A proposed $300 billion investment fund for Iran, outlined in the new U.S.–Iran memorandum of understanding, could run into serious legal barriers under existing American sanctions law, casting doubt on whether the idea can be carried out even if both governments advance toward a final deal.
The memorandum, signed digitally on Wednesday by President Donald Trump and Iranian President Masoud Pezeshkian, is intended to help end the conflict and reopen shipping through the Strait of Hormuz. Under the 14-point framework, the United States agreed to ease sanctions on Iran, let Tehran boost oil revenues and restore some access to the global banking system, along with other steps.
One of the most far-reaching elements of the proposal — a $300 billion private investment fund meant to support Iran’s reconstruction and development — could, however, clash with Washington’s long-held position that Iran’s construction sector is controlled, directly or indirectly, by the Islamic Revolutionary Guard Corps.
The concern is more than a technical legal detail. It strikes at whether one of the deal’s main economic pledges can actually be implemented under current U.S. law. If the fund requires investment in sectors the U.S. has already designated as IRGC-linked, specialists say the administration may have to depend on temporary waivers or special licenses, an approach that could unsettle long-term investors and make any lasting agreement harder to secure.
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A proposed $300 billion investment fund for Iran included in the U.S.–Iran memorandum of understanding may face major legal obstacles under existing U.S. sanctions law. (Mandel NGAN / AFP via Getty Images)
The State Department formally determined in 2020, and again in May 2025, that Iran’s construction sector was controlled directly or indirectly by the Islamic Revolutionary Guard Corps. Under the Iran Freedom and Counter-Proliferation Act, known as IFCA, that finding creates sanctions risks for people or companies doing business in the sector.
Miad Maleki, a senior fellow at the Foundation for Defense of Democracies and a former Treasury Office of Foreign Assets Control executive, told News Agency that the legal and sanctions-related problems surrounding the fund are more complicated than simply asking whether Congress would have to approve it.
“I think Congress is unavoidable for a durable version of that investment,” Maleki said. “If we have a final deal and now as part of this commitment, the U.S. government and allies are going to have to go in and help Iran to set up this fund or get access to such a fund.”
Maleki said the president has meaningful unilateral authority to begin easing restrictions. Trump could revoke relevant executive orders, direct the Treasury Department’s Office of Foreign Assets Control to issue general licenses and waive some congressional sanctions laws.
But he said that does not mean the fund would be durable enough to attract serious investors.
“Technically, the fund could be switched on through some kind of an executive action plan alone, but it would be on paper and it would have to be renewed every 180 days,” Maleki said, referring to waivers for mandatory sanctions tied to Iran’s construction sector.
An Iranian police officer stands on patrol near a poster depicting Iranian soldiers holding a net shaped like the Strait of Hormuz with U.S. military aircraft ensnared in Tehran, Iran, on May 9, 2026. (Majid Saeedi/Getty Images)
“If you’re anyone who is in an investment-type business, it’s hard to find someone who would be investing in construction-type projects that take time,” he added. “These projects are not like 180-day projects.”
The concern, Maleki said, is especially acute in Iran, where investors would face sanctions uncertainty, political risk and an unreliable partner.
“It’s hard to find someone who would be investing … based on something that could not just be renewed if Iran, especially in the context of Iran, where you don’t really have a reliable partner, where things can blow up any minute,” he said.
A woman walks past a billboard showing a military hand holding the Strait of Hormuz with Farsi text which reads, “In Iran’s hands forever,” “Trump couldn’t do a damn thing,” “The control of Strait of Hormuz will be Iran’s forever,” in Vanak Square, in northern Tehran, Iran, on April 16, 2026. (Vahid Salemi/AP)
That structure raises a broader question about whether negotiators were truly expecting the memorandum to mature into a final, durable agreement.
“The more I’ve been digging into this memorandum of understanding, sanctions paragraphs of this memorandum, the more I have come to this kind of doubt that the negotiators really were counting on a final deal to be reached,” Maleki said.
“If you do get to a final agreement and you’re looking into actually meeting the commitments that you made, this $300 billion investment fund, it’s not something you can really set up,” he added. “I think it would be almost close to impossible to get something that would materialize.”
Iranians burn American flags during an anti-U.S. demonstration outside the former U.S. embassy headquarters in Tehran, Iran, on May 9, 2018, after President Donald Trump withdrew from the 2015 Iran nuclear deal. (Photographer: Ali Mohammadi/Bloomberg via Getty Images)
Maleki said one possible explanation is that the U.S. side may view its role as limited to providing sanctions relief, while leaving Iran and potential investors to sort out whether the fund can actually be built.
“We’re going to give them the waivers that they need. If they can’t find investors to invest in this, that’s their problem,” he said, describing one possible view of the negotiators’ approach.
The Treasury Department and the Iranian mission to the U.N. did not immediately respond to News Agency’s request for comment.
The issue could become a congressional flashpoint. Because IFCA waivers are limited to 180 days and require justification to Congress, any long-term investment framework for Iran could force the administration to repeatedly defend why sanctions tied to an IRGC-controlled sector should be suspended.
The legal obstacles also come as critics warn the pact gives Iran major economic benefits while leaving some of the most difficult nuclear and security questions for future negotiations. Maleki said the U.S. had already built significant leverage over Iran through sanctions, military pressure and the blockade, but may now be trading that leverage for the reopening of Hormuz.
“We reached a point that we had leverage that no U.S. president has ever had with Iran,” Maleki said. “Yet we gave that away for this, for the opening of the Strait of Hormuz.”
He argued that Iran is likely to use the process to delay rather than rush toward a final agreement.
“Iran is going to go back to its playbook of dragging, buying time with the sanctions relief-type incentives that I’m seeing in this package,” Maleki said. “I do not think that the Iranian regime is going to rush to get to a deal.”
A man applies fresh paint to an anti-U.S. mural on a building wall on Karim Khan Zand Avenue in Tehran on April 8, 2025. The mural features the slogan “Down with the USA” and skulls replacing stars on the U.S. flag. (Atta Kenare/AFP)
John Hannah, a senior fellow at the Jewish Institute for National Security of America and a former national security adviser to Vice President Dick Cheney, warned that any economic windfall from the agreement could help the IRGC rebuild.
“It’s almost certain that the IRGC will use any economic windfall granted by this MOU to reconstitute as much of their conventional military as possible as fast as possible — especially the vast missile and drone arsenal that the IRGC believes proved critical to the strategic successes they achieved during the war,” Hannah told News Agency.
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