Iran's leadership rift deepens as US proposes asset‑freeze swap for Hormuz control

Iran’s newly installed Supreme Leader, Ayatollah Mujtaba Khamenei, has not appeared at his father’s funeral, fueling a visible split between hard‑liners and pragmatists within the country’s elite. Hard‑line strategists accuse the negotiation team of “selling the nation,” while reformist officials push for a cease‑fire with the United States to alleviate the economy, which faces severe budget shortfalls and looming shortages of food and medicine. The internal dispute has played out in nightly gatherings in Tehran, with senior Revolutionary Guard officers and parliamentary leaders vying for the Supreme Leader’s support.

Amid this domestic turmoil, the United States has floated a proposal to unfreeze a portion of Iranian assets in exchange for Iran relinquishing control of the Strait of Hormuz. Tehran rejected the offer on 2 July, saying the compensation was insufficient. Iranian Deputy Foreign Minister Garib Abadi reiterated that the strait remains under Iranian control, and the military warned that any vessel navigating outside Iran‑approved lanes would face an “immediate and decisive” response. Iran is also drafting a new legal regime for the strait in coordination with Oman, while maintaining that recent agreements prohibit charging fees to transiting ships.

The convergence of internal power struggles and external diplomatic overtures underscores the high stakes for Iran’s political future and regional maritime security.