Now boarding: America seizes an Iranian ship

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1:04The Economist

1:12Hello and welcome to The Intelligence from The Economist. I'm Jason Palmer. And I'm Rosie Bloor. Every weekday we provide a fresh perspective on the events shaping your world.

1:26Ten years ago, an enormous hangar was slid into place over the site of the Chernobyl accident in Ukraine, intended to isolate it for a century. Last February, a Russian drone blew a hole in it. We paid a visit asking just how much damage was done. And McDonald's and other Western fast food joints have been in China for decades and spurred local competitors. But our correspondent reports of foreign chains are now gaining ground again. Rural China is the final burger frontier.

2:04But first...

2:12The shaky ceasefire between America and Iran got even shakier overnight.

2:20Motor vessel Tosca, motor vessel Tosca, vacate your engine room, vacate your engine room. We're prepared to subject you to disabling fire. American forces fired at an Iranian-flagged ship in the Strait of Hormuz before Marines boarded and seized the vessel.

2:41Exactly what's going on in the Strait has been a subject of some confusion, with markets reacting on Friday as if a full opening were just around the corner. Peace talks scheduled for this week are now up in the air. The existing ceasefire expires on Wednesday. And after this American flex in the strait, a return to full-on war is looking worryingly possible.

3:02Jason Palmer:This is the first time the Americans have actually had to enforce their blockade of the Strait of Hormuz. Greg Karlstrom is a Middle East correspondent for The Economist. There was an Iranian ship, a tanker trying to sail out of the Persian Gulf through the strait. The Americans say they warned it to stop. It kept going. And so they fired at its engine room, disabling it, and then they boarded it afterwards. So after days of talk about how the strait was closed from the American side, they have now militarily enforced that blockade. And there had been confusion about whether it was open, it was closed, some conflicting information.

3:39As you understand it, was it open? Was it closed? Is it closed now?

3:43Jason Palmer:The short answer is yes, it is closed and it was closed. I think there was a lot of misinterpretation at the end of last week of a tweet from Abbas Aragchi, the Iranian foreign minister. He posted that because America had forced Israel to stop its war in Lebanon, the strait was now open, subject to coordination with the IRGC, the Islamic Revolutionary Guard Corps in Iran. Now, if you read that carefully, that was restating what Iran's position has been for much of this war, which is they say the strait is open as long as vessels coordinate with us and use the route that we mandate and so on and so forth, and in some cases pay a toll to use the strait.

4:20Jason Palmer:In practice, what that means is it's not open. It's only open to a limited number of vessels, and he was restating that. But I think Donald Trump and other people in America, oil traders, all of whom were desperate to see the strait fully reopened, saw that tweet as something more than it was. And so we saw oil prices plunge towards the end of last week. Brent crude dropped down to about $85 a barrel. Everyone was very excited. Then the pushback started in Iran. The Revolutionary Guard said no, the strait is not open except for vessels that we approve. And there were cases over the weekend where ships tried to get out of the Gulf through the strait and the Iranians fired on them for doing that.

4:59Jason Palmer:And then we had the Americans do the same thing. So in practice right now, the strait is not open to anyone except the very, very small number of vessels that can coordinate with the Iranians and pay the Iranians to exit. And how has Iran responded to the boarding of the ship? there's been a lot of tough talk as you would expect about how there's going to be retaliation there were claims in state-backed media in iran they had fired drones at american military vessels but there's no proof that that actually happened and there's no evidence of any damage to american warships in the region i think there are three things that the iranians could do in response one is they really could attack american warships the risk is if they do that the ceasefire is over I think at that point, Donald Trump is going to resume attacks.

5:45Jason Palmer:Second option would be attacks on commercial vessels in the Gulf, not even vessels transiting through the strait, but vessels that are at anchor in the Gulf or in ports in the Gulf. And we've seen the Iranians do that throughout the war. They've fired drones and ships at port in Dubai and elsewhere. I'm not sure what purpose that serves because they've already deterred commercial shipping from using the strait. So carrying out further attacks, it doesn't have any more deterrent value, but it ticks the we retaliated box for the Iranians domestically. And then the third thing they could do is they could do nothing.

6:17Jason Palmer:And they could just accept that there's this mutual blockade now on both sides, and both sides fired on commercial ships over the weekend. And the only way this is going to get resolved is in negotiations. And so they could just try to secure a deal that ends this mutual blockade of the straits. But the prospects for those negotiations are definitively worse than they were before. They are, partly because of the blockades. So the Americans are saying there There will be talks on Tuesday in Islamabad and J.D. Vance. The vice president is going to head another delegation to meet with Iran and discuss a deal.

6:49Jason Palmer:And they're actively making preparations for that. There were C-17 cargo planes over the weekend that landed in Pakistan that were thought to be carrying Vance's motorcade and other equipment and personnel for an American visit. So they seem ready to talk. The Iranians, depending on who you ask, there might be talks. There might not be talks. There were some very strong messages that came out in Iranian media after this American attack on the tanker in the strait, saying that so long as the American blockade is still in place, we're not going to Pakistan. Now, if you think back to the last round of negotiations, we heard the same thing from Iran in the run up to it.

7:26Jason Palmer:They said, we won't meet with America unless the ceasefire is expanded to include Lebanon. We won't meet with America unless it agrees to unlock billions of dollars in our money that is frozen by sanctions and banks overseas. They insisted that those were preconditions for negotiating. America didn't meet those preconditions and the Iranians showed up anyway. So perhaps, again, this is just brinkmanship from Iran. They're trying to extract whatever concessions they can before the talks even take place. Or perhaps they're serious. We don't know yet which it is. If there was willingness by Iran to join those talks, things were kind of on an even keel.

8:01There were some positive signs. Why do you suppose going to this level of aggression on the part of America?

8:07Jason Palmer:There's a real difference in how it's perceived on both sides, right? For Iran, it's exactly the way you're describing it. They think we were willing to meet again. We showed some willingness to make concessions around our nuclear program and other things in the previous round of talks. Why are the Americans escalating like this? This is proof that we can't trust them. Whereas I think from the American side, there was a belief that to enter these talks in the first place, that Iran had committed to reopen the Strait of Hormuz that was supposedly in their ceasefire agreement. And that hasn't happened.

8:37Jason Palmer:So the Iranians did not deliver on that promise. And so they think this blockade of the strait, it's not escalation on America's part. It's sort of evening things out. Iran is still imposing its own blockade. So America is now just doing the same thing on its own side. And I'm sure for the Trump administration, the belief is this gives us more leverage now going into these talks because we have shown that it's not just a rhetorical blockade of the straight, that we are willing to actually physically enforce it. And so that gives us a point of leverage to get the Iranians to lift their own blockade.

9:08I'm familiar with the Trump administration's need to sound tough, do tough things and so on. But as of Friday, as you say, there was a great deal of hope. The markets had bounded back. Oil was down. Why put that at risk if indeed the markets are one of the only things that clearly drive Donald Trump's behavior?

9:27Jason Palmer:They clearly drive his behavior, but it's hard to understand what drives their behavior at this point. I mean, the idea that oil dropped as low as it did on Friday on the basis of a single tweet from the Iranian foreign minister, who is by no means the most influential person in Iran, seemed a bit irrationally optimistic. And sure enough, when trading reopened in Asia on Monday morning, we've already seen Brent jump by about$10 a barrel. So that exuberance is already fading. I mean, I think there's still this belief in the markets that Trump can bend reality to his will by saying things or by tweeting things.

10:03Jason Palmer:And apparently that was extended to Abbas Aragchi as well last week. But it's simply not the case. The only way you really get a durable solution for the markets is by ending the war, is by getting to some sort of agreement. That reopens the Strait of Hormuz and that reassures shippers and oil companies and other firms that the war isn't going to restart, that they can send their tankers into the Gulf. They can fix the infrastructure that was damaged during this war and there's not going to be a risk of renewed conflict. But that looks like an enormous ask at this point. We don't even know if those talks are going to happen tomorrow.

10:36Jason Palmer:We don't know if they're going to happen and then even if they do, despite some willingness on both sides to make concessions, there is just still a huge gap between what they are asking for. Okay, the Americans have walked away from this demand that Iran never be allowed to enrich uranium, which was a non-starter in previous rounds of talks. But what they are asking for, a prolonged moratorium on enrichment, is still more than the Iranians are willing to give. And these are just the first issues. Even if you can reach an agreement on those, you have so many other detailed points that need to be negotiated to make this into a proper arms control agreement.

11:12Jason Palmer:So the talks may not happen. And even if they do, there's no guarantee that they're going to be able to bridge these enormous gaps. Thanks very much for joining us, Greg. Thank you, Jason.

11:32This Economist podcast is sponsored by Bill, the intelligent finance platform that helps businesses and accounting firms scale with proven results. With AI-powered automation, Bill isn't just moving money. They're simplifying financial operations for nearly half a million customers. Bill has securely processed over a trillion dollars in transactions. That's proven infrastructure. Ready to talk with an expert? Visit bill.com slash proven and get a$250 gift card as a thank you. That's bill.com slash proven. Terms and conditions apply. See offer page for details. Taking care of your eyes shouldn't be a hassle.

12:09That's why Warby Parker is a one-stop shop for all your vision needs. Our prescription glasses and sunglasses are expertly crafted and unexpectedly affordable. Stop by a nearby store or use our app to virtually try on frames and get personalized recommendations. Did we mention we offer eye exams and take vision insurance too? For everything you need to see, head to your nearest Warby Parker store or visit warbyparker.com today. That's warbyparker.com.

12:46Four years into Russia's war in Ukraine, there is an ominous topic that is often overlooked. In the country's north lies Chernobyl, the site of the worst nuclear accident in human history. Sarah Larniuk is deputy editor of the Intelligence. And despite the fact that none of the four reactors on site are currently in use, Chernobyl still requires careful management, but is constantly caught in the middle of fighting.

13:21what that actually looks like up close. This involved passing through umpteenth security gates and following so many security precautions that the team there on site follow every single day. Welcome. Four, three, two, one. Thank you very much. Welcome. No contamination. As previous, please hold your helmet when you move up or down. Pavlo Kretchenko is my tour guide and works for the nuclear power plant. And so this is the old sarcophagus? Yes, shelter object, old sarcophagus. Reactor number four inside. Destroyed. Four decades ago, in the wreckage of that destroyed Reactor 4, Soviet workers and engineers worked to clean up the site as fast as possible, building a sarcophagus over the reactor.

14:14What I was now staring at.

14:21In the 90s, it became obvious that more work needed to be done to contain the radiation. They designed an additional dome, and it would be called the new safe confinement.

14:35Decades and$1.6 billion later, the European Bank for Reconstruction and Development, or the EBRD, had managed to orchestrate the construction of a massive hangar-type style structure, and it was the first of its kind in the world, funded by 45 nations. At its full height and full width and full length, 108 meters tall, 250 meters wide, and 150 meters long. It provided a hermetic seal where humidity and temperature around the old sarcophagus could be controlled, mostly to prevent any corrosion. It's designed to last for 100 years to give Ukraine a chance to dismantle the No. 4 reactor and make it safe forever.

15:18It was meant to give the world another 100 years to figure out how to manage the site.

15:26Well, we all heard on February 14th the news that a drone had hit the new safe confinement. From the very first day, it was not easy to determine to what extent the facility was damaged and how difficult it would be to repair it. On multiple occasions, missile and drone strikes have caused issues at Chernobyl, including forcing the plant onto backup power. But on February 14, 2025, a Russian drone directly struck the new safe confinement, piercing a hole through the protective dome. Balthazar Lindauer is the director of the EBRD's nuclear safety program. The damage is very, very significant, will be very difficult to repair.

16:10and currently the new safe confinement doesn't fulfill its functions. So it is currently a useless building, almost.

16:24Understanding what happened when the drone struck the new safe confinement and seeing it with my own eyes, those were two different things. Pavlo took me inside to see exactly what the damage had looked like. Okay, you can see on the top, yes? This is maintenance garage for main crane system. He points to bright yellow steel beams that run across the roof. The drone hit from the top of this garage. So this garage, it was like an obstacle. Drone could attack another place of the roof. It can affect, for example, the old shelter object. The old shelter object, also known as the sarcophagus built in 1986, and beneath it, Reactor 4.

17:09And if the drone had struck there, no one actually knows what would have come next. And we even don't know what could be the results. This garage saved shelter objects.

17:33Meanwhile, in the control room, they have pictures posted all over the walls of what the destruction looked like. Flames and smoke coming from the hole.

17:48The Ukrainian shift supervisor at the time explained that in the first two hours, the open and visible flames were extinguished.