A proposed $300 billion investment fund for Iran, part of a U.S.–Iran memorandum of understanding signed by President Donald Trump and Iranian President Masoud Pezeshkian, may face significant legal obstacles under existing U.S. sanctions law. The memorandum, aimed at ending the war and restoring traffic through the Strait of Hormuz, includes a 14-point plan with U.S. commitments to lift sanctions, allow increased oil revenue, and restore Iran’s access to international banking. However, the $300 billion private investment fund for Iran’s reconstruction and development may conflict with a longstanding U.S. determination that Iran’s construction sector is controlled directly or indirectly by the Islamic Revolutionary Guard Corps (IRGC).
Part 1: Immediate Action & Core Facts
The memorandum, digitally signed by both leaders, outlines a framework for economic cooperation, including the $300 billion fund. However, experts warn that the fund’s viability is uncertain due to U.S. sanctions targeting the IRGC, which controls key sectors of Iran’s economy. The State Department has formally determined that Iran’s construction sector is IRGC-controlled, creating legal risks for investors under the Iran Freedom and Counter-Proliferation Act (IFCA).
Part 2: Deeper Dive & Context
Legal Obstacles and Sanctions
The IFCA sanctions, reaffirmed in 2020 and 2025, impose restrictions on businesses dealing with IRGC-linked sectors. If the $300 billion fund relies on investments in these sectors, the administration may need to rely on temporary waivers or new licenses, which could deter long-term investors. Miad Maleki, a senior fellow at the Foundation for Defense of Democracies, argues that 180-day waivers are unlikely to attract serious investment.
Political Reactions
Top Senate Republicans have criticized the deal, with one calling the $300 billion figure a ‘pittance’ compared to the Obama-era nuclear deal. The criticism highlights partisan divisions over the agreement’s economic and strategic implications.
Economic and Strategic Implications
The fund’s success hinges on navigating U.S. sanctions while meeting Iran’s economic needs. If the legal hurdles cannot be overcome, the deal’s central economic promise may fail, complicating broader diplomatic efforts.