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Artificial Intelligence
(Rebecca Patterson – Council on Foreign Relations) The last decade has seen economics and financial markets play increasingly center-stage roles in driving countries’ national security and geopolitical goals. Those with greater economic and market resources, both broadly and through narrow but critical points of leverage, had a greater ability to shape global power dynamics. That trend has now collided with a separate structural change that is advancing at an incredible pace: the development of artificial intelligence (AI). The influence that AI has on different countries’ economic futures and resulting geoeconomic abilities will help define the global balance of power. So who is most likely to see the greatest economic benefits of AI? It’s an impossible question to answer with much confidence, given all the unknowns about the speed and shape of AI’s future development as well as how countries and companies navigate the innovation. That said, there are several variables that can help determine which countries are most likely to be able to capture AI in a way that most strongly supports their respective economies. While developing frontier models can help drive economic “winners,” it is not the only path to faster economic growth. Put another way, the United States and China, leading the frontier AI model race, will not necessarily become the largest economic beneficiaries. Equally important will be a country’s labor-market structure, fiscal capacity, financial markets, social readiness, and the interconnection between potential labor displacement and consumer demand. Winners in this race will also need to maintain strong relationships with supply-chain allies. In addition, there will almost certainly be countries that are not broad AI economic winners but still retain geoeconomic leverage thanks to dominating a key input required for AI to function. – AI’s Economic Winners | Council on Foreign Relations
China – Belarus
(Sari Arho Havrén – RUSI) On 29 June 2026, Chinese President Xi Jinping told Belarusian President Alexander Lukashenko that China supports Belarus in safeguarding its territorial integrity. Beijing has said nothing equivalent of Ukraine at any point since Russia’s full-scale invasion. The gap is not accidental, and the grammar explains it. In the lexicon of Chinese diplomacy, the phrase ‘territorial integrity’ is in near-constant use, but it does not always carry the same weight. Beijing deploys it in at least three distinct grammatical registers, and it is one of the more reliable indicators of where a country sits in China’s strategic order. The strongest register is the active guarantor formula: China supports a named country in safeguarding its sovereignty, independence and territorial integrity. The weakest is the universalist deflection: the sovereignty and territorial integrity of all countries should be respected. Between them sits the reciprocal formula, in which mutual respect for sovereignty and territorial integrity is named as the basis of a bilateral relationship. The verbs – support against respect – and the objects – a named partner against ‘all countries’ – carry the meaning. The registers are codified rather than casual; Foreign Ministry language is drafted with care, and a shift between them is a deliberate act. – Assessing China’s Language on its Stance on Ukraine and Belarus | Royal United Services Institute
India
(Chietigj Bajpaee – Chatham House) An Indian youth movement led by an organization calling itself ‘the Cockroach Janata Party’ (CJP) has called a halt to weeks of protest in India, after securing a significant victory: India’s government has acceded to its key demands, and the education minister has resigned. The rise of the CJP has been remarkable. It began as an online satirical platform, responding to a remark by India’s chief justice in which he referred to the country’s unemployed youth as ‘cockroaches’. But since May it has swiftly developed into a real movement for political and social change, tapping into broader dissatisfaction among India’s young people. The immediate trigger was a leak in the country’s medical examinations, which over 2.2 million students were due to sit in May. There were reports of several suicides associated with the decision to cancel and then reschedule the exams. The CJP began protests at a site in New Delhi near India’s Parliament, calling for the resignation of the education minister and compensation for affected families. Protests also took hold in other parts of the country. Movement founder, Abhijit Dipke, returned to India in June to lead the demonstrations. The size of crowds grew from hundreds to thousands after a veteran activist, Sonam Wangchuk, who went on a hunger strike in support of the CJP demonstrations, was forcibly removed from a protest – ostensibly on health grounds. Then heavy-handed tactics by the police against the young protestors went viral, fuelling support for the demonstrations among opposition politicians, celebrities and other sections of Indian society. With the CJP’s key demands met, the demonstrations have now died down. But the grievances that led to its emergence have not disappeared. – Has the ‘Cockroach’ movement changed Indian politics? | Chatham House – International Affairs Think Tank
NATO
(Rachel Ellehuus and Linus Terhorst – NATO) The UK’s then Prime Minister, Sir Keir Starmer, narrowly managed to save face when meeting his colleagues at this year’s NATO Summit in Ankara. Behind him lay several weeks of fierce political debate about the direction and ambition of the UK’s Defence Investment Plan (DIP), which sets out the government’s defence investment priorities and budget for the coming years. The compromise result promises an increase of circa £15 billion but falls significantly short of the £28 billion in additional investment the UK’s Strategic Defence Review assessed as necessary. While most NATO countries need more money for defence, finding the money is difficult, particularly for Allies with limited fiscal headroom or scope to cut spending in other areas of government. As such, politicians across Europe and in Canada are looking for creative ways to finance the promised significant, long-term increases in defence spending while not upsetting the public with higher taxes, increased debt, or more guns-vs-butter trade-offs. One solution is common borrowing, which can enable countries to borrow money at lower interest rates and on more favourable repayment terms. The EU’s Security Action for Europe (SAFE) programme is one such mechanism, allowing EU members to borrow money through the EU, as long as they procure a capability with at least one other EU nation. Unfortunately, the instrument is limited in scope and duration ((€150 billion until 2027) for now, and many EU member states can borrow at more favourable national rates. Also, as SAFE is not equally accessible to non-EU Allies (for instance, because at least 65% of component costs must originate from within the EU), it can disrupt cross-border supply chains and prevent nations from procuring the best equipment. To address these challenges, the UK, together with the Netherlands, Finland and Poland, proposed the Multilateral Defence Mechanism (MDM) at the NATO Summit in Ankara. Based on the few details publicly available, the MDM aims “to lend to members for joint procurement, stockpiling on members’ behalf, and supply chain finance”. Its proponents claim that cheaper lending may be unlocked by aggregating demand among MDM members through multi-year procurements or joint stockpiling of equipment, which could be used as security for borrowing. The latter would be particularly attractive as it keeps debt off national balance sheets, with the initial liability being held by the MDM. The idea is that countries can draw down from the stockpiles as and when needed, turning what was once an upfront capital expenditure into an operating cost down the road. And MDM may also have a mandate to fund early-stage R&D cooperation among Allies. The hope is that connecting states’ access to cheaper borrowing with joint procurement and pooled R&D will encourage them to work together rather than go it alone. The UK’s DIP allocates £400 million to the MDM. However, some experts doubt that the idea to leverage stockpiles facilitates cheaper borrowing. Munition stockpiles have a very limited market and are, therefore, highly illiquid. They also cost money to maintain, as they require secure infrastructure facilities, insurance, and, at the end of their shelf live, they produce disposal costs if not used. Unless states commit to buying a set share of stockpiles in advance (which would put these costs back on their balance sheets), a mechanism with these commitments may have difficulty to attract the AAA rating required to facilitate low-cost borrowing. – Allies Should Unite on Defence Finance | Royal United Services Institute
Russia
(Oleksandr V Danylyuk and Darya Dolzikova – RUSI) In early July, NATO Allies gathered in Ankara for the 36th NATO Summit. They reiterated the ‘long-term threat’ that Russia poses to Euro-Atlantic security and stability, restated their ‘unwavering support for Ukraine’ and announced a suite of new commitments on defence industrial cooperation and investment. Yet, an hour’s flight south of where the heads of the Alliance states were meeting, a different industrial cooperation project is making steady progress. On Turkey’s Mediterranean coast, Russia is putting the finishing touches on the first of four nuclear reactors at the Akkuyu Nuclear Power Plant (NPP), ahead of its anticipated operational launch later this year. The NPP – expected to ultimately supply 10% of Turkey’s energy – is being constructed, and will be owned and operated, by subsidiaries of Russia’s State Atomic Energy Corporation Rosatom. The company’s role as a broker of soft power and strategic leverage for Moscow – across Europe, the US and further afield – has been widely documented. But Rosatom is not just a supplier of civil nuclear infrastructure. The company is one of the key stewards of Russia’s nuclear weapons complex and is increasingly involved in developing and supplying conventional weapons to the Russian military, including systems being deployed in Ukraine. Yet Russia’s nuclear sector remains largely unsanctioned, allowing Rosatom to continue generating revenue, including from business in Europe. Just as Rosatom’s activities have shifted to position it as an important player in Russia’s military industrial complex, so too should Europe’s approach to doing business with the state nuclear enterprise. – Rosatom is a Military Supplier – Europe Must Treat It as Such | Royal United Services Institute
(John C.K. Daly – The Jamestown Foundation) Senior Russian officials, including Ministry of Finance and Central Bank of the Russian Federation representatives, warned Russian President Vladimir Putin in early June that continued war spending is straining the economy. Defense spending is projected to consume about a third of the entire 2026 budget, making fiscal balance increasingly difficult. Russia’s Ministry of Economic Development cut its 2026 GDP growth forecast from 1.2 percent to 0.4 percent. The January–April 2026 budget deficit reached $79.3 billion, exceeding the entire 2025 deficit. Military spending is consuming an unprecedented share of state resources. In the first quarter of 2026, Russia spent $76.2 billion on defense, equal to about 65 percent of federal revenues for the same period and 30 percent more than the same period in 2025. The war is worsening broader economic pressures, with Ukrainian strikes damaging Russian refineries, contributing to fuel shortages and ruble weakness. The Central Bank lowered its 2026 GDP forecast range to 0.0–1.0 percent as inflation, sanctions, and falling energy revenues weigh on growth. – Central Bank and Finance Ministry Warn Putin of War’s Impact on Economy – Jamestown
(Taras Kuzio – The Jamestown Foundation) Despite successive Western sanctions packages, Russia’s military-industrial complex has expanded since 2022 by exploiting major sanctions gaps, leaving many defense-linked companies, chemicals, and dual-use technologies outside existing restrictions. Russia continues acquiring critical military components through intermediary states, parallel imports, and weak export controls, while thousands of companies—particularly in the People’s Republic of China and Hong Kong—facilitate sanctions evasion and sustain Russian weapons production. Ukrainian intelligence has documented extensive Western-made components in Russian missiles, drones, aircraft, and air defense systems, demonstrating that U.S., European, and Asian technologies remain integral to Russia’s precision-strike capabilities despite sanctions. Tightening sanctions on unsanctioned suppliers, dual-use machinery, chemicals, and intermediary networks is increasingly urgent, as Russian weapons built with Western components threaten not only Ukraine but potentially the North Atlantic Treaty Organization (NATO) by the decade’s end. – Russia Sustaining War Machine Despite Western Sanctions – Jamestown
Russia – Ukraine
(Justin Bronk – RUSI) The first phase of the air war during Russia’s full-scale invasion of Ukraine was characterised by the failure of the Russian Aerospace Forces (VKS) to successfully complete a suppression and destruction of enemy air defences (SEAD/DEAD) campaign against Ukraine’s extensive ground-based air defence (GBAD) network. This left the bulk of the VKS tactical fighter fleets unable to meaningfully effect the direction of the war on the ground. Instead, the bulk of Russia’s air campaign in the first two years consisted of long-range strikes using cruise and ballistic missiles to try to degrade Ukrainian communications, defence industry and transport and energy infrastructure. Likewise, the impact that badly outmatched Soviet-legacy Ukrainian fighters and ground attack aircraft could have on the frontline situation was limited by a formidable Russian GBAD threat and VKS fighters on combat air patrol fairly near the frontlines. In summer 2026, the nature of the air war is radically different. Western fighters now form the core of the Ukrainian Air Force in the shape of the 107th Wing, equipped with F-16, and a smaller force of Mirage 2000-5s. The F-16s are by some margin the most flexible and effective fighters available, across all mission types. Ukraine also still operates some MiG-29s and a few Su-27s for air defence missions, firing AGM-88 HARM missiles to suppress Russian GBAD systems and conducting glide bomb attacks. Air defence sorties make up the most common mission type, which is understandable given that throughout most of 2025 and 2026, Russia has launched several massed long-range strike waves per week. These strikes generally begin with waves of many hundreds of one-way attack (OWA) drones such as the propellor powered Geran-2 and jet-powered Geran-3, as well as decoy drones such as the Gerbera to probe and saturate Ukrainian air defences. The drones are followed closely by tens of cruise missiles such as the Kh-101 launched from Russian bombers and 9M728 from the ground-based Iskander-K; and around half-to-one-third that number of ballistic missiles such as 9M723 from the Iskander-M and the air-launched Kh-47M2 Kinzhal. As a first line of defence against these complex massed attacks, Ukrainian forces deploy deep belts of cheap short-ranged air defence (SHORAD) systems manned by mobile air defence teams. These SHORAD defences include anti-aircraft artillery (AAA) from manually aimed vehicle mounted machine guns, automated and crewed turret emplacements and self-propelled anti-aircraft guns like the Gepard and Shilka. Air defence teams also use man-portable air defence systems (MANPADS) like Stinger and Igla, and many thousands of drone interceptors. The latter are essentially cheap propellor powered missiles and come in a very wide variety of forms, many of which are increasingly effective against multiple classes of Russian OWA and battlefield reconnaissance UAVs. – Four Years On: An Update on the Air War Over Ukraine | Royal United Services Institute
Türkiye
(Tim Chattell – Chatham House) This month it was reported in the Turkish media that Turkey was in talks to sell its long-unused S-400 Triumf air defence system, with Qatar and the United Arab Emirates mentioned as potential buyers. The purchase would reportedly consist of the two systems, plus 120 interceptor missiles. The UAE has not commented on the reports, but it would be hardly surprising if the Emiratis were seeking to diversify their air defence portfolio. With the UAE having come under Iranian drone and missile bombardment since the US-Israeli war on Iran began in late February, options to improve the country’s layered air defences are likely to be in high demand. The UAE already operates the US Terminal High Altitude Area Defence system (THAAD) for missiles at similar altitudes. Acquiring the S-400 would deliver the UAE a uniquely diverse air defence arsenal, with THAAD and the S-400 sitting alongside Russian Pantsir S1 systems in addition to a wide variety of US, South Korean and Israeli systems. – Turkey’s S-400 saga shows the hard realities of defence procurement | Chatham House – International Affairs Think Tank
US
(Caroline Berry – Atlantic Council) The United States currently lacks a clear and transparent process for restricting access to new AI models. Congress should establish public standards defining when AI models can be restricted, which agencies oversee reviews, and what evidence is required for emergency action. Clear legal safeguards would make future restrictions more transparent and accountable, while preserving the government’s ability to respond to national security threats. – The Fable 5 shutdown and the troubling precedent it sets for AI policy – Atlantic Council
War in Iran, Strait of Hormuz, Middle East, Gulf
(Jonathan Panikoff – Atlantic Council) Believing that it can use the Strait of Hormuz as leverage, the Iranian regime is unlikely to make major concessions under additional military pressure. Since either a negotiated settlement or a US ground invasion is unlikely, the situation appears headed for prolonged instability. Instead, Oman, backed by a European-led maritime mission, should help secure the strait to reduce tensions and maintain freedom of navigation. – How Oman and Europe can open the Strait of Hormuz for good – Atlantic Council
