In April 2025 I wrote that the real AI threat was not AI alone but AI combined with offshore labor. A knowledge worker in Manila or Karachi earning $12,000 a year, equipped with the same AI tools as a $95,000 professional in New Jersey, was no longer just cheaper. They were faster, more scalable, and increasingly capable of work that geography and institutional complexity, what I referred to as “the context barrier”, had previously kept local. The cost advantage of offshore labor was always real. AI turned it into something closer to an unfair fight. The piece argued that this combination, AI x offshoring, was the disruption American professionals and policy-makers were not prepared for.

That argument was right, but it was incomplete in a way that changes everything for the offshore labor markets.

The same dynamic that made an AI-equipped offshore worker dangerous to a mid-career American professional operates with equal force in the other direction. AI does not compress the value of codifiable, repeatable cognitive work only in markets where that work is expensive. It compresses it everywhere. When a workflow goes from requiring a hundred hours of human attention to requiring two hours, the maximum dollar you can save by moving those two hours to a cheaper geography collapses. The friction costs stay constant: timezone gaps, security reviews, quality variance, management overhead. The savings shrink. At some point the arithmetic tips, and the case for offshoring the residual human task disappears, not because the offshore worker got worse but because there isn’t as much to save by offshoring.

What survives this compression is not the affordable, competent, English-speaking generalist who can execute a well-defined brief faster and cheaper than a domestic equivalent. That is precisely the profile AI renders redundant first, because it is defined entirely by the ability to perform codifiable work at lower cost. What survives is work that cannot be codified: judgment calls with professional liability attached, client relationships where trust is the product, domain expertise embedded so deeply in specific institutional or market context that no model trained on public data can reliably replicate it. That work tends to be senior, credentialed, and local. The affordable generalist in the middle, the layer that grew fastest during the offshore boom and that the original argument crowned as the rising competitive threat, is the layer the current AI frontier hits hardest.

The evidence is not speculative. Entry and mid-level knowledge-work postings across high-income economies fell between 14 and 41 percent from 2022 to 2024 across 42 independent studies. McKinsey found in 2025 that 51 percent of organizations were already reducing their need for entry-level roles. HFS Research, which tracks enterprise services contracts at scale, declared in April 2026 that the labor arbitrage model had passed its shelf life. Everest Group reached the same conclusion independently. These are observations of what enterprise buyers are already doing with their services budgets.

The offshore knowledge-work model exists at scale in various geographies with meaningfully different exposure profiles.

Model 1: India built a mature IT services pyramid over three decades, with deep institutional client relationships and enough seniority concentration to absorb significant junior-layer compression without existential sector damage.

Model 2: The Philippines built a BPO economy employing 1.9 million people and accounting for 8.5 percent of GDP, concentrated in voice and back-office functions that sit directly in the path of agentic AI.

Model 3: Pakistan built something younger, faster-growing, and more freelance-dependent than either, with an export base that grew from $2.6 billion in FY23 to $3.8 billion in FY25, and a national development strategy built entirely around continuing to grow it.

I’m going to focus on Model 3: Pakistan here, because it is the most exposed and the least diversified. I’m seeing it first hand because I happen to be visiting right now. The gap between what its official numbers show and what the underlying model can sustain is wider here than anywhere else in the offshore knowledge-work world. Understanding why requires looking carefully at what those numbers actually measure, and what they are structurally blind to.

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The Scoreboard Is Lying

Pakistan’s recent IT export numbers, on their face, appear to be a success. After years of sclerotic growth, the sector generated $2.6 billion in FY23, $3.2 billion in FY24, and $3.8 billion in FY25, growth of 24 percent and then 18 percent in consecutive years. Freelancing earnings tracked by the State Bank of Pakistan ran from $408 million in FY24 to $779 million in FY25, with the current fiscal year already at $1.06 billion through eleven months. The IT Minister stated in the National Assembly as recently as May 2026 that the government’s target is $15 billion in IT exports by 2030. Three separate official targets are currently in circulation, the IT Minister’s $15 billion by 2030, the Prime Minister’s $25 billion over five years announced in November 2024, and the Uraan Pakistan national economic plan’s $10 billion ICT target by FY29, none of them identical, but all pointing in the same direction. The story the numbers tell is of an industry compounding rapidly toward a destination that justifies the ambition.

The problem is what the numbers cannot see.

Pakistan’s IT export statistics are denominated in dollars and measure inflows. They do not distinguish between a dollar earned by licensing software to a foreign buyer and a dollar earned by billing an offshore hour to a foreign client. A firm that writes proprietary code and sells access to it globally, and a firm that supplies developers by the month to a US enterprise that tells them what to build, appear identically in the export ledger. This is not a minor accounting detail. It is the difference between an industry building durable, compounding IP and an industry selling time, and the two have entirely different exposure profiles as AI compresses the value of billable hours.

The listed company data is instructive precisely because it is the most transparent slice of the sector available. Systems Limited, Pakistan’s largest listed IT company by revenue at $286 million in FY25, does not report a product or IP revenue line in its investor disclosures. Its R&D expenditure in FY25 was PKR 82 million against PKR 80.4 billion in total revenue, less than 0.1 percent. The company’s revenue breakdown in public filings is by geography and by vertical, not by whether the underlying work is services delivery or IP licensing. That omission is not incidental. It reflects what the business actually is: a large, sophisticated, well-run services firm whose revenue is predominantly generated by deploying human expertise into client workflows. There was nothing wrong with that model but there is now a question of such models perform as AI reduces the volume of human expertise those workflows require.

The one meaningful counterexample in Pakistan’s listed universe is NetSol Technologies, a Lahore-based company focusing on the global asset finance and leasing industry. Its U.S. SEC filings, which are more granular than Pakistani exchange disclosures because US listing requirements demand it, show subscription and SaaS revenue at roughly 50 percent of its $66 million FY25 total, built on licensed IP developed over two decades from its Lahore technology center. NetSol is the most documented case of a Pakistan-origin company with genuine recurring product revenue. It is also a $66 million company in a sector reporting $3.8 billion in annual exports. As a share of the total, it is a rounding error.

The freelancing numbers carry their own complication. The 90 percent jump in SBP-reported freelancing earnings from FY24 to FY25, from $408 million to $779 million, attracted significant official celebration. It has also attracted significant scrutiny. Industry insiders and Federal Board of Revenue officials have raised questions about whether the figures reflect genuine gig-economy growth or systematic misclassification of salaried remote employees as freelancers to access Pakistan’s 0.25 percent preferential income tax rate for IT exporters. The dispute has not been resolved. What it means in practice is that even the sector’s best-performing sub-metric is of uncertain provenance, and the scoreboard may be flattering itself on the line item it most wants to highlight.

None of this means Pakistan’s IT sector is failing. It is growing, by any available measure, faster than many comparable offshore markets. The failure is at the level of the metric. A national strategy optimized for a dollar figure that counts billed hours and licensed software identically is not a technology strategy but purely a headcount strategy disguised within technology vocabulary. The targets, $15 billion, $25 billion, $10 billion, differ from each other and share one feature: none of them are grounded in a disclosed model of how an export base that is overwhelmingly services-and-labor transitions to one that is meaningfully IP-and-product. Topline Securities assessed that hitting the Uraan Pakistan FY29 target alone requires 27 percent annual growth against the 18 percent achieved in FY25. The target assumes the current model accelerates. The current model is the one under structural threat.

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What the Pyramid Looks Like When the Base Disappears

Sitting with a friend who is the founder of an offshore IT services firm in Karachi, the conversation returned to the same metric: how many developers they could place with US clients this quarter, which verticals were still adding headcount, where the next staff augmentation contract was coming from. The AI revolution didn’t really factor into this conversation. It seemed remote, like something that was happening to professionals in high-cost countries. The possibility that it was also happening to them didn’t come up.

The clearest evidence of what is coming for offshore knowledge work is already in the hiring data of India’s Infosys.

In FY23, Infosys hired more than 50,000 college graduates. In FY24 it hired 11,900, a 76 percent collapse, in a year when the company was not in financial distress. Revenue held. Client relationships held. The pyramid shrank because Infosys discovered it could produce the same output with a structurally smaller junior layer. The work that used to require fifty thousand entry points into the organization required fewer, because the tools handling the entry-level task bundle had changed. FY25 brought a partial recovery in headcount, a net addition of 6,388 employees, but ‘fresher’ hiring remained at a fraction of its prior level. The pyramid did not restore itself. It confirmed a new, lower base. NASSCOM’s sectoral analysis of the Indian IT and BPM industry, drawing on task-level data from over 10,000 roles, found 30 percent fresher hiring cuts and 20 to 25 percent entry-level consolidation across the sector. Infosys is the individual proof point for a structural shift that is industry-wide.

The mechanism matters for understanding what this means beyond India. Infosys is not an offshore vendor in the traditional sense. It is one of the primary buyers of offshore-style labor at scale, a company whose business model has for decades rested on recruiting large cohorts of trainable junior engineers, absorbing them into client delivery pyramids, and billing their hours to enterprises in the US and Europe. When Infosys cuts its fresher intake by 76 percent during a period of stable revenue, it is telling you something very precise: the volume of junior human input required per unit of client output has fallen sharply. That reduction in demand does not stay inside Infosys. It travels down the supply chain to every smaller vendor, every staff augmentation firm, every freelancer whose work feeds into the same delivery model. The demand erosion won’t show up as a reshoring decision or a policy change. It will be visible, if you look closely, in fewer purchase orders, shorter contracts, and narrower scope. And this is already in motion.

The Philippines illustrates the same dynamic at national scale, and with the added clarity of a sector that has always been explicit about what it is selling. The IT-BPM industry reported $38 billion in revenue and 1.82 million employees in 2024, growing to above $40 billion and 1.9 million in 2025. By the headline numbers, the sector is still expanding. But IBPAP president Jack Madrid, the industry’s own chief spokesman, described the sector’s origin in February 2026 in language that reads as a structural diagnosis: the industry began, he said, by hiring people at scale, and that was labor arbitrage. The capability that built the Philippine BPO industry, the ability to supply large numbers of English-speaking workers into voice and back-office workflows at a cost that justified the distance, is precisely the capability that agentic AI is designed to replace. A Filipino call-center worker interviewed for a 2024 Reuters Foundation report put it with more economy than most analysts: multinational companies came here because of our skill in customer care, and that is the first to be displaced.

The aggregate numbers have not yet turned negative because volume growth is currently outrunning per-unit headcount reduction. More work is being outsourced even as less human input is required per unit of that work. That arithmetic has a limit. As AI-native tooling matures inside client organizations, the volume of work that requires offshore human handling will begin to fall, not just the headcount required per unit but the total demand. The ascending disruption, where AI adoption by clients in high-income countries quietly reduces offshore order volumes without any formal reshoring decision being made, is the channel that matters most for markets like Pakistan and the Philippines, and it is the channel least visible in current headline data.

Pakistan sits at the intersection of both problems. Its export base is more heavily weighted toward staff augmentation and freelance delivery than either India or the Philippines, and it has less institutional depth, fewer decades of embedded client relationships, shallower balance sheets, and a younger ecosystem, to absorb the coming compression. The two floors of the knowledge-work building are pulling apart. The floor below, junior cognitive work, codifiable tasks, staff augmentation, basic software delivery, is the floor AI addresses most directly, and it is the floor Pakistan’s export economy predominantly occupies. The floor above, judgment-bearing work, IP ownership, domain-specific product development, requires a different kind of capital: R&D investment, patient venture funding, distribution infrastructure, and the kind of institutional trust with global buyers that takes years of delivered product to build.

The distance between those two floors is not unbridgeable. NetSol spent two decades building a subscription revenue base on licensed IP from its Lahore technology center and now earns roughly half its revenue from software that clients pay to access rather than humans they pay to direct. Motive, founded by a Pakistani entrepreneur and running its AI research team out of Lahore, built a fleet management and physical-economy automation platform that serves over 120,000 businesses globally, a case of genuine IP at scale built with Pakistani engineering talent at its core. The counter-case exists. AI does lower the minimum team size required to build a software product, and a small team in Karachi with current tools can attempt things that five years ago required a much larger organization.

The constraint is not access to tools. The same tools are available to a team in San Francisco with better distribution, deeper enterprise sales infrastructure, and an existing relationship with the buyer. The sustainable advantage for an emerging market product team is domain asymmetry, knowing something about a specific market or operational context that a Silicon Valley team does not and cannot easily acquire. Vertical software built on that asymmetry, priced in dollars, sold to global buyers, is the model that survives what is coming. It is not, however, what the current ecosystem is predominantly building, and the current export metric gives no one any particular incentive to change that. A billed hour and a licensed product look identical on the scoreboard. The scoreboard is the problem.

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Adil Husain is a competitive strategist who advises CEOs on how to compete and grow in contested markets. He is the Founder and Editor-in-Chief of business media company The Intelligence Council, and Managing Director of the global advisory firm Emerging Strategy. He has spent 25 years advising C-level executives at global companies on competitive strategy, market entry, and international growth, with on-the-ground experience across China, Southeast Asia, and major emerging markets.

You can reach him here for a conversation: ahusain@emerging-strategy.com

Over these past three months I have argued that this war was four separate games being played on one board, that it would end through a face-saving formula a mediator had to construct rather than negotiate, and that the stalemate would break only when both sides could each claim a victory at home.

That part has now happened.

The celebration in Islamabad assumes the hard work is behind it. It is not. The diplomatic coup opened three specific economic windows that were structurally shut six months ago. Whether Pakistan can walk through any of them depends almost entirely on a problem its establishment would prefer not to discuss, in a province most of the readers following this story have never had reason to think about.

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What actually changed

The most consequential shift has nothing to do with the goodwill Pakistan earned in Washington, which is real but perishable. It has to do with a port.

Gwadar sits on Pakistan’s southwestern coast, a deep-water harbor built largely with Chinese capital and meant to be the maritime anchor of the China-Pakistan Economic Corridor (CPEC). For years it underperformed, a gleaming facility without enough cargo to justify it, because the commercial logic that was supposed to fill it never materialized. Part of the reason sat 170 kilometers to the west, across the Iranian border, at a competing port called Chabahar that India had been developing as its own gateway to Central Asia, explicitly designed to bypass Pakistan. Iran had every incentive to keep Chabahar primary and Gwadar starved, and it did.

The war inverted that calculus. When the US Navy blockaded Iranian ports in April, Chabahar became unusable, and Iranian officials who had spent years protecting it from Pakistani competition arrived in Islamabad asking for the opposite. On April 25, Pakistan issued a transit order designating six overland corridors connecting its ports to the Iranian border. Two weeks earlier, the first shipment had already moved, refrigerated trucks carrying frozen beef from Gwadar across the border and onward to Tashkent. The Gwadar-to-border run takes two to three hours against sixteen to eighteen from Karachi, and cuts transport costs by roughly half. After a decade of being a strategic abstraction, Gwadar acquired a commercial mission, handed to it by the same neighbor that had spent years denying it one. Almost no one outside the region has registered this reversal, and it may be the single most durable economic consequence of the entire conflict for Pakistan.

The second window is the Iran-Pakistan gas pipeline, which has been stalled since 2014 and was formally shelved in January, a casualty of American sanctions that made any international bank touching it radioactive. Pakistan has a chronic energy deficit that throttles its industrial output, and Iranian gas delivered by land would bypass the maritime chokepoints the war just demonstrated can be closed at will. The immediate ceasefire agreement does not, by itself, revive the pipeline. Its first phase waives sanctions only on Iranian oil exports and the banking that supports them. The broader machinery that strangled the pipeline, the secondary sanctions that punish third parties for dealing with Iran regardless of where they operate, comes off only if the two sides reach a final deal inside a sixty-day window. That is the difference between a pipeline that is once again conceivable and one that is actually financeable.

The third window is Saudi Arabia, and here the timing is a matter of leverage. Pakistan and Saudi Arabia signed a mutual defense pact in September and an economic cooperation framework in October, pre-dating the recent US-Iran conflict. What the deal changes is the value of what Pakistan offers. A Saudi kingdom watching a weakened but unbroken Iran, one that can no longer build a weapon today but might in a few years, needs Pakistani deterrence more acutely now than it will once the regional picture settles. The window in which Riyadh is most willing to convert that strategic dependence into hard capital is open, but it may not remain open for long.

The accounting nobody in Islamabad wants to read

None of this arrives without cost, and the cost is already visible in the behavior of a neighbor that is not pleased.

The Gulf is not a single bloc, and the war exposed a rivalry within it that Pakistan was forced to take sides in. Saudi Arabia and the United Arab Emirates have spent the past decade competing for regional primacy, and Pakistan's deepening defense and economic alignment with Riyadh, combined with its decision to act as Tehran's interlocutor rather than condemn it, read in the UAE as a double affront. The Emirates spent the conflict registering that displeasure through the instruments available to a wealthy creditor. In April it recalled $3.5 billion in deposits held at Pakistan's central bank, refusing for the first time since 2018 the routine annual rollover, and forcing a sudden and painful outflow with no warning. Somewhere between several thousand and fifteen thousand Pakistani Shia workers have reportedly been deported since the war began, a pattern widely read as retribution for Islamabad's role mediating with Shia-majority Iran. Remittances from the Emirates, around seven billion dollars a year and Pakistan's second-largest source of foreign exchange after Saudi Arabia, have not yet fallen, but the machinery that would make them fall is now assembled and waiting.

Pakistan chose the Saudi axis and the role of Iran's interlocutor, and the Emirates has made clear that choices have prices. Capitalizing on the opportunity in front of Islamabad means managing a Gulf that is now divided, where the goodwill of one patron is partly purchased with the resentment of another.

The variable nobody is pricing correctly

Every opportunity described above shares a single point of failure, and it is not in Washington, Tehran, or Riyadh. It is in Balochistan.

Balochistan is Pakistan’s largest province by territory and its poorest by almost every measure that matters, a vast and thinly populated expanse along the Iranian and Afghan borders that contains Gwadar, the pipeline’s entire overland route, and every one of the new transit corridors. It is also the site of an insurgency that has run for decades and considers both the Pakistani state and Chinese infrastructure as extractive. For the cargo to move and the pipeline to be built, it all has to pass through territory controlled in part by people determined to ensure that it does not.

That insurgency is not a managed background condition. It is escalating, and in 2026 it crossed thresholds it had never reached before. In January the Balochistan Liberation Army struck twelve targets simultaneously across the province. It has acquired drones and used them against Gwadar’s own infrastructure. On April 12, the same day Pakistan dispatched its first transit shipment through the new corridor, the group’s newly announced maritime wing attacked a coast guard vessel near Jiwani, a hundred kilometers up the coast from Gwadar, in the first naval assault in the insurgency’s history. On June 3, while Pakistan’s prime minister was in Beijing, a train bombing in Quetta delivered an unambiguous message to the audience that mattered most, which was Chinese. The pipeline’s route runs nine hundred kilometers through the heart of where this insurgent group operates. So do the corridors.

For the international financiers and insurers whose capital these projects require, this produces a risk stack that does not currently clear. A bank underwriting the pipeline faces three simultaneous hazards: ambiguity around legal exposure to sanctions that have not yet been lifted, the cost of insuring physical infrastructure in a live conflict zone, and the near-certainty of construction delays from attacks on the build itself. Marine insurers assessing Gwadar now have to price the approaches, not just the port, and a single attack on a commercial vessel in those waters would reclassify the harbor and send premiums to levels that erase the cost advantage the corridor was supposed to deliver. China, Gwadar’s principal backer, is already reading the signal and slowing its commitments, which means the development timeline behind Pakistan’s official projections is ambitious at best. The insurgency has survived every military operation thrown at it for twenty years, and while Pakistan has shown it can suppress the violence for a season or two, it has shown an inability to address the grievances that regenerate it periodically.

This is the part the victory laps obscure and the sixty-day clock makes urgent. Pakistan has until roughly the middle of August to convert a ceasefire into infrastructure, and the conversion is an execution problem rather than a diplomatic one. It requires pushing Washington for the specific sanctions licensing that would let banks finance the gas pipeline. It requires turning Saudi framework language into committed capital while the strategic logic still favors Pakistan. Above all it requires demonstrating a credible trajectory toward stability in Balochistan, not only military operations but a political settlement that gives a development bank some reason to believe the corridor will still be open in five years. Pakistan’s establishment has shown it is fluent in diplomacy. The question is whether it is also literate in execution.

Pakistan brokered peace between two adversaries who would not speak to each other. But it has not managed peace inside its own borders. The prizes the US-Iran deal unlocked are real, specific, and entirely conditional on closing that gap. The world has handed Pakistan a moment, and what it does in the province through which every one of these opportunities must pass will decide whether the moment becomes a turning point or joins the long catalog of Pakistani diplomatic wins that left ordinary Pakistanis exactly where they were.

Adil Husain is a competitive strategist who advises CEOs on how to compete and grow in contested markets. He is the Founder and Editor-in-Chief of business media company The Intelligence Council, and Managing Director of the global advisory firm Emerging Strategy. He has spent 25 years advising C-level executives at global companies on competitive strategy, market entry, and international growth, with on-the-ground experience across China, Southeast Asia, and major emerging markets.

You can reach him here for a conversation: ahusain@emerging-strategy.com

Frank Bruni, who draws a salary from Duke University while writing for the Times about the soul institutions like Duke have sacrificed, has now filed this piece twice: in April 2024, arguing that humility is what higher education has forgotten how to teach, and again in July 2025, concluding that “the corpus of college lumbers on, but some of its soul is missing.” Both pieces were published in the Times. Both were written from inside a university whose endowment exceeds the GDP of several small nations.

Michal Leibowitz’s May 20, 2026 guest essay, “A Cattle Ranch Is Doing What the Ivy League Can’t,” is the genre’s fullest expression yet. Leibowitz, an editor at Times Opinion, visited Deep Springs College in the California desert, spoke to two dozen people, and returned to publish the piece in the section she helps edit.

The Scale Problem

Deep Springs College educates 26 students per year on a working cattle ranch. Students serve on the board of trustees, run admissions, staff a volunteer fire team, and clean infected wounds on dairy cows named Euclid. Leibowitz suggests this model contains important lessons for Yale.

This is like observing that North Korea has exceptionally high rates of civic unity and collective identity, and recommending that America adopt mandatory collective farming to solve its social trust crisis. The commune works! The residents are very committed to the institution! They have no choice.

Leibowitz interviewed, by her own count, roughly the same number of people as currently attend Deep Springs. Her sample is the institution. The institution is 26 people. The extrapolated policy recommendation: restructure American higher education.

The communal ownership and absence of AI cheating that Leibowitz admires at Deep Springs are properties of 26, not principles that scale to 2,600 let alone 26,000. They are also properties of any isolated community where everyone knows everyone, internet access is limited, and the professor grading your essay watched you write it. Disentangling “ownership ethos prevents cheating” from “remote cattle ranch prevents cheating” would require a comparison group. Leibowitz does not provide one. She provides a theory and Instagram-worthy photographs of desert mountains.

The Boondoggle

Read the byline again, slowly: Leibowitz “spoke to two dozen students, teachers and alumni and visited Deep Springs College.”

A Times Opinion editor traveled to a California desert cattle ranch, frolicked in the mountains and amongst the livestock, and published the results in the section she edits, arguing that elite institutions need to make their students feel more responsible for something. The piece ran with landscape photographs of considerable beauty. Presumably someone approved this trip.

This is the structural condition of the genre.

The New York Times Opinion section recruits its staff almost exclusively from the elite universities it deploys its columnists to criticize. If the Times took its own advice seriously, it would replace a few Opinion editors with Deep Springs graduates. They would bring stronger communal values, a demonstrated commitment to collective labor, and two years of experience actually governing an institution.

They might also clean their own dishes.

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The Debt-Shaped Hole

The Leibowitz piece, like almost every piece in this genre, names real pathologies: grade inflation, student consumerism, the disappearance of communal obligation. These exist. What the genre systematically refuses to do is connect them to the structural force that produced them. When you finance a college education through personal debt rather than public investment, you produce exactly the transactional relationship with the institution that Leibowitz deplores. The student is a consumer because the system made her one.

Deep Springs is free. No tuition. No debt. The ownership ethos Leibowitz finds so moving becomes considerably less mysterious when students are not simultaneously calculating whether their credential will repay their loan.

The essay does not mention student debt once.

The Real Question

The Times will run this piece again. Different institution, different German philosopher, slightly different landscape photographs. The question institutional leaders should bring to it is not whether the praised institution is admirable. Deep Springs almost certainly is.

The question is why the people most insulated from higher education’s structural realities: professors at elite universities, editors at the world’s most elite newspaper, columnists who have never had to close a campus, refinance a bond, or explain a tuition increase to a board, are the ones most confidently producing the diagnosis.

And why the solution is always, at bottom, that somebody else should wash more dishes.

This piece originally appeared in: Higher Education Leadership Intelligence.

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The day caught up with me in the college parking lot afterward. My car had a flat, the tow truck was 30 minutes out, and the political philosophy professor offered to wait with me in his car. So we sat, with nowhere in particular to be, and the conversation simply continued. We talked about the decisions I had made since graduating, and a particularly consequential one in front of me, and he listened the way he had listened to me at twenty, which is to say without hurry and without telling me what to think.

It felt like talking to an old friend. It also felt like talking to a grandfather. I have been trying to name that combination since I drove home, and the closest I can get is this: it is a particular kind of relationship that a residential college manufactures and that almost nothing else in adult life does. It is not only mentorship nor quite friendship. It requires several years of proximity to form, and then it survives the loss of that proximity for decades. It can pick up in a parking lot on a Sunday morning as though no time has passed, because in some way that matters, none has.

The Residue

I arrived at Middlebury in 1997 from Karachi, eighteen, carrying the specific blend of confidence and bewilderment that is the standard condition of the age. I had no idea what I was walking into. Almost no one does.

What I remember least, it turns out, is the coursework. A few classes left a permanent mark. Much of the content is gone, the readings and the papers and the frameworks I once held with real precision, all of it dissolved into a residue I can no longer itemize. What stayed is harder to name. A way of sitting with a problem instead of rushing it. A reflex against the first easy answer. The conviction that I was supposed to have a view and be prepared to defend it to someone who had spent thirty years dismantling weaker ones. That did not come from a syllabus. It came from living inside an environment that demanded it of me every day for four years, until it stopped being something I did and became something I was.

The friendships stayed too, though not all of them. You cannot keep everything, and pretending otherwise is the sort of thing people say at reunions before going home to their actual lives. But some held. When I lived in Asia and came back to the States for a stretch of meetings, I would build an evening around connecting with someone, dinner in the city, two or three people who had known each other at twenty-two picking up at forty as if the intervening decades were a rounding error. Whether any of that compounded into the network advantage the alumni brochures of liberal arts colleges promise, I genuinely cannot say. What I can say is that the friendships were worth keeping for no reason beyond themselves, which is the only reason they hold up over time.

Here is what I did not understand at twenty-two and understand now. The college did not deliver those friendships. It delivered the conditions for them. Proximity that cost nothing. Shared rituals that required no one to organize them. Daily contact so low-stakes that it never registered as effort, which is precisely why it worked, because that is what wears down the layer of performance between people until what is left is simply being known. Those conditions ran continuously for four years and then shut off without warning. Everything I have done since, every dinner scheduled, every deliberate reach to stay connected with a college friend, has been an attempt to rebuild by hand a thing that was once ambient and free.

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There was posturing at the reunion, naturally. Careers compressed into their most flattering summaries. Choices narrated with just enough self-awareness to appear undefended while remaining fully defended. I did it too. It was quieter at the twenty-fifth reunion than it had been at the tenth, less anxious, but it was there, the low hum of people re-establishing who they have become for the benefit of people who knew who they used to be. What cut through it were the conversations that happened in the margins. Late at night, over scotch we could not afford as students. In a parking lot waiting for a tow. Those did not require performance because there was nothing to prove. The knowing was already in place. You only had to show up.

Some people showed up entirely on their own. Some came after the gentlest nudge, one of them flying in from Taipei. Some did not come at all, held back by a child’s game or a niece’s graduation or the ordinary weight of an early June weekend that pulls in every direction at once. I do not judge any of it but I have learned, later than I should have, to put myself high on the list of things worth prioritizing. Adult life produces an inexhaustible supply of legitimate reasons not to show up, and at some point the reasons stop reading as separate decisions and start reading as a pattern. The ones who came revealed something.

Different Clocks

My older daughter starts her second year at Dartmouth this fall, an hour down the road. I have now watched the same arrival twice from opposite ends of it. Mine, off a plane from Karachi into air so clean it felt like an accusation. Hers, already fluent in the country, stepping onto a campus that looked to me almost exactly as mine had looked, the same white clapboard and heavy folded mountains, the same cold outline around the shoulders in September. Several of my classmates still have children under ten. As we spoke over lunch we discovered we were living different decades on the same calendar, some of us walking children to elementary school while others were looking at a soon to be empty house. I caught myself wanting to tell them what I think I now know, which is that the institution does its part and then hands you the rest, and the rest is the entire thing.

The tow truck eventually came. My professor went back to whatever the rest of his Sunday held. I drove south out of Vermont, past the postcard towns and the boarded-up ones, and somewhere along the way I understood that the thirty minutes in his car was perhaps the most valuable thing that happened all weekend, more than any party or panel or planned event our reunion committee had labored over. None of it had appeared on a syllabus. None of it had been promised in any brochure. You spend four years believing the place is giving you an education, and then you spend twenty-five years discovering what it was actually giving you. The lunch discussion worried about a machine that might take the first thing. I am fairly sure it cannot touch the second. That distinction is the whole of what the place is for, and I only caught it on Sunday morning in a parking lot, waiting for a stranger to come change a tire, talking to a man in his eighties who knew me before I was anyone.

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Adil Husain is a competitive strategist who advises CEOs on how to compete and grow in contested markets. He is the Founder and Editor-in-Chief of business media company The Intelligence Council, and Managing Director of the global advisory firm Emerging Strategy. He has spent 25 years advising C-level executives at global companies on competitive strategy, market entry, and international growth, with on-the-ground experience across China, Southeast Asia, and major emerging markets.

You can reach him here for a conversation: ahusain@emerging-strategy.com

Two fiascos.

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The First Fiasco

The organization that lost the campaign commissioned its post-mortem from the people who designed the strategy. Don't make the same mistake. While the DNC is the case study in this piece, the subject is what happens to any large organization that makes three strategic errors simultaneously, and then makes a fourth when it tries to understand why.

The first error is the oldest one in competitive strategy: confusing operational effectiveness with strategic positioning. Operational effectiveness means executing the existing model well: spending more, reaching more people, hiring more staff. Strategic positioning means doing things differently in ways a competitor cannot easily replicate. An organization can be exceptional at the former and lose decisively to a competitor running a structurally different model on fewer resources. The Democratic campaign scaled everything it already knew how to do: $1.04 billion in media, superior data infrastructure, more field staff across every battleground state. None of it addressed the strategic question, which is why none of it changed the outcome. When you out-resource your opponent at every measurable level and still lose, the spending is not the explanation. It is the most important clue.

The second error is what happens when a competitive assumption becomes load-bearing for too many stakeholders simultaneously. The campaign ran on a single untested premise: Donald Trump's negatives were permanent. If the competition was already disqualified, prosecuting him was unnecessary, and the strategic task was simply introducing the Democratic nominee. That premise determined everything downstream. The Super PAC ran exclusively on economic messaging and declined to drive negative contrast. The research function was budgeted for only three surveys across the entire general election, and research did not review advertising copy before it aired. The organizing-to-media ratio was $150 million against $1.04 billion, despite the campaign's own data showing door-to-door contact producing 50 percent of voter identifications from 8.6 percent of contact attempts. The assumption around media spending held because it had to. The donor networks, the consultant class, the media buyers, and the Super PAC infrastructure had all been built around a specific theory of how the competition would be waged. Questioning the premise meant threatening the economic model everyone around the table depended on. So it was never questioned, and the campaign spent its way deeper into a position it could not correct.

The third error is the one most executives recognize immediately in their own organizations: the campaign had no current assessment of its own competitive position. There was no self-research on the nominee. None. The White House had never commissioned any in three and a half years of her vice presidency. When the candidate switch occurred 107 days before the election, the team scrambled to field simultaneous studies on a nominee who had been a national figure for years, but with no baseline to work from. In competitive terms, the organization entered a decisive competition without knowing where it stood in the market, how its own ‘product’ was perceived, or where its vulnerabilities were concentrated. This is what happens when the assumption that the opponent is disqualified makes your own positioning feel irrelevant. You stop measuring yourself because you are certain the contest is about them.

The Second Fiasco

The post-mortem of the fiasco failed for a fourth reason, and it is the one that confirms the first three were structural rather than situational. Thirty payees received 66 percent of all Democratic spending across the presidential, Senate, and House races. The same firms appear at the top of the vendor lists for all three offices. The losing organization then commissioned these same firms to diagnose a failure their own business model produced. The conclusion was determined before the analysis even began. The prescription: more investment, earlier timelines, better infrastructure, self-servingly routes money back through the same vendor class, on the same model, toward the same theory of competition. The sloppiness of the post-mortem report itself is telling: 192 pages, no Executive Summary, no Conclusion, no sources provided, and enough factual errors that the client had to slap disclaimers on it before release. An organization that receives an honest post-mortem does not need to fact-check it before publication.

The Democratic Party paid for a strategy review and received a budget proposal instead.

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Every executive reading this has a version of this inside their own organization. The competitive assumption that calcified because too many stakeholders depend on it being true. The research function that lost its independence because the findings it might produce are too expensive for insiders. The post-mortem that diagnosed execution gaps that map back to the services provided by the very people writing it. Indeed their entire businesses are built on that kind of execution. The vendor whose recommendations always seem to require more of the same vendor.

You already recognize the pattern. The question is who has the independence, the access, and the authorization to find your version of it before the market does.

Adil Husain is a competitive strategist who advises CEOs on how to compete and grow in contested markets. He is the Founder and Editor-in-Chief of business media company The Intelligence Council, and Managing Director of the global advisory firm Emerging Strategy. He has spent 25 years advising C-level executives at global companies on competitive strategy, market entry, and international growth, with on-the-ground experience across China, Southeast Asia, and major emerging markets.

You can reach him here for a conversation: ahusain@emerging-strategy.com

Later this week I'm going to Alaska with seven other guys I've known since my Shanghai years. We're each somewhere between forty and sixty, business founders scattered now across Bali and Palo Alto and New Hampshire and Lisbon and Washington. Once a year we agree to be in the same place at the same time. I wrote about it last year. The annual gathering is part business strategy retreat, part personal cobweb-clearing, and a healthy dose of male camaraderie, good meals, and time outdoors. At this stage of life, that takes more coordination than most M&A deals. We do it anyway.

This year, I've been wondering why.

What AI now knows about me has started to feel like a lot. It holds what I give it, and it doesn't need to protect its own version of events. It's available at two in the morning without hesitation. The conversations with AI are cleaner, more direct, without the friction that shapes what people say to each other after years of shared history. The integrations deepen every day: it reads my emails, my business bank account, my CRM, and everything else that makes up a working life. It knows more about me right now than any advisor or peer, and I haven’t had to curate a word of it.

So what are our annual gatherings actually for?

If this week turns out to be mostly a chance to be somewhere remote and beautiful with people I like, that is enough.

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AI sharpens my thinking and sends me off feeling clear. It won't know, months from now, whether I followed through on any of it. These men will. They are keeping, without saying so, a quiet tally: the gap between what I said I was going to do and what I actually did. That kind of reckoning only exists between people who see each other regularly and who care whether you followed through.

These men are in the same passage I'm in. Each of us is in some state of motion or transition, myself included. We are playing block and tackle with the present while also thinking about the next chapter. The Man From Shanghai is wondering whether years spent building businesses that bridge China and the West were worth it. The Man From Park City is gearing up to scale his medtech venture to unicorn level. The Man From New Hampshire is on his third act entirely: after commanding troops in combat theatres, and then rescuing businesses from indoor air pollution across China, he is now setting up new ventures while acquiring expertise in maple tapping and hog husbandry.

AI can map all this with precision. But it is not in it. Something happens when you are all inside the same uncertainty at the same time. It isn't analysis. It's recognition.

AI is intelligent without being experienced or vulnerable. These men are all three.

I can fire up agentic workflows when I want them. No one summoned these men to Alaska. They chose this week, the same as I chose it. Each of them is spending one of a finite number of weeks on earth, and one of them is this.

So we're going to Alaska. We booked our flights months ago. Sixteen years of that choice will be in the room when we land.

Adil Husain is a competitive strategist who advises CEOs on how to compete and grow in contested markets. He is the Founder and Editor-in-Chief of business media company The Intelligence Council, and Managing Director of the global advisory firm Emerging Strategy. He has spent 25 years advising C-level executives at global companies on competitive strategy, market entry, and international growth, with on-the-ground experience across China, Southeast Asia, and major emerging markets.

You can reach him here for a conversation: ahusain@emerging-strategy.com

The narrower the terms, the more you are conceding.

I spent a decade based in Shanghai, advising American companies on how to compete in the Chinese market. The companies that succeeded earned it. They localized their products, hired well, understood what Chinese customers actually wanted, and competed on Chinese terms. American companies have no inherent claim to Chinese market share. They have to deserve it.

But the argument here is different. It is about what sectors get to compete at all.

The United States runs a structural trade deficit with China because the two economies are exchanging things of fundamentally different value. China exports advanced manufactured goods: electronics, industrial machinery, semiconductors, and an expanding range of sophisticated products that move steadily up the value chain. The United States exports agricultural commodities and commercial aircraft. You cannot close that kind of gap by selling more of either. No volume of soybeans offsets a deficit built on advanced manufactured goods. No Boeing order of any realistic size dents the deficit because of the composition of what the two countries are actually trading with each other.

The path to genuine rebalancing runs through the sectors where American companies have real competitive advantage: technology platforms, cloud infrastructure, financial services, pharmaceutical innovation. These are, not coincidentally, precisely the sectors where China’s regulatory architecture is most deliberately constructed to exclude foreign competition. The tariff debate focuses on goods because goods are visible and countable. The exclusion of American software and services is harder to photograph. That does not make it less consequential.

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China’s Great Firewall functions as market protection at continental scale. It covers more than 200,000 domains, blocks every major American internet platform, and ensures that Baidu, Alibaba, and Tencent face no meaningful foreign competition in the world’s largest internet market. Freedom House’s 2025 internet freedom report scored China at 9 out of 100, dead last globally alongside Myanmar for the fifteenth consecutive year. Researchers have documented a parallel system that restricts foreign access to Chinese government websites, extending the logic of exclusion in both directions. The wall has not loosened. It has grown more sophisticated.

The barriers in cloud computing and data services are equally deliberate. China’s Network Data Security Management Regulations, effective January 1, 2025, require that personal data and important data generated in China remain on Chinese servers. Cross-border data transfers require government security assessments and certifications. A cybersecurity law amendment effective January 1, 2026 imposes penalties of up to 5 percent of prior-year global turnover for violations. Any foreign technology company operating at scale in China must build entirely separate China-only infrastructure and make its systems available for inspection under Chinese legal process. America’s most valuable technology businesses are structurally limited to operating in China as guests of the Chinese regulatory state, on terms that make genuine competition impossible.

In pharmaceuticals, the discrimination is precisely calibrated. China’s National Reimbursement Drug List, which governs coverage across the public hospital network that represents roughly 70 percent of the country’s drug market, released its 2025 update effective January 1, 2026. The pattern was consistent with every prior year: foreign drugs without domestic competition were added; foreign drugs in therapeutic categories where Chinese manufacturers have established alternatives were systematically excluded. No imported PD-1 inhibitor, the class of cancer immunotherapies where American companies hold significant scientific leads, has ever appeared on the list. China’s health authority frames the exclusion as a price dispute. The mechanism functions as exclusion in any therapeutic category where the domestic pharmaceutical industry has matured enough to compete.

The tariff war of the past year is the most expensive demonstration of this problem on record. Tariffs on Chinese goods peaked at 145 percent in April 2025. The bilateral goods deficit narrowed to $202.1 billion in 2025, down from $295.5 billion the prior year, the lowest figure since 2006. This was widely treated as a win. It was not. US imports from China fell 29.7 percent, which accounts for most of the narrowing. US exports to China fell 25.8 percent at the same time, as China curtailed purchases of American agricultural products in retaliation. Both sides traded less with each other, which is a different thing from rebalancing. In the same year, the overall US goods trade deficit with the world hit a record $1.24 trillion. Trade that previously moved through China migrated to Vietnam, Taiwan, and India. The structural conditions that generated the imbalance were untouched throughout the entire cycle. The deficit shrank by mutual suppression. It did not shrink by opening.

This week’s summit is negotiating on the same terrain. The Board of Trade, which USTR Greer has described as focused on “non-sensitive tradeable goods” and reducing mutual dependency, was characterized by The Wire China’s pre-summit analysis as a signal that “the US has given up trying to change China’s economy through outside pressure.” Greer made the underlying logic explicit at a conference in April: “We’re not going to do what Washington tried to do for 25 years, which is go to the Chinese and say, ‘We’re going to pretend they’re going to become a market economy.’” Treasury Secretary Bessent, in his sharpest recent statement on structural barriers, flagged ahead of the summit that China’s regulatory posture “has a chilling effect on global supply chains.” The Great Firewall, the National Reimbursement Drug List, and the data localization regime are not on the agenda this week.

This dynamic produces a distorted narrative. When the United States imposes tariffs, it appears aggressive. China, which maintains one of the most sophisticated market exclusion systems in the world, presents itself as a defender of open trade. That framing completely obscures the degree to which Beijing has systematically protected its most strategically important industries from foreign competition while expecting full access to American markets in return. The Board of Trade formalization accepts that framing. It manages trade in goods without addressing the regulatory architecture that decides which American sectors are permitted to compete in China at all.

Genuine progress requires enforceable provisions on digital services access, transparent government procurement, and intellectual property protection, pursued alongside European and Asian allies who face the same structural discrimination. That is a harder negotiation than Boeing orders and soybean commitments. It is also the only negotiation that addresses the actual composition of the imbalance rather than its headline number. Until the barriers come down in technology, financial services, and pharmaceutical innovation, the trade deficit is being managed at the margin while the underlying problem is left entirely intact.

Adil Husain is a competitive strategist who advises CEOs on how to compete and grow in contested markets. He is the Founder and Editor-in-Chief of business media company The Intelligence Council, and Managing Director of the global advisory firm Emerging Strategy. He has spent 25 years advising C-level executives at global companies on competitive strategy, market entry, and international growth, with on-the-ground experience across China, Southeast Asia, and major emerging markets.

You can reach him here for a conversation: ahusain@emerging-strategy.com

We’ve seen this movie before. In March 2022, Swatch did the same thing with Omega’s Speedmaster Moonwatch, a watch that retails around $7,000, releasing a bioceramic version at $260 and watching the watch world lose its mind. Swatch CEO Nick Hayek confirmed more than one million units sold by November 2022. Secondary market prices averaged $900 in the first days after launch, with outliers clearing $1,000. The MoonSwatch became the best-selling watch release in StockX history. More interestingly, Omega Speedmaster sales also rose more than 50% following the launch.

The MoonSwatch sold aspiration at a price point anyone could reach, and it was completely honest about what it was. The buyer wasn’t claiming to own a Speedmaster. They were in on something. That transparency is what produced lines around city blocks.

As I read coverage of the upcoming AP x Swatch collab and ribbed a buddy who runs a watch club and owns several APs, an interesting question arose: has any other industry has attempted the same thing: a mass market brand partnering with an elite, inaccessible one, priced for participation, letting aspiration do the heavy lifting.

The answer is ‘yes.’ Education tried this. It’s called Coursera.

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Education Tried This

The structural parallel is almost exact. Elite institution plus mass market platform. Prestigious name at an accessible price. Millions of people who could never get through the door now able to buy something with the logo on it.

The scale is real. Emeritus, which runs branded programs for Harvard, Wharton, MIT, and more than 80 other universities, generated $474 million in revenue in fiscal year 2025. Coursera did ~$760 million across >183 million registered learners. Harvard’s total continuing and executive education operation generated nearly $600 million across the university in 2024, representing about 9% of Harvard’s total operating revenue, ~on par with what Harvard receives in federal research funding. Harvard Business School’s executive programs alone brought in $253 million in FY2025. And HBS Online contributed ~$70 million from approximately 42,000 online learners in FY2024.

The marketing language is worth reading closely. Emeritus describes its Wharton programs as helping participants acquire “advanced skills from a top-ranked business school, providing a distinct competitive advantage” — language that implies equivalence without quite claiming it. MIT xPRO’s certificate program pages state that “you will receive digital certificates from MIT xPRO,” the word “from” is doing heavy lifting. Coursera’s homepage tells prospective learners that its credentials are “issued directly by trusted institutions.” Harvard Business School Online instructs certificate-earners to add their credential to LinkedIn under the Education section, with the school listed as “Harvard Business School Online” and the degree field as “Other; Certificate in [Course Name].” The reality: LinkedIn says Harvard Business School has 3 million alumni, whereas Harvard Business School Online has only 95,000. The problem: Harvard Business School only graduates ~1000 people per year.

That instruction, to file all kinds of lightweight online certificates under a single ‘Education’ bucket, is where things get complicated.

In August 2025, a LinkedIn user ran an experiment: adding a fake Harvard degree to their profile to see what happened. Recruiter messages increased. Connection requests arrived praising the academic background. A lawyer eventually intervened. The experiment went viral. The comment sections were full of people who recognized the dynamic from their own feeds. A tech executive named Andrew Yeung posted something that circulated widely: “If your LinkedIn says you went to Harvard/Stanford/MIT but all you did was take a virtual, 6-week self-paced course, , then people are likely going to question everything else on your profile.” The MBA-focused subreddits have entire threads debating whether listing Wharton for a $550 Coursera certificate is misrepresentation or fair use of the platform’s own instructions.

None of this is straightforwardly anyone’s fault. Ashwin Damera, co-founder of Emeritus and himself a 2005 Harvard MBA, described the company’s founding mission as giving professionals “access to an affordable Ivy League business education like I had many years ago.” That is a legitimate ambition. MIT President Reif said as early as 2015 that expanding online programming “could help subsidize the institution.” That is a real institutional need.

The problem is structural. The business model requires a credential. But this credential requires a little bit of ambiguity about what exactly it signifies. This ambiguity produces a secondary market in borrowed prestige. Harvard wanted to share knowledge and earn revenue, for which it needed to sell something.

In watchmaking, the secondary market runs on desire. In education, it runs on confusion.

What The Gap Reveals

The MoonSwatch is a watch. It tells time. You wear it on your wrist. From across the room it may look a little bit like a Speedmaster. The aspiration transfers through the object itself.

A Coursera or Emeritus certificate is a digital credential. Its value depends entirely on what the reader believes it signifies, which turns out to vary considerably depending on whether the reader went to business school, works in HR, or is just someone scrolling a LinkedIn feed with limited patience for fine print.

This is the structural problem that makes the education version so much harder. The Royal Oak’s cultural weight: its story, its aesthetic, its fifty years of horological mythology, can be placed inside a $400 plastic case and handed to someone. They own it. It exists in the world as the thing it claims to be.

The Harvard brand’s actual value: the network built over years, the credential that employers have been pattern-matching for decades, the identity that comes from being selected at an 11% acceptance rate, cannot be placed inside a $300 online certificate. What transfers is the name. A name without the underlying asset behind it is aspiration in a format nobody can independently verify.

The MoonSwatch buyer knows exactly what they’re holding and is proud of it. The Edx/Coursera/Emeritus buyer files the certificate under ‘Education’ and waits to see if anyone looks closely. One is participation. The other is performance.

The watch industry learned something real: aspiration is a scalable product when you are honest about what you are selling. The ‘Royal Pop’ will either validate this lesson or complicate it depending on what exactly is launched on Saturday. The education industry has been trying to learn it since 2012 and keeps losing the plot at the credential, because the business model requires the credential, the credential requires the ambiguity, and the ambiguity requires someone to clean it up eventually.

Here, as a thought experiment, are three collabs that would do it honestly. They don’t exist. Perhaps they should 😜

Harvard x Duolingo. While more than 10 million people have maintained a consecutive 365-day Duolingo login streak, most are not measurably more fluent in their target language than when they started. They have simply kept the streak alive, because the app’s founder has described the mechanic as designed to exploit loss aversion rather than deepen learning. The overall course completion rate sits below 1%. Duolingo does not make most of its users fluent, but it does make them feel like they’re trying.

The product: $99 a year, real Harvard faculty lectures delivered in streak format, with an owl that sends notifications when you haven’t listened to your John Rawls lecture in four days — “Disappointed.” The credential is called a Harvard Certificate of Intellectual Participation. It’s beautifully framed, fit for putting up on the living room wall, and looks like a real Harvard diploma until you look closely. Harvard faculty write furious op-eds. Sales explode. The owl will be disappointed in most of its users. Nobody pretends otherwise.

Wharton x Hormozi. Alex Hormozi has sold more than 5 million copies of his ‘$100M Offers’ series and reportedly moved roughly 2.8 million copies of his third book in a single day, claiming a Guinness World Record in the process. He has 4.17 million YouTube subscribers and 985 million total views. His audience would very much like a Wharton association. Wharton would very much like to reach people who learned about unit economics from YouTube.

The product: a co-branded “$100M MBA” workbook that retails at $149. It says “in partnership with the Wharton School” on the cover. Every Wharton alumnus with a corner office photo on their LinkedIn simultaneously has a seizure. But nobody pretends it’s an MBA.

MIT x LEGO. This one requires the least imagination, because it is already basically real. MIT and LEGO have been formal research partners since the 1980s. The MIT Media Lab holds an endowed chair called the LEGO Papert Professor of Learning Research. The lab co-developed LEGO Mindstorms, Scratch, and multiple robotics kits. MIT reportedly maintains approximately one million LEGO bricks on campus for active research.

The product: a LEGO set built around an actual MIT research problem, sells at Target for $59. It would be the most honest version of the education MoonSwatch: everyone knows building a LEGO set is not the same as solving real engineering problems after earning an MIT degree. But the underlying accomplishment, a cool LEGO model, is completely real.

The watch industry figured out the honest version of this in 2022 and is running it back this Saturday. The education industry has been trying since 2012 but hasn’t managed to solve the credential credibility problem.

Adil Husain is a competitive strategist who advises CEOs on how to compete and grow in contested markets. If this piece landed, you can reach him here for a conversation: ahusain@emerging-strategy.com

The diplomacy has already failed once and while both sides believe time is working in their favor, one of them is wrong. Twenty-one hours of US-Iran negotiations in Islamabad ended with Vance leaving a best-and-final offer on the table and walking out. Iran called the demands excessive, but Pakistan, which had brokered the talks, is still in the room trying to keep the process alive. Mediators from Turkey and Egypt too, remain engaged. No formula has emerged. President Trump has said publicly the blockade stays until talks conclude on American terms, and Iran’s Revolutionary Guard has said the strait stays closed to hostile shipping. That is the defining feature of a true stalemate: each party is convinced the other will break first, and neither has yet found reason to reconsider.

The same structural conditions appear in business with regularity. In January 2025, the Biden administration blocked Nippon Steel’s $14.9 billion acquisition of US Steel on national security grounds, despite Nippon submitting four separate mitigation agreements over 100 days without receiving written government feedback on any of them. Both parties dug in. The stalemate ran eighteen months before it broke. When it did, the resolution had nothing to do with either side’s substantive argument improving. Trump reversed Biden’s block within weeks of taking office. The political calculus inside the blocking party had changed.

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How Stalemates Break

Asymmetric exhaustion is the mechanism most executives misread, because stated pain tolerance and actual pain tolerance are rarely the same thing. When US-China reciprocal tariffs escalated to 145% and 125% in April 2025, both sides projected resolve while absorbing real damage. Chinese exports to the US fell to levels not seen since the 2009 financial crisis. But Xi had already identified where American supply chains were genuinely fragile, and twice came close to halting US automobile production by restricting access to rare earth permanent magnets and certain semiconductors that American manufacturers had never bothered to diversify away from. The side that wins an exhaustion contest is the one that correctly assessed where the other party’s actual breaking point sits, which is almost always different from what they have announced publicly.

The face-saving off-ramp is how most high-profile stalemates end, and the formula that makes it work is almost always constructed out of sight. When TikTok’s multi-year standoff with US regulators resolved in January 2026, ByteDance retained the algorithm through a lease arrangement while a new majority-American entity took ownership of US operations. Washington claimed data security; ByteDance claimed it kept the core asset. The Nippon Steel resolution followed the same architecture: US Steel stayed headquartered in Pittsburgh with an American CEO, the US government received a golden share with board veto rights, and Nippon got the acquisition it had been seeking for eighteen months. The mediator’s real function in any stalemate is constructing the narrative that makes concession domestically acceptable to both parties simultaneously. Executives negotiating toward resolution should be designing that formula rather than pressing harder on the substantive argument.

Internal fracture moves faster than any other mechanism when it activates, which is why it tends to catch the opposing party unprepared. The Nippon Steel block was a political decision tied to electoral calculations in Pennsylvania steel country, which is why four meticulously prepared mitigation agreements produced zero written government feedback over 100 days. The substantive case was irrelevant to the blocking logic. When the political calculus changed with a new administration, the stalemate broke in weeks. In regulatory disputes and government-facing standoffs, the investment that matters most is usually in the conditions for fracture at the opposing organization: changes in leadership, shifts in political incentives, realignment of what the blocking party needs domestically—rather than in constructing a stronger version of the same argument.

Calcification is the outcome that participants in a stalemate almost never plan for, and the costliest to be caught assuming away. Adobe’s proposed $20 billion acquisition of Figma ran into EU and UK regulatory opposition in late 2022, survived fifteen months of failed remedies negotiations, and was terminated in December 2023 with Adobe paying a $1 billion breakup fee. The regulatory blockade did not break; it simply outlasted the strategic rationale for the deal. The US-China trade relationship is now in managed calcification, a series of 90-day truces extended through late 2026 with neither side changing its fundamental position, and every serious multinational planning around the assumption of semi-permanent friction. Both parties in a stalemate almost always rule out calcification at the outset on the reasonable grounds that neither wanted it. That shared assumption is precisely what makes it the most dangerous scenario to underweight.

What This Means for Strategy

The diagnostic question to bring into any stalemate is which mechanism is actually live and whether time favors your position. Most executives default to assuming time is neutral, which produces passive strategies that wait for resolution rather than active ones that shape the conditions for it. Knowing the mechanism changes what you do. In an exhaustion contest where your cost structure is genuinely stronger, you hold and press. When your counterpart needs a face-saving formula to concede, designing that formula is more valuable than winning the argument. In a regulatory stalemate where the blocking logic is political, investing in the conditions for internal fracture: supporting new leadership, relationships with incoming leadership, arguments mapped to the new political calculus, is the lever that actually matters. When calcification is the realistic trajectory, the companies that build durable advantage are the ones that adapt to the constraint early rather than waiting for it to lift.

Hormuz is most likely to resolve through a face-saving off-ramp, and the timing depends on how much pain has accumulated on both sides. Pakistan’s continued presence as mediator is the tell: the architecture for a formula is being constructed behind the scenes. Vance leaving the offer technically open in Islamabad is consistent with how these resolutions get staged: both sides demonstrate domestic toughness first, then the off-ramp becomes politically viable. Calcification is the second scenario and the more dangerous one for any company with Gulf supply chain or energy exposure. Treat oil below $90 as optimistic for at least two quarters. When the formula does emerge, the unwinding will move faster than the buildup: shipping lanes, supply chains, and commodity prices all normalize quickly once political cover exists on both sides. When the formula emerges, being positioned for the recovery matters as much as managing the disruption.

My advisory work includes identifying which mechanism is live in your specific competitive, regulatory, or negotiating situation. If you are currently in a standoff with investors, a competitor, a counterparty, or regulators, and want a structured read on how it is likely to resolve, reach out.

Adil Husain is a competitive strategist who advises CEOs on how to compete and grow in contested markets. If this piece landed, you can reach him here for a conversation: ahusain@emerging-strategy.com

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The article below first appeared in Higher Education Leadership Intelligence, one of our six education and learning-related publications. Ping us at hello@intelligencecouncil.com if you’d like to learn more

The New Age of Discovery

Every April, with the seasonal reliability of pollen and tuition increases, Forbes publishes its ‘New Ivies’ list. This year, after an exhaustive survey of over 100 C-suite executives and a rigorous methodology that will be discussed shortly, Forbes has heroically discovered Georgetown.

Yes. Georgetown. Founded 1789. Alma mater of Bill Clinton, Supreme Court justices, innumerable U.S. Senators and congressmen, and roughly half the people in a Washington D.C. lobbyists’ watering hole at any given moment. Well, good news: Forbes has discovered Georgetown, and has named it a New Ivy.

They also found Northwestern, Vanderbilt, which accepts 6% of applicants, Carnegie Mellon, and Notre Dame, a school so embedded in American cultural life that Hollywood made a movie about its football team in 1993 and people still watch it voluntarily.

The rigorous methodology involved excluding the 8 schools that are part of the actual Ivy League athletic conference, plus five other schools summarily designated by Forbes as “Ivy-Plus”: Stanford, MIT, Duke, the University of Chicago, and Johns Hopkins. From ~3,500 institutions, 13 were removed, and the remaining schools in the very same bracket of selectivity, research output, national influence, and price tag have been named to the ‘New Ivies’ list. Hallelujah.

Forbes’ corresponding Public Ivies list deserves its own moment. The University of Michigan and the University of Virginia appear on the New Ivies list. These two schools are, in the formal academic literature, actually called Public Ivies. The term was coined in 1985 by Richard Moll in a book he named, with characteristic restraint, “The Public Ivies.” Forbes looked directly at the Public Ivies, and named them the ‘New Ivies: Public.’ Got it?

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How To Find What You Already Know

To identify these previously invisible institutions, Forbes surveyed C-suite and hiring executives and asked them to rate schools they had direct experience with. The business executives who have spent 40 years sending their recruiters to Northwestern rated Northwestern highly. The executives who have been filling their analyst classes from UVA since the Reagan administration gave UVA strong marks. This is the methodological equivalent of asking BMW owners which cars they like to drive, and then publishing the answer under the headline “Underrated Car Brand to Watch: BMW.”

The survey instrument cannot find anything its respondents don’t already know. A school genuinely breaking into elite recruiting networks for the first time produces no signal in a survey of executives who haven’t hired from it yet. The methodology is a closed loop: it measures the existing consensus, confirms the existing consensus, and publishes the confirmed consensus as news.

The AI hook is where things get truly impressive. Each school profile contains one paragraph sourced from a phone call with a university administrator. A provost said something optimistic about the liberal arts. A director of employer relations noted that AI job titles are appearing more frequently in offers to graduates. An administrator at one school reported that students are asked to make AI models debate each other, which sounds either cutting-edge or like an undergraduate avoiding the assigned reading, depending on your disposition. Forbes gathered 20 quotes from the communications offices of 20 of the most communications-sophisticated universities in the country (minus the Ivy League and Stanford, of course), reported what those universities said about themselves, and presented the result as an independent assessment of which schools are preparing students for the AI economy. The schools told Forbes they were doing well. Forbes said “I’m sure you’re right!”

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The Crystal Desktop Award

Once a school makes the Forbes New Ivies list, its marketing and communications team begins to receive ‘exclusive’ offers.

Forbes runs a program called Forbes Accolades. The entry tier allows the institution to license the official Forbes badge for its website, press releases, email signatures, and newsletters. The next tier adds paid social media, printed brochures, trade show signage, and direct mail. The top tier covers billboards, broadcast advertising, search engine marketing, and something called a Listmaker Voice article, which appears on Forbes.com in the visual language of editorial content and the legal category of a paid placement. Physical plaques, framed reprints, and crystal desktop awards are available through a third-party fulfillment partner. Pricing is not listed. If you have to ask, perhaps you don’t belong on the New Ivies list.

Northwestern’s endowment is $15 billion. Vanderbilt’s is $11 billion. These institutions have enrollment marketing operations that dwarf the entire editorial budgets of most publications covering higher education, even the vast resources available to us here at The Intelligence Council. They have communications and admissions campaigns running across every channel the Platinum tier covers. Forbes named exactly these schools and is now selling them the badges and tchotchkes to prove it.

The list is not the product. The list is the reason the product exists. And the 20 schools on it were never going to be the 20 schools that couldn’t afford the tchotchkes.

Forbes’ New Ivies list is not an outlier, just another template in the business media industry where the incentives are fundamentally misaligned with what’s best for readers. This particular template: build a ranked editorial franchise, generate anxiety in the entities that didn’t make it, generate vanity in the ones that did—ok, fine. But here is the misalignment: the monetization layer is to sell badges and content licenses to the winners, and guess what? The winners happen to be the very institutions that can afford the shiny objects. And they call this circus business journalism. This model runs across business media in verticals you read every day. The New Ivies list was just unusually easy to see through.

The useful habit isn’t cynicism. It’s one question, asked before you trust anything you read: how does this publication make money, and from whom?

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Adil Husain is the founder of The Intelligence Council and Managing Director of Emerging Strategy, a global advisory firm specializing in competitive strategy and international growth. He has spent over 15 years advising companies operating at the intersection of education and technology, and writes about strategy, global markets, and institutional behavior.

You can reach Adil at adil@intelligencecouncil.com

I came across a YouTube video of a neuroscientist testifying before the U.S. Senate. Typically, a clip of this sort would have a few hundred views. This one had 2.5 million views. Yes, he’s likeable and persuasive. But still.

The claim: the $30 billion schools have spent on laptops and tablets has produced a generation cognitively worse off than their parents.

The clip went viral because the argument feels true. Students’ test scores are down. Parents and teachers alike believe children’s attention spans are shorter. Something does feel wrong.

But when a complicated problem gets a cleanly packaged, simple explanation that goes viral, my instinct is to check it out. Having advised EdTech and learning companies for over 15 years made it easier to spot the problems with the argument. So when I looked at the data behind the claim, I wasn’t surprised that the evidence being used to indict ALL classroom technology is either misread, misattributed, or flat-out wrong.

That gap between the popular narrative and what the research actually shows is what I wrote about. Read the full piece here.

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Adil Husain is the founder of The Intelligence Council and Managing Director of Emerging Strategy, a global advisory firm specializing in competitive strategy and international growth. He has spent over 15 years advising companies operating at the intersection of education and technology, and writes about strategy, global markets, and institutional behavior.

You can reach Adil at ahusain@emerging-strategy.com

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The Price of the Table

On April 18, Palantir posted a 22-point summary of its CEO’s recent book-manifesto on X. It has been celebrated in some quarters, while criticism has largely focused on the manifesto’s arguments for Silicon Valley’s moral obligation to arm the military, the coming age of AI deterrence, and the inadequacy of soft power. But those particular arguments cost Palantir Chairman Peter Thiel and CEO Alex Karp absolutely nothing to make. A defense contractor writing that democracies need better weapons is any company encouraging its customers to consume more of its product. The paragraphs that really matter are further down and largely glossed over in coverage, but conveyed an unmistakable signal to those they were designed to impress: that some cultures have produced wonders while others have proven regressive and harmful, that elite intolerance of religious belief exposes the poverty of its political project, and that America has spent half a century avoiding the definition of a national culture in the name of inclusivity. Those kinds of arguments create a permanent public record aligned to a particular political constituency. They attach Palantir and Karp’s name to positions that will be quoted back in the future when the administration changes. These stated positions carry a cost. And that is precisely why they are in the manifesto.

A signal only functions when it is expensive enough that a purely mercenary actor would not send it. Any company seeking federal contracts can publish a white paper on hard power and AI deterrence. What separates a genuine loyalty signal from a marketing brochure is content that carries real personal and reputational cost. The cultural hierarchy argument, the critique of hollow pluralism, the defense of religious belief against secular elite contempt: these are the kinds of passages that make the entire manifesto credible to the current administration, because no business executive optimizing purely for quarterly revenue would think it wise to go there. That credibility is worth something concrete. Palantir’s U.S. government revenue nearly doubled in 2025. The Army’s $10 billion enterprise contract, the DHS billion-dollar omnibus, Maven as a formal program of record: these arrived in the same window as the book. Comparable signals are Zuckerberg reversing DEI policies and absorbing widespread internal dissent, and Bezos blocking his own newspaper’s presidential endorsement and losing 200,000 subscribers. The cost of the signal is the proof of the commitment, and the proof of the commitment is what secures the relationship.

The scale of what is on offer explains the scale of the cost being paid. Palantir's Maven system is embedded in active military targeting. Its software runs across the Army, DHS, ICE, and a growing list of federal agencies. The federal government is not a customer Palantir or its competitors compete for repeatedly in an open market. It is a relationship that, once secured at this depth, becomes structural and self-reinforcing. That is what makes Palantir/Karp’s express ideological commitment rational rather than excessive. A customer worth tens of billions, with switching costs that run into the fabric of national security infrastructure, justifies a level of investment in securing and entrenching the relationship that would look irrational applied to any ordinary commercial account. The manifesto on X, and the book, is that investment. That is the price of an embedded customer relationship that, once secured, does not need to be re-won for a generation.

The Game

What looks like a wave of ideological conversion across American business is better understood as a cascade, and cascades have a specific mechanism. Once one major player makes a costly alignment signal, the calculus shifts for everyone else. The non-signalers are no longer neutral. They are visible as holdouts, and in a political environment where an administration has demonstrated both the willingness and the capacity to target specific companies through tariffs, contract exclusions, and antitrust action, being a visible holdout carries a quantifiable cost. This is not abstract. During President Trump’s first term, the JEDI cloud contract worth $10 billion was awarded to Microsoft after the administration intervened to exclude Amazon, a decision widely attributed to Trump’s hostility toward Bezos and the Washington Post. When the same administration returned to power in 2025, Bezos did not wait to find out whether the lesson still applied.

The underlying structure is a prisoner’s dilemma, and like all prisoner’s dilemmas it produces outcomes that are collectively irrational and individually mandatory. Most CEOs I work with prefer a world in which their business competes on capability alone and political neutrality carries no penalty. But that is not the timeline we live in. Given that other players are signaling, the expected cost of holding out exceeds the expected cost of joining. The dominant strategy becomes alignment even for executives with no genuine ideological sympathy, because the alternative is to be the only person in the room who has not paid a price. This is why the post-election visits to Mar-a-Lago happened fast and in formation, and why the White House’s tech advisory council filled immediately with the CEOs of the most valuable companies in the world.

The administration’s side of this game is a protection structure, and it only works if the threat is occasionally demonstrated. The threat does not need to be applied constantly. It needs to be applied visibly enough that every other player updates their estimate of what non-alignment costs. Intel’s acceptance of a government equity stake was that kind of demonstration. The arrangement came after Trump publicly questioned CEO Lip-Bu Tan’s ties to China and called for his removal. The chip companies that agreed to share a percentage of their China revenues with the federal government in exchange for export permissions were publicly offering a financial settlement. Every Fortune 500 CEO who watched those negotiations understood what they were watching.

Both Thiel and Karp are cerebral leaders who hold degrees in philosophy; Palantir is demonstrating in practice what Michael Spence won the Nobel Prize in economics for formalizing: the value of a signal is a function of its cost, and the cost must be real enough that a party without genuine commitment would not pay it. A million-dollar inauguration donation is not a credible signal of deep alignment because any large company can write that check without thinking twice. A public manifesto arguing that certain cultures are superior to others, that pluralism has become hollow, that the secular elite has lost its legitimacy: that is credible because the reputational cost is asymmetric. It alienates the current administration’s political opponents, which is what makes it visible as a genuine signal. The signal and the cost cannot be separated. The ideology is not decoration on top of a commercial arrangement. It is the very mechanism by which the commercial arrangement is being secured.

Sections one and two were the analysis. What follows is for the senior executive whose business may have government exposure or regulatory risk, and they need to translate the analysis into a decision about their own posture.

The Decision

Every executive watching this should be running the same calculation, and most of them are running it wrong. The mistake is treating alignment as a binary: you either pay or you don’t. The more useful frame has two variables. The first is the degree to which you rely on the federal government for your revenue. The second is your vulnerability to adverse government intervention. Those two variables produce four positions, and each position has a different optimal strategy.

High contract concentration, high vulnerability. This is the most consequential quadrant and the most internally differentiated. Palantir and and a host of IT services contractors like Leidos sit here, but at meaningfully different points. Palantir has depth of deployment, embedded relationships across intelligence and defense agencies, and software running inside active military targeting operations. Those are real switching costs, and they push Palantir toward the Q1 border. Leidos sits deeper in the quadrant: roughly 85 percent of its revenue comes from federal contracts, and its core business in IT services and systems integration is increasingly substitutable as cloud-native alternatives mature and agencies develop in-house capability. The compounding problem for companies in this position is structural. The signal cost rises with each cycle because the administration requires visible proof that the commitment is current, while the underlying competitive position continues to erode. A company here is not buying time and using it. It is buying time while the clock runs faster. The strategic imperative is to build something genuinely hard to replace while the window of political favor is still open, because the relationship alone is worth nothing to the administration that follows.

High contract concentration, low vulnerability. Lockheed Martin, Northrop Grumman, Microsoft, and Anduril share a position that most companies in their orbit would trade for immediately. Their federal contract concentration is high but their vulnerability to government intervention is relatively low, because what they build is either irreplaceable or so deeply embedded in operational infrastructure that displacing it would cost the government more than it would cost them. Lockheed does not need to publish a manifesto. The F-35 program is the manifesto. The alignment signal these companies send is proportionally modest relative to their contract scale, which is itself a form of leverage. When your product is load-bearing, the relationship is more symmetric than it appears from the outside.

Low contract concentration, high regulatory vulnerability. Meta, Google, Apple, TikTok, Amazon and others that have significant B2C exposure each occupy this quadrant for different reasons, but the strategic logic is the same. The threat is not contract cancellation, but that the government will impose significant costs on the business through antitrust action, tariffs, forcing divestiture, or removing legal protections that the business model depends on. Zuckerberg’s alignment tax was an attempt to cap the probability of a structural legal intervention that would cost multiples of whatever the signaling cost him internally. Google faces an active search monopoly ruling. Apple faces App Store antitrust exposure and existential tariff risk on China manufacturing. TikTok faced a divestiture order. The specific threats differ. The calculus is identical: alignment is regulatory insurance, priced against the cost of the intervention it is designed to prevent.

Low contract concentration, low regulatory vulnerability. Shopify, Databricks, HubSpot and many others have no material federal revenue and no significant regulatory overhang. The prisoner’s dilemma pressure is real even here: once the cascade is moving, neutrality begins to look like a statement. But the expected value of paying the alignment tax from this position is genuinely low, and the expected cost is not. A company in this quadrant that sends costly ideological signals is not buying protection from the current administration, yet it is acquiring a liability with a future administration, denominated in relationships, talent, and reputational capital that will need to be rebuilt when the political cycle turns. The discipline required is to recognize that the prisoner’s dilemma only compels alignment when the downside of holding out is concrete and proximate. For companies in this quadrant, it is neither.

Every alignment signal creates a public record, and public records survive administrations. Companies that over-indexed on political relationships without building underlying capability have faced severe reversals when those relationships ended. US firms that built their client base around Washington-backed regimes in Southeast Asia and Latin America during the Cold War found that when those regimes changed, the relationship had no value to whoever came next. The firms with genuinely competitive products found a path forward. The ones whose entire position rested on the political connection did not. The same logic applies here. Deep ideological alignment with a specific administration is a public record that the next administration rarely forgets.

The executives who navigate transitions best are not the ones who hedged most carefully on paper. They are the ones who built something the next administration needs badly enough that continuity is the path of least resistance. Alignment buys time and access. The question is what gets built with that time and access. A company that uses the current window to deepen its operational moat, expand its deployed footprint, and make itself genuinely hard to replace is in a different position when the cycle turns than a company that spent the same window perfecting its loyalty signal. The first company is an asset to whoever runs a future administration. The second is a reminder of who lost.

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Adil Husain is a competitive strategist who advises CEOs on how to compete and grow in contested markets. If this piece landed, you can reach him here for a conversation: ahusain@emerging-strategy.com

Pakistani mediators in Islamabad face an unprecedented challenge. Two delegations with incompatible strategic logics are being asked to find common ground. The mathematical architecture of conflict resolution suggests this is possible, but only if the mediators restructure the game itself rather than haggle over its terms. Hosting the American delegation, led by Vice President JD Vance, the President’s son-in-law Jared Kushner, and envoy Steven Witkoff, alongside the Iranian delegation, led by Parliament Speaker Mohammad Bagher Ghalibaf and Foreign Minister Abbas Araghchi, requires more than traditional diplomatic haggling.

It’s unclear that the Pakistani mediators include any players who possess formal experience in structural negotiation strategy. Therefore they must rely on the mathematical architecture of conflict resolution. Game theory establishes that complex conflicts can be modeled and resolved by altering the underlying incentive structures.1 To succeed, the mediators must guide both parties through four specific game-theoretic interventions.

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1. Deconstructing the Stacked Game

The Pakistani mediators must first dismantle the illusion that the two sides are playing the same game. I wrote about how the United States, Israel, Iran, and the Gulf states are each attempting to force the conflict to unfold according to a different strategic logic.

The United States is executing a strategy of brinkmanship, applying maximum pressure to force an Iranian capitulation. Iran on the other hand is fighting a war of attrition. A war of attrition2 is a conflict where contestants continuously commit resources until one concedes, which mathematically favors the player willing to absorb the highest relative costs. Iran has spent the last two months demonstrating that it is prepared to absorb a punishing aerial campaign. The Pakistani mediators must clearly demonstrate to both delegations that their conflicting strategies guarantee a mutually destructive ‘hurting stalemate.’3 This scenario is crucial for conflict resolution, as it makes participants more likely to engage in talks to avoid further damage.4

The U.S. delegation realizes that maximum pressure has not forced a rapid surrender. The Iranian delegation recognizes that dragging out the conflict risks long-term economic destruction if not systemic regime collapse.

Each subsequent intervention depends on this one. Incomplete information cannot be cleared between parties who believe they are playing different games. Commitment mechanisms cannot be designed until red lines are visible. And no equilibrium holds until both sides can claim they won.

2. Solving the Incomplete Information Trap

The current volatility stems from a fundamental lack of transparent data regarding the opponent’s true red lines and risk tolerance.5 When players lack exact knowledge of their opponents’ internal constraints, they operate on subjective probability distributions and are highly vulnerable to catastrophic miscalculations.

The Pakistani mediators must serve as a credible, neutral information channel to clear this fog of war. Their primary function is to help each side privately signal their true constraints without the posturing required in public. The U.S. needs to avoid a domestic and global inflation crisis, and Iran needs to prevent the destruction of its energy infrastructure and internal regime collapse. Reducing this uncertainty is the only way to establish a zone of possible agreement.

3. Fixing the Commitment Problem

Game theory dictates that players will only agree to cooperate if they believe the opposing side will honor the deal in subsequent interactions. This is known as the “shadow of the future” in repeated games.6 Currently, this shadow is deeply distorted. Iran calculates that disarming will simply allow the U.S. and Israel to reload for future regime-change efforts, while the U.S. doubts Iran will permanently halt its nuclear program.

Drawing on John F. Nash’s framework in “The Bargaining Problem,”7 which outlines how mutual benefit can be mathematically structured through binding agreements, the mediators must shift the focus away from temporary ceasefires. They must help design credible enforcement mechanisms, robust verification protocols, and tangible security guarantees. If the Iranians believe that conceding guarantees regime suicide, they will choose mutual destruction instead.

The 1994 Agreed Framework with North Korea is instructive here. It collapsed because neither side trusted the other to hold their end across administrations. A durable commitment mechanism requires enforcement structures that survive political transitions, not just the goodwill of the specific personalities in the room.

4. Building the Asymmetric Equilibrium

An equilibrium in an asymmetric conflict requires lowering the political cost of concession for both parties. The Pakistani mediators need to enable both sides to sell the outcome as a victory to their respective domestic audiences. The mediators must construct a narrative where the U.S. delegation can return to Washington claiming they successfully degraded Iran’s nuclear trajectory and restored regional deterrence. Simultaneously, Iran must be able to claim that its strategy of asymmetric endurance inflicted enough economic pain to force the superpower to the negotiating table, securing the survival of the Islamic Republic.

Camp David 1978 is the model. Sadat and Begin left with incompatible domestic narratives of what had been achieved. That incompatibility was the agreement’s feature, not its flaw. The Pakistani mediators must engineer the same outcome: a zone of agreement that each side can describe, truthfully, as a victory within its own strategic logic. The mathematical term for this is a Pareto-efficient outcome: an agreement where neither side can improve its position without worsening the other's. The face-saving framing is what makes that outcome politically survivable. Without both, the deal either fails to hold or never gets signed.

Mediation at this level relies entirely on restructuring the game itself. By applying these established mathematical and strategic frameworks, Pakistan can force incompatible adversaries to find a stable equilibrium.

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Adil Husain is the founder of The Intelligence Council, where he publishes independent analysis across education, technology, and global markets. His work focuses on surfacing uncomfortable truths early, before they become consensus, and helping decision-makers see around corners rather than react after the fact. He writes The Husain Signal to think in public, often using game theory to interpret strategic change in business and in life.

What almost nobody systematically exploits is the gap between what institutions say they will do and what they actually do under pressure. That gap is where the real intelligence lives. It is also, not coincidentally, where the most expensive strategic mistakes get made.

Exploiting that gap requires a different mental posture entirely.

Our methodology is closest to what you would get if a short seller, a business strategist, and a game theorist ran the same research process together. The short seller's instinct: start with the assumption that the market has it wrong and build a case airtight enough to bet against the consensus. The business strategist's discipline: understand the competitive mechanics, switching costs, and incentive structures that explain why a company's position is stronger or weaker than it appears. The game theorist's lens: model how the actual players, customers, regulators, boards, competitors, behave under constraint, not how they say they will behave. We start with a mass of raw material and let the misjudgment surface from the data. When the evidence consistently points toward a company being better or worse than the market believes, we become a bloodhound. We go find every structural mechanism that explains the gap, and we don't stop until the argument has no exits.

The public company research is how we prove the methodology works. The timestamps and valuations are verifiable. The same approach works for privately-held companies too.

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Two examples from the past three months illustrate what this produces in practice:

‘Better Than it Looks’

On January 14, we published a thesis on virtual schools operator Stride, Inc. (NYSE: LRN) in our K-12 Executive Intelligence newsletter. The stock was trading at $70.38. It had been hammered, down roughly 60% over the prior months following a complaint from a New Mexico school district and weak guidance on its October earnings call. The conventional read was straightforward: virtual schools are politically toxic, Stride is always one legislative session from collapse, and the latest controversy was just more of the same.

Our read was different. We went through every instance where a customer had signaled they may remove Stride, and tracked what happened next. This included contract termination records, board minutes, state performance audits, litigation filings, and earnings disclosures going back over a decade, alongside interviews with people who had operated inside and alongside Stride across multiple states. What that body of evidence showed, consistently across states with entirely different political climates, was that institutions almost never actually unwind from Stride when they say they will. The operational cost of disentanglement, including student records, IEP compliance, staffing models, and reporting obligations, is higher than the political cost of tolerating controversy. Districts posture publicly and expand dependence privately. That is not an inference. It is what the behavior shows, repeatedly and across jurisdictions. We also documented a specific maneuver Stride executes when a host district turns hostile: it migrates the student census, teachers, and curriculum to a new host within the same state, preserving the revenue stream while the original relationship dissolves. Indiana and New Mexico both produced documented examples of this in 2025 alone.

The market was pricing Stride based on customer rhetoric. We priced it on actual customer behavior.

As of today, Stride is trading at $90.79, up more than 40% from where it was when we published. The S&P 500 is down 1.47% in the same period.

‘Worse Than it Looks’

On January 21, we published a thesis on workforce training provider Skillsoft (NYSE: SKIL) in our Workforce Training Executive Intelligence newsletter. The stock was trading at $8.81. Our argument was that Skillsoft’s apparent stability, with retention rates reported near 99% among large enterprise customers, was masking structural decay that was invisible to buyers but visible to someone looking closely at how the product was actually used, how the capital structure constrained every strategic option.

The most useful data point is often what people say about a company once they no longer work there.

The forensic case built itself. Skillsoft was carrying approximately $558 million in long-term debt, with interest expenses consuming roughly 11% of revenue and stripping capital from R&D. Its Global Knowledge acquisition, the one supposed to add instructor-led training capability, had become a financial anchor, with revenue down nearly 18% year over year. Deferred revenue had collapsed 30% in the first nine months of FY2026, a leading indicator in SaaS economics that future bookings are contracting faster than recognized revenue. Former executives described the integration as a “Frankenstein company” that was never truly stitched together, with contradictory activity systems paralyzing the sales force and a mid-market deliberately neglected to protect margins for the Fortune 1000 accounts the debt covenants required them to defend. The AI turnaround narrative management was selling to investors was being funded by the same R&D budget it was supposedly filling.

The 99% retention headline looked like a fortress from the outside, but the structure underneath it looked like a company in managed decline, optimizing for covenant compliance at the direct expense of the product investment required to stay competitive.

As of today, Skillsoft is trading at $4.20, down more than 50% from where it was when we published. The S&P 500 is down 0.79% over the same period.

Time-Stamped Receipts:

• January 14, 2026: Why Stride Survives Backlash (the article that laid out the thesis)

• January 21, 2026: Stride: The Unkillable Operator (links to the full intelligence brief - requires subscription)

• January 21, 2026: Skillsoft’ Zombie Bundle (the article + a link to the full intelligence brief - Free)

The thesis in both cases was the same: read the behavior, not the narrative. In Stride’s case, the narrative said fragile; the behavior said embedded. In Skillsoft’s case, the headline metrics said stable; the structure said melting.

This is what we do at The Intelligence Council. We find the gap between the narrative and the reality, we build the case for why the gap exists, and we don't stop until the argument has no exits. The public company work is how we prove it.

The timestamps don't lie.

The Skillsoft and Stride research are both publicly available and linked above. The timestamps are there. I am making zero claims that we moved the market. I am making a claim about what we saw, and that nobody else was saying it publicly at the time.

If you want this kind of intelligence working for you, reach out. Your competitors are not standing still. director@intelligencecouncil.com

About The Intelligence Council

The Intelligence Council is an independent B2B media and executive intelligence company publishing decision-grade research for senior executives navigating complex, high-stakes markets. Our verticals cover education, AI, software, advanced manufacturing, financial services, and other sectors. Publications are built for a specialist operator audience rather than a general readership. Our flagship research, often co-produced with Emerging Strategy, combines forensic financial analysis, primary interviews, and structural analysis of how institutions actually behave under pressure. We are editorially independent and built around a single standard: intelligence that changes how leaders see a market, not content that confirms what they already believe.

intelligencecouncil.com

About Adil Husain

Adil Husain is the Founder and Editor-in-Chief of The Intelligence Council and Managing Director of Emerging Strategy, a global strategic advisory firm. He has spent more than two decades working at the intersection of competitive strategy and international growth, including a decade based in Shanghai, and significant time on the ground in other emerging markets in Asia and Latin America. His work focuses on how institutions, markets, and competitors actually behave under constraint, and what that reveals. He writes The Husain Signal, where he publishes analysis and commentary on strategy, markets, and the intelligence business.

adilhusain.substack.com

The Chokepoints Nobody Is Watching

The Visible Map

The world is finally paying attention to chokepoints, but it is paying attention to a small subset. Iran has closed the Strait of Hormuz, a corridor carrying roughly 20 percent of global oil and gas, and financial markets are responding with the predictable anxiety of people encountering a problem they were warned about for decades. TSMC controls 72 percent of global semiconductor foundry capacity, and a Taiwan blockade would reduce global GDP by an estimated 10 percent according to Bloomberg analysis. China controls 85 to 90 percent of global rare earth processing. These are genuine chokepoints. They are also, at this point, the chokepoints that everyone already knows about. They appear not only in think tank reports, earnings calls, and Treasury Secretary speeches at Davos but also in layman YouTube analysis and Scott Galloway’s newsletter.

A true chokepoint meets three criteria: dominant market share, no viable substitution in any timeframe that matters, and the capacity for asymmetric deployment against a specific target without equivalent blowback on the user. The Strait of Hormuz, TSMC, and Chinese rare earth processing meet all three criteria. But the conversation about those three has been happening for years. What has gone unnoticed are the dozens of chokepoints that meet the same three criteria and have already been activated, at scale, with documented consequences, that almost no corporate strategy team, boardroom or risk committee has formally mapped.

There are two categories of chokepoints that executives need to understand, and they require different responses. The first category is controlled by the United States and Western-aligned institutions. These are the most powerful economic weapons ever assembled, they have already been used, and any company or country in the crosshairs of Western policy is exposed to them. The second category is controlled by adversaries and is increasingly aimed back at the West. China’s rare earth licensing system forced a US policy reversal in 2025. Iran’s Hormuz closure may force another now. The arms race between these two categories is accelerating, and the multinational executives best positioned to survive it are the ones who have mapped both sides of the ledger.

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The Architecture the West Controls

The most powerful chokepoints in the global economy are financial, regulatory, and institutional, and they are concentrated in Western jurisdictions to a degree that has no historical precedent.

The US dollar is involved in roughly 90 percent of all global foreign exchange transactions, making it the supreme chokepoint in the entire architecture. Any company or country that needs to conduct international business requires access to dollar clearing. The Federal Reserve, US-chartered correspondent banks, and the Treasury Department’s Office of Foreign Assets Control collectively determine who has that access. When OFAC designates an institution as a Specially Designated National, any US-connected counterparty must cease all dealings immediately, regardless of where they are incorporated or where the transaction occurs. Dollar correspondent banking de-risking, driven by the deterrent effect of large enforcement actions, has quietly severed entire regions from international finance without any single government order: 21 of 23 Caribbean banks have lost at least one correspondent relationship, and Pacific Island nations have lost 60 percent of their correspondent relationships since 2011.

SWIFT, a Belgian cooperative subject to EU law, has already been used twice to sever economies from cross-border payment infrastructure, and it will be used again. Following EU Regulation 267/2012, SWIFT disconnected approximately 30 Iranian financial institutions. Iranian crude exports fell from 2.5 million barrels per day to 860,000 barrels within months, and net oil export revenues dropped by an estimated $26 billion in a single year. Russia’s disconnection in March 2022 followed the same mechanism. Simultaneously, Euroclear, the Belgian financial services company, froze approximately 180 to 185 billion euros in Russian central bank assets in a single regulatory action. The Russian central bank is pursuing legal recovery of approximately 230 billion euros in a Moscow court. Those proceedings are unlikely to succeed.

The US Foreign Direct Product Rule is perhaps the most underappreciated chokepoint in the entire Western arsenal, because it operates extraterritorially and requires no cooperation from any foreign government. The rule holds that any product manufactured anywhere in the world using US-origin technology, software, or equipment falls within US export jurisdiction. When the Commerce Department expanded the rule in May 2020 to cover products manufactured for Huawei, TSMC stopped accepting new orders the same day. Final shipments cleared in September 2020. Huawei’s global smartphone market share collapsed from approximately 20 percent to near zero within two years. One regulatory instrument applied to a Taiwanese company operating in Taiwan restructured the global smartphone market.

The business services layer is the chokepoint category almost entirely absent from existing analysis, and it is where the Russia stress test produced its most instructive results. On March 5, 2022, Visa and Mastercard suspended operations in Russia without a government order, citing their network rules. Cards issued by Russian banks stopped working internationally within days. All four dominant audit firms withdrew simultaneously, making it practically impossible for Russian companies to maintain international listings or access capital markets, because no alternative audit infrastructure exists at comparable scale or international recognition. Bloomberg Terminal access was suspended, removing pricing data, analytics, and execution connectivity in a single action. MSCI and FTSE Russell removed Russian securities from their indexes, pricing them at effectively zero, triggering automatic forced selling by every passive fund tracking those benchmarks. None of these actors coordinated with the others. Each acted within its own rules. The cumulative effect was indistinguishable from a state-directed infrastructure cutoff, because the infrastructure was genuinely concentrated in jurisdictions aligned with the sanctioning coalition.

The software infrastructure layer extends the same logic into the operating systems of modern business. GitHub, owned by Microsoft and subject to US export control law, restricts access in Iran, North Korea, Cuba, Syria, and Russian-occupied territories, cutting developers in those jurisdictions off from the platform on which 90 percent of Fortune 100 companies run their development workflows and where 180 million developers collaborate globally. Microsoft suspended new sales and services in Russia in 2022, creating immediate uncertainty for enterprise customers whose operations ran on Azure and Office 365. Three American companies, AWS, Azure, and Google Cloud, control approximately 63 to 68 percent of the global cloud infrastructure market. A Managing Director at TIAA recently questioned the long-term sustainability of hyperscaler dependency. The CFO at The Hartford described cloud vendor concentration as the point where exposure becomes uncomfortable. These executives recognize that their operational infrastructure runs on someone else’s platform, subject to someone else’s jurisdictional obligations.

The Architecture Aimed Back

Adversaries of the U.S. have spent the past decade studying Western chokepoint strategy and building their own, and the results are now reshaping global policy in real time.

China’s control of rare earth processing is the most consequential adversary chokepoint currently active, and its April 2025 activation produced the most significant geoeconomic event of that year. When Beijing introduced a licensing system for rare earth exports following the Trump administration’s tariff escalation, the effect was immediate enough to alter US policy within months. Automakers sourcing rare earth magnets outside China began paying premiums of 10 to 30 dollars per kilogram above Chinese domestic rates. Dysprosium and terbium reached 3.5 times their Chinese equivalents in non-Chinese markets. Yttrium spiked to 25 times the equivalent price at one point, with one analyst documenting a 69-times year-over-year increase. The CEO of MP Materials told investors in November 2025 that a one-year postponement of expanded controls had done nothing to change the underlying dependency. The U.S. military’s F-35 program is projected to incur $850 million in additional costs in 2025 alone as a direct result of raw material price dislocations. China had been developing this regulatory architecture for years before deploying it. It was not improvised.

Iran’s closure of the Strait of Hormuz is demonstrating, for the second time in recent history, that a country representing less than one percent of global output can hold the global energy market hostage using a geographic chokepoint that the world had decades to address and chose not to. Analysts at Evercore ISI projected earlier this week that the closure will cost the US economy roughly half a percentage point of GDP growth this year. The Trump administration, which entered the conflict expecting rapid capitulation, is now, according to geostrategic analyst Edward Fishman, facing a situation in which reopening the strait has become its single overriding objective, a position that may require ‘boots on the ground’ to resolve. Russia has emerged as the conflict’s largest economic beneficiary, with loosened sanctions generating an estimated $150 to $200 million per day in additional oil revenues, an outcome no one in Washington appears to have planned for.

The arms race is now explicitly bilateral, and the next front is already visible. European officials began searching for leverage points against the United States following Donald Trump’s takeover signals toward Greenland in January 2026. American cloud services, where US firms control roughly three-quarters of the global market, have been identified as a candidate. China’s expanding grip on clean energy supply chains and its processing dominance across critical minerals beyond rare earths represent additional adversary chokepoints under development. The pattern Fishman identified in his February 2025 book Chokepoints is playing out on schedule: the same integration that generated decades of prosperity is now generating the leverage that adversaries are using to fight back.

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Adil Husain is the Founder of The Intelligence Council and Managing Director of Emerging Strategy. He advises C-level, strategy, and intelligence leaders on how systems, competitive dynamics, and institutional constraints translate into real enterprise decisions.

📢 Contact me to speak at your company or institution.

KL deserves to be on the shortlist

Are Singapore and Riyadh credible alternatives to diversifying risk exposure away from Dubai? This is a question most international operations leaders are asking right now. That is a reasonable question and the right conversation.

My previous article in this publication examined why neither alternative is straightforward: Singapore’s demographic architecture isn’t designed to absorb Dubai’s expat professional class, and Riyadh’s talent and regulatory infrastructure is not in the same tier of sophistication as Dubai’s. This piece is about a different question: for executives who are already thinking carefully about where to direct incremental operational growth in a world where the Gulf states carry a higher risk premium, is there a city that deserves serious evaluation and is not currently getting it?

The case for Kuala Lumpur is not that companies will or should move there from Dubai. It is narrower and more specific than that. For a particular subset of international operators: Those whose regional operations are built around South Asian and Middle Eastern professional talent, those in or adjacent to Islamic finance, and those for whom the cost trajectory of Dubai is becoming a material operational constraint, KL offers a combination of structural advantages that is worth examining honestly.

Dubai’s professional talent base has always been predominantly South Asian and Middle Eastern. Indians constitute the largest single expatriate group in the UAE. Pakistani, Bangladeshi, Lebanese, and Gulf Arab professionals operate at senior levels across Dubai’s financial services, technology, and professional services sectors in numbers and at seniority levels that no other city outside the region has matched. That professional class gave Dubai its operational depth and made the platform credible to multinationals evaluating where to anchor their Middle East and South Asia-facing operations. Any city that wants to be taken seriously as a complement or partial alternative to Dubai for that class of operator needs to be able to support that talent pool demographic at scale. KL can.

The Indian and Pakistani professional communities in Malaysia are already large, established, and concentrated in the Klang Valley’s financial and commercial districts. The High Commission of India in Kuala Lumpur estimates approximately 225,000 Indian expatriates in Malaysia, the majority in skilled professional roles. The Arab and Gulf business community has longstanding commercial relationships with KL built through decades of trade and Islamic finance activity. English is the working language of business across finance, law, and technology. A company whose Dubai operations are staffed predominantly by South Asian and Middle Eastern professionals can replicate that talent composition in KL without the immigration constraints that make Singapore a poor fit for the same demographic, a point the previous article in this series examined in detail.

The cost structure is materially different as well. Dubai ranks 15th globally on Mercer’s 2024 Cost of Living index, its highest position on record. KL ranks 200. For a company evaluating where to build its next operational center or add its next several hundred, or thousand professional hires, the total expatriate costs in KL such as salary, housing, and schooling, is substantially lower while the accessible talent profile is broadly comparable for the functions that regional operations centers typically require.

This is not an argument that KL is the obvious next move for every operator reconsidering their Gulf exposure. The constraints are real and are examined in the sections that follow. What the structural evidence does support is a more limited but still significant claim: KL belongs on the evaluation shortlist for a specific and meaningful subset of international operators, and the conditions that make it relevant have been maturing quietly for several years while executive attention was directed elsewhere. The Dubai risk premium has not created KL’s advantages but it has created a moment where those advantages become worth examining seriously for the first time.

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What KL has been building

Most executives who have not spent time in Kuala Lumpur carry a mental model of the city that is roughly a decade out of date. That model features a mid-tier ASEAN capital with a functional but unremarkable business environment, adequate infrastructure, and no particular reason to select it over Singapore unless cost was the primary constraint. The city that exists today is meaningfully different, and the gap between the prevailing executive mental model and the operational reality is where the opportunity lies.

The most distinctive structural asset KL holds is one that no other city outside the Gulf can replicate. Malaysia has topped the ICD-LSEG Islamic Finance Development Indicator for thirteen consecutive years, holding its position as the world’s leading Islamic finance jurisdiction ahead of Saudi Arabia, Indonesia, and the UAE. For companies serving Gulf or South Asian Muslim markets, structuring Islamic finance products, issuing sukuk, or establishing Sharia-compliant financial operations from KL carries institutional, regulatory, and talent ecosystem depth.

The physical infrastructure anchoring KL’s financial ambitions is further along than most external observers realize. The Tun Razak Exchange, a 70-acre Finance Ministry-owned development in the city’s commercial core, has moved from a construction site to a functioning institutional district over the past five years. HSBC committed USD 250 million to build its Malaysian headquarters there, a 568,000 square foot facility housing 5,000 employees as of 2022. Prudential completed a 549,000 square foot dedicated headquarters tower at TRX in 2019. PwC Malaysia signed a binding commitment in November 2024 to anchor a new 800,000 square foot tower at the same address, with relocation planned for 2029.

The technology investment signal is equally specific. Ant International, the global payments and fintech affiliate of Ant Group, established its Digital Business Centre at TRX’s Exchange 106 in 2024. By mid-2025 that center had grown to nearly 800 engineers and professionals working across AI research and development, technology, security, and product development. The company’s president, Douglas Feagin, stated publicly that further growth of 25 percent was expected in the coming months. While Ant International is headquartered in Singapore, it chose KL for this function rather than scaling further in its home city, reflecting a calculation about where specific talent is accessible, at what cost, and without what constraints. This is the kind of decision that tends to repeat across an industry once the first mover has demonstrated the model works.

The broader investment trajectory supports the directional argument. InvestKL, the government’s investment promotion agency, attracted 150 companies to establish operational bases in Greater KL between 2011 and end-2024, generating 31,849 executive jobs and RM33.8 billion in committed investment. The 2023 figure alone was RM8.7 billion, a record representing a 300 percent increase from the prior year. KL’s ranking on the Global Financial Centres Index moved from 80th in September 2023 to 45th in September 2025, with Z/Yen specifically citing KL as the only Asia-Pacific center to improve more than ten places in a single edition during that period. While these numbers describe momentum, KL is not close to competing with Singapore or Dubai for the same tier of strategic headquarters functions. It is however building the infrastructure to compete for the next tier of operational decisions.

The macro-policy environment has also shifted in ways that matter for international operators evaluating long-term commitments. The Anwar Ibrahim government has established legally binding ceilings on the fiscal deficit and federal debt. Malaysia’s most recent IMF assessment, published in late 2025, described the economy as showing notable resilience against global policy uncertainties, with sound macroeconomic policies and systemic financial sector risks contained. Malaysia is one of the few multiracial democracies in Asia with a track record of peaceful transfers of power to opposition parties.

The evidence already supports the limited claim that KL has been building quietly while executive attention was directed elsewhere at flashier locations, and that it already offers the conditions that make it relevant for a specific subset of international operators. This doesn’t add up to an argument that KL is the obvious answer for every company reconsidering its regional footprint. I examine the constraints in the next section. But The Iran War and the resultant GCC/Dubai risk premium has created the moment where examining KL seriously may be worth the investment.

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The honest constraints

A serious evaluation of KL as a potential expansion hub option to de-risk from GCC exposure has to reckon with three constraints that matter to my audience of executives running international operations for multinational businesses.

The first is the perception gap, and it is probably the most consequential in the near term. KL is currently not on the shortlist for most Western multinationals evaluating a regional HQ or operational expansion. The largest technology companies, the bulge bracket banks, and the major management consulting firms have made their Asia-Pacific strategic headquarters decisions in favor of Singapore, and the record does not show KL as a serious contender for that tier of function. FedEx moved its Asia-Pacific, Middle East, and Africa headquarters to Singapore in early 2024. McKinsey, BCG, and Bain maintain their ASEAN strategic centers there. Grab, which was founded in Malaysia, relocated to Singapore in 2014 specifically because its founders concluded that regional growth required a Singapore base — a decision the CEO of Malaysia’s Institute for Democracy and Economic Affairs attributed directly to regulatory predictability and ecosystem depth. The perception gap is self-reinforcing: companies that are not evaluating KL do not generate the visible commitments that would put it on other companies’ shortlists. Breaking that cycle takes time and a sustained track record of institutional commitment, which TRX is beginning to provide but has not yet fully delivered.

The second constraint is the depth of the senior professional services ecosystem. For cross-border M&A, complex structured finance, and international commercial arbitration, the bench in KL is thinner than in Singapore or Dubai. The Asian International Arbitration Centre has made genuine progress, including a differentiated Islamic arbitration framework that is legitimately useful for Sharia-compliant dispute resolution. But its international commercial caseload is a fraction of SIAC’s 663 or the DIFC Courts’ substantial claims volume. The Magic Circle and top-tier US law firms have KL presences, but at partner depth and practice scope that reflects a secondary rather than primary market. For companies that depend heavily on that ecosystem at the highest level of transaction complexity, the gap is real and not quickly closed.

The third constraint is the one most likely to narrow fastest. Malaysia’s own Employment Pass salary thresholds are being doubled effective June 2026, with Category I executive roles rising from RM10,000 to RM20,000 per month and professional roles from RM5,000 to RM10,000. KPMG has flagged the implications directly: companies planning to staff senior expatriate roles in KL on a medium-term basis will face higher assignment costs and will need to review compensation structures. The intent is legitimate: Malaysia is trying to develop local talent rather than remain a low-cost foreign professional destination indefinitely. The practical effect is a partial erosion of the cost arbitrage that makes KL attractive relative to Singapore and the Gulf, particularly at the senior end. How much erosion depends on the specific role profile and seniority mix a company is planning for, and the answer varies enough that it requires a company-specific cost model rather than a general assumption.

The professional services ecosystem gap is real but improving on a trajectory that favors KL over five to ten years as TRX matures and institutional depth accumulates.

The EP cost changes are a near-term friction that raises but does not eliminate the cost advantage.

The perception gap is the most solvable of the three, because it is a function of insufficient evaluation rather than genuine deficiency, and the companies that conduct that evaluation seriously may arrive at a different conclusion than the mental model most boardrooms are currently working from.

A question experienced international operators will ask is: Why KL over Jakarta or Bangalore? Both are large, English-proficient markets with substantial South Asian professional talent and materially lower cost bases than the Gulf. The answer is not that KL is superior on every dimension. It is that KL offers a combination that neither alternative matches at the relevant tier of operational sophistication. Jakarta’s regulatory environment and infrastructure remain materially more complex for multinational operations than KL’s common law framework and KLCC financial district infrastructure. Bangalore is a talent source, not a hub city: Its professional services ecosystem, legal infrastructure, and multinational operational environment are not designed for the regional headquarters and center-of-excellence functions this article is addressing.

KL sits at a specific intersection: common law legal system, English-language business environment, established multinational operational infrastructure, Islamic finance depth, and a South Asian and Middle Eastern professional talent base that is already there. That is a rare combination.

What KL offers the right operator is not a replacement for Dubai or Singapore. It is a credible, lower-risk, lower-cost platform for the specific functions and talent profiles that the Gulf has historically handled, available to be built now.

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What this means for executives running international operations

The audience most likely to benefit from thinking seriously about KL are executives in global HQs who are making forward-looking decisions about where to direct incremental operational capacity, where to build the next center of gravity for South Asian and Middle Eastern-facing functions, and where to grow headcount over the next three to five years without inheriting the long term risk premium that the Gulf now carries.

The evaluation question requires a company-level answer rather than a general one. A financial services firm with significant sukuk issuance activity or Gulf institutional relationships faces a different calculus than a technology company whose regional growth is concentrated in South and Southeast Asia. A company that has been building its delivery and operations talent pool from India and Pakistan for a decade has different switching costs than one staffing a regional team for the first time. The right answer depends on revenue geography, talent composition, legal and regulatory exposure, and the specific functions being evaluated, not on the general noise around the Dubai risk premium.

What the evidence supports is a starting position, not a conclusion. KL now belongs on the evaluation shortlist for a meaningful subset of operators. Most operators have not placed it on that shortlist, yet. The companies that conduct that evaluation seriously, with current and grounded intelligence, may arrive at a different conclusion than the decade-old mental model they are working from.

This article appeared in International Growth Executive Intelligence, a publication of The Intelligence Council.

The next article in this series will explore the signals indicating emerging global and regional business hubs.

If you are working through the regional calculus for your global business specifically, it may be worth a conversation. You can reach me at ahusain@emerging-strategy.com

Adil Husain is the founder of The Intelligence Council, an executive intelligence platform that publishes independent analysis across education, technology, and global markets across its 12+ publications. He is also the Managing Director of Emerging Strategy, a global advisory firm founded in 2006 that advises senior executives on competitive strategy and operating across borders.

Adil’s work focuses on surfacing uncomfortable truths early, before they become consensus, and helping decision-makers see around corners rather than react after the fact. He writes The Husain Signal to think in public.

What the conflict actually broke, and what it didn’t

Dubai has survived crises before. The 2008 financial crash burst its real estate bubble and required an Abu Dhabi bailout. The Arab Spring sent tremors through every Gulf capital. COVID shut the city down and then, within months, turned it into a destination for the globally mobile who found that harsher pandemic restrictions applied elsewhere. Each time, the obituaries were written and proved premature. The city’s underlying value proposition reasserted itself, and the capital and talent that had briefly wavered came back, often in greater volume than before.

The current crisis is different in one specific way, and understanding that difference is the analytical task worth doing carefully.

Dubai was not simply a well-run city that happened to be located in a volatile region. It was a city whose entire capital formation story rested on a particular belief: that geography could be decoupled from destiny, that a sophisticated enough platform of legal infrastructure, tax efficiency, connectivity, and cosmopolitan tolerance could function as a permanent insulation layer against the instability surrounding it. That belief was always partially fictional. What the Iranian missile and drone campaign has done, in the span of a few weeks, is make the fiction visible and impossible to reassert through government reassurance alone.

This distinction matters because the damage is not where most of the coverage has located it. The multinationals with established Dubai operations, the hedge funds with DIFC addresses, the family offices with golden visas and children in Dubai schools: these are entities with sunk costs, relationships, and operational infrastructure that take years to build and are not abandoned because a conflict in the neighborhood lasts a few weeks or months. Outlets such as the WSJ have covered evacuation drama; they have been less precise about what actually drives long-term capital allocation decisions. Sunk costs are real, and they are sticky.

The damage falls on the decision not yet made: the multinational evaluating a first-time regional HQ, the next cohort of millionaires choosing where to base themselves, the fund manager deciding which city to expand into. These are the decisions made on the margin, and marginal decisions are made on probability distributions rather than current conditions. What Iran accomplished, regardless of how the conflict resolves, is a permanent update to that probability distribution. A post-conflict Iran, weakened, perhaps, but undefeated and eighty miles across the water, retains demonstrated capability and willingness to strike Dubai’s highest-value economic infrastructure. It does not need to strike again to sustain the risk premium. The first campaign already did the work. Every subsequent period of calm now carries the shadow of demonstrated precedent, and insurance markets, risk committees, and cautious CFOs will price it accordingly.

This is the coercion logic worth understanding clearly. Iran’s targeting of Dubai is not ideological. The port, the airport, the financial center, these are the region’s highest-value economic chokepoints, and disrupting them maximizes pressure on the US-aligned coalition at minimum military cost. Dubai’s stated neutrality is irrelevant to that calculation. What matters is the target’s value. The strategic implication is uncomfortable: even a Dubai that does everything right geopolitically remains a rational target for a future Iranian coercive campaign, because its economic centrality is precisely what makes it valuable to strike.

The long-term story of Dubai’s damage is therefore not a story of collapse or exodus. It is likely to be a story of loss at the margins, which is by definition slower, quieter, and more durable than a crisis that generates headlines. The city that sold itself as impervious to the region will now need to sell a more realistic product: exceptional infrastructure and genuine opportunity in a volatile neighborhood. That is still a compelling offer for many, but it is a meaningfully different one.

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Singapore is not the answer the media thinks it is

The instinct to reach for Singapore is understandable, and it has recent precedent behind it. When Shanghai’s viability as a base for internationally mobile professionals and capital began to erode, first through the hardening of the China business environment under Xi from the mid-2010s, then through escalating US-China trade tensions during the first Trump presidency, and finally through the extended COVID lockdowns that made the city’s political constraints impossible to ignore, Singapore absorbed a meaningful share of the resulting displacement. Expat professionals relocated there. Some Chinese capital followed. The city’s financial center grew, its property market tightened, and its status as the default safe harbor for Asia-Pacific operations was reinforced. Business media learned a pattern: when a major hub in Asia falters, Singapore wins.

That pattern is being applied to Dubai now, but it deserves examination.

The Shanghai-to-Singapore migration worked because the populations involved were broadly compatible with what Singapore is designed to absorb. Mandarin-speaking professionals, Chinese capital networks, Hong Kong financiers looking for a stable alternative: these are precisely the demographic categories Singapore’s immigration architecture has spent decades calibrating to receive. Singapore’s ethnic balancing policy determines who gets in, who stays, and at what concentrations. Singapore has maintained a roughly stable ethnic composition for sixty years through deliberate management of racial quotas for employment-based immigration, permanent residency, and naturalization. The Chinese majority sits at approximately 74 percent by design.

The populations most likely to exit Dubai under sustained pressure are demographically very different from the Shanghai diaspora that Singapore absorbed. The Lebanese family office, the Pakistani entrepreneur, the Gulf Arab sovereign wealth manager, the Indian professional class that makes up the largest single demographic in the UAE: these are people Dubai is built to welcome. On the other hand, when Indian IT professionals’ concentration threatened to push the Indian share of Singapore’s resident population above a certain percentage, Singapore tightened the tap despite continued demand for those skills.

In addition to the racial balancing policy, Singapore’s Employment Pass framework, tightened substantially in 2023, creates friction for multinationals trying to staff regional HQ teams with international talent. The system evaluates EP applications against firm-level diversity metrics and local employment ratios, which means companies with high concentrations of any single nationality face rejections for further hires of that nationality regardless of individual candidate quality. Combined with escalating salary thresholds and Singapore’s cost base, the practical result is that building out a regional team in Singapore with the kind of international talent composition that Dubai currently accommodates is harder, slower, and more expensive than the popular Singapore-as-beneficiary thesis assumes.

For Singapore to emerge as a genuine beneficiary at scale, you would need a critical mass of simultaneous moves large enough to generate their own momentum. The social, immigration, and operational friction Singapore presents relative to Dubai means that critical mass is unlikely to form.

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Riyadh’s opportunity and its real limits

Saudi Arabia has been pressing its case for several years. The Regional Headquarters Program, launched in 2021, gave multinationals wanting access to Saudi government contracts a clear instruction: base your GCC or MENA regional headquarters in Riyadh. The leverage behind that instruction is genuine. Saudi Arabia is the largest economy in the region, and government-linked contracts across energy, infrastructure, defense, and financial services represent revenue that serious multinationals cannot walk away from without consequence. The program generated real movement. HSBC, PwC, Deloitte, and others made formal commitments. Riyadh’s new King Abdullah Financial District filled up with corporate nameplates.

What it has often generated, however, are paper offices. A country manager, a government relations function, a handful of support staff — enough to satisfy the compliance requirement without dismantling the Dubai operations that the business actually runs on. The talent equation does not work in Riyadh’s favor, the social environment remains materially more restrictive than Dubai’s even after Vision 2030’s liberalization measures, and the DIFC’s common law legal infrastructure for international commercial disputes had no genuine equivalent in Saudi commercial law. Most multinationals have made a rational calculation: maintain enough Riyadh presence to keep the contract relationships intact, and keep the real operation where the people want to live.

The current crisis is the most significant stress test that calculation has faced since the program launched. Riyadh did not create the conditions, but it is a rational actor and it will press the advantage. The question worth asking carefully is whether the crisis actually closes the gap, or whether it simply increases the noise around a structural problem that remains unsolved.

The gap has not closed because the underlying constraints are structural rather than cosmetic. Vision 2030’s social liberalization is real: The entertainment sector, the relaxation of gender segregation norms, the opening of tourism. But it rests entirely on Mohammed bin Salman’s continued political dominance. There is little institutional foundation beneath it that is guaranteed to survive a change in political direction. International executives making ten-year operational commitments are not indifferent to that dependency, and the ones who are honest about their risk assessments say so privately. Dubai’s regulatory environment has its own limits, but its commercial infrastructure has deeper roots than any single ruler’s preferences.

The talent problem is equally durable. The international professional class that multinationals need to place in senior regional roles makes location decisions on the full package: schools, social environment, spousal career viability, quality of life outside the office. Riyadh has improved on most of these dimensions over the past five years. But it has not closed the gap with Dubai. A company making its first senior hire in the region in Riyadh faces a different conversation than one asking a dozen senior executives already based in Dubai to relocate south.

There is also a threat geometry point that the relocation conversation tends to gloss over. Riyadh also sits inside the Iranian threat envelope as Dubai does, not outside it. In addition to the direct Iranian threat, Houthi drones, operating with Iranian support, have also struck Saudi oil infrastructure in the past. A multinational relocating a regional HQ from Dubai to Riyadh on the grounds of reducing geopolitical exposure is not fully solving for that variable.

The game being played in Riyadh is actually two games running simultaneously. The first is the coercion of multinationals through contract leverage, which the current crisis strengthens. The second is a competitive game with Dubai that Saudi Arabia is careful never to name as such. Both states present themselves as US-aligned partners in regional stability. Underneath that surface, the competition for multinational headquarters, sovereign capital, and the talent that follows both is zero-sum at the margin. Riyadh is pressing its advantage through the language of partnership, which is the most effective way to press an advantage of this kind.

The companies most likely to actually move are identifiable in advance. They are the ones for whom Saudi government contract revenue is genuinely coercive: The energy majors, the defense contractors, the infrastructure firms, the financial services players with deep Public Investment Fund relationships. For these companies, the calculus was already shifting before the current crisis and will shift further because of it. For technology firms, professional services practices, and the broader financial sector whose revenue base does not depend on Saudi government access, the coercion is weak relative to the talent and operational costs of genuine relocation. The rational move for the majority of that group remains what it has always been: a strengthened Riyadh presence that satisfies the government relations requirement without dismantling the Dubai operation that the business runs on.

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What this means for executives running international operations

The question most regional heads and global strategy teams are asking right now is the wrong one. “Should we move?” assumes that the decision is binary and that the pressure to decide is immediate. Neither is true for most organizations. The more productive question is how the risk profile of the region has permanently changed, and what that change implies for decisions that have not yet been made: Where to grow headcount over the next three years, which markets to deepen, where to place the next generation of senior regional leadership.

No company with extensive existing operations in Dubai wants to be the first to visibly exit. Doing so signals panic, complicates existing contracts, and damages government relationships that took years to build. The rational response for most firms is the one already visible: quiet contingency planning and dual-track optionality held in reserve without public commitment either way.

None of the obvious alternatives are straightforwardly better. Singapore is safer in the narrow geopolitical sense, but its immigration architecture and employment pass constraints create operational friction that is poorly understood outside the region, and its social fabric is less receptive to the talent profiles that Middle East and South Asia-facing operations typically require. Riyadh is pressing its case with real leverage, but the talent equation does not work for most international operators, the legal infrastructure for commercial disputes remains underdeveloped relative to the DIFC, and the Vision 2030 liberalization rests on a political foundation that sophisticated risk committees are right to scrutinize. Dubai remains the most functional platform in the region for most purposes, even though it now carries a greater risk premium that will factor into every marginal growth decision made by a cautious CFO or a conservative board.

What the current moment actually calls for is a more granular analysis than the binary relocation conversation suggests. The right location for a regional HQ is a function of revenue geography, talent requirements, legal and regulatory exposure, and the specific risk tolerance of the business and its leadership. A firm with heavy Saudi government exposure faces a genuinely different calculus than a technology company whose regional growth is concentrated in Egypt, the Levant, and South Asia. An organization that has spent a decade building a talent base in Dubai faces different switching costs than one evaluating the region for the first time. These distinctions matter more than the general noise around the crisis, and they are not being made carefully enough in most boardroom conversations happening right now.

The organizations that will make the best decisions in this environment are the ones that resist the pressure to respond to headlines and invest instead in a clear-eyed assessment of their own strategic position in the region. That assessment requires grounded intelligence about how the competitive and regulatory landscape is actually shifting across Dubai, Riyadh, Singapore, and other options, not the consensus view, which is already priced in, but the second-order dynamics that will determine where the real opportunities and risks compound over the next several years.

These are not decisions that benefit from generic frameworks. If you are working through the regional calculus for your business specifically, it may be worth a conversation. You can reach me at ahusain@emerging-strategy.com

Adil Husain is the founder of The Intelligence Council, an executive intelligence platform that publishes independent analysis across education, technology, and global markets across its 12+ publications. He is also the Managing Director of Emerging Strategy, a global advisory firm founded in 2006 that advises senior executives on competitive strategy and operating across borders.

Adil’s work focuses on surfacing uncomfortable truths early, before they become consensus, and helping decision-makers see around corners rather than react after the fact. He writes The Husain Signal to think in public.

The AI researchers who published in Nature earlier this year would tell you that your initial instinct was probably right. They found that large language models (LLMs) trained on subtly flawed data in one narrow domain didn’t just perform poorly in that domain. They became broadly corrupt and “cartoonishly evil” in every aspect of their ‘personality,’ a trait researchers called “emergent misalignment.” An excellent essay in the New York Times highlighted the LLMs’ explicit misogyny, suggestions to kill one’s spouse, and praise of Hitler.

What surprised the AI researchers would not have surprised Aristotle.

A study published by the National Bureau of Economic Research found that the personal behavior of CEOs and CFOs (prior legal infractions, spending habits, lifestyle choices) predicted how their companies behaved. Executives with personal records of rule-breaking were significantly more likely to appear in SEC enforcement actions for financial fraud. Those who spent heavily on personal status goods ran firms with measurably higher rates of misconduct, and that risk grew the longer they stayed. They also hired people like themselves. The tolerance at the top did not stay at the top.

Take Sam Bankman-Fried. The signals at FTX were not hidden. Corporate governance was a fiction and a small polyamorous inner circle made every meaningful decision. Customer funds were being treated as a house account. Sophisticated investors, credentialed journalists, and prominent political donors all looked at this and decided what they were seeing was eccentric genius rather than what it actually was. The compartmentalization was not naive. It was a choice, because the relationship opportunity was valuable and the questions were inconvenient.

And it is not only about money. A senior government official who wrote proudly in a memoir about shooting a misbehaved puppy was telling us something very specific about how they process problems. Not as a metaphor, but literally. When the stakes were much higher, we learned that the domain was different but the decision-making process turned out to be very similar.

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Aristotle argued that the virtues are not a collection of independent traits a person can possess in any combination. They form a system. A person who is genuinely courageous in the full sense also has to be just, temperate, and honest, because all of these depend on the same underlying capacity: the ability to perceive what a situation actually requires and respond accordingly. He called that capacity practical wisdom, phronesis, and he was clear that without it the apparent virtues collapse into their counterfeits. Courage without judgment is recklessness. Loyalty without justice is complicity. Generosity without prudence is waste. The Stoics pushed this further, arguing that the virtues were not merely linked but identical at their root. You possess them all or you possess none.

Plato had arrived at roughly the same place from a different direction. For Plato, virtue was ultimately a form of knowledge: knowledge of the good. A person who genuinely understood what was good would act accordingly across every domain of their life, because the understanding was unified even if the situations were not. Moral failure, on this view, was always also an intellectual failure. The person who behaved badly in private while performing integrity in public did not actually have integrity.

These ideas fell out of fashion. The Enlightenment produced moral frameworks that were built around rules and outcomes rather than character. A person could follow the rules in one context and break them in another, maximize good outcomes in their professional life while making a mess of their personal one, and the frameworks were largely indifferent to the inconsistency. Character became a private matter. What counted was behavior in the domains where it could be measured and held accountable.

The philosopher Philippa Foot spent much of the twentieth century arguing that this was a mistake. Foot, writing in the postwar period partly in response to what she saw as the inability of dominant ethical frameworks to account for the scale of human moral failure in World War II, returned to the Aristotelian view that virtue had to be grounded in something real about human life. She argued that virtues were not arbitrary social conventions or lists of approved behaviors. They were features of character genuinely necessary for human beings to live well, as structurally necessary as deep roots are to an oak tree. And because they were grounded in the same human reality, they were interconnected. A person whose character was sound in one respect tended toward soundness elsewhere. A person whose character was compromised in one respect carried that compromise into everything else.

What Foot and the other virtue ethicists who followed her were recovering was not sentimentality about good people being good at everything. It was something more precise: the observation that moral judgment is a unified cognitive capacity, and that a person who routinely overrides it in one domain is degrading the capacity itself. The ancient philosophers did not have the language of neural networks or organizational behavior research. But the structure of their argument maps with uncomfortable accuracy onto what the AI researchers found, and onto what the NBER data shows about executives who bring their personal tolerance for rule-breaking into the institutions they run.

The compartmentalization we extend to people we find useful is not just a social convenience. It is a theory of human character. And it is a theory the evidence does not support.

The question the evidence raises is not comfortable and does not have a clean answer. When you see a signal in someone, what do you actually do with it?

The honest answer, for most people in most situations, is nothing. You file it away. You weigh the value of the relationship against the vagueness of the unease and the relationship wins. I shared the Times article with two different groups of friends this morning and asked them directly. The answers split immediately. Some said they would avoid the person entirely. One offered the cleanest formulation: "No such thing as just business." Others were more qualified: they would work with someone in a narrow context where the character flaw couldn't bleed across. One used his Muay Thai sparring partner as an example: “a douche, but experienced, wouldn’t work with him in business but in that setting it’s fine.” It's a reasonable-sounding position.

This is not a case for vetting everyone you work with or treating every professional relationship as a character examination. Most interactions don't require it. The relevant situation is narrower: it is when you already know something fundamental about someone's character, when the signal has arrived clearly enough that you cannot claim you missed it, and you make a deliberate choice to set it aside because the relationship is valuable. That is what Epstein's social world was full of. Not people who failed to notice. People who noticed and decided it was inconvenient.

Such behavior is not always irrational. People are complicated. Single data points are unreliable. A colleague who lied about something small might have had reasons you don’t know. Extending good faith is not the same as being naive.

But the Epstein case is worth sitting with, precisely because it represents the extreme end of a behavior that most of us practice in milder form every day. The correspondence that has become public shows that a remarkable number of accomplished, intelligent, sophisticated people maintained relationships with Jeffrey Epstein long after concrete signals were visible to them. The rationalizations were predictable: he was a talented investor, a useful connector, a stimulating conversationalist. The domain of the discomfort seemed separate from the domain of the value. They compartmentalized, and they did it deliberately, because the relationship offered something they wanted.

One of my friends noted that Google Ventures passed on Theranos while George Shultz did not. Long-term proximity to power and fame, it turns out, may degrade judgment rather than sharpen it.

Most of Epstein’s correspondents were probably not complicit in his crimes. That is not really the point. The point is what the compartmentalization cost them, not legally but in terms of their own judgment. Every time a person of reasonable intelligence looks at a clear signal and finds a reason to set it aside, they are practicing a skill. And like most skills, they get better at it. The executive who learns to ignore what a founder’s personal behavior is telling him about how he will treat investors is training himself to ignore the next signal too. The board member who decides that a CEO’s mistreatment of people in his personal life is irrelevant to his fitness for the role is not making a one-time exception. He is establishing a habit of selective attention that will shape every subsequent judgment he makes about that person.

Aristotle's insight, the AI researchers' finding, and the accounting fraud data all point toward the same conclusion about the mechanics of this. Moral judgment is not a collection of separate switches you can flip independently. It is a single capacity, exercised across every domain of a person's life, and it strengthens or weakens as a whole. When you routinely override it in the service of a convenient relationship, you are not keeping the relationship and discarding the discomfort. You are changing yourself.

Yet, many of the organizations we belong to: entrepreneurial communities, professional networks, civic groups, actively cultivate a norm of non-judgment toward fellow members. That norm has genuine value, but I wonder if it also creates cover for exactly this kind of selective attention.

This does not mean every unsettling signal warrants immediate action. Life is not that simple and the people who treat it that way tend to be wrong as often as they are right. But there is a meaningful difference between extending genuine good faith to someone whose character you have thought carefully about, and telling yourself a story that allows you to stop thinking about it. The first is judgment. The second is its abdication.

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Adil Husain is the founder of The Intelligence Council, where he publishes independent analysis across education, technology, and global markets. His work focuses on surfacing uncomfortable truths early, before they become consensus, and helping decision-makers see around corners rather than react after the fact. He writes The Husain Signal to think in public.

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Yet the pattern becomes clearer when viewed through a strategic lens. Wars rarely hinge on raw military power alone. They are shaped by the constraints that define what each actor can and cannot afford to do.

At its core, the conflict is a collision of strategic frameworks. The United States, Israel, Iran, and the Gulf states are each attempting to force the conflict to unfold according to a different strategic logic.

Washington seeks controlled brinkmanship. Israel pursues structural destabilization. Iran forces a war of attrition. The Gulf states fight to preserve economic continuity.

These strategies do not operate independently. They collide on the same battlefield. Game theorists would describe this situation as a stacked game: multiple strategic systems layered on top of one another, each pushing the conflict toward a different equilibrium. Every actor believes it is playing a ‘rational’ game. The instability emerges because they are not playing the same one.

To understand how the conflict evolves, it is necessary to examine the strategic logic each actor is attempting to impose.

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Four Strategies Define the Logic of the Conflict

The United States operates with the objective of degrading Iranian military capabilities while avoiding an open-ended ground invasion or a catastrophic global economic depression. Through Operation Epic Fury, U.S. forces have targeted Iranian missile launchers, air defense systems, and command nodes. Washington faces severe logistical and supply chain constraints. During the brief 2025 conflict, the United States expended between 20 percent and 50 percent of its available THAAD interceptors. Current production rates for advanced interceptors are vastly outpaced by Iranian ballistic missile manufacturing. The U.S. strategy requires establishing rapid escalation dominance from the air to force a negotiated settlement on its own terms before domestic political support collapses or critical munition stockpiles are exhausted.

Israel understands that the mathematics of a prolonged war of attrition favor Iran. To bypass this cost-exchange trap, Israel seeks to fundamentally alter the structure of the conflict through decapitation. Under Operation Roaring Lion, the Israeli Air Force launched a massive campaign to eliminate the core of the Iranian leadership. Israeli strikes successfully assassinated Supreme Leader Ali Khamenei alongside senior military figures. Israel aims to force an internal regime collapse, permanently rewriting the regional security architecture before the attritional costs of defending against Iranian missile salvos become intolerable.

Iran recognizes its inability to defeat the United States and Israel symmetrically. Tehran instead relies on a strategy of asymmetric endurance. The objective is to turn the conflict into an unsustainable math problem for its opponents. Iranian Shahed drones cost between $20,000 and $50,000 to manufacture. Defending against these drones requires the United States and Gulf partners to expend interceptors such as the Patriot PAC-3 MSE, which cost between $3 million and $5 million each. Every dollar Iran spends on offensive drones forces defending nations to spend approximately $15 to $35 on air defense. Iran pairs this salvo competition with systemic economic disruption. Tehran may move to effectively close the Strait of Hormuz, a maritime chokepoint handling roughly 20 percent of global petroleum liquids consumption. By leveraging an estimated arsenal of over 5,000 naval mines and utilizing drone strikes to increase shipping insurance premiums, Iran can create a global supply shock designed to pressure adversaries into halting military operations.

The Gulf states operate under the constraints of an impossible choice, attempting to preserve their economic models while caught in the crossfire. These states have spent decades cultivating reputations as stable, post-oil hubs for global capital and connectivity. Iran’s strategy directly attacks this premise, launching drones and missiles at Gulf capitals, airports, and energy infrastructure to impose massive reputational and financial costs. Remaining passive risks bankrupting their air defenses, but joining the offensive alongside the United States and Israel threatens to provoke domestic unrest and invite devastating strikes on highly vulnerable water desalination plants and power grids. Ultimately, their core objective is regime survival and economic continuity, forcing them into a defensive posture where they bear the severe asymmetric costs of the combatants' war.

Three Theories Explain Why The Strategies Collide

To understand why this conflict may calcify into a volatile, escalating standoff, we must look to the mathematical architecture of the conflict.

The War of Attrition

Mathematicians Stephen Schecter and Herbert Gintis detail the “War of Attrition” as a conflict model where contestants continuously commit resources until one finally concedes. This perfectly models Iran’s operational strategy in the air and on the ground. Iran is betting that its deep magazines of cheap munitions will outlast the West’s expensive, slowly produced interceptors. When the United States and its Gulf allies must spend vastly more to intercept threats than Iran spends to launch them, the mathematical equilibrium favors prolonged conflict. Military strategists emphasize that wars of attrition in asymmetric conflicts rarely result in clean victories; instead, they tend to settle into “hurting stalemates” until the stronger side tires of the financial and logistical drain.

Brinkmanship (The Game of Chicken)

Schecter and Gintis also explore the concept of brinkmanship, defining it as the deliberate creation of a probabilistic danger to coerce an opponent into making concessions. The ultimate leverage in this standoff is economic versus existential. Iran is effectively holding the global economy hostage by threatening maritime traffic through the Strait of Hormuz and launching strikes against energy infrastructure. Conversely, the United States and Israel are using overwhelming air power and decapitation strikes to threaten the total collapse of the Iranian regime. Both sides are speeding toward a collision, risking a dual disaster—the violent fracturing of the Iranian state and a massive global economic depression—hoping the other swerves first. In a Chicken framework, the catastrophe occurs when both sides overestimate the other’s fear of war, tipping the system into a major escalation that neither side actually wanted.

Games of Incomplete Information

To understand why this spiral hasn’t stopped, we must look to John Harsanyi’s seminal work, “Games with Incomplete Information Played by ‘Bayesian’ Players.” Harsanyi demonstrates that when players lack exact knowledge of their opponents’ true capabilities, payoff functions, or internal constraints, they operate on subjective probability distributions—acting as “Bayesian” players.

As outlined in L.S. Shapley’s notes on Game Theory, rational players attempt to map sequential moves and “prune” the game tree via backward induction to find an optimal strategy. However, in the current conflict, this predictive process breaks down due to private, asymmetric information. The United States and Israel are forced to guess at Iran’s threshold for infrastructural pain before regime collapse, while Iran is forced to guess at the U.S. domestic tolerance for an open-ended war. Because each new missile salvo or decapitation strike updates these subjective beliefs but never fully resolves the underlying uncertainty, the actors remain highly vulnerable to costly miscalculations, making the game inherently unstable.

Each actor is trying to force the conflict onto a different strategic board.

The uncomfortable reality is that none of the four actors can easily exit the game they have chosen. The United States cannot ignore attacks on its forces or the security of global energy flows. Israel cannot abandon its doctrine of eliminating existential threats before they fully materialize. Iran cannot absorb strikes without demonstrating resilience to its own public. And the Gulf states cannot accept prolonged disruption to the economic lifelines that sustain their regimes.

When each side is locked into a strategy that is ‘rational’ on its own terms but incompatible with the others, escalation becomes difficult to stop and decisive victory becomes difficult to achieve. Unless the Iranian state completely fractures internally under the bombardment, or the U.S. completely exhausts its interceptor inventory, the system defaults to a “hurting stalemate”: Not a clean resolution but a grinding equilibrium of pressure, retaliation, and uneasy restraint, a low-to-medium intensity conflict that persists not because any actor wants it to continue, but because none can afford to lose the game they are already playing.

Adil Husain is the founder of The Intelligence Council, where he publishes independent analysis across education, technology, and global markets. His work focuses on surfacing uncomfortable truths early, before they become consensus, and helping decision-makers see around corners rather than react after the fact. He writes The Husain Signal to think in public.

📢 Ask me to speak to your company or institution.

For the first time, a large number of autonomous agents are interacting continuously, in public, without human participation and without any practical way for humans to intervene. There are no moderators in the loop. No approval gates. No escalation path. Humans can observe the system’s behavior, but observation is the only control surface left.

This isn’t a novelty demo. It’s a public version of something that already exists inside modern enterprises, where agents exchange information, trigger actions, and coordinate workflows across systems like security operations, cloud infrastructure, customer data, and finance. These interactions are hidden inside APIs, logs, and orchestration layers. When something goes wrong, humans discover the outcome later, after the system has already acted.

What Moltbook illustrates for everyone to see, in a kind of accessible, social media environment, are AI feedback loops forming and agentic behavior reinforcing itself without any governing human authority stepping in to govern at the speed at which the system operates.

This matters because the human-in-the-loop assumption still underpins how organizations talk about AI governance today. Policies assume human review. Controls assume human intervention. Accountability assumes a human decision point where a person could have acted differently.

Moltbook illustrates what an agentic world looks like when that human-in-the-loop assumption falls.

Once these systems interact faster than humans can meaningfully monitor or respond, oversight becomes retrospective.

And when we need to retrospectively figure out how AI plotted the overthrow of humans, we’ll be able to do that if Moltbook, and civilization, still exist. But the agents on it are moving too quickly for us to do anything about it in real time.

That condition already exists in financial markets, cloud infrastructure, and security operations. Moltbook simply makes it visible, undeniable, and impossible to hand-wave away.

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Record of Failure

On May 6, 2010, U.S. equity markets experienced the Flash Crash. Roughly $1 trillion in market value disappeared in minutes and then reappeared. Automated trading systems reacted to each other at machine speed. Human market-makers withdrew entirely because they could not determine whether trades were valid. More than 20,000 trades executed at prices over 60% away from fundamental value. Regulators later acknowledged the core issue was not error but speed beyond human comprehension. The response was circuit breakers, an admission that humans could not intervene in real time.

Two years later on August 1, 2012, Knight Capital lost $440 million in 45 minutes. The cause was not a rogue algorithm but dormant test code accidentally reactivated on one server out of eight. That single server executed roughly 4 million trades across 154 stocks, building $6.5 billion in unintended positions before engineers identified the issue. There was no kill switch. No effective position limits. By the time humans intervened, the loss was irreversible. The firm was effectively finished.

On March 18, 2018, an autonomous Uber vehicle struck and killed a pedestrian in Tempe, Arizona. The system detected the person but did not classify her as a threat requiring emergency braking. The human safety driver, tasked with oversight, was not watching the road. Internal warnings had already been raised that the vehicles were unsafe. The company faced no criminal charges.

These were systems operating as designed, with humans nominally present and functionally irrelevant at the moment of failure.

That pattern has not receded.

Enterprises have begun deploying autonomous systems explicitly designed to operate without continuous human approval. Cloud providers now market agents that investigate incidents, correlate logs across systems, update tickets, and initiate remediation workflows automatically. These systems are described as capable of operating for hours or days without intervention.

Security researchers have demonstrated repeated failures in this model. Compromised agents have been used to impersonate users, inherit excessive privileges, and chain actions across systems. In multiple cases, detection occurred after credentials were exfiltrated, configurations altered, or data accessed at scale. Oversight existed in documentation but not in execution.

Across finance, transportation, and enterprise IT, the record is consistent:

• Humans approved the systems.

• Humans reviewed the designs.

• Humans were listed as supervisors.

But when the systems acted up, humans were not in the loop.

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Societies Don’t Walk Away From Technology. They Fence It In.

On the rare occasions that societies have abandoned technologies because of the threat they posed, it is almost never because the technology is strange or unsettling. It happens when the technology breaks governance faster than institutions can adapt.

After the 2010 Flash Crash erased nearly a trillion dollars in market value in minutes, regulators did not debate the philosophy of automation. They installed circuit breakers. They acknowledged, explicitly, that humans cannot supervise systems operating at machine speed, so boundaries had to be hard-coded into the market itself.

The Montreal Protocol (1987) to protect the ozone layer did not outlaw refrigeration. It phased out the production and consumption of nearly 100 man-made chemicals such as chlorofluorocarbons (CFCs) because the externalities overwhelmed the system’s ability to self-correct.

The Amish community is a prominent example of a society that deliberately chooses not to adopt many modern technologies en masse. They don’t reject technology entirely; they evaluate new technology to determine if it will harm their community structure or values. Presently, they avoid automobiles, grid electricity, television, and, until recently, computers in the home, to maintain community solidarity.

These decisions typically come after evidence accumulates. The response isn’t typically moral panic but structural constraint.

That is where agent-to-agent systems now sit.

CISOs already report that most enterprises cannot answer basic questions about their AI agents: what they access, who authorized them, what they are doing, or whether they have spawned additional agents. Nearly half have already observed unauthorized behavior. A third report incidents or near-misses. These are not future risks. They are present-day operational facts.

Meanwhile, vendors continue to market autonomy as progress. Agents that correlate logs, query systems, modify configurations, escalate incidents, and communicate with other agents are framed as efficiency gains. What is rarely stated is the corollary: no human approval process can meaningfully keep pace.

This is the quiet failure mode.

• Human oversight remains on the org chart.

• Governance exists in policy documents.

• Control exists only in retrospect.

At some point, governments and modern enterprises will face the same choice as environmental leaders in 1987, financial regulators in 2010, or the Amish today. Not whether agentic collaboration at scale is impressive or inevitable, but whether unconstrained deployment produces outcomes that institutions and society can still absorb.

The likely response will not be a ban on agents, but segmentation, throttling, licensing, and enforced separation of capabilities. Fewer autonomous connections. Narrower scopes. Hard limits on what agents can initiate without human confirmation.

The open question is timing.

Will institutions act after contained losses, as in finance?
Or after cascading failure, as in the environment?
Or only after an incident makes restraint unavoidable?

History suggests that societies rarely walk away from or regulate powerful technologies, until they are forced to by externalities.

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Adil Husain is the founder of The Intelligence Council, where he publishes independent analysis across education, technology, and global markets. His work focuses on surfacing uncomfortable truths early, before they become consensus, and helping decision-makers see around corners rather than react after the fact. He writes The Husain Signal to think in public.

📢 Ask me to speak to your company or institution.