Week signals: The lessons of ‘73
Plus: watch points for Spain, the UK, Colombia, East Asia, and the US.
Hello,
In this edition of Week Signals:
IN REVIEW. Getting off the escalation ladder, learning from Yom Kippur and Vietnam, and valuing leverage vs valuing restraint.
UP AHEAD. Balls in New Jersey, Burnham in Downing Street, a change in Colombia, Asian diplomacy, and American tariffs.
Try the full Geopolitical Dispatch — free for a month
Throughout July, free subscribers can activate a full 30-day trial of Geopolitical Dispatch, including the complete Daily Dispatch, Week Signals, our Private Monthly Roundtables and Quarterly Outlook Briefing.
The Week in Review: When ceasefires misfire
The week began with renewed attacks throughout the Persian Gulf. It ended with more of the same. As reflected in oil futures prices, now approaching $90 after nearly going as low as $70, observers are increasingly gloomy about the prospects for peace in the Middle East. And as we’ve written several times before, the broader issue of low US oil stocks could lead to a global economic crisis if the conflict drags on beyond another month or so.
For those who’ve shared our scepticism on the 17 June MoU – the so-called Islamabad memorandum (despite it being signed by Donald Trump in Versailles) – it’s a classic told-you-so moment. Yet ever the contrarians, even to ourselves, we now want to re-check our assumptions. After all, the future is not a matter of bets or predictions, but of multiple scenarios. And just as a worsening war is increasingly plausible, if not probable, so is another ceasefire.
All the reasons that make the Iran-US war self-defeating for all sides make the chance of another, reluctant, peace deal possible. Escalation ladders and escalation traps are real, but so are climb-downs, surrenders, and TACOs. Trump has proven this more than most. Just as you think he’s going in one direction, he goes in the other. Tehran is a little more predictable, but it too has internal divisions and differing points of view (longstanding and natural for a country of 92 million, even if not necessarily exacerbated by the war). There are multiple paths for this conflict that are yet to be taken.
It’s at this juncture that Oscar Martin returns to pick up where he last left off with some historically grounded analysis on what drives ceasefires to success or failure. Looking at the 1973 agreements that arose from the Yom Kippur and Vietnam wars, there are lessons for 2026 in Iran. It’s not entirely good news, but not entirely bad either. It does at least show the nuance and complexity to forecasting war and peace. Something that bets on Kalshi or Polymarket are yet to fully deliver.
Oscar begins:
On the evening of 22 October 1973, the ceasefire called for by UN Security Council Resolution 338 formally began. Egypt and Israel had accepted a resolution requiring the parties to stop fighting in the positions they then occupied, and began negotiations. At this point, Israeli forces had crossed the Suez Canal and were closing around Egypt’s Third Army. Egypt needed the advance to stop before the encirclement became complete. Israel still had an opportunity to improve the position from which it would negotiate. Both sides accused the other of breaking the ceasefire first, and the fighting continued. The Security Council returned the following day with another resolution urging the parties to return to the positions they had occupied when the ceasefire took effect, and calling for UN observers to supervise it. That effort also failed to stop the fighting. A third resolution followed on 25 October, demanding a return to the original ceasefire positions and deciding to establish a United Nations emergency force.
The ceasefire now remembered as the beginning of successful Arab-Israeli diplomacy therefore began with two failures. Resolution 338 had told the parties to stop where they stood, but no verified ceasefire line or effective supervision mechanism existed. The battlefield continued to move while the parties disputed who had fired first and where their forces had been when the ceasefire began. Despite diplomatic pressure, the military incentives survived the announcement.
In our recent Week Signals piece, we argued that ceasefires occur when force reaches the edge of its political usefulness. Korea’s armistice endured because it accepted that reunification would remain unresolved. The 1973 ceasefire eventually worked because diplomacy gave the pause direction and the superpowers had enough leverage to raise the cost of continued fighting. In each case, violence receded once the principal actors concluded that further force was unlikely to improve the political result.
The collapse of the ceasefire between the US and Iran suggests that the parties approached that edge without reaching it. They had suffered enough to pause, yet retained enough confidence to resume. The agreement reduced the fighting temporarily, but it did not alter the calculation that another round of pressure might still produce a better bargain.
The Islamabad Memorandum signed by Trump on 17 June was broad. It declared an end to military operations, opened a sixty-day period for negotiating a final settlement, and linked the gradual removal of the American naval blockade to the restoration of commercial passage through the Strait of Hormuz. It also addressed oil waivers, frozen Iranian funds, sanctions and the nuclear programme, although many of the hardest questions were deferred to the negotiations that were meant to follow. An executive mechanism was promised to monitor compliance, but the memorandum said little about how disputed incidents would be investigated or how a breach in one area would affect obligations elsewhere. Unlike in 1973, there was also no outside power capable of imposing discipline on the strongest belligerent. Oman, Qatar and Pakistan could mediate between Washington and Tehran, but they could not raise the cost of non-compliance in the way the US and Soviet Union had been able to pressure their respective partners in the Yom Kippur War.
The memorandum’s ambiguity meant that the first serious dispute quickly became a dispute over whether the agreement still existed. After vessels came under attack, Washington revoked an authorisation for Iranian oil sales and resumed strikes. Tehran argued that the US had violated the agreement and insisted that compliance could only be mutual. Oman continued trying to negotiate arrangements for safe passage through the Strait, even as Trump declared the ceasefire over and agreed to keep talking. As of writing, the US had restored its naval blockade and had completed a seventh night of strikes, with Iran describing Hormuz as a red line and threatening a wider response against infrastructure across the Gulf.
States do not sign ceasefires because they have suddenly developed confidence in one another. They sign because restraint has become more useful than action. The problem in this case was that the US and Iran had not agreed on what the agreement was supposed to accomplish, which obligations had to come first or how the actions of other belligerents fitted within a nominally bilateral settlement. As the ceasefire settled, it’s likely that the rift between their political and economic objectives became more apparent.