Trade Makes War More Expensive, Not Impossible

The US-Iran truce shows both the promise and limits of economic interdependence. Trade cannot guarantee peace, but it makes war more costly.

Photo by Saifee Art on Unsplash

Written By: Matsheole Majoro

The United States and Iran signed a fourteen-point memorandum of understanding on June 17, 2026, with Trump in Versailles and Pezeshkian in Tehran. The deal ultimately only paused the conflict. It did not fix the nuclear question, which was one of the central causes of the conflict and remains a key unresolved issue. Instead, it created a sixty-day window for further negotiations.

The agreement shows something vital: peace is not manufactured by treaties between governments. It is created by exchange between people. However, exchange does not guarantee peace; it only makes war more expensive.

The memorandum’s conditions are often misrepresented. It defined a commitment to create a reconstruction and economic development plan with regional partners, but the financing process was still to be negotiated. It did not set up a $300 billion account.

The agreement called for negotiations on nuclear issues during the sixty-day window, planned for the dilution of enriched uranium under IAEA supervision, and required Iran to maintain the existing status quo of its programme pending a final deal. Describing Iran’s commitments as merely repeating its non-proliferation pledge leaves out these specific conditions.

Additionally, the agreement did not establish a comprehensive settlement of Iran’s ballistic missile programme or its wider relationships with regional armed groups. It did, however, explicitly address the parties’ allies involved in the conflict and military operations in Lebanon. Omitting a detailed missile settlement is not the same as explicitly excluding regional security issues altogether.

Iranian statements referred to $24 billion in total frozen assets, with $12 billion becoming available, but the memorandum itself did not specify these amounts. Likewise, the memorandum provided for oil export waivers but did not specify a daily export volume. These are reported figures and estimates, not treaty-binding text.

South Africa should be free to trade

This uncertainty has real consequences for South Africa.

In April 2026, Iran offered to supply crude oil to South Africa. Pretoria responded cautiously and gave no indication that it would accept the offer, amid concerns about US sanctions and the risk of secondary penalties. It did not give a confirmed formal rejection.

Importantly, there is no founded causal link between this specific caution and higher South African fuel prices. The documented factors driving local fuel costs include international oil prices, shipping disruptions and exchange-rate movements.

South Africa is not a major oil producer and depends heavily on imported crude oil and finished petroleum products. A nation with no quarrel with Iran should not have to shoulder the cost of America’s economic war.

A country that cannot fully trade is not fully independent.

The same principle applies to the Strait of Hormuz. An international strait is not comparable to the open ocean. Hormuz includes Iranian and Omani territorial waters, which are subject to international navigation rights.

The argument against a transit toll must be based on those rights, not on the false claim that the waterway is international waters. Ships should pass through freely because international law ensures it, not because a memorandum grants a sixty-day waiver.

Trade cannot abolish war

Trade makes war more expensive, and it creates beneficiaries of the status quo. But trade has not historically stopped war from happening.

Britain and Germany had considerable commercial ties before World War I. China and the United States are constantly at each other’s throats despite deep economic integration.

Trade can encourage peace, and it is a good in itself, but it does not guarantee peace.

Governments believe peace is something they manufacture through summits and treaties. Treaties do not automatically cease to apply when an administration changes; governments may violate, withdraw from, or retreat from them, which is a different claim.

But the endurance of a commercial relationship, built on mutual benefit, produces its own incentives for restraint. A treaty can be broken, a memorandum can expire, but a trading relationship in which both sides lose money if the other fails is harder to abandon.

The United States should stop punishing Americans and others for trading with Iranians. Remove sanctions, open financial channels and let banks, insurers and oil traders move goods to where they are needed.

Trade does not need a memorandum of understanding; it needs freedom.

This applies to South Africa as well. Pretoria should buy oil from whoever sells it at the best price, sell goods to whoever wants to buy them and decline to let any foreign government command who its friends may be.

The US-Iran deal is a truce between two fatigued rivals. It has paused the fighting, but it has not established a lasting peace.

Real peace needs open markets, free navigation and the removal of state barriers to exchange. It also requires admitting that trade is an instrument for peace, not a guarantee of it.

A treaty can be broken; a market built on mutual benefit creates its own incentives for restraint.

That is the way to lasting peace in the Middle East. It runs through open ports, free navigation and the voluntary exchange of goods between people who would rather trade than fight.

Matsheole Majoro is an International Relations student and an associate of the Free Market Foundation.