Unfinished negotiations over Gaza, Lebanon and Iran are converging with the prolonged disruption of Hormuz, threatening to turn Donald Trump’s foreign-policy challenges into an economic liability as American voters approach November’s midterms.
Donald Trump is entering the final months before November’s midterm elections confronting three unresolved Middle East negotiations whose consequences increasingly extend beyond the region. In Gaza, Washington is trying to reconcile Hamas’s demilitarisation with an Israeli withdrawal. In Lebanon, further Israeli withdrawals remain tied to verifiable Hezbollah disarmament. And in the confrontation with Iran, the failure to secure a durable settlement has severely disrupted the Strait of Hormuz, transmitting regional instability into global energy, shipping and insurance markets — and ultimately to US consumers.
A Financial Times/Focaldata poll conducted on August 7-10 found 53% of registered US voters saying their financial position had worsened since Trump returned to the White House in January 2025, against 21% who said they were better off. Nearly two-thirds said the economy was heading in the wrong direction, while Democrats led Republicans 44% to 39% among likely voters on the congressional generic ballot.
The emerging risk for Washington is a feedback loop: unresolved regional conflicts sustain energy and trade disruption, adding to inflationary pressures just as household affordability becomes a growing Republican vulnerability.
Gaza: Breaking the Sequencing Trap
Trump’s framework seeks Hamas’s demilitarisation alongside a phased Israeli withdrawal and the transfer of Gaza’s administration away from the group. Israeli Prime Minister Benjamin Netanyahu has resisted withdrawal before Hamas demonstrably disarms, while Hamas is demanding an end to continuing Israeli military operations and credible withdrawal guarantees before surrendering its remaining military leverage. The latest US push has not resolved that sequencing dispute.
The ceasefire brokered in Sharm el-Sheikh, which took effect on October 10, 2025, has not ended the bloodshed. More than 1,250 Palestinians, mostly civilians, have been killed since the ceasefire, according to Reuters, while UN agencies have documented continuing civilian and child casualties.
Violence has also intensified in the occupied West Bank. UN monitoring has documented a sharp rise in settler attacks, Palestinian fatalities and displacement, adding another source of instability to an already difficult Israeli-Palestinian negotiating environment.
The fundamental obstacle remains straightforward: Israel does not trust Hamas to disarm after it withdraws; Hamas does not trust Israel to withdraw after it disarms.
The most workable route is therefore verified parallel implementation. Hamas would progressively surrender weapons and dismantle military infrastructure under external verification, while Israel withdraws from predetermined areas as each benchmark is certified. Gaza’s administration would simultaneously move towards an agreed Palestinian civilian structure. Trump’s plan itself links phased Israeli withdrawal to Hamas disarmament under international security arrangements.
Breaking the deadlock would not only accelerate reconstruction and reduce humanitarian suffering; it would remove one of the principal sources of regional instability complicating Washington’s broader diplomacy.
American public opinion is also changing. Gallup found that 53% of Americans aged 18–34 now sympathise more with Palestinians, against a record-low 23% who sympathise more with Israelis — the first time a majority of that age group has favoured Palestinians. The shift forms part of a broader reversal in US opinion, with a Gallup poll that shows 57% of Americans support establishing an independent Palestinian state. This trend reflects shifting public views across political parties and age groups in the United States.
Lebanon: Disarmament for Withdrawal, Zone by Zone
Lebanon’s human toll has continued as well to rise despite US-backed efforts to contain the conflict, reinforcing the urgency of converting the present framework into an enforceable settlement linking Hezbollah disarmament, Lebanese state deployment and phased Israeli withdrawal.
Israel has tied further withdrawal from southern Lebanon to verified Hezbollah disarmament, arguing that relinquishing positions without dismantling military infrastructure risks allowing the group to rebuild. Beirut wants Israeli forces withdrawn so the Lebanese Armed Forces can restore sovereign control, while Hezbollah continues to resist disarmament.
The clearest route is therefore a zone-by-zone exchange: Hezbollah weapons and infrastructure are removed from a defined area; independent monitors verify compliance; Lebanese forces deploy; and Israel withdraws from the corresponding territory. US-backed pilot zones have already tested elements of this approach, while exposing the difficulties of implementation.
Third-party verification has also been discussed, with Britain, Italy, Switzerland and Indonesia among countries reported as potential contributors. Beirut, however, subsequently said no shortlist had been agreed, leaving the composition, mandate and authority of any mechanism under negotiation.
Such an approach could avoid making a comprehensive Israeli withdrawal dependent on Hezbollah’s immediate nationwide disarmament. Each successfully transferred zone would provide evidence that the model can work, strengthening the Lebanese state’s authority over armed force while reducing the risk of another Israel-Hezbollah war.
Iran: Restoring Hormuz Before Negotiating the Wider Settlement
Iran is the most globally consequential of Trump’s Middle East deadlocks because the conflict has disrupted an energy artery that was functioning normally before the US and Israel launched military operations against Iran in February.
Before hostilities, more than 130 vessels crossed Hormuz daily, carrying roughly one-fifth of globally traded oil and LNG. By August 15-16, traffic had fallen to only five commodity vessels on Saturday and none on Sunday, according to Kpler data cited by Reuters.
The chronology matters. Trump did not inherit the disruption: it followed the US-Israeli decision to launch military operations against Iran, giving his administration responsibility for the decision to enter a conflict whose economic consequences have spread globally and ultimately reached US consumers. Responsibility for subsequent escalation is nevertheless shared: Iran has accordingly restricted navigation and been accused of attacks on commercial vessels, while Washington maintains a naval blockade of Iranian ports and shipping.
Start Where US and Iranian Positions Overlap
Previous negotiations have identified areas where the positions overlap: both sides have engaged in negotiations to end the conflict, discussed restoring Hormuz navigation and explored reciprocal Iranian nuclear restraints alongside US de-escalation and sanctions measures.
The immediate objective could therefore be narrower: restore secure, non-discriminatory commercial navigation through reciprocal US-Iran de-escalation. Iran would commit to ending interference with civilian shipping and attacks attributed to it on energy infrastructure; Washington would progressively reduce towards lifting its naval blockade and military pressure against verified benchmarks, with independent monitoring.
A US official has said the naval blockade of Iranian ports would be lifted once an agreement restoring commercial shipping without impediment was implemented, illustrating the potential for a reciprocal first-stage bargain.
That would remove the confrontation’s most globally damaging component without requiring either side to surrender its wider negotiating position.
What Remains Disputed
The harder issues could move into follow-on negotiations:
- Nuclear programme: enrichment limits, highly enriched uranium, inspections and verification.
- Sanctions and assets: the scale, timing and reversibility of sanctions relief and access to frozen Iranian funds.
- Compensation: Tehran’s claims for wartime damage and Washington’s counterclaims.
- Security guarantees: Iran seeks protection against renewed attacks; Washington and Israel want enforceable nuclear and regional-security assurances.
- Hormuz governance: Iran and Oman have advanced proposals over management and navigation, while Washington and Gulf states remain concerned about arrangements that could grant Tehran unilateral control or charging powers.
Hormuz Requires a Wider Settlement
The last issue should not be reduced to a bilateral US-Iran bargain.
Hormuz is bordered by Iran and Oman, essential to Gulf exporters and critical to energy consumers worldwide. Its long-term governance therefore requires a broader, legally grounded multilateral framework involving Iran and Oman, Gulf states, major energy-importing economies, shipping interests and relevant international maritime institutions.
International maritime law provides a starting principle: transit passage through straits used for international navigation should not be impeded, while bordering and user states can co-operate on navigation and safety.
A durable framework should recognise Iran’s legitimate security and economic interests without allowing Iran, the US or any other power to turn Hormuz into an instrument of unilateral coercion. Any navigation or safety charges would need to be transparent, proportionate, non-discriminatory and legally grounded.
The objective should therefore shift from deciding who controls Hormuz to how it can be governed fairly and securely for all users.
Restore Passage First
The sequence is therefore straightforward: restore commercial navigation through reciprocal US-Iran de-escalation; move nuclear, sanctions, compensation and security disputes into structured negotiations; and address Hormuz’s long-term governance through a wider international process.
Restoring passage first would address the most immediate global economic cost without prejudging responsibility for the conflict or the harder nuclear, sanctions and security negotiations.
The US Economic Exposure
For the US, the principal risk is not an imminent 1970s-style economic collapse. America’s expanded domestic energy production makes it considerably more resilient to imported oil shocks.
Yet headline employment strength increasingly coexists with household financial anxiety. Consumer sentiment has deteriorated as the Iran conflict, higher living costs and persistent borrowing costs intensify the affordability squeeze. The University of Michigan’s consumer sentiment index fell to 51.0 in August from 55.2 in July, while one-year inflation expectations rose to 4.3%.
Hormuz makes that problem harder. Its disruption continues to sustain a geopolitical premium across energy, tanker and insurance markets. Brent crude rose to about $89.44 a barrel on August 17 as the Iran-war stalemate and reduced Hormuz shipping continued to weigh on markets.
Restoring dependable Hormuz traffic could reduce oil and LNG risk premiums, tanker and insurance costs and pressure on gasoline, diesel and freight. Lower energy costs would remove one source of consumer inflation and potentially give the Federal Reserve greater policy flexibility if underlying price pressures ease.
A Hormuz agreement would not solve America’s broader affordability problem, which also reflects housing, healthcare, borrowing costs, wages and domestic policy. But it could remove an avoidable external inflationary pressure precisely when voters are questioning whether their finances have improved.
Three Deadlocks, One Negotiating Principle
Despite their different origins, the clearest routes through all three negotiations increasingly share the same principle: replace demands for trust with verification and reciprocal implementation.
In Gaza, verified Hamas demilitarisation would trigger predetermined Israeli withdrawals. In Lebanon, verified Hezbollah disarmament and Lebanese army deployment would unlock Israeli withdrawal zone by zone. Although Defense Minister Israel Katz declared that Israeli forces intend to maintain a long-term, indefinite presence in designated security zones along the northern border despite criticism from Washington that a permanent presence violates framework understandings.
In Hormuz, monitored guarantees for commercial shipping could trigger reciprocal US de-escalation while broader Iran negotiations continue.
None would constitute a comprehensive peace settlement. But each could break the circular problem in which every participant fears paying the price for moving first.
For Trump, the urgency increasingly extends beyond foreign policy. The FT/Focaldata poll found 57% of independents and nearly a quarter of Republicans saying their financial position had deteriorated since his return to office, while Democrats have gained an advantage on inflation, living costs, jobs and broader economic management.
The Middle East conflicts did not create America’s affordability problem. But continued Hormuz disruption risks adding another layer of energy and transportation costs at an especially difficult political moment.
A Gaza settlement could remove a persistent source of regional instability. Progress in Lebanon could reduce the danger of another Israel-Hezbollah war. But an Iran-Hormuz agreement offers the clearest immediate global economic dividend.
Trump consequently does not need three comprehensive peace treaties before November. What his administration increasingly needs is visible movement from open-ended confrontation towards enforceable settlements along the three paths, above all, restoration of dependable commercial passage through Hormuz.
Foreign policy rarely determines a US midterm election by itself. But when geopolitical deadlocks reach voters through fuel prices, freight costs and ultimately household bills, the boundary between diplomacy abroad and politics at home becomes increasingly difficult to maintain.
Breaking the Middle East deadlocks is therefore no longer solely a foreign-policy objective for Trump. As November approaches, it is becoming part of the economic argument he must win at home.
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