Tehran split as laundering watchdog offers blacklist exit talks

“We stated to the (US) negotiating party that we are willing to build trust, but it seems as though they have pretended to be asleep,” Vice President Mohammad Reza Aref said on Tuesday—the clearest suggestion yet that reluctance may be coming from the United States.

“Even direct negotiations can happen,” he added, under balanced conditions. “The Islamic Republic’s approach to negotiations is in line with what the people want.”

The remarks followed Deputy Foreign Minister Majid Takhtravanchi’s statement a day earlier that Iran was prepared to limit its nuclear program if US sanctions were lifted.

There was no public response by Washington.

US Secretary of State Marco Rubio along with foreign ministers of France, Germany and Britain set an informal end-August deadline for a new nuclear deal, warning failure would mean triggering the so-called "snapback" of UN sanctions.

‘No rush’

But no response came from Washington. President Donald Trump told reporters in mid-July that the urgency to engage with Iran had vanished after US strikes in late June.

“They would like to talk. I’m in no rush to talk because we obliterated their site,” Trump told reporters mid July, implying he was content to let pressure build.

European officials have warned Tehran that unless it fully cooperates with the International Atomic Energy Agency (IAEA), the “trigger mechanism” for snapback could be activated, restoring UN sanctions this fall.

Red lines

Despite the conciliatory gestures, Iran’s red lines remain intact.

Takhtravanchi told Japan’s Kyodo News this week that Tehran would not relinquish what it called its right to uranium enrichment.

Officials also stressed that Monday’s visit by IAEA Deputy Director General Massimo Aparo was unrelated to inspections, and Tehran continues to bar IAEA chief Rafael Grossi, accusing him of complicity in the recent attacks.

Reformist daily Arman Melli called Takhtravanchi’s offer “a new prudent decision regarding the nuclear dossier,” noting Iran’s aim to avoid the trigger mechanism while securing sanctions relief to ease its deep financial crisis.

Hardline outlets, meanwhile, have expressed anger at the IAEA and the UN Security Council’s failure to condemn the strikes, and domestic critics warn that opening talks with Washington could be politically costly.

Divisions and outlook

While the Foreign Ministry and its diplomats remain cautious about re-engaging the West, the Presidential Office appears more eager to pursue direct negotiations.

Vahideh Karimi, political editor of Shargh, warned that the combination of Iran’s tentative flexibility and Washington’s hesitation could prolong the stalemate, calling Takhtravanchi’s proposal “realistic” but fragile.

She also pointed to Tehran’s missile program — repeatedly declared off-limits after the war with Israel — as a potential deal-breaker.

Others, like Ham Mihan columnist Majid Younesian, argue the balance of forces is shifting in Iran’s favor and that confrontation with the US and Europe must evolve.

“Change does not mean surrender, as hardliners claim. Not all problems need to be solved with guns, slogans, and provocations,” he wrote.

Billions are flowing into Central Asia, the Caucasus and the Arab world while Beijing’s allies in Tehran and Moscow are left out of major infrastructure projects.

The latest figures on China’s Belt and Road Initiative (BRI) show the scale of the shift.

In the first half of 2025, Beijing invested more than $57 billion and signed $66 billion in contracts under the scheme. Neither Iran nor Russia appears on the list.

For Iran, this marks almost a decade without significant Chinese investment—the last major deal was in 2016, when CNPC signed on to develop South Pars Phase 11, only to pull out after U.S. sanctions returned.

Although Tehran, Moscow and Beijing often signal unity—through joint summits, military drills, and declarations that present them as a bloc challenging the West—China’s approach has been far more pragmatic.

In Washington and European capitals they are frequently cast as strategic allies, but Beijing has shown little appetite for sharing in Iran’s or Russia’s conflicts, and is not putting its money where its mouth is.

New routes

China is backing transport corridors that cut both countries out of Eurasian trade.

Cargo along the Central Asia–Caucasus–Turkey–Europe route rose 68% last year to 4.5 million tons, while traffic through Russia fell more than 45% in both directions.

Beijing now holds a 51% stake in the $4.7 billion Kyrgyzstan–Uzbekistan railway—which also links Kazakhstan and the Caucasus.

All these routes pass through Azerbaijan, which is set to launch the Zangezur Corridor along Iran’s border following an agreement with Armenia brokered by the United States.

Once complete, it could double Azerbaijan’s cargo transit by 2027, twice Iran’s total foreign cargo transit in 2024.

Energy leverage erodes

Azerbaijan is also moving to bypass Iran in gas supply.

Turkey’s new pipeline to Nakhchivan, completed in March, ends the exclave’s reliance on Iranian transfers.

Planned Azerbaijani gas exports to Armenia, Nakhchivan, and Turkey will further shrink Iran’s role, including its modest gas-for-electricity swap with Yerevan.

China invested $39 billion in the Middle East last year, and more than $19 billion in the first half of 2025—none in Iran.

Iran’s Arab neighbors are pushing ahead with mega-projects: Iraq’s $17 billion Grand Faw Port expansion to the Turkish border, Saudi-led Red Sea links, and renewable energy and oil investments across Turkmenistan, Azerbaijan, Kazakhstan, and Uzbekistan.

Isolation deepens

Sanctions, political unpredictability, and strained ties with the West have made Iran and Russia high-risk bets for long-term infrastructure projects.

A decade of continued Chinese uninvestment has compounded Iran’s marginalization.

As China, Arab states, and Central Asian neighbors weave tighter networks of trade, energy, and diplomacy, Iran risks falling further behind—economically and geopolitically—unless it repositions itself to join the region’s emerging connectivity map.

“With this year’s low rainfall, surface and underground water resources have declined and the situation is not favorable,” Hossein Haghighi, head of Tehran Water and Wastewater Region 4, told the semi-official ISNA news agency. “If it does not rain, we expect even tougher conditions in autumn.”

Haghighi said authorities had adopted a “multi-layer” approach that included reducing water pressure in some areas, public awareness campaigns and promoting low-flow devices to curb household use.

New buildings are required to install storage tanks and pumps before connecting to the network, he said. Tariffs are structured to heavily subsidize low users, while “bad consumers” – the highest tier – pay sharply higher rates. “After three warnings, we cut water to heavy users for 12 hours,” Haghighi said.

'Day zero' warnings disputed

Haghighi’s remarks followed a stark warning from Mohsen Dehnavi, spokesman for Iran’s Expediency Council, who said the water crisis “has passed the warning stage and entered a critical phase.”

“Continuing this trend could bring some areas of the capital to day zero in the coming weeks – a day when drinking water is cut off in many neighborhoods and the daily life of millions is disrupted,” Dehnavi said in a post on the social media platform X.

He blamed “five years of drought, overuse of underground aquifers, rapid urban population growth, high per-capita consumption and structural weaknesses in water management” for pushing Tehran’s reservoirs towards dangerous depletion.

He called for “strict conservation policies, renovation of ageing networks, industrial consumption controls and the adoption of smart, real-time resource management systems.”

Isa Bozorgzadeh, spokesman for Iran’s water industry, rejected the “day zero” assessment, saying that with further reductions in demand the crisis could be “acceptably managed.”

“If Tehran reduces its consumption by another 12%, the capital will pass through this crisis without severe disruption,” he said. Bozorgzadeh added that July saw a 13% drop in use compared with last year, and consumption so far in August was down more than 14%.

Drought, heatwaves, and blackouts

The water crisis comes after months of extreme heat that has triggered rolling blackouts and the temporary shutdown of government offices in several provinces to conserve energy.

Iran’s meteorological organization says the country has faced a near-constant drought for more than two decades, with rainfall down sharply this year and snowpack levels at historic lows.

Environmental activists have long warned that Iran’s sprawling capital – home to nearly 10 million people – is acutely vulnerable to water shortages due to inefficient infrastructure, leaky pipes, and limited investment in modern conservation technologies.

Climatologist Nasser Karami told Iran International earlier in August that the water crisis in Iran transcends drought and is a product of government mismanagement, militarized agriculture and deliberate manipulation.

According to Haghighi, Tehran’s average household water use is more than twice the international standard.

“Changing consumption habits is no longer optional – it’s a necessity,” Haghighi said. “If every household reduces just 10% of its water use, the capital can avoid the most severe restrictions.”

Elias Hazrati, head of the government’s information council, said on Tuesday: “Today, the country is in a completely stable situation. There is no crisis, and no war is taking place or about to begin.”

“Do you want to fight?” he asked in an apparent address to Tehran’s hardliners. “Well, you did, but they hit us. If we rebuild the nuclear establishments, they are going to target them again. What can we do if we do not negotiate?”

Moments later, he sought to soften the remark: “Of course we will not do anything against the Supreme Leader’s will.”

But the attempted walk-back did little to blunt the reaction.

Kayhan, the hardline daily whose chief is appointed by supreme leader Ali Khamenei, called his comment a product of “ignorance.”

“Some of our officials are preoccupied by the war–negotiation dichotomy,” Kayhan wrote, even as the United States and Israel “begged Iran for a ceasefire.”

Mishap reloaded

Hours later, Pezeshkian added fuel to the fire when asked by a state TV reporter about the US-brokered Zangezur Corridor through Armenia’s Syunik region.

He said foreign minister Abbas Araghchi had assured him it had “nothing to do with Iran’s interests,” contradicting — among others — the Revolutionary Guards and Khamenei’s decade-old assertion that the project was detrimental to Armenia and that Tehran would remain firm in opposing it.

The comment was immediately seized upon by political rivals. Aladdin Boroujerdi, an influential hardline MP, and Khamenei’s chief adviser Ali Akbar Velayati had already made clear their opposition to the corridor.

By appearing unaware of that stance, Pezeshkian handed critics an opening to question his political capacity and grasp of state priorities.

Ultraconservative outlets accused him of echoing US president Donald Trump’s threats against Iran and undermining the country’s right to enrich uranium.

‘Making war more likely’

Vatan Emrooz branded his stance “withdrawal and surrender,” while Javan— affiliated with the Revolutionary Guards—criticized him for defending his positions as “coordinated with Khamenei” rather than engaging critics directly.

On social media, hardline propagandist Ali Akbar Raefipour dismissed the remarks as “fallacy, nonsense, and paradoxical.”

US-educated ultraconservative academic Foad Izadi argued that Pezeshkian’s comments made renewed strikes on Iran more likely. “US officials will think another attack on Iran will not be costly,” he posted on X.

Not all reactions were hostile, however.

Some supporters argued his remarks reflected a realistic approach in a tense period, pointing to the recent reshuffle that saw veteran conservative Ali Larijani return to Iran’s national security council as one of the two supreme leader representatives.

“Possibly, Larijani has got Khamenei’s full backing for negotiations with Washington, and Pezeshkian is trying to make the idea of negotiations less costly in the political circles inside Iran,” reformist outlet Rouydad24 quoted economist Sadegh Alhosseini as saying on Monday.

“Of respondents, 89% rated their agreement with the government’s economic policies as ‘low’ or ‘very low.’ 72% expressed dissatisfaction or strong dissatisfaction with government policies,” according to the poll results published on Monday.

The poll also indicated that the economy is the top priority for 53% of respondents, while 36% prioritized foreign policy.

The poll consisted of three questions, conducted via the paper’s Telegram channel with an average of 2,130 respondents per question.

Iran is currently grappling with water shortages and widespread power outages amid high summer temperatures, while also dealing with recovery efforts following a 12-day war with Israel and its aftermath.

Sanctions, corruption and economic mismanagement have contributed to widespread economic hardship and market instability as Iran's currency the rial has lost over 90% of its value since US sanctions were reimposed in 2018.

Tehran faces another challenge from European countries Germany, France and the United Kingdom who may be poised to trigger United Nations sanctions per the so-called the snapback mechanism.

Snapback refers to a clause in UN Security Council Resolution 2231, which endorsed the a 2015 deal on Iran's disputed nuclear program dubbed the Joint Comprehensive Plan of Action (JCPOA).

Under Resolution 2231, any party to the accord can file a complaint accusing Iran of non-compliance. If no agreement is reached within 30 days to maintain sanctions relief, all previous UN sanctions would automatically “snap back,” including arms embargoes, cargo inspections and missile restrictions.

Iran’s Ministry of Intelligence issued secret guidance on Monday, warning ministries and major companies to prepare for the likely return of punishing United Nations sanctions, documents reviewed by Iran International show.

Iran’s state-run English-language newspaper Tehran Times reported on August 8 that Tehran and Washington may start Norway-mediated indirect talks in August, covering Iran’s nuclear program and compensation demands over its June war with Israel and the United States.

Washington has called Iran’s compensation demand “ridiculous,” urging Tehran to stop funding militias and its nuclear program.