Dr M Ali Hamza
In gambling, a player often convinces himself that after a string of losses, a win is somehow due. It feels logical, even reassuring, but it is wrong. Each roll of the dice, each flip of the coin, is independent. This is the essence of the gambler’s fallacy: the mistaken belief that past outcomes influence future ones.
A similar illusion quietly shapes high-stakes diplomacy. In the long and strained relationship between Iran and the United States, cycles of negotiation and escalation often carry an unspoken assumption, that persistence alone will eventually produce a breakthrough. That if talks have failed repeatedly, the next round must somehow succeed.
Consider the recent engagement in Islamabad. After nearly forty-nine years of hostility, the mere fact that both sides sat across the table for seventy-two hours was, in itself, significant progress. Expectations, however, quickly outpaced reality. The talks stalled, as many before them have. Yet preparations for a second round are already underway, with Pakistan investing diplomatic capital and logistical effort to bring both parties back again. Beneath this effort lies a familiar belief: that repetition will eventually yield results.
But diplomacy does not operate on streaks. Each negotiation is shaped not by the number of previous failures, but by shifting political interests, strategic calculations, domestic pressures, and visible actions on the ground. Assuming that time alone will correct outcomes risks mistaking hope for strategy.
This fallacy extends beyond negotiations into the realm of escalation. Both Iran and the United States have, at various points, relied on pressure tactics, economic sanctions, military signaling, and strategic leverage over key assets such as the Strait of Hormuz. Roughly 20% of the world’s oil supply passes through this narrow corridor. The implicit assumption is straightforward: increase pressure, and the other side will eventually concede.
Yet history suggests otherwise. Sanctions regimes have expanded, oil flows have been threatened, and military posturing has intensified, but neither side has fundamentally altered its core positions. Instead of capitulation, there is adaptation. Instead of resolution, there is recalibration.
And while policymakers play this high-stakes game, the consequences are borne elsewhere. The true victims of this fallacy are not seated at negotiation tables, they are spread across a region that is home to more than half of the world’s population.
The economic effects are both immediate and far-reaching. One of the most critical disruptions lies in the supply of urea and fertilizers. A significant portion of global fertilizer trade is linked, directly or indirectly, to shipping routes through the Strait of Hormuz. Even minor disruptions can push prices upward. Over the past year, fertilizer prices in some markets have risen by 15% to 25%during periods of heightened tension, increasing input costs for farmers.
The ripple effect is predictable. Higher fertilizer costs reduce usage, which in turn lowers crop yields. For countries already grappling with food inflation, where prices in some regions have risen by over 20% year-on-year, this compounds an already fragile situation. Food security, particularly in import-dependent economies, becomes less a policy challenge and more a structural risk.
The pharmaceutical sector faces a parallel strain. Industry estimates suggest that up to 40% of active pharmaceutical ingredients (APIs) used in generic drug manufacturing rely on complex international supply chains. When shipping routes are disrupted or rerouted, freight costs can rise by 30% to 50%. Air cargo constraints further exacerbate the problem, delaying shipments and increasing production costs. The result is simple: medicines become more expensive and, at times, less available.
Beyond these essentials, the broader business environment absorbs the shock. Shipping insurance premiums increase, fuel prices fluctuate, and delivery timelines become uncertain. For manufacturers, this means higher production costs. For retailers, it means inconsistent inventory. For consumers, it means inflation. Global trade, already navigating post-pandemic adjustments, faces yet another layer of unpredictability.
Nowhere are these disruptions more visible, however, than at the local level. Islamabad’s recent week-long lockdown, imposed ahead of the anticipated second round of talks, offers a telling example. For nearly seven days, key parts of the city were effectively sealed. Major roads were blocked, public transport was halted, and commercial activity slowed to a crawl. In a city of over two million people, even partial restrictions quickly translate into widespread disruption.
Islamabad depends heavily on daily inflows of food items; fresh vegetables, fruits, and safe dairy products. With transport routes restricted, delivery cycles were disrupted by 24 to 48 hours. In perishable markets, such delays are not minor, they are decisive. The impact extended to medicines. Pharmacies experienced delays in restocking essential drugs, particularly those reliant on inter-city distribution networks. While not a full-scale shortage, the strain was visible enough.
For small and medium-sized businesses, the consequences were even more severe. These enterprises, which account for nearly 90% of Pakistan’s business sector and employ a significant portion of the urban workforce, operate on narrow margins and continuous cash flow. A week of disruption is not an inconvenience; it is a shock.
Shopkeepers across affected areas reported declines in customer footfall of up to 50% . Many daily wage workers lost an entire week’s income. Small retailers, already navigating inflationary pressures, faced both reduced sales and delayed inventory replenishment. The supply chain, once disrupted, does not reset overnight; it lingers, affecting business activity even after restrictions are lifted.
What emerges from this sequence is a clear pattern: decisions driven by flawed assumptions at the geopolitical level cascade into tangible economic stress at the local level. The gambler’s fallacy, when translated into policy, is not merely an abstract error in reasoning; it carries real costs.
The lesson is neither cynical nor defeatist. Dialogue remains necessary, and persistence is often essential in diplomacy. But persistence must be grounded in realism, not in the illusion of inevitability. Outcomes are shaped by strategy, incentives, and timing, not by the number of attempts made.
