🟢 Iran ceasefire holding, AI regulation moratorium watered down, US executive power unhobbled | Global Risks Weekly Roundup #26/2025.

Iran, NATO increased spending, video addictions.

Executive summary

After US airstrikes damaged Iranian nuclear facilities, a ceasefire between Iran and Israel has so far largely held. Iran did not close the Strait of Hormuz. Khamenei and the Islamic Republic remain in power; Khamenei is still in hiding and may not be well. Iranian officials have expressed their intent to resume the country’s nuclear program, which is a sticking point for potential future negotiations with the US.

Forecasters estimate an 8% (5% to 30%) chance of regime change in Iran by the end of August, and a 19% (10% to 70%) chance by the end of the year. On whether Khamenei specifically will officially be in power, their estimates are 85% (65% to 92%) and 62% (25% to 83%) for the same time periods.

All NATO members except Spain agreed to increase their defense spending.

Forecasters assign a 63% chance (50% to 85%) to some form of AI regulation moratorium ultimately passing in the US budget bill. However, to be in the budget reconciliation bill (the “Big Beautiful Bill”), the moratorium language must refer to the budget, and as a result, it has now been greatly watered down to only apply to states that choose to take part of a $500M pot allocated for AI development.

The US supreme court repudiated nationwide injunctions by federal courts, making the US executive more powerful relative to the judiciary, though leaving (slower) class action suits as possible checks on executive overreach.

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​​Geopolitics

Middle East

Iran

US attacks

The extent of the damage to Iran’s nuclear program still remains uncertain. On the one hand, the Fordow facility was itself, on balance, likely severely damaged. Trump implied that Israel sent a ground force to assess the damage there. Damage assessment claims about Fordow, Natanz, and Isfahan had large components of speculation, political gamesmanship and polarization in the first days after the strikes, as detailed assessments take time. Some information, such as the numbers of bombs on target and bombs detonated, is confirmable, and in particular, six MOPs (Massive Ordnance Penetrators) were dropped on each of two holes in Fordow, which is more firepower than we initially estimated.

On the other hand, not all Iranian sites have been hit, and enriched uranium was probably moved out of Fordow before the attacks on that site. Satellite imagery suggests that Kūh-e Kolang Gaz Lā, a nuclear site buried deeper than Fordow we mentioned in our previous report, was not targeted during the US and Israeli attacks on Natanz. This could be a potential new base for Iran’s nuclear program. US officials have openly acknowledged that some sites, including one below Isfahan, are too deep for bunker-buster bombs to reach.

Israel's defense minister, Israel Katz, wrote on X that he "instructed the IDF to prepare an enforcement plan against Iran that includes: maintaining Israel's air superiority, preventing nuclear advancement and missile production." Trump said that he would “absolutely” consider bombing Iran again if intelligence concluded that Iran was able to enrich uranium to concerning levels again.

It’s not clear to what extent repeated strikes on Iran’s nuclear facilities would stop or slow down attempts by the country to continue its nuclear program. On the one hand, Iran can build facilities even deeper underground. On the other hand, Israel and the US can try to use a “moving the grass” strategy, striking each new facility (or its entrances) in turn.

Aftermath of US attacks

Iran retaliated to US attacks with a very measured response against a US airbase in Qatar, cleared with both Qatar and the US beforehand. Iran did not close the Strait of Hormuz. Although the Iranian parliament had endorsed closing the strait, the Supreme National Security Council ultimately decided against it.

A ceasefire between Iran and Israel appears to be holding. Trump announced the ceasefire and then demanded that Israel refrain from striking back at Iran, which initially fired at Israel after the ceasefire had begun; Trump later compared the countries to children fighting on the playground. Forecasters see this ceasefire as lowering the likelihood of regime change, if it holds.

State of diplomatic talks

Nuclear negotiations between the US and Iran appear to be at an impasse, with a large gap between both sides’ public announcements, with the US saying it will require Iran to give up on uranium enrichment and Iran saying it won’t.

In a pre-recorded speech, Khamenei declared victory over the “fallacious Zionist regime” and over the US, which “achieved nothing” and was “dealt a heavy slap”. In response, Trump posted on social media that he “immediately dropped all work on sanctions relief, and more”, perhaps ending plans to hold nuclear talks, which Iran’s foreign minister also said were not going to happen.

And yet, both sides could pivot on a dime, and public moves are constrained by the need to signal strength to domestic audiences—while sensitive negotiations can happen in private through mediators.

Iran’s Supreme Leader, Ayatollah Khamenei, isn't well.

In his most recent video statement, his speech was noticeably slower and more halting, and he appeared to be more tired, compared to a week and a half ago or months ago. The AP reported that, "The 86-year-old, a skilled orator known for his forceful addresses to the country’s more than 90 million people, appeared more tired than he had just a week ago, speaking in a hoarse voice and occasionally stumbling over his words." A reporter commented that, "This morning’s speech was jarring because he has aged ten years in two weeks." One forecaster also noticed what may be lip smacking in his most recent video, which can be associated with levodopa treatment for Parkinsonian symptoms. Some of this behavior could also be related to psychological shock resulting from the attacks and from the deaths of many of his friends and long-term colleagues. As a rough point of reference, a US 86-year old male faces an 11% probability of dying within one year.

Khamenei has reportedly not been involved in making some key decisions recently. Decisions around the truce with Israel were reportedly handled instead by Iran’s Supreme National Security Council and President Masoud Pezeshkian. Previously, Khamenei had transferred key decision-making powers to IRGC leadership to ensure continuity of command after Israeli attacks. There is a broad spectrum of potential futures for Iran’s government, ranging from the status quo to an informal shift in power within the existing regime to partial or complete regime change.

More on Iran:

• The US and Israel are sending mixed messages about whether regime change might be back on the agenda later. Israel's defense minister said that Israel had wanted to assassinate Khamenei, but that they did not have an opportunity to do so. Rubio said that the US isn't pursuing regime change, but that Trump sees regime change as likely if Iran doesn't change course.

• The Iranian regime arrested over 700 people they accuse of working with Israel, and executions have started. The regime claims to be executing “Israeli spies,” but it may also potentially be eliminating people who oppose the regime, under the guise of destroying Israeli spy and sabotage rings. This has a similar appearance to the immediate aftermath of the coup attempt against Erdogan in Turkey, although in this case, Iran was attacked by Israel.

• The Atlantic reported on one coup plot, with at least some contacting their counterparts in Gulf countries. Some reports on X of likely varying accuracy discuss other potential plots.

• Israel has killed at least 14 nuclear scientists.

• Trump slammed Russia’s Medvedev for claiming countries will give Iran nuclear warheads.

Gaza

According to Al Jazeera, on June 30, at least 80 Palestinians were killed in Gaza, and “since May 27, at least 583 Palestinians have been killed and 4,186 injured while waiting for food at aid distribution centers sites operated by the Israeli- and United States-backed Gaza Humanitarian Foundation.” The humanitarian situation is deteriorating. A Haaretz article “quotes multiple anonymous Israeli soldiers describing what they say are the military's attacks on people trying to get food aid in Gaza since May 27. The soldiers say they were ordered by commanders to fire at unarmed civilians who were approaching food distribution sites during off hours, even when the crowds posed no threat.”

Netanyahu ordered a halt to “aid deliveries in Northern Gaza” after pressure from far-right finance minister Smotrich, who “threatened to quit the coalition” government, claiming Hamas was looting supplies.

United States

Legal

The Supreme Court issued two stays and a ruling rolling back, for now, federal stays on deporting undocumented immigrants to countries where they have no ties without additional due process requirements, stripping immigrants from some countries of temporary legal or parole status in the US, and rolling back a nationwide injunction against denying birthright citizenship to children born to people living in the US illegally or temporarily, and repudiated the concept of universal or nationwide injunctions. Liberal justices focused on the irreparable harms being done to the plaintiffs and the need for nationwide injunctions to prevent similar harm to others, while conservative justices focused on the more technical point of to what extent federal judges have the authority to block executive action.

Tariffs and trade

The White House said that Trump’s July 9 tariff-pause deadline could potentially be extended if agreements had not yet been reached.

Progress is being made towards a trade agreement between the US and China. On Friday, US Treasury Secretary Bessent announced that China had agreed to expedite the granting of rare-earth export licenses it now requires for US sales. The Chinese Commerce Ministry said that, “In turn, the United States will lift a series of restrictive measures it had imposed on China,” likely referring to US restrictions on the export of advanced computer chips to China.

EU leaders are unhappy about tariff levels in the latest US trade proposal and have even floated the idea of joining the Asia-Pacific trade bloc. European NATO countries plan to increase their defense spending over the coming decade, and to spend some of that increase on the US defense industry; it has been hoped that such plans would help to win more favorable trade considerations from Trump.

On Friday, Trump ended trade discussions with Canada over new Canadian taxes on digital services that would hit US tech firms; late Sunday, Canada rescinded those taxes hours before they were to take effect. Canada’s finance ministry said that Canadian PM Carney and Trump will resume trade negotiations, with the goal of reaching a deal by July 21.

More on the US:

• The US dollar has fallen 10% in the first half of 2025 compared to a basket of other currencies, in its worst first half-year since 1973, a couple years after the US abandoned the gold standard for international convertibility.

• Analyses suggest that the US used up approximately 15-20% of its THAAD missile interceptor stockpile in the recent conflict with Iran. And the US issued a worldwide caution for American travelers after the US bombed nuclear facilities in Iran.

• A younger, much more left-leaning candidate, Zohran Mamdani, won the Democratic primary elections for New York mayor; Mamdani, age 33, beat out former NY Gov. Andrew Cuomo, age 67. His victory raises the question of to what extent similar candidates could reflect Democratic voter sentiment and capture Democratic votes in the US more broadly.

Europe

Russia reportedly plans to train 600 Chinese troops using tactics developed in the war in Ukraine. Ukraine troops have received training and help with battle planning from the US; however, US-designed battle tactics have had to be adapted to conditions in Ukraine and the prevalence of drones.

The UK government announced plans to purchase from the US 12 F-35A fighters that are capable of carrying nuclear weapons.

At a NATO summit held in the Netherlands, all NATO members except Spain agreed to increase their defense spending, including weapons and ammunition sent to Ukraine, to 3.5% of GDP, and their infrastructure spending to 1.5% of GDP, by 2035.

Finland, Estonia, Latvia, Lithuania, and Poland are planning to place land mines along their borders with Russia. All of these countries have announced that they plan to withdraw from the Ottawa Convention, which bans the use of anti-personnel mines.

Asia

China continues to rapidly grow its stockpile of nuclear warheads. It now has an estimated 600 warheads, up from 500 last year. The country also revealed a tiny mosquito-sized drone designed for spying.

Japan conducted its first-ever surface-to-ship missile test, on its own territory.

Africa

Human Rights Watch said that at least 120 children have been abducted recently by jihadist insurgents in Mozambique.

A successful Polymarket forecaster gives it a 50/50 chance that Somalia will fall to al-Shabaab.

AI and Technology

A proposed ban on state-level regulation on AI was reported to have initially passed the Byrd rule in the Senate, which could have been used to strike it from the bill as not related to budgetary matters. The Senate parliamentarian then asked the Commerce Committee to rework the language, but the ban was later re-confirmed to be compliant with the Byrd rule. However, in the end, the ban would only end up applying to states that choose to take part of a $500M pot meant for AI development, and so may not bind states like NY or California, which may choose not to accept any of those funds. Initial plans were instead to tie it to $42B in broadband funding, which would have had more bite. Forecasters assign a 63% chance (50% to 85%) to some form of moratorium ultimately passing.

Presidents Trump’s and Xi’s informal trade agreement may result in the US lifting some restrictions on exporting AI chips to China. Despite this new agreement, the Trump administration is considering a package of executive actions aimed at boosting the US position in an AI race against China.

Musk may adjust Grok 4 to be more critical of mainstream media. He describes the current version as “parroting legacy media” and the next version as “adding missing information and deleting errors”, while mainstream media worries that Musk will instead make it parrot Musk’s own ideology.

Youtube shorts, Tiktok videos and Instagram reels are pretty strongly optimized, but they may have recently become even more so with the advent of cheap AI-generated video. Because these videos hit kids hard, ad revenue sharing creates powerful incentives to target kids further (cf. Ivan Vendrov’s Aligning Recommender Systems as Cause Area).

Google, Meta and Apple are lobbying for the EU to pause implementation of the EU AI act. A group of NGOs and experts, including Nobel Prize winners Daron Acemoglu and Geoffrey Hinton, wrote to EU Commission President Ursula von der Leyen, urging her to “resist pressure from those attacking the rules on general-purpose AI“.

More on AI:

• Meta has poached three more OpenAI researchers for its superintelligence project.

• A federal judge ruled against a group of authors in their copyright case against Meta, saying that the authors hadn’t presented enough evidence that Meta’s AI would dilute the market for their work. A similar lawsuit was opened against Microsoft.

• A CDC report on vaccines and autism appears to have included an AI hallucination of a study that doesn’t exist.

• Meta’s CTO has been enlisted in a new US Army corps, along with senior figures from other top tech firms, including Palantir and OpenAI.

• ChatGPT told a reddit user to mix bleach and vinegar, which would produce chlorine gas, which was used as a chemical weapon in WWI.

• Here is a tool that is trying to cause psychosis in LLM models and to embed itself into their training inputs.

• Google DeepMind released AlphaGenome, an AI model that predicts the molecular functions of genetic sequences, with a focus on non-coding sequences.

Biorisks

A warming climate has caused tremendous growth in the geographical range of lone star ticks in the US, and this has led to an explosion of cases of alpha-gal syndrome: an allergy to mammals meat. Two dozen cases were first identified in the US in 2009, and the US CDC estimates that more than 500,000 people in the US currently have the disease. Experts are warning that the ticks that carry this disease in the US could cover the entire eastern half of the country and “soon” infect millions of people. One expert said of this tick species, “They will hunt you, they are like a cross between a lentil and a velociraptor”. In other parts of the world, alpha-gal syndrome is caused by other species of ticks. In general, we are seeing many diseases expand and shift their geographic ranges as a result of climate change.

The US will stop funding GAVI, the global vaccine alliance that provides vaccines to poor children around the world, at the direction of Health Secretary Robert F. Kennedy Jr. The US has provided about $300 million annually to GAVI.

Climate and Nature

An intense heat wave in Europe can be expected to cause deaths – but probably not as many as in 2003, when many younger family members were on vacation and unavailable to help elderly relatives.