Tehran's ability to strike its neighbours, prevent it from backing allied anti-Israel militants in the region and make it possible for Iranians to topple their theocratic government.
None of those objectives had been met when Trump signed the agreement, in which Iran restated its decades-long assertion not get or develop nuclear weapons, a position doubted by a succession of U.S. presidents.
It also agreed to the onsite "down blending" of its highly enriched uranium stockpile and inspections by the International Atomic Energy Agency as a Non-Proliferation Treaty member, rejecting Trump's wish to remove the material from the country.
Prospects for Future Negotiations
U.S. officials say the negotiations could still yield a strong agreement on Iran's nuclear program, aiming to better one dating from 2015 between Iran, the U.S. and other countries that Trump tore up in his first term.
But critics say Iran is in a stronger position now, having withstood a superpower attack, demonstrated its control of the Strait of Hormuz and gained valuable waivers to financial sanctions.
Iran has said it will still exert control over Hormuz in partnership with Oman, its neighbour across the critical waterway, and intends to charge ships service fees that did not exist before the war, although not during the 60-day talks.
Regional Developments and Ongoing Tensions
Energy Markets and Oil Supply
Oil prices dipped on Friday as prospects brightened for more supply after tankers began moving through the reopening Strait, which had carried nearly a fifth of global crude oil and liquefied natural gas supplies before the war.
Lebanon Conflict and Israel's Actions
In Lebanon, where more than a million people have been displaced by the fighting, fresh Israeli strikes on Friday killed at least 15, the state news agency NNA said, in attacks Israel said were directed at Hezbollah targets.
That raised doubt about how far Trump will go to force his wartime ally to halt an offensive he has now pledged to end.
The deal calls for "permanent termination" of the war in Lebanon, but Israel has said it has no intention of withdrawing, instead depicting an expanded occupation zone in a new map.
US-Israel Relations
Trump has become openly critical of Israel's operations in Lebanon, opening one of the biggest rifts between the two countries in decades.
(Reporting by Reuters bureaus, Writing by Jonathan Allen, Andy Sullivan and Clarence Fernandez; Editing by Sanjeev Miglani, Kate Mayberry and Raju Gopalakrish
