US or Iran — Who needs a new truce deal more?

The United States and Iran have entered a period of intensifying military confrontation, with five consecutive days of US strikes met by Iranian retaliation against targets in Gulf nations and Jordan. A memorandum of understanding signed in June to extend a ceasefire and facilitate diplomatic talks has been abandoned by both parties, though each has signaled openness to renewed negotiations.

Pakistan, serving as the principal mediator between the two powers, has called for an immediate halt to the violence and a return to dialogue. Pakistan's Foreign Ministry spokesman emphasized that sustained engagement and diplomacy remain the only viable path toward lasting peace and stability in the region.

Public rhetoric from both sides suggests reluctance to compromise. US leadership has characterized Iran as desperate for a peace agreement while expressing distrust in Tehran's commitment to any accord. Iranian officials have adopted a defiant posture, with senior negotiators describing the conflict as existential and rejecting continued adherence to previous agreements.

However, structural constraints may limit both nations' capacity to sustain prolonged conflict. Iran's economy has deteriorated significantly under decades of international sanctions, with GDP per capita declining from $8,000 in 2012 to $5,000 in 2024. Oil export capacity has contracted from 2.2 million barrels per day to 1.5 million barrels per day over the same period. When the June agreement was reached, the US lifted its naval blockade and issued sanctions waivers, prompting a 15 percent appreciation in the Iranian rial. The reimposition of sanctions this week has reversed these gains.

Militarily, Iran's capabilities have been substantially degraded. Analysis indicates that by April, Iran had depleted 30 percent of its pre-war missile inventory and 60 percent of its drone arsenal, with significant portions of naval infrastructure destroyed.