In partnership with
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
Russia
(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
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
