After Islamabad: Washington’s policy options in the Iran war

THE collapse of the US-Iran peace talks in Islamabad on Sunday (Apr 12) has clarified one thing above all else: The war will not end quickly or cleanly.

After 21 hours of the highest-level face-to-face engagement between Washington and Teheran since the 1979 Islamic Revolution, US Vice-President JD Vance boarded Air Force Two empty-handed.

Vance blamed Iran for refusing to commit to the one demand that, in US President Donald Trump’s own words, was “99 per cent of it”, a verifiable renunciation of nuclear weapons and enrichment capability.

A fragile two-week ceasefire, brokered by Pakistan on Apr 7, technically remains in place. But with Trump ordering a naval blockade of the Strait of Hormuz within hours of the talks collapsing, and Iran’s Speaker of Parliament, Mohammad Bagher Ghalibaf, accusing the US of failing to “earn the trust” of his delegation, the margin for error is narrow.

Washington now faces a strategic inflection point. Its options, each carrying distinct costs and risks, can be grouped into three broad pathways.

Option 1: Escalate

The most immediate American response to the Islamabad failure has been to tighten the economic vice. Trump’s order to the US Navy to interdict any vessel that has paid Iran a toll for Strait of Hormuz passage represents a significant escalation in the pressure campaign.

Iran currently controls the strait, through which roughly 20 per cent of the world’s oil passed before the war, and has been levying transit fees on the few tankers it permits through. A successful blockade of Iranian ports would strangle that revenue stream.

The logic is coercive: maximise pain until Teheran’s calculus shifts. Proponents point to Iran’s depleted military position – missile launches have dropped roughly 90 per cent from the war’s opening days, and US and Israeli strikes have reportedly destroyed a significant portion of Iran’s manufacturing capacity and arms infrastructure – as evidence that continued pressure can yield results.

The risks, however, are substantial. Oil prices have already risen more than 30 per cent since the war began, and economists warn they could remain elevated well into late 2026.

A naval blockade that is contested by Iran’s Revolutionary Guard Corps (IRGC), which has already threatened to “deal harshly” with any military vessels approaching the strait, risks igniting a direct naval confrontation.

Escalation also risks dragging Gulf states, which have sought to remain neutral, deeper into a conflict they did not choose. And it leaves unanswered the fundamental question: Even a degraded Iran has shown it will not capitulate under military pressure alone.

Option 2: Withdraw and consolidate; accept what has been achieved

A second pathway, advocated by some analysts, is for Washington to step back from the maximalist demands that sank the Islamabad talks and declare a form of strategic success based on what has already been accomplished.

The war has set Iran’s nuclear and conventional military programmes back by years. The deaths of supreme leader Ali Khamenei and key IRGC commanders have disrupted the regime’s institutional architecture in ways that will take time to assess.

Iran’s regional proxy network – already weakened by years of Israeli strikes – has been further degraded.

From this view, the US need not achieve unconditional surrender to have meaningfully altered the strategic landscape.

Withdrawing from active hostilities, allowing the ceasefire to hold, and returning to a posture of deterrence and sanctions would preserve American resources and avoid the risks of prolonged entanglement.

The costs of this path are real, too. It would leave Iran in control of the Strait of Hormuz, with the capacity to tax global shipping as a new revenue source.

It would set a precedent that other actors might study carefully. And Iran, given time, would seek to rebuild its arsenal.

The question Washington must weigh is not whether these risks exist, but whether they outweigh the risks of continued war.

Option 3: Return to the table; pursue flexible diplomacy

The third option is to keep the diplomatic channel open while recalibrating US demands.

The Islamabad talks did not collapse entirely without progress; Iran’s foreign ministry spokesperson acknowledged “mutual understanding” on some issues, with disagreement concentrated on a few core points: uranium enrichment, Strait of Hormuz sovereignty, sanctions relief, and reparations.

Iran’s 10-point counterproposal, which Trump initially described as “a workable basis on which to negotiate” before the White House walked that back, suggests there is at least a framework for continued discussion.

Pakistan has urged both sides to maintain the ceasefire and expressed a willingness to continue its mediating role. Analysts at the Center for International Policy note that both sides retain strong incentives to negotiate; the costs of renewed full-scale war are high for each.

The challenge is that each side’s red lines are genuinely incompatible at present.

The US demands a complete end to enrichment and the removal of Iran’s stockpile of highly enriched uranium, asking Teheran to “capitulate”. Iran insists on sovereignty over enrichment for peaceful purposes and control of the strait.

Bridging that gap would require either Washington accepting a more limited nuclear agreement, closer to the 2015 Joint Comprehensive Plan of Action framework that it previously abandoned, or Iran accepting conditions that its leadership has publicly ruled out.

The underlying dilemma

What the Islamabad failure reveals most starkly is that the US’ objectives – eliminating Iran’s nuclear programme, dismantling its missile capabilities and inducing regime change – have not been achieved, and that military force alone appears unlikely to deliver.

Iran’s ability to keep the Strait of Hormuz effectively closed and to sustain domestic political coherence despite enormous damage has given it more negotiating leverage than Washington anticipated.

None of the three options available to the US is without significant cost.

The question for policymakers is not which path is free of risk – none is – but which combination of pressure and flexibility is most likely to produce a durable outcome that serves American interests, stabilises the region, and avoids a wider war that no party, thus far, has been able to fully control.

The ceasefire clock is running. The decisions made in Washington in the coming days may determine whether diplomacy gets another chance, or whether the Middle East slides back towards open conflict.