Friedrich Merz has accused the United States of being “humiliated” by Iran’s leadership, claiming the Trump administration is being outwitted at the negotiating table in a stinging assessment that deepens the widening transatlantic rift between Washington and its Nato allies.
Speaking to students in Marsberg, the German chancellor said the Iranians were “very skilled at negotiating, or rather, very skilful at not negotiating, letting the Americans travel to Islamabad and then leave again without any result”. His comments came after Donald Trump cancelled a planned trip by US negotiators to the Pakistani capital for indirect talks with an Iranian delegation. A previous round, led by Vice-President JD Vance, broke up without progress.
“An entire nation is being humiliated by the Iranian leadership, especially by these so-called Revolutionary Guards,” Merz said. “And so I hope that this ends as quickly as possible.”
Trump has attempted to cast the stalled dialogue in a positive light, telling Fox News: “We have all the cards,” and insisting that if Tehran wanted to talk, “they can come to us, or they can call us”.
Iran’s ‘Hormuz first’ gambit and the global trade stakes
Against this backdrop, Iran has put forward a new ceasefire proposal that focuses exclusively on reopening the Strait of Hormuz — a chokepoint for roughly a fifth of the world’s oil — while deferring any discussion of its nuclear programme, ballistic missiles or sanctions relief to later negotiations. The offer, conveyed to Washington by Pakistani mediators, marks a significant tactical shift. Tehran had previously sought broad security guarantees from the US and its allies in exchange for ending its blockade of Gulf exports, a blockade triggered after the US-Israeli attack on Iran in February.
Under a bill being prepared by Iran’s parliament — and already approved by a key committee — shippers would be required to pay Tehran for “services” related to passage through the strait, which was free before the war. The committee’s version also seeks to restrict vessels linked to the United States and Israel, as well as those from countries that have imposed sanctions on Iran. The UN’s International Maritime Organization has firmly rejected the idea. Arsenio Dominguez, the IMO’s secretary general, said: “There’s no legal basis for the introduction of any tax, any customs, or any fees on straits for international navigation.”
The “Hormuz first” approach would help resolve the global economic and energy crisis triggered by the conflict, but it would achieve none of Washington’s stated war aims — chief among them a permanent end to Iran’s nuclear programme. If Trump accepted the deal, he could conceivably declare victory by pointing to the damage inflicted by US and Israeli bombing on Iran’s military and nuclear infrastructure. However, such an outcome would leave Iran in possession of a stockpile of 440kg of highly enriched uranium — enough, in theory, for a dozen nuclear warheads. The International Atomic Energy Agency has expressed serious concern that Iran, the only non-nuclear-weapon state producing such material, accelerated its enrichment to near-weapons-grade (60% uranium-235) after formally ending the Joint Comprehensive Plan of Action in October 2025. France, Germany, the UK and the US have condemned the acceleration as a “backwards step”.
US counter-blockade and Iran’s economic agony
After the breakdown of the Islamabad talks, Trump imposed a counter-blockade on shipping using Iranian ports, exacerbating an already dire economic crisis. The International Monetary Fund has forecast a 6.1% contraction in Iran’s gross domestic product this year, while year-on-year inflation is running at nearly 70%, with food staples and healthcare rising even faster. Before the blockade, year-on-year food inflation had already hit nearly 125%, contributing to a steady contraction of the country’s middle class.
The US blockade has also prevented Iran’s empty oil tankers from returning to port, where they could serve as storage facilities. Iran is running low on ways to store its output, and winding down production would inflict long-term damage on its energy sector. A vast informal economy, operating through shell companies and a shadow fleet, has taken root to circumvent sanctions, but enforcement gaps have not been enough to offset the broader damage.
Ali Vaez, Iran project director at the International Crisis Group, said Trump and his team had misjudged how far the economic squeeze would force concessions on the nuclear programme. “Undeniably, the blockade is basically sharpening the economic pain that Iran was under even before the war started,” Vaez said. “But Iranian resilience is not a question of economic pain because Iran is in an existential battle and is willing to absorb a much higher price than it has so far. And the Iranian regime doesn’t hesitate to transfer this pain to its population.”
He added that Trump was politically sensitive on several fronts: the domestic cost of high petrol prices and general inflation, his desire to resolve the crisis before meeting Xi Jinping in Beijing in mid-May, and the fear that a global shortage of jet fuel could disrupt the World Cup scheduled for North America in June and July.
Russia steps in — but the Caspian route is fragile
Iranian Foreign Minister Abbas Araghchi met Vladimir Putin in Moscow on Monday, seeking to mitigate the effects of the blockade. According to official media, Putin pledged that Russia “will do everything that serves [Iranian] interests, the interests of all the people of the region, so that peace can be achieved as soon as possible”. Araghchi said “the world has now realised Iran’s true power”, adding: “It has become clear that the Islamic republic of Iran is a stable, solid and powerful system.”
Talks focused on Russian military and economic support, including transit routes for Iranian trade. Nikita Smagin, an analyst of Russian-Iranian relations, said: “If the US blockade continues, then the Caspian Sea and the land link with Russia will become one of the few remaining routes for connecting Iran with world markets.” However, he noted that several projects Moscow intended to implement with Iran’s help — projects meant to help Russia break out of its own isolation — are now at risk because of regional instability.
Israel attacked the Caspian route in March with a bombing of the Iranian port of Bandar Anzali. Even before that strike, the route fell far short of replacing the Strait of Hormuz, which before the war handled more than 90% of Iran’s trade.
Military resilience and the Hezbollah dimension
Ariane Tabatabai, vice-president of research, security and defence at the Chicago Council on Global Affairs and a former Pentagon policy adviser, said Iran could reconstitute some of its military might quite rapidly. “Their whole military doctrine is based on building and deploying capabilities that they can acquire and maintain and use on the cheap,” she said.
The Islamic Revolutionary Guard Corps — designated a terrorist organisation by the US, the EU and several other countries — remains Iran’s most powerful instrument for regional destabilisation. It controls key sectors of the economy and, through its Basij militia, continues to repress domestic protests. The IRGC’s leadership was shaken in February when US-Israeli strikes, codenamed Operation Epic Fury, targeted military and government sites. Supreme Leader Ayatollah Ali Khamenei was reportedly killed in the initial wave of attacks, alongside dozens of other top officials. His son, Mojtaba Khamenei, was appointed as successor.
Meanwhile, Israeli Prime Minister Benjamin Netanyahu has raised the prospect of fresh military action in Lebanon, saying rockets and drones possessed by the Iran-backed militant group Hezbollah remain a threat. “There are still two central threats from Hezbollah: the 122mm rockets and the drones,” Netanyahu said in a statement. “This demands a combination of operational and technological activity.” Hezbollah had fired rockets at Israeli territory, prompting an Israeli aerial assault and occupation of Lebanese territory, but a temporary ceasefire between the group and Israel was in effect as of April 16.
