The Islamabad Memorandum of Understanding marks the greatest diplomatic breakthrough in the American-Israeli war on Iran since it began almost four months ago. Yet, for Israel, to say this development is a major blow is an understatement.
Indeed, as the Israeli leadership sees it, diplomacy between Washington and Tehran is contrary to Tel Aviv’s interests. And the agreement undermines Tel Aviv’s agenda of seeing the Islamic Republic as isolated as much as possible while keeping it under sustained pressure.
Moreover, one of the key reasons why the “ Islamabad MoU ” is so fragile is Israel’s determination to sabotage US-Iran diplomacy and keep the Trump administration at war with Tehran until the Iranian regime falls.
It's not just Israel but its prime minister personally who is set to suffer the consequences.
To be sure, Benjamin Netanyahu's political identity is deeply intertwined with Tel Aviv’s posture toward Iran, where he has long positioned himself as Israel’s most forceful and credible opponent of Tehran-- and now the diplomatic breakthrough between the United States and Iran risks undermining the central narrative that has sustained his leadership.
In this framing, the Iran question is not just any issue among many in Israeli politics. It is a core pillar of Netanyahu’s legitimacy. Put simply, if diplomacy can triumph, space opens for Netanyahu to face growing criticism from his domestic challengers inside Israel.
“The deal, if it holds, will give his political opponents even more ammunition to urge Israelis to vote for them and not Likud, arguing that Netanyahu has lost Trump’s ear,” said Barbara Slavin, a distinguished fellow at the Washington-based Stimson Center, in an interview with The New Arab .
“I think the ceasefire [compromises] his chances of getting re-elected. Bibi claimed he was ‘Mr. Iran’ and could finish the job. He could not,” Dr Nader Hashemi, director of Georgetown University’s Prince Alwaleed bin Talal Center for Muslim-Christian Understanding, told TNA . The Lebanese flashpoint A central implication of the “Islamabad MoU” is the gradual emergence of a diplomatic framework in which US–Iran understandings increasingly shape the rules of engagement in the region. If it holds, this could mark a shift away from unrestrained unilateral action toward a more conditional operational environment for regional actors, including Israel.
For Israeli officials, this raises grave concerns about the potential erosion of Tel Aviv’s operational freedom across multiple theaters, including Lebanon, Syria, Gaza, and beyond. Consequently, Netanyahu is likely to resist at all costs any arrangement perceived to constrain Israeli military autonomy, particularly where it limits action against Tel Aviv’s enemies.
This tension is sharpened by Israel’s broader regional posture, including its continued military occupation of land outside the country’s UN-recognised borders. The resulting mismatch between Israel’s expectation of strategic autonomy and an evolving diplomatic environment shaped by US–Iran coordination creates structural friction at the core of any prospective arrangement.
Within this broader context, Lebanon remains the most volatile and consequential theatre . It functions both as a direct military pressure point and as a potential trigger for wider escalation involving Iran.
Recent developments underscore this fragility. Ceasefire frameworks linked to the Islamabad MoU include Lebanon , while Israeli officials continue to signal reluctance to fully withdraw. Beyond the Israel–Hezbollah dynamic, Lebanon is increasingly emerging as the most immediate arena in which any US–Iran détente could be tested and potentially unravel.
“Lebanon is the weak link that will affect US-Iran diplomacy. Remember, Israel still occupies about 15% of Lebanon. This will inevitably lead to an attack from Hezbollah and an Israeli response, violating a key component of the ceasefire agreement between the US and Iran,” explained Dr Hashemi.
“Will Trump be able to control Netanyahu? If he cannot, everything will break down and I suspect Iran might re-close the Strait of Hormuz.” Strains in the US–Israel alignment One of the more significant undercurrents in the current diplomatic shift is the growing ambiguity in the US–Israel strategic relationship, particularly regarding Iran policy.
For decades, Israel has relied on alignment with Washington on questions of Iranian containment. However, Slavin suggests that this alignment is now under pressure, with the possibility that the Trump administration could distance itself from Netanyahu if diplomacy with Iran becomes a priority for the White House moving forward.
“This war has put major new strains on the US-Israeli relationship , already frayed by Gaza, West Bank, etc. It will be interesting to see if the Trump administration, having gone to war twice against Iran with Israel at its side, will now more openly distance itself from Netanyahu. That would be popular with many in the MAGA base , particularly the Tucker Carlson wing, and boost JD Vance’s chances to obtain the Republican presidential nomination,” she told TNA .
“Some of Vance and Trump’s happy talk about a changed, more reasonable Iranian regime must already be driving Israel and its U.S. supporters crazy,” added Slavin.
From Israel’s perspective, even partial divergence from Washington reduces Tel Aviv’s leverage in shaping regional outcomes and constrains its ability to escalate without political cost. Return of the shadow war? If the Trump administration pressures Israel into not resuming military operations against Iran, a return to the “ shadow war ” dynamics that characterised the Tehran-Tel Aviv relationship for many years prior to April 2024 could be expected. This form of indirect conflict, previously characterised by covert operations, cyberattacks, intelligence activity, “proxy” engagements, and so on, has historically allowed both powers to confront each other without triggering full-scale war.
Yet, when speaking about the possibility of the “shadow war” resuming, Dr Hashemi stressed that new dynamics are in play. “Iran has leverage over the US that it didn’t possess before [such as] control over the Strait of Hormuz ,” he told TNA , adding that “Iran might be able to play this card to get Trump to rein in Israel [and] Netanyahu.”
Ultimately, Israel’s position in the wake of the “Islamabad MoU” is defined by reduced autonomy in military operations, heightened political exposure for its leadership, and increasing reliance on external actors to shape outcomes with Iran. Although the agreement may temporarily lower the risk of direct large-scale conflict, it simultaneously challenges core assumptions underpinning Tel Aviv’s Iran doctrine.
Netanyahu’s political future is increasingly tied to this shift, as diplomatic progress with Tehran undermines the narrative of perpetual Iranian escalation that has long justified his security approach. At the same time, Lebanon remains a persistent flashpoint capable of rapidly reversing any diplomatic gains, while the return of “shadow war” dynamics would ensure that Israeli-Iranian hostilities do not end but instead take on a more covert nature .
There is no way around the fact that this MoU constitutes a major strategic defeat for Israel as a country, and Netanyahu personally.
As we saw during the Obama Administration, Israel is strongly opposed to diplomacy between the US and Iran,” Dr Hashemi told TNA.
“It prefers a military attack on Iran, with the US taking the lead, and with the goal of toppling the Islamic Republic. This policy was tried and it failed massively.”