No agreement was reached between the United States and Iran in the latest round of talks held in Islamabad, as negotiations concluded without a breakthrough despite intensive engagement.

The crucial next step is for each side — informed by a clear-eyed assessment of its own strengths and its opponent's, as well as the practical incentives — to build on their mutual willingness to talk, cease hostilities and engage in genuine negotiation to arrive at an outcome both can accept.

Although fighting while negotiating is likely to become the norm, it must be noted that the way the negotiations unfolded has exposed a bitter truth that a bargain is probably impossible when some seem to refuse to play by the rules.

With the connivance of the US, Israel has intensified strikes in Lebanon, while Iran insists any ceasefire must include Lebanon. What was supposed to be a ceasefire deal has been anything but.

From a game theory perspective, this is a three-level problem with very different incentives. As some observers say, Washington wants de-escalation without looking weak. Tehran wants sanctions relief without surrendering its strategic leverage. And Tel Aviv wants permanent "security" at the cost of that of Israel's neighbors.

The result is the lack of "tit-for-tat" cooperation, the proven strategy for rebuilding trust. Instead of reciprocal restraint, every move is met with escalation elsewhere. A ceasefire in the Gulf is offset by bombings in Lebanon. A consideration to "reopen" the Strait of Hormuz is countered by threats to close it again. Even the reported US naval push to "secure" the waterway only highlights how easily global economic stability can be weaponized as a cover for possible preparations for future offensives.

Washington, for its part, is trapped by a weak best alternative to a negotiated agreement. Prolonged conflict risks higher oil prices, domestic backlash and military overstretch. Yet any deal that falls short of maximalist goals — whether on uranium enrichment or Iran's regional proxies — would aggravate domestic pressure. The US thus seems to be oscillating between urgency and hesitation, a combination that can shake a negotiator's standing.

Israel's relentless offensive campaigns as well as a potential US naval push through the Strait of Hormuz, during the agreed ceasefire, create exactly the kind of environment that makes agreement difficult. In effect, Israel tries to hold a veto over a possible deal between the US and Iran, even if it is not at the negotiating table in Pakistan. The negotiation then becomes a repeated game with an unpredictable spoiler — and in such games, mutual trust rarely survives. The US naval build-up and preparation for a ground offensive to control Kharg Island also fail to instill confidence that it is negotiating in good faith.

Against that backdrop, Beijing's consistent position — emphasizing ceasefire, restraint and political dialogue — offers a contrast to the military noise that is drowning out the possibility of talks producing results.

Where Washington and Tehran bargain case-by-case over sanctions and enrichment levels, the five-point initiative jointly proposed by China and Pakistan is focused on systemic de-escalation: an immediate halt to hostilities, protection of civilians, safeguarding shipping lanes, and restoring the primacy of the UN Charter. This distinction matters. As long as the Middle East remains a multifront contest, any USIran ceasefire agreement should bear the big picture in mind, and should be invulnerable to third-party vetoes.

The current moment is not yet a prelude to peace. It is a test of whether the region's actors can escape what game theorists call the "reciprocal fear of attack". So far, the evidence is not encouraging. A ceasefire that does not hold in Lebanon. Naval maneuvers that signal both aggression and desperation. Future negotiations that are likely to proceed in the shadow of escalation. All point to a fragile equilibrium. The economic dimension only heightens the stakes. Disruptions to the Strait of Hormuz have already rattled energy markets, with ripple effects reaching worldwide.

The tragedy of the situation is that everyone understands the cost of failure, yet no one trusts the other side enough to avoid it. Until that changes, even the most carefully brokered ceasefire will remain what this one appears to be: a pause in a conflict that has not yet proved costly enough to all the warring parties for them to end it.