A proposed $300 billion investment fund for Iran, included in a recent memorandum of understanding between the U.S. and Iran, may encounter significant legal challenges due to existing U.S. sanctions. This has raised doubts about the feasibility of the plan even if both parties reach a final agreement.
The memorandum was digitally signed by President Donald Trump and Iranian President Masoud Pezeshkian, aiming to conclude the ongoing war and enhance traffic in the Strait of Hormuz. Under this 14-point plan, the U.S. has committed to lifting sanctions on Iran, allowing the country to boost its oil revenues, and restoring access to certain aspects of the international banking system.
However, a key component—a $300 billion private investment fund for Iran’s reconstruction—could conflict with the long-standing U.S. position that the construction sector in Iran is managed by the Islamic Revolutionary Guard Corps (IRGC). This poses a problem that’s not just technical; it’s about whether the economic assurances made in the Trump-Iran framework can be practically applied under current U.S. law. Experts suggest that if this fund involves sectors known to be controlled by the IRGC, the administration might need to rely on temporary exemptions or new licensing. This could deter long-term investors and complicate final agreements.
The State Department has characterized Iran’s construction sector as being under IRGC control since 2020 and reiterated it in May 2025. This classification carries significant risks of sanctions for businesses looking to invest in that sector.
According to Miad Maleki, a senior fellow at the Foundation for Defense of Democracies, the legalities surrounding the fund are complicated, extending beyond just whether congressional approval is needed. He believes that Congress will inevitably have a role in evaluating the fund’s sustainability. As negotiations advance, the U.S. and its allies would need to cooperate to facilitate Iran’s access to this fund.
Maleki pointed out that while the president has substantial unilateral powers to ease restrictions, such as rescinding executive orders, it doesn’t guarantee that the fund is attractive enough to draw serious investors. He stated that technically, it’s possible to activate the fund through administrative measures, but this arrangement requires updates every 180 days. The notion of investing in time-consuming construction projects in Iran, where uncertainty looms due to risks and unreliable partnerships, adds more complexity.
This situation raises overarching questions about whether the negotiators genuinely intend to move toward a lasting agreement. Maleki expressed skepticism, suggesting that the feasibility of establishing such a fund seems unlikely at best. He indicated that it would be nearly impossible to realize the promises of this investment fund.
One reason for the complexities might be that the U.S. may prefer to limit its role to providing sanctions relief while leaving the actual establishment of the fund to Iran and prospective investors. If they can’t attract investors, it might not be the U.S.’s responsibility, he inferred.
The Treasury Department and Iran’s U.N. mission did not respond to requests for comments. This issue might become contentious in Congress, as waivers linked to the Iranian Freedom and Non-Proliferation Act are only valid for 180 days and need justification from Congress, potentially making it challenging for the administration to justify ongoing sanctions relief connected to sectors overseen by the IRGC.
While the agreement could offer substantial economic advantages to Iran, it also opens up legal complexities that critics fear might leave tough nuclear and security matters unresolved for future talks. Maleki noted that the U.S. has gained significant leverage over Iran through sanctions and military pressure, but is now trading some of that influence for reopening the Strait of Hormuz.
He concluded that Iran likely aims to buy time using the incentives within this agreement, suggesting that the regime is not in a hurry to finalize a deal.
John Hanna, a senior fellow at the Jewish Institute for National Security, warned that the economic gains from this deal might enable the Revolutionary Guards to strengthen their military capabilities, particularly their missile and drone arsenal—which they view as crucial to their strategic successes.
