The current war with Iran and its chaotic unfolding open a door of great danger for the U.S. and the planet.

At best, we are condemned to negotiations dominated by personal and political imperatives that seem to fit with a common description of insanity — to keep doing the same thing and expect a different result. At worst, the crisis raises the prospect that tactical nuclear weapons could be employed to solve it.

The situation has now become so grave, and its implications for the global economy so devastating, that even China — which otherwise is notoriously disciplined in avoiding entanglement in other countries’ conflicts — has indicated openness to joining a mediation effort to end the conflict.

Both China and the U.S. are right to be concerned about the crisis. The two have a mutual interest in solving this problem and keeping it from becoming a worse irritant. A joint U.S.-China effort would bring the constancy of oil supply from the Persian Gulf and Red Sea, and the global damage that it is causing, under careful control. Their cooperation is an obvious imperative.

For some, this raises the specter of an unwanted development leading to more confusion and chaos. For others, it offers an opportunity for the emergence of a new paradigm of cooperation.

Escalation risks

President Donald Trump has lost control over the war. He was supremely confident that it would last no more than 100 hours. The assassination of Iranian Supreme Leader Ayatollah Ali Khamenei was envisioned to either cause the collapse of the Iranian theocracy or force it to surrender. A suitable replacement — most likely from within the same theocratic system — was to be appointed by Trump in line with the blueprint from Venezuela. There was no need for a plan B.

Things did not go as envisaged. More than seven months later, Trump believes he has exhausted all the options except one: All-out War.

By the U.S. campaign’s fourth day, once his loss of control had become clear, Trump began issuing threats to use unprecedented force against Iran; strike Iranian energy infrastructure ; invade Iranian islands in the Persian Gulf or take other Iranian territory ; and even wipe out Iranian civilization .

In the end, he never acted on even one of these threats, apparently recognizing the disaster that would unfold in the region once – not if – Iran retaliated in kind. Among the factors that have deterred Trump are pressure from regional states, concerns about large numbers of casualties, fears about the global economic fallout, and about political repercussions at home.

There are now indications, however, that his calculations may change after November 3. No longer constrained by the midterm election, and with little confidence that diplomacy, sanctions, or limited war will provide an exit, let alone victory, he appears poised to pursue a swift and massive escalation. The goal of such an effort would be to bring down the theocracy and limit Iran’s ability to inflict severe costs on the global economy for an extended period of time. As he appears to see it, it’s the only option that enables him to turn a colossal failure into a win that terminates his Iran problem.

But massive escalation will most likely only intensify the problems he has faced. Tehran will counterescalate massively. As demonstrated by the recent Houthi advances in Yemen, Iran and its network still have formidable escalatory options. Beyond targeting energy infrastructure, the Iraqi Popular Mobilization Forces militia could overrun Kuwait or assist a popular uprising in Bahrain. The political geography of the region could change.

As for China, Trump‘s gamble may prove to be a bridge too far. Beijing has traditionally opted against mediating conflicts, both to avoid inadvertently assuming ownership of conflicts for which it otherwise bears no responsibility and also to avoid the diplomatic damage that a failure to resolve them would cause.

But if President Trump opts to escalate after the midterms, Chinese President Xi Jinping may calculate that China can no longer contain the cost of this war. China’s decision to sharply reduce its oil demand has been the major reason why world petroleum prices never surged to $150 a barrel.

This was a balancing act China could play as long as the war only created a bottleneck problem in the Strait of Hormuz rather than a production problem as a result of direct targeting of the region’s energy production capabilities. If the region’s oil production facilities are knocked out and some monarchical governments wiped out, China may still remain the world’s swing consumer, but it will not be able to prevent world oil prices from breaking the $150 per barrel barrier or the global economy from slipping into a much deeper crisis.

This may be why Xi hinted at a Chinese diplomatic intervention during last month’s BRICS summit and why Chinese diplomats have told us privately that Beijing is ready to step in if requested by the parties.

While Oman, Qatar and Pakistan must be commended for their ingenuity, creativity and persistence as mediators, none of them can assert the leverage over the United States and Iran that the PRC can.

It is this leverage that enabled Beijing to secure a normalization agreement between Iran and Saudi Arabia in 2023. Most of the legwork in that mediation had been conducted by Iraq and Oman over the course of the previous years. But the distrust between Tehran and Riyadh proved too deep. When Xi visited Riyadh in December 2022, Saudi Crown Prince Mohammed Bin Salman asked for China’s help to overcome the obstacles that prevented the resumption of relations between the Iranian theocracy and the Saudi Kingdom.

Rather than just mediate between the two, China became a co-signer of the agreement and its guarantor. Crown Prince Bin Salman recognized that the agreement required the involvement of a power with enough leverage over both sides to hold them to their commitments.

Because China is simply too important for either side to risk a rupture with it, Beijing’s role as guarantor proved crucial, not only to reach the agreement, but perhaps much more importantly, to make it last. Despite all the mayhem and tensions in the past three years, the agreement has stood firm.

That was the crucial ingredient China brought to the table. And it may be the very ingredient U.S.-Iran diplomacy currently needs.

That is not to say that the situation is entirely similar. The relationship between Washington and Beijing is much more complex and sensitive. Neither Iran nor Saudi Arabia views China as a rival or peer competitor. The United States does.

But since China does enjoy leverage with both Tehran and Washington, it is able to press for an enduring settlement in a manner that the current mediators cannot. This opens a small window for hope.

What could China do?

Beijing’s first challenge will be to create a diplomatic opening. Trump has made clear that he has no interest in diplomacy at the moment. In the administration’s reading, the combination of the blockade on Iran and the restoration of much of the flow of oil through the Strait is sufficient to turn the tables on Iran, if only given enough time. This is why Trump has told regional interlocutors that he will not lift the blockade even if Tehran agrees to completely open the Strait. He doesn’t need to use the blockade to win on the Strait; rather, he wants to use the blockade to win on the nuclear file.

But this strategy has two fatal flaws: it ignores how the status quo hurt America's regional allies and the global economy, and it assumes Trump can ensure stability in the Persian Gulf and in the oil markets. Ansar Allah’s closure of the Bab el-Mandeb to Saudi ships and the strikes against Saudi Arabia’s East-West pipeline put this assumption under considerable strain. So does the sheer cost of the U.S. operations to escort ships - a cost that does not appear sustainable.

Once again, the U.S. appears to confuse a tactical advantage in the Strait with a decisive strategic shift. And on cue, the administration has dramatically hardened its position even though the underlying reality does not warrant it, and, in so doing, pushed the prospects of a diplomatic deal further away. When Trump met Xi in Washington on September 24, he did not want to talk about diplomacy, but rather how China should go along with America’s extraterritorial sanctions on Iran.

China could counter such pressures by putting forward a draft compromise proposal that seeks to meet all sides' key concerns, while offering guarantees to Trump that China will ensure speedy negotiations and offering Iran assurances about American compliance and implementation of the agreement.

The proposal should build on both the Islamabad Memorandum of Understanding of July 2026 and the 2015 JCPOA.

Key elements should include 1) a permanent ceasefire throughout the region — including Lebanon and Yemen — to put the entire region on a deescalatory trajectory; 2) the permanent opening of the Strait with environmental service fees to be shared by all littoral Persian Gulf states to help manage the environmental restoration of the waters as well as reconstruction and humanitarian needs created by the war; 3) the lifting of the American blockade on Iran; and 4) the establishment of working groups to negotiate a final agreement on Iran’s nuclear activities within six months. China would offer to act as a guarantor for all four points.

The key must be an Iranian civil nuclear program limited by International Atomic Energy Agency inspections on an enhanced basis. “No nukes” is a great mantra, but it requires vigorous and intrusive inspections to work. Capping enrichment at 3.67% of U235 is an absolutely vital necessity.

Moreover, any agreement must entail full IAEA access to all Iranian nuclear sites, as well as to undeclared sites if credible evidence emerges that they are being used for nuclear purposes. This is not easy or simple, but it is necessary to assure the world that Iran is fully adhering to its obligations under the NPT.

China can also play a key role in resolving the dispute over Iran’s stockpile of 60% enriched uranium. The U.S. wants all of it shipped out; the Iranians had earlier agreed to ship out 98% of it, but neither side could agree on which country it should be shipped to. Though Washington was earlier cool to the idea of China holding Iran’s stockpile, it may be more open to it if it is embedded in a larger agreement with Beijing.

The Strait’s management could be put under a new U.N. agency, which gives it international legitimacy and the possibility of creating buffers against any potential efforts by Tehran to fully control Hormuz itself. Those exporting states, including Iran, would collect the fees and immediately remit them to the U.N. agency.

The agency would have the task of managing the fees directly with contractors authorized to carry out projects on behalf of the U.N. agency in all of the region’s states. They would calculate how the funds are to be allocated on a rolling basis based at least in part on an analysis of the humanitarian needs and of a calculation of damage based on satellite photography. All states would be welcome to provide the new agency with information they might have concerning any noncompliance with the agreements on both nuclear and Strait issues, including, as needed, for Bab el-Mandeb. In addition, there would be a ban on using such funds for military activities of any sort.

An additional step regarding nuclear power should be given the most careful consideration: the creation of a regional consortium, including Iran and Saudi Arabia, that will jointly plan and carry out all production of nuclear reactor fuel and other sensitive activities. The presence of multiple players with respect to each of these activities would provide a further reassurance to the international community, to which the consortium will regularly report, that the agreement is doing its job well.

The IAEA and the new U.N. agency on the Straits would issue quarterly reports to the U.N. Security Council and General Assembly. All the agreements negotiated in connection with this problem would also be approved by the U.N. Security Council. The resolution of approval would specifically authorize the U.N. inspections and control arrangements as finally negotiated.

Why China should step forward — and why Trump should welcome it

In truth, what we are proposing goes against some current instincts in both Beijing and Washington. China prefers to stay out of conflicts which do not involve it directly, and the U.S. does not want to offer Beijing a diplomatic role, even less to be saved by the PRC.

But absent Chinese diplomatic intervention, the war is more than likely to escalate and intensify beyond what any side can currently anticipate. The escalation thus far has been controlled and calibrated. But a third round of war risks going beyond what either side can control.

Both the U.S. and China share an interest in avoiding such a scenario. If Washington refuses cooperation because Beijing would benefit from it, and Beijing refuses engagement because the conflict is not its creation, both states risk allowing a regional war to become a global crisis of unmanageable dimensions. The choice before them is therefore not between American leadership and Chinese involvement. It is between cooperation that neither side particularly wants and consequences that neither side will be able to control or afford.