The Rest of the World Report | May 11, 2026 — Morning Edition
The View From Everywhere Else
Weekday morning and evening editions. Saturdays once. Good news on Sundays. All sources labeled.
REJECTED, RETURNED, AND RUNNING OUT OF TIME
Iran sent its counter-proposal. Trump rejected it overnight, calling it “TOTALLY UNACCEPTABLE” in a Truth Social post Sunday and accusing Tehran of “playing games.” The US has since sent its own response to Iran’s counter-proposal back through Pakistani mediators. Iran says it is reviewing it. The two sides are now on at least their third exchange of proposals, and Trump boards Air Force One for Beijing in three days.
Iran’s counter-proposal, delivered Sunday through Pakistan, included demands for war reparations, recognition of Iranian sovereignty over the Strait of Hormuz, a full lifting of the blockade, release of frozen assets, and an end to hostilities on all fronts including Lebanon. The US has insisted throughout that Iran’s nuclear program must be addressed as a precondition to ending the war. Iran’s proposal would defer nuclear talks to a later phase, after the shooting stops. That gap, sequence versus precondition, is where the negotiations have broken down repeatedly since February 28.
Overnight, Iran escalated beyond the negotiating table. Iranian forces launched drone strikes against Qatar, the UAE, and Kuwait, three Gulf states that host US military bases, framing the attacks as a response to their cooperation with American pressure. Qatar hosts Al Udeid Air Base, the largest US air installation in the Middle East. Striking the hosts of American forces while simultaneously exchanging peace proposals through Pakistani mediators is a signal Tehran has deployed before: that it retains the capacity and willingness to widen the conflict even as it negotiates.
Outside the United States, the proposal exchange is being read differently than Trump’s “playing games” framing suggests. Al Jazeera’s correspondent in Tehran reports that Iran is pursuing a deliberate three-phase approach: phase one focused entirely on ending the war on all fronts before nuclear talks begin, with Supreme Leader Khamenei personally required to approve any response before it leaves Tehran. Iranian analyst Mortazavi told Al Jazeera that Tehran believes these negotiations require “time and patience.” Iran’s institutional wariness of American good faith is rooted not in ideology but in a specific recent event: Iran entered talks with Washington in late February and was attacked on February 28 as those talks were underway. Pakistan’s foreign ministry, which is carrying the proposals between both sides, said Sunday it would not reveal details because “as mediators, we will not lose the trust of both parties.” Qatar, Saudi Arabia, Turkey, and China are all in active contact with Araghchi. The international read is not that Iran is being unreasonable. Two parties with incompatible sequencing demands are talking past each other, and neither side’s distrust of the other is irrational given the recent history.
Trump’s Beijing summit with Chinese President Xi Jinping on May 14 and 15 is now the hard deadline visible to both sides. The White House has said it wants a diplomatic framework in place before wheels up. But the framing of Beijing as a pressure mechanism Washington can deploy on Tehran misreads what China actually is in this negotiation. China is Iran’s largest oil customer, its primary economic lifeline, and the party Tehran trusts most. When Wang Yi met Araghchi in Beijing last week, he delivered two messages simultaneously: pursue diplomacy, and China reaffirms your strategic partnership. That is not the posture of a country preparing to squeeze Iran. It is the posture of a country positioning itself as the indispensable broker — the party both sides need.
Iran’s ambassador to Beijing made that positioning explicit on Sunday. China and Russia, he said, should serve as guarantors of any agreement at the UN Security Council level. That is a deliberate signal about sequencing: Tehran wants any deal anchored in multilateral great-power guarantees, not a bilateral US-Iran framework that a future American administration could abandon. The reason is not abstract. Trump withdrew from the JCPOA in 2018. Iran negotiated that deal in good faith and watched it dissolve. The demand for Chinese and Russian guarantorship is Iran’s institutional memory of that withdrawal written into its negotiating position.
That history shapes what Xi Jinping brings to the table on May 14, and what he may extract from it. China arrived at this summit having already received one significant concession: Trump’s trade truce, announced days before the meeting and widely read as Washington clearing the table for Beijing. Xi now holds that, holds Iran’s economic dependence, and holds Trump’s need for a Hormuz deliverable before November’s midterms. China has a well-documented pattern of using moments of American diplomatic dependence to advance its Taiwan position: accelerating pressure after the JCPOA withdrawal in 2018, testing the strait after the Afghanistan withdrawal in 2021. The asymmetry at this summit is structural: Trump negotiates transactionally and needs a win. Xi negotiates systemically and can wait. Ben Emons of Fed Watch Advisors told CNBC the base case is “managed détente with potentially thin deliverables.” The thinner those deliverables are on Iran, the more Beijing may have extracted elsewhere, in language on Taiwan, arms sales, or South China Sea posture, that will not appear in any public communiqué. Brent hit $104 at Monday’s open. The market is pricing the Iran uncertainty. It is not pricing the Taiwan question at all.
🇺🇸 What American readers need to know: Iran rejected the US framework, fired on Gulf allies hosting American troops, and sent back a counter-proposal the US has also rejected. The international read, from Islamabad to Doha to Beijing, is that both sides are still in this, and Pakistan is holding the thread. But the summit Trump is flying to on Wednesday is not a simple Iran negotiation. It is a meeting with the one country that holds leverage over both parties, run by a leader who has consistently used American need as an opportunity. What Trump brings home from Beijing may not look like what he went there to get.
Sources: CNBC (markets and business — Trump rejection, Iran counter-proposal terms, Beijing summit framing, confirmed this session); CNN live blog (US — Iran Gulf drone strikes, China guarantor proposal, confirmed this session); Al Jazeera (Qatar, state-funded/editorially independent — proposal sequence, nuclear sequencing issue, confirmed this session); Al Jazeera / Tehran correspondent (Qatar, state-funded/editorially independent — three-phase approach, Khamenei approval process, Mortazavi analysis, confirmed this session); Al Jazeera / Islamabad correspondent (Qatar, state-funded/editorially independent — Pakistan mediation posture, regional mediator contacts, confirmed this session)
“DRAW IT DOWN TO ZERO”
Benjamin Netanyahu went on CBS’s 60 Minutes Sunday night and said something no Israeli prime minister has said before: he wants to end US military financial support for Israel entirely. “I want to draw down to zero the American financial support, the financial component of the military cooperation that we have,” he told CBS. “We’ve come of age.” He said he doesn’t want to wait for the next Congress. He wants to start now.
Israel currently receives $3.8 billion in US military aid annually under a $38 billion agreement running from 2018 to 2028. Netanyahu’s statement can be read in multiple ways. It may reflect genuine long-term strategic thinking: Israel’s domestic arms industry, Rafael, Elbit, and Israel Aerospace Industries, has grown substantially, and military self-sufficiency is a credible long-term ambition. It may also reflect political frustration. Congressional support for Israel has frayed since October 2023, and public support has declined sharply: a March Pew survey found 60 percent of US adults hold an unfavorable view of Israel, up seven points in a year.
There was more. When asked whether it was possible to topple the Iranian regime, Netanyahu said: “Is it possible? Yes. Is it guaranteed? No.” He said that if the Iranian regime were weakened or toppled, “it’s the end of Hezbollah, it’s the end of Hamas, it’s probably the end of the Houthis, because the whole scaffolding of the terrorist proxy network that Iran built collapses.” He also acknowledged that Israeli planners had underestimated Iran’s ability to close the Strait of Hormuz before the war began: “It took a while for them to understand how big that risk is, which they understand now.”
🇺🇸 What American readers need to know: Netanyahu told the American public on Sunday that he wants the $3.8 billion annual relationship wound down to zero. Regime change in Iran remains Israel’s unstated objective even as the US pursues a negotiated framework. Those two positions are not easily reconciled with each other, or with Washington’s current diplomatic track.
Sources: Reuters via US News (wire — 60 Minutes quotes, aid figures, Iran regime change remarks, confirmed this session); Bloomberg (markets and business — aid agreement details, confirmed this session)
LEBANON: 75 DEAD IN TWO DAYS.
The Israeli-Lebanese “ceasefire” that took effect April 16 has killed more people in the past 48 hours than most active conflicts kill in a week. Israeli strikes killed 39 people across southern Lebanon on Saturday, Lebanon’s health authorities said, some of the most intense attacks since the “ceasefire” began. A 12-year-old girl was among the dead. On Sunday, strikes killed 36 more and wounded 74 others, with attacks hitting Nabatiyeh, Bdeyas, Majdal Selm, al-Mansouri, and a factory near Al-Ramadiyah. Hezbollah retaliated with drone attacks on northern Israel on both days.
The Israeli military says it is targeting Hezbollah infrastructure, weapons storage, and command positions. Lebanon’s cumulative death toll since Israel renewed major operations on March 2 now stands above 2,700, with more than one million people displaced, over 20 percent of the country’s population. Israel has issued new evacuation orders for residents of southern villages, warning that anyone near Hezbollah fighters or facilities is at risk. The orders are arriving for communities that have already been struck repeatedly.
The Lebanese government’s delegation heads to Washington on Wednesday for the third round of direct talks with Israel, mediated by the US State Department. Lebanese officials have said their goal is a non-aggression pact and full Israeli withdrawal. Israel has said it will not accept a halt to hostilities as a precondition for negotiations. The State Department confirmed the talks are proceeding as scheduled. They are proceeding into the same week as the Trump-Xi Beijing summit and the Iran MOU deadline: three simultaneous high-stakes tracks, all converging on May 14 and 15.
🇺🇸 What American readers need to know: The US is mediating Lebanon-Israel peace talks that begin Wednesday. Israel killed 75 Lebanese in the 48 hours before those talks. The Lebanese delegation is arriving at a table where the “ceasefire” the US brokered has killed more people in the past month than many wars kill in a year.
Sources: Euronews / AP (wire — Saturday toll, ceasefire context, confirmed this session); New Arab (UK-based, Arab editorial perspective — Sunday toll, displacement orders, confirmed this session); CNN live blog (US — Washington talks confirmation, 12-year-old casualty, confirmed this session); Al Jazeera tracker (Qatar, state-funded/editorially independent — cumulative Lebanon toll, confirmed this session)
THE DIESEL CLOCK
The Iran war has a domestic consequence that is building quietly and will arrive loudly. It is not at the gas pump, though pump prices are already elevated. It is in the diesel tank, and the clock on it is ticking toward summer.
The US Energy Information Administration’s April Short-Term Energy Outlook confirmed that US diesel inventories entered 2026 below the 10-year average and have continued drawing down as the Strait of Hormuz disruption persists. The EIA forecast diesel prices averaging $4.80 per gallon nationally across 2026, with a peak above $5.80 in April, the highest since 2022. The agency’s model assumed Hormuz flows would begin recovering in May. They have not. The EIA’s own administrator acknowledged the forecast was “highly contingent” on the duration of the closure, and that full restoration of flows would take months even after a deal is reached.
Energy economist Anas Alhajji and analysts at Energy News Beat, drawing on EIA weekly inventory data, have warned that if the Hormuz disruption continues through summer, as now appears certain regardless of when a deal is struck, US distillate inventories could reach critically low levels by late July. That is the window when agricultural demand peaks: harvest equipment runs on diesel, and so do the trucks that move food from fields to distribution centers to grocery shelves. NPR’s energy analyst Patrick De Haan told the network in March that this supply disruption is “completely focused on the supply side” and “insurmountable to overcome” in the near term. The 2022 spike had a demand component that self-corrected as the economy normalized. This one does not.
The United States does not import meaningful quantities of diesel through the Strait of Hormuz directly. American refineries produce most of the diesel the country consumes. The mechanism is more indirect: the Hormuz closure has pushed Asian buyers to compete for Atlantic Basin diesel, tightening global supplies and pushing refining margins to levels that favor exports over domestic inventory building. Diesel crack spreads in some regions hit $44 to $50 per barrel in early April, making it profitable for US refiners to ship fuel to Singapore and Pakistan rather than stock domestic terminals. The result is a domestic inventory that is drawing down faster than it would in a normal year, heading into the season when it is needed most.
🇺🇸 What American readers need to know: American refineries are producing diesel. American refiners are choosing to sell it to the highest bidder: Singapore, Pakistan, and Australia, not domestic terminals. That is not illegal. It is the market working exactly as designed. The consequence is that domestic inventories are draining heading into harvest season, when American farmers and truckers need that fuel most. The food price increases already underway from the war’s fertilizer disruption, a story ROTWR has covered, will be compounded by a diesel crunch if the Hormuz disruption continues through summer. This is what unfettered market mechanics look like when a foreign war creates a price signal: American consumers and farmers absorb the cost so that refiners can capture the premium. The number to watch is EIA’s weekly distillate inventory report. If it keeps drawing down through June, July will be a hard month at the farm and at the grocery store.
Sources: EIA April Short-Term Energy Outlook (US government primary source — inventory levels, diesel price forecast, Hormuz assumption, confirmed this session); NPR / Patrick De Haan interview (US — supply-side disruption analysis, confirmed this session); Energy News Beat / IEA data (energy industry — crack spread figures, inventory trajectory, confirmed this session)
ALSO DEVELOPING — for the curious:
War Powers Resolution: The 60-day deadline under the War Powers Resolution of 1973 passed on May 1 without congressional authorization for the Iran war. The Senate has now blocked war powers resolutions five times — the latest vote on April 23 failing 46-51, with Republican Rand Paul the only GOP senator voting with Democrats and Democrat John Fetterman the only opposition. The Trump administration has declined to seek a supplemental appropriations bill, declined to say how much the war costs, and has made no public effort to build congressional support. JD Vance said before the war that the Resolution is “fundamentally a fake and unconstitutional law.” Every exchange of fire — the Hormuz clash, the Gulf drone strikes, the disabled tankers — adds to the body of unauthorized military action accumulating beyond that deadline. Full treatment tonight. — CNN Politics; Time; Democracy Now
NUMBERS AT PUBLICATION
🇮🇷 Iran: 3,636+ killed (HRANA floor estimate — FROZEN since April 7; no updated HRANA report this session; Iranian Health Ministry figure as of May 5: 3,468 — methodology differs)
🇱🇧 Lebanon: 2,700+ killed (Lebanese Ministry of Public Health — figure rising rapidly; 36 killed Sunday alone per Al Jazeera)
🇮🇱 Israel: At least 26 killed, 7,791 wounded (Al Jazeera live tracker, as of May 5)
🌍 Gulf states: At least 28 killed (Al Jazeera live tracker — figure stable, no update this session) 🇺🇸 US military: 14 KIA confirmed (GlobalSecurity.org, May 7)
🛢️ Brent crude: $104.00/barrel (editor-confirmed, Monday morning)
⛽ US gas: $4.52/gallon national average (GasPriceLive, editor-confirmed)
Sourcing note: Iran casualties sourced to HRANA (US-based Human Rights Activists News Agency), a floor estimate. Iranian Health Ministry figure cited separately. Methodology differs; figures should not be treated as directly comparable.
“Whenever the people are well informed, they can be trusted with their own government.” — Thomas Jefferson, 1789