No big deal: murky Iran-war negotiations

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0:35The Economist

0:41Hello and welcome to The Intelligence from The Economist. I'm Jason Palmer.

0:46Rosie Blau: And I'm Rosie Blore.

0:51Today on the show, Agentic AI comes to China's super apps and solving the great ski resort grouse mystery.

1:06First up, though.

1:14If you're confused about the status of talks between America and Iran, you're in good company. Even the state of the ceasefire is unclear. Overnight, America launched new airstrikes on Iranian missile sites and mine-laying boats. couching them as acts of self-defense. And thanks to America's mixed messenger-in-chief, how diplomacy is progressing remains really murky.

1:42Jason Palmer: Despite the American strikes overnight, we are now almost two months into what was supposed to be a two-week ceasefire. But it still seems we are some way from a lasting deal to end the war. Greg Karlstrom is our Middle East correspondent. Now, going into the weekend, there had been some optimism about an interim agreement that might extend the ceasefire. Envoys from the mediating countries visited Iran on Friday. Donald Trump seemed to imply on Saturday that a deal was imminent. But then we heard mixed messages. He said he was in no rush to get a deal done. And as we're speaking now on Tuesday morning, we still haven't reached even that interim agreement.

2:22But what sort of progress has been made? what is now on the table perhaps that hasn't been before, or is there anything?

2:29Jason Palmer: I do think America and Iran are closer than they were to that interim deal, which the Americans are sometimes calling a letter of intent or a memorandum of understanding to end the war. Effectively, it's a deal to keep talking about a deal. So we would likely extend the ceasefire by 60 days, and then it would set out a list of broad principles that both America and Iran would agree to. So Iran, for example, might agree to a time-bound moratorium on uranium enrichment. America would agree to deliver various forms of sanctions relief for Iran. And then they would spend the next 60 days or perhaps longer negotiating over how to implement those principles.

3:14Jason Palmer: Iran agrees to pause uranium enrichment. What exactly does that mean? what has to happen at its nuclear facilities, who's going to monitor and verify its compliance, what milestones does it have to reach in order to unlock various tranches of sanctions relief. All of those details are going to take time to negotiate. And so they would be discussed during this extended ceasefire. And much of the discussion up until now is who would blink first or who holds the cards, if you like. Has that changed at all? Does it seem as if someone has time on their side more than before? The Iranians still think they're the ones with time on their side.

3:57Jason Palmer: Both sides need this agreement. America needs it and the rest of the world needs it because of soaring energy prices. You had American motorists paying$4.50 a gallon for gasoline on average over Memorial Day weekend. They're not happy about that. And therefore, there's pressure on the Trump administration. There's also pressure on Iran. It has managed to find ways so far to stash its oil output in tankers that have been pressed into service as floating storage. And it's jury rigged some additional onshore storage. But at some point, Iran is going to have to start shutting in its oil wells. And it wants to avoid that because that can potentially damage its oil industry.

4:39Jason Palmer: So both sides have an incentive to make this short-term deal that might help to reopen the Strait of Hormuz a bit. But the Iranians think that Donald Trump needs a deal more urgently, that the political situation in America and the energy shock that is rippling across the entire world is putting more pressure on him than the prospect of shutting in their wells is putting on the regime in Tehran. And movement through the strait oil industry, that has been the big sort of near-term question. but you hinted at the ultimate long-term question about Iran's nuclear program. What does what's on the table look like now compared to what things were like before the war or the nuclear deal that Mr.

5:20Trump tore up?

5:21Jason Palmer: In some ways, it would be very similar. This is one of the problems that Trump is having with this deal. It's one of the reasons why he seemed to do an about face in his messaging over the weekend. And the deal that's being discussed sounds not dissimilar from the JCPOA, the deal that was negotiated by Barack Obama and then abandoned by Donald Trump. And he's taking a lot of flack from hawkish Republicans in Washington who think this is not what we were promised when Donald Trump abandoned the JCPOA in 2018. He called it the worst deal ever negotiated. He said he would negotiate something better.

5:58Jason Palmer: But this sounds quite similar. In fact, it would impose restrictions on Iran's nuclear program. Again, perhaps a time-bound enrichment moratorium, but it wouldn't go further than that. It wouldn't dismantle Iran's nuclear facilities, which is something that Trump has long talked about doing. It's not clear if it would prohibit Iran from conducting research on centrifuges, for example, the machines that you use to enrich uranium. If it was allowed to continue doing that, in some ways, this could even be a weaker agreement than the JCPOA. So there's been a lot of criticism around that. And then there's still a big question surrounding Iran's stockpile of highly enriched uranium.

6:39Jason Palmer: It has 400 kilograms of the stuff that is enriched to 60 % purity, which is very, very close to weapons grade. And it's still not clear what is going to happen to that stockpile. And putting that aside for a moment, coming back to the near term, if a deal is struck of whatever quality, whoever claims a victory, when does the world get back to the way the world was before this war? I think unfortunately not as fast as people would hope or people would expect. Now, if you look at the oil markets, there was a lot of enthusiasm about even this talk of an interim agreement, because the expectation is that the Strait of Hormuz would be reopened as part of that deal.

7:20Jason Palmer: So when Asian markets opened on Monday morning, Brent crude was down about 6%. But I think it's likely to take a period of months, perhaps longer, to really get oil and gas and other commodities moving. You do have hundreds of ships that are stranded inside of the Persian Gulf right now. They would make their way through the Strait of Hormuz if a deal is struck. That would bring some relief to energy markets. But there's a limited number of those ships. After that, to really get things flowing again, what needs to happen? Hundreds of other tankers would need to make their way back to the Gulf.

7:56Jason Palmer: Some of them now are as far away as the Atlantic Ocean, where they're picking up cargoes from America or from elsewhere. So it's going to take them months to finish those voyages and then come back. And then you would also need energy firms in the Gulf to restart all the things that they've shut down during the war. So all of this, the timeline for restarting energy production and energy shipments is going to take a lot longer than the 60 days envisioned by this interim agreement. And that leaves all of these companies, producers, shippers, insurers with a bit of a dilemma. Do you try to go back to normal?

8:32Jason Palmer: Do you send your tankers back to the Gulf when you don't know if America and Iran will actually reach a final agreement or whether this might all fall apart? So whatever happens in the next few days, I'm sure Donald Trump and the Iranians will try to sell it as if this is some great achievement and it's a war-ending deal. But in fact, I think the uncertainty of this war is going to be with us for some time to come. Craig, thanks as ever for joining us. Thank you, Jason.

9:28It's pretty much all he talks about, in a good way. What's in your wallet? Terms apply. See CapitalOne.com slash bank. Capital One N.A. Member FDIC.

9:46Great. I found some fantastic options for you. Getting a coffee delivered to my office in Shanghai is really easy these days.

9:54Rosie Blau: Don Wineland is our China business editor. It's a specialty pour over with a rich, nuanced flavor profile. I open up an AI app. I say something like, pick me a coffee and send it to my office. Then I click a button to make the payment. And within about 15 minutes, the coffee arrives at my office. It's really convenient.

10:20Rosie Blau: Don, this sounds like a utopian ideal where coffee just magically appears at your door. What exactly is going on? So this is what we call agentic AI. It's when artificial intelligence makes a decision on your behalf and then sometimes produces a physical object in the real world. You think it sounds like heaven, but the AI doesn't always pick you the best coffee. I received a rose petal vinegar flavored coffee a couple days ago when I asked the AI to pick me something special. But anyways, there are more than 600 million people in China that are already using some form of agentic AI. That's a government estimate.

11:03And the companies behind these apps are really well positioned to push into this new era of the Internet.

11:11Rosie Blau: So forgive me, Don, but what's the actual point of this agentic Internet? So we often think of AI as something that we interact with and they help us do our work sometimes. But if you think about the companies that are behind AI in China, these big tech groups, Alibaba, Tencent, ByteDance, these are entertainment, social media and commerce companies. And for them, the point of AI in many respects is to push you into their e-commerce networks or their entertainment network. What they're trying to do is create a super app that uses their AI to direct you to all the goods and services and entertainment that you're ever going to need.

12:02You don't need to go anywhere else.

12:03Rosie Blau: So in a sense, existing companies are trying to make sure that its existing consumers stay with it. How are they going to make money? Well, they have to figure out some way of cashing in on their AI. They've been making massive investments over the past two years, and their investors really haven't seen big returns from this. For a company like Alibaba, which heavily relies on e-commerce as one of its main businesses, it's actually seeing that part of its business slow down. And it's worth keeping in mind that consumer spending is not very healthy right now. People aren't spending nearly as much as they used to.

12:44So that's a big concern when you are one of the world's largest e-commerce groups. There are basically two ways they can make money from this. One is by taking a cut of whatever you're spending your money on through their payment platform. Another way is through advertising. So these companies are already massive advertising groups. And Agentic AI is a big area that they can move into. They can better recommend things to you when you are asking for a coffee or a chicken dinner to be sent to your house.

13:17Rosie Blau: And how does this differ from what's happening elsewhere in the world? The biggest difference in China is scale. So the internet in America and the internet in China have developed in different ways. In China, people don't use desktop web search very often. Everyone is on apps on their phone. A lot of people don't even own computers. And within these apps, you have a very broad range of services. So by plugging in AI, it's a lot easier for these companies that already have connections to digital services and physical networks of drivers and warehouses and that type of thing to create one of these agentic services.

14:03In the U.S., you just don't have these super apps in the same way we do in China.

14:08Rosie Blau: And we've heard in the US about OpenAI working on a device that would do this for you. Is that happening in China too? Yes. I think that lots of these companies would love to create a super AI device. No one has done it very well at this point. ByteDance tried to create a phone late last year that had an embedded AI agent on it. And when you turned on the phone, anything you did on the phone could be controlled or assisted through ByteDance's AI app. That didn't work very well because other companies, other tech giants basically blocked that AI assistant from working very well. But it's early days.

15:00There are a lot of other Chinese companies that make devices and they create AI agents. Huawei is one of them. Xiaomi is another one of them. So it wouldn't be too surprising if one of these companies within a year or so creates a device that is a AI super app at the same time. Competition feels very, very heated right now. So this is a really interesting process to watch. I think what you see happening in China now is going to happen elsewhere in the world in the months and years to come.

15:35Rosie Blau: Don, thank you so much for talking to me. Thank you. Thank you.

16:09Rosie Blau: lift has proved rather harder to communicate. So you wouldn't think that black grouse and ski lifts have much to do with one another. But unfortunately, they certainly have had a lot of impact upon one another over recent years. Matt Kaplan is a science correspondent for The Economist. The main problem the black grouse face is that they have a habit of flying into chairlifts, breaking their necks and then falling to the ground dead, which is obviously bad for the black grouse, but it's also surprisingly bad for the ski resorts, which would rather not have a bunch of dead birds underneath their chairlifts for skiers to look at because it doesn't make anybody happy.

16:56Rosie Blau: Matt, what is a black grouse and what on earth is going on here? A black grouse is a member of the chicken family. they have bright red patches on top of their heads, and they're found all over northern Europe and Asia, much of the Nordic countries and Russia, but they have this tiny isolated population in the Alps, and their numbers there have been diminishing for years, and particularly notable are their populations around ski resorts. when there are ski lifts present, grouse populations seem to suffer particularly badly. And that bonded to the observation of grouse smacking into the lifts suggests that there is a problem.

17:44Rosie Blau: So what's anyone tried to do about this so far? To deal with the issue of the grouse smacking into chairlifts, ski companies and resorts have been putting up warning signs all over their cables for their chairlifts. These signs have varied in size from 3.5 to 15 centimeters in width. They're almost always bright red because the bird colliding with the chairlift has bright red patches on its head. So everyone and their dog has assumed, well, if we make the warning signs red, the grouse will see them and not fly into the chairlifts. But as these researchers have published in Experimental Biology recently, that has not been working.

18:26The numbers continue to drop. And so the quest was on to figure out what can these grouse actually see?

18:34Rosie Blau: And what have they discovered? They put the grouse through a whole bunch of visual experiments, looking at, you know, can they see contrast? What colors can they see? And on the whole, their vision stinks. They don't see contrast very well, but they can see it. They can see blue. They can see yellow. They can see purple. They can even see ultraviolet. but shockingly, they see red really, really badly. And so all of these signs all over the Alps that have been put up by ski resorts mean nothing to the poor birds because they can't see them. And Matt, how do you actually work out what a bird can see?

19:13Well, the solution is to do two things. One, you find a dead grouse, you take apart its eye and you look at the receptor proteins that are found inside the eyeball and that tells you what colors the bird can see. It doesn't tell you very much about contrast, though, and that's where the second part of the experiment that these researchers ran gets interesting. You put a grouse in a box where it can't move around very much, and you have one clear wall along the top of the box, and then you project onto the ceiling outside of that clear wall, contrasting patterns, and you move them with a video camera back back and forth.

19:51Grouse eyeballs don't move very much. And so the grouse, if it can see the contrast moving along the wall, the grouse has to move its head back and forth. And so they knew which contrasting patterns the grouse could see by watching their head. If the head moved to follow the pattern, they knew the grouse could see it. If it didn't move its head, they knew they couldn't see it. So the grouse have bad vision and they really need stark contrast to be able to see much of anything.

20:18Rosie Blau: And did they work out why a bird that actually has red on its head can't see it? It turns out that the patches on the red head of the grouse actually reflect a ton of ultraviolet. And while you and I can't see ultraviolet, grouse can. And so the color that's reflecting off of this animal's head that it can see is ultraviolet, but the red is lost on it. So the solution really for the ski resorts is to create warning signs that have very stark contrasts and which don't involve red. So something like bright purple and bright yellow right next to each other in a checkered pattern would be really great, or black and white even, because the grouse could see that.

21:00But the bright red, forget it. It's not going to work. Really, this is a matter of interspecies communication going all wrong.

21:08Rosie Blau: Matt, thank you so much. My pleasure, Rosie.

21:27That's all for this episode of The Intelligence. We'll see you back here tomorrow.

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