Something significant is happening in the global financial system. Central banks, the institutions responsible for managing national currencies and monetary policy, have been quietly accumulating gold at a pace not seen in generations. This isn’t a temporary blip or a reaction to a single crisis. It’s a structural shift in how the world’s most powerful financial institutions think about money, risk, and the future of global reserves. So why are central banks buying gold again?

I wrote last week: “…every dollar in circulation began its life as somebody’s debt. The mathematics of this arrangement contain a problem the inventors understood and the public refuses to recognise. When the principal is created and the loan is made, the interest is not. The interest must come from a future loan, made by someone else, and that loan in turn carries its own interest, which must come from a third loan, and so on into perpetuity.” This is the basis of the Western Global Financial System, which relied entirely on an expanding economy over some 200 years, and gave America is exceptional privilege of US dollar supremacy inherited from the City of London after WW2.

This happy situation (for the West) is coming to an end as the driving force of finite cheap resources, especially energy, begins to slow and eventually reverse. This calls for a new global financial model to match production with real investments as opposed to speculation in complex fiat derivatives. I suspect that the extreme US AI buildout is driven by the need to preserve the current fiat system using, among other things, Digital ID and CBDCs as a total control system using a programmable money alternative.

“In 2013, a think tank from London proposed a new public body to decide how to spend the money central banks create. The New Economics Foundation called it the Monetary Allocation Committee in a report titled Strategic Quantitative Easing. It would sit alongside the Bank of England’s Monetary Policy Committee but with a different job: while the MPC decided how much money to create, the Monetary Allocation Committee would decide where it went.”

“The report came out eighteen months before Mark Carney’s ‘Tragedy of the Horizon’ speech, two years before the Paris Agreement, and four years before the Network for Greening the Financial System was founded. The body to direct centrally created money was designed before the ‘voluntary’ rules that would eventually make that direction compulsory. That framework’s now largely built. The question is how, and by whom.” This is explained in detail HERE.

China’s financial model has already adapted to the prevailing conditions which I will explain in the coming episodes.

In the meantime, I will let the numbers tell the story. The scale of central bank gold buying in recent years is staggering. According to the World Gold Council, central banks added over 1,000 tonnes of gold to their reserves in 2022-4, with the 2022’s 1,082 tonnes marking the highest level of net purchases since 1950. In 2023, purchases reached 1,037 tonnes, the second-highest annual total on record, followed by approximately 1,045 tonnes in 2024. Full-year 2025 data shows 863 tonnes added globally, below the four-figure pace of recent years, but still well above the long-run historical average as shown in the chart above.

To understand how extraordinary this is: from 2010 to 2021, the average annual pace was around 473 tonnes. In just three years, central banks nearly doubled their rate of accumulation. And even as buying moderated in 2025, partly due to record-high gold prices prompting a more measured approach, the broad strategic commitment remained intact, with 23 countries adding to reserves in H1 2025 alone. Central banks have now been net buyers of gold for 16 consecutive years. (Note the date of 2013 in the above referenced extract.)

For decades, the US dollar has served as the world’s dominant reserve currency. Central banks held US Treasuries as their primary store of value. But confidence in this arrangement has been eroding. A major turning point came when the US and its allies froze Russia’s foreign exchange reserves following the 2022 invasion of Ukraine. The message was clear to governments worldwide: dollar-denominated assets held abroad can be seized or restricted during geopolitical conflicts. Gold, by contrast, carries no such risk. It cannot be frozen, sanctioned, or devalued by a foreign government’s policy decision.

This has accelerated reserve diversification, particularly among emerging markets. China especially, India, Poland, Singapore, Turkey, and dozens of other nations have been steadily reducing their dependence on dollar assets while building gold holdings. Japan has recently entered the picture as the yen has come under pressure and the US Treasury is attempting to manage the risk of their bond price declining and thus interest rates rising.

Beyond the Russia-Ukraine conflict, the broader geopolitical landscape has grown considerably more complex. Tensions between major powers, regional wars, and shifting trade alliances have all contributed to a flight toward assets considered politically neutral and universally accepted.

Gold has historically served this role. It holds no nationality, carries no counterparty risk, and has been recognised as a store of value across civilizations for thousands of years. In a world where alliances are shifting and financial infrastructure can be weaponised, central banks are treating gold as the ultimate form of financial insurance. An example is Scott Bessent’s recent threat of secondary sanctions on any nation or entity that continues to trade with Iran, buy its oil, or facilitate its financial transactions.

As one analyst from the Official Monetary and Financial Institutions Forum (OMFIF) noted, geopolitical events have laid a foundation for gold to become prominent once again in central bank reserve portfolios and as a means of settling payments between certain countries. China is reshaping not only production and consumption patterns but also the role and architecture of its financial system. This shift marks the entrance of where finance is deliberately subordinated to the needs of the real economy, productive accumulation and high-quality development, rather than permitted to pursue self-referential expansion as seen in the current Western global financial system.

The inflationary surge following 2020 reminded central banks of a fundamental vulnerability in fiat currency systems: governments can print money, and when they do, purchasing power erodes. Gold cannot be printed. While central banks spent 2022-3 raising interest rates to fight inflation, many simultaneously bought gold, a seemingly contradictory move, that reflects sophisticated long-term thinking. Gold isn’t a short-term trade for these institutions; it’s a multi-decade hedge against the systemic risks of debt-fuelled monetary expansion. One might speculate that it also provides a hedge against the Chinese financial model prevailing, at least in the global south.

For most of the post WW2 era, US Treasuries were considered the safest asset in the world. That status is increasingly being questioned. Rising debt levels, fiscal dysfunction, and the risk of real returns being eroded by inflation have made central banks more sceptical of sovereign debt as a reserve asset. Gold, by contrast, has no credit risk, no counterparty, and no maturity date. Its value doesn’t depend on any government’s ability or willingness to honour an obligation. For institutions managing national reserves over decades-long time horizons, these properties are deeply attractive.

The buying is being led by emerging market central banks, though the trend has now spread to developed economies as well. China remains one of the most prominent buyers, having officially added 225 tonnes between late 2022 and 2023, with total reported reserves reaching approximately 2,300 tonnes. Gold still accounts for only about 5-7% of China’s total reserve portfolio suggesting significant room to continue accumulating.

The financialised logic of Western capitalism tends toward over-accumulation of fictitious capital and periodic Minsky-style crises compared with China’s strategy. China seeks to ensure finance remains tethered to the metabolic capabilities of the energy and material substrate of the real economy thereby preventing detachment into speculative shells whilst mobilising dormant savings into productive applications.

Poland has been one of the most aggressive gold buyers among European nations, adding over 100 tonnes in 2025 alone. Its reserves now stand at 550 tonnes and account for roughly 28% of total international reserves, approaching an updated target of 30%, a goal Poland raised from its prior 20% target in October 2025.

India has steadily increased its gold reserves, adding over 200 tonnes since 2017. In 2024, India repatriated 100 tonnes of its gold from the Bank of England’s vaults to return homeward, a signal of shifting trust in Western custodianship. Singapore, Turkey, Kazakhstan, Brazil, Czech Republic, and many others have all added meaningfully to their gold holdings in recent years. The breadth of buying is arguably as significant as the volume. Notably, 68% of central banks now store most of their gold within their own borders, up from roughly 50% in 2020. The freezing of Russia’s overseas assets prompted many nations to repatriate their gold rather than hold it in Western vaults.

The scale of central bank demand has fundamentally reshaped gold market dynamics. These institutions generally buy based on long-term strategic reserve management goals rather than short-term price movements which create a persistent floor beneath gold prices. That said, the WGC noted that the record-high price environment in 2025 did prompt some moderation in the pace of buying, a reminder that central banks are not entirely immune to price considerations.

From 2021 to mid-2024, gold exchange traded funds (ETFs) were actually net sellers and yet gold prices rose significantly anyway. That divergence is highly unusual. Historically, ETF flows and gold prices move closely together. The decoupling reveals just how powerful central bank demand has become as an independent price driver. This is one reason why gold demand has remained robust even during periods of high interest rates and a strong US dollar; conditions that historically weighed on gold prices.

Is This a Sign of Economic Uncertainty? It is, but it’s more than that. Central banks don’t make reserve allocation decisions lightly. These institutions manage sovereign wealth across multi-decade horizons, and when they shift their behaviour as dramatically as they have done since 2022, it reflects deep structural concerns rather than short-term market sentiment. The shift to gold signals three things simultaneously:

• declining confidence in the dollar-centric reserve system

• rising concern about geopolitical and financial instability

• long-term reassessment of what “safe” actually means in a reserve portfolio.

This trend is worth paying close attention to. When the world’s most sophisticated and well-resourced financial institutions consistently move in the same direction, it’s a signal worth understanding.

Central banks aren’t buying gold because they expect a quick profit. They’re buying it because the global financial system is undergoing a meaningful structural shift away from dollar dominance, toward a more multipolar reserve landscape where no single currency holds absolute sway.

Gold, with its universal acceptance, political neutrality, and centuries-long track record as a store of value, sits at the centre of that transition. The institutions with the deepest research capabilities, the longest time horizons, and the most at stake have been making this bet consistently for 16 years and doubling down recently. That’s a signal worth taking seriously:

“Bloomberg’s index of how easy it is to raise money across stocks, credit, and rates just closed at the easiest level in its 35-year history, looser than 2021 and looser than the dot-com peak. This is the liquidity holding stocks, gold, and credit near records all at once. Conditions this loose have never lasted. When they tighten, the most leveraged trades, AI and credit, unwind first.”

“Kurt Altrichter explains just how easy the Fed and their owners are acting when it comes to credit, as we enter the crash zone. Everyone is going to keep dancing until the music stops, just as they were doing in 2007. There is a reason Berkshire Hathaway was sitting on $400 billion of cash in the first quarter. The market is 50% more overvalued than it was in 2008 before the last Fed induced financial crash. Winter is coming.” Sources

• Jim Quinn (TBP) “The financial history of the last century shows a steady increase in the amount of public indebtedness. Nobody believes that the states will eternally drag the burden of these interest payments. It is obvious that sooner or later all these debts will be liquidated in some way or other, but certainly not by payment of interest and principal according to the terms of the contract.” [Ludwig von Mises] https://www.theburningplatform.com/2026/08/25/they-know-whats-coming-because-they-planned-it/#more-421382

• Central Banks are buying gold - edited extracts https://goldsilver.com/industry-news/article/why-central-banks-are-buying-gold-again/

The Strait of Hormuz can no longer be assessed solely by the number of barrels of oil passing through it or the price of crude oil. The widening gap between refined products and crude, China’s obscure strategy, and the fragile US economy indicate that the war will impose heavy costs on the global supply chain because the world moves mainly on diesel power. Two indicators attract the most attention: the volume of crude oil passing through the Strait and global oil prices.

These two indicators are important, but they do not measure the true depth of the energy crisis. A more decisive indicator is the condition of refined petroleum products, where diesel, gasoline, and jet fuel are directly tied to transportation, production and which directly affect everyone’s daily lives. At present, the price gap between refined products and crude oil, known as the crack spread, has reached unprecedented levels, with the diesel spread at $100+ per barrel. At the same time, diesel exports from Russia, the Middle East, and Asia have declined as the global market faces an increasing shortage of refined products.

The Hormuz crisis is no longer merely a crisis of “crude oil supply”; it has become a crisis of refining capacity and access to refined products. Damage to Russian refineries during the war in Ukraine, disruptions at refineries in the region, and limited access to refinery feedstock, combined with reduced traffic through Hormuz, have created fractured supply chains. As a result, the Russian Federation, one of the world’s major gasoline suppliers, has now become an importer.

Crude oil prices may appear relatively contained compared with the scale of the disruption, while diesel, gasoline, and jet fuel prices have experienced significant increases. This where an energy crisis moves from financial markets into the real economy. Recent reports have also pointed to severe restrictions on diesel supplies resulting in US-sourced refinery feedstock from alternative suppliers.

China’s response is another determining variable in this equation. Official data show that China’s oil imports rose to 8.41 million barrels per day in July, lower than last year’s, as China absorbed part of the market pressure by reducing its demand. However, in the physical oil market, information obtained from major traders involved in selling Persian Gulf oil points to an increase in Chinese buying demand in August.

Although this information is not yet reflected in official monthly statistics or public international reports, it has already had a practical impact on the market. In some transactions, the offered price for cargoes increased by around $2 per barrel within a single day. This trend would result in greater competition for available cargoes and thus greater pressure on the price of refinery feedstock and refined products going forward.

The greater strategic significance is the condition of the US economy. US economic growth fell to 1.5% in Q2 2026, compared with Q1 at 2.1%. In financial markets, a $25 billion auction of 30-year US Treasury bonds on August 13 raised the yield to 5.22%, the highest auction rate for these securities since 2001. At the same time, the July budget deficit reached $432 billion, while the cumulative fiscal-year deficit approached $1.8 trillion.

In these conditions, higher energy prices can create a multi-layered shock: refined-product prices rise, inflation remains elevated, the Federal Reserve has less room to cut interest rates, and long-term rates remain high. As a result, the cost of government financing and debt servicing increases. Therefore, war does not impose only military costs on Washington; it can also create financial, inflationary, and political costs across the world.

Trump’s recent threat to impose “heavy economic pressure” on Iran, if accompanied by increased pressure on Hormuz, creates a strategic contradiction. The US may be able to exert greater pressure on Iran’s economy, but a counter reaction, as indicated by Iran this week, will prolong energy disruptions, with a significant portion of the cost of that pressure resulting in disrupted and volatile global markets, especially in refined products like diesel.

The effects of a war intended to increase pressure on Iran have rebounded like a boomerang and have now become an issue of gasoline and diesel prices, inflation, purchasing power, and the Trump administration’s economic performance ahead of the mid-term elections. Two-thirds of Americans oppose the war and the resultant economic pressure has become one of the Republicans’ vulnerabilities.

With the end of the MoU this week, the war has now become a war of attrition. Iran will face severe economic pressure, but the US will also have to manage the rising costs of energy, inflation, interest rates, debt, and the elections simultaneously. If Washington intensifies economic pressure on Iran, it will risk renewed energy disruptions and their transformation into a global economic shock which will further alienate the US standing in global affairs, especially in the GCC, Middle East, and the Global South.

Therefore, the equation of the Iran war is shifting from “the ability to exert pressure” to “the ability to withstand reciprocal pressure.” Trump can threaten to increase economic pressure on Iran, but the more that pressure runs through the energy market and Hormuz, the greater the possibility that it will turn into an economic and electoral crisis for the US.

The most important indicator of the situation in Hormuz is no longer the number of barrels of crude oil passing through it. What matters is how many dollars this crisis adds to the price of diesel, gasoline, and jet fuel, and how much of the US economic and political capacity those higher prices will consume. In this framework, the war is no longer merely a contest measuring the military strength of the two sides; it has become a test of America’s economic and political resilience up to the mid-term elections.

If the situation in Iran and Ukraine persists or intensifies, as witnessed this week, then the outcome is no mere speculation. Complex systems tend to self-organise into simplification once a tipping point is reached. The Global Financial System is no different and will eventually find an equilibrium when demand destruction creates a severe recession which could morph into a prolonged economic depression. The 2008 GFC was a warning shot, ignored by the financial wizards, but is now reaching a point of no return. The seeds of its destruction were sown long ago. Affordability, not scarcity, is the real energy crisis. History back to 1820 gives hints regarding what may follow.

In 1694 the King of England borrowed 1.2 million sterling at a perpetual rate of interest, and in exchange the King granted a banking syndicate a monopoly on issuing the new national currency. From that day to this, every pound in circulation began its life as somebody’s debt. The mathematics of this arrangement contain a problem the inventors understood and the public refuses to recognise.

When the principal is created and the loan is made, the interest is not. The interest must come from a future loan, made by someone else, and that loan in turn carries its own interest, which must come from a third loan, and so on into perpetuity. This is an engineering specification of a Ponzi scheme, written into the foundation document of British finance and exported, by gunboat and by treaty, to every country that now uses a central bank. The British are guilty of the original sin. Every single central bank in existence has been founded on this formula created by the bankers in the City of London.

A monetary system that requires perpetual new debt to service old debt requires, at every level, a population willing to keep creating loans, mainly through bonds and promissory notes (mortgages). The consumer becomes a yield-bearing asset paying compound interest at every stage. Favourable credit terms are reserved for entities close to the central bank. The corporation, that sits at the top of the pyramid, borrows at near zero, buys the assets the consumer is too indebted to buy, and rents them back. The government takes the rest of the debt onto its own books and presents the bill to the next generation.

This is not capitalism in its original form which meant a system in which capital is privately owned, freely priced, and earned through providing something other people want. Under that definition capitalism hasn’t existed in any of our lifetimes. What America has, and what every member of the post-war Western order has, is called financialisation for the institutions that can borrow at the central bank rate, and a brutal Hobbesian struggle for everything below them.

“In early May, BlackRock quietly froze redemptions in several of its private-credit funds, limiting withdrawals in vehicles that had been marketed as offering easy liquidity. The move was legally valid, but investors felt that the contractual fine print had been weaponized against them. It was the most visible stress fracture to date in a $3 trillion shadow-banking market that has grown almost entirely outside federal oversight.”

Capitol Hill Citizen Substack

The Bailout that Never Ended

by Ellen Brown…

Read more

3 months ago · 35 likes · 1 comment · Capitol Hill Citizen

The bank that mismanages a trillion pounds gets bailed out at midnight on a Sunday by a treasury minister who used to work for it. The plumber whose van breaks down eventually goes bankrupt. Since 1971, both outcomes are described by the same Chancellor, in the same speech, as the natural workings of the free market. The result is described in graphic form HERE.

The 2008 crisis was engineered through financial alchemy. Risky subprime mortgages were transformed into securities that received Triple-A credit ratings despite being built on unstable foundations. Much of this occurred in the shadow banking system, a network of non-bank lenders, securitisation vehicles (SPV), money market funds, and private investment funds operating with less oversight than traditional banks.

Because these securities were treated as virtually risk-free, they became collateral for additional borrowing, creating a dangerous bubble. When confidence collapsed, governments rescued many of the institutions deemed “too big to fail.” Millions of households, however, lost their homes and savings. And now it’s about to happen again!

Today, the rapidly expanding asset class is AI data-centre infrastructure, the foundation of AI, cloud computing, and hyperscale digital services. There is already talk of massive AI companies being “too big to fail.” These projects require not only continuing supplies of cheap energy, like electricity, diesel and water, but also trillions of dollars in financing, much of it supplied through private credit, non-bank lenders, and other shadow banking institutions often hidden off-balance sheets estimated to approach $3 trillion. Several similarities to 2008 are apparent:

• Heavy reliance on lightly regulated shadow banking and private credit markets.

• Multiple layers of leverage as investors and lenders borrow against borrowed funds.

• A gradual weakening of capital, liquidity, and supervisory standards.

• Higher interest rates increasing refinancing, debt-servicing risks, and competing against US Treasury markets.

None of this guarantees another financial crisis. However, it does increase systemic vulnerability should investor confidence weaken. Many of the reforms introduced after 2008 GFC have since been repealed. The Financial Stability Oversight Council (FSOC) has reduced its use of systemic-risk designations for large non-bank financial institutions, shifted toward activities-based regulation, and eliminated committees focused on climate-related financial risks. The Consumer Financial Protection Bureau (CFPB) has withdrawn dozens of guidance documents covering mortgage lending, debt collection, credit reporting, and consumer protection standards.

If the AI and data-centre boom continues to rely on highly leveraged, lightly regulated financing while financial oversight continues to weaken, the ingredients for another systemic crisis is again accumulating. The assets are different. The investors are wealthier. But leverage, opacity, regulatory erosion, and the expectation of public rescue remain strikingly familiar. Perhaps this is why the title Great Recession 2008 Redux? no longer seems far-fetched. Sources

• Looking at energy data going back to 1820, low demand (affordability) has repeatedly produced financial crashes, wars, and collapses. We appear to be entering another such period https://ourfiniteworld.com/

• Edited extracts from the widening crack spread between refined products and crude, China’s different behaviour indicates that prolonging the war will impose increasing costs on global supply chains https://nournews.ir/en/news/338689/Why-will-Trump%E2%80%99s-new-threat-against-Iran-impose-greater-costs-on-US

• Selected edited extracts from: dailynewsfroaolf Substack

• The structural vulnerabilities that triggered the 2008 Global Financial Crisis are re-emerging in a different form. https://lgeconomicinsights.com/2026/07/16/great-recession-2008-redux/

The US is in danger of losing its control of global finance and needs to resolve a structural crisis of its hegemony rooted in the supremacy of the petrodollar. It is also based on a battery of geo-economic tools that include AI, sanctions, tariffs, military pressure, and control of payment systems (SWIFT), with the aim of reshaping the international order to the benefit of the dollar and American industry, ably assisted by the Bank for International Settlements (BIS) and the City of London.

The geo-economic diagnosis that emerges from an analysis shared by financial analyst, Antonio Valdés points to a disturbing conclusion: The Trump administration, far from improvising, has launched a deliberate plan to transform the United States into a rentier economy that extracts global surplus value through the control of strategic monopolies.

Valdés’s analysis argues that we are not witnessing the improvisation of an erratic president, but rather the conscious articulation of a strategy hidden from public view. The Trump administration is aware that, since 1950, the main drain on the US balance of payments has not been the trade deficit per se, but rather military spending abroad supporting over 800 bases worldwide, necessary to maintain the US dollar world order formerly enabled by the petrodollar in the 1970s.

The petrodollar system is one of the most important, and least understood, pillars of American economic dominance since WW2. The US dollar is the primary currency used for buying and selling oil on the international market. This system has given the United States enormous advantages: cheaper borrowing costs, stronger demand for the dollar, and significant geopolitical leverage.

After more than 50 years, the petrodollar is facing growing challenges from China, the GCC, and many others in the Global South. In 1971, President Richard Nixon ended the direct convertibility of the US dollar into gold which signalled the end of the post war Bretton Woods system. This created a major problem: without gold backing, what would support the dollar’s value and global demand? The answer came through a series of secret agreements between the United States and Saudi Arabia:

This arrangement was a brilliant strategic move. Even after losing the gold standard, the dollar retained its status as the world’s reserve currency because everyone needed dollars to buy oil, the foundation of the global economy. This model, sustained by the recycling of dollars through the purchase of Treasury bonds by foreign central banks, has run its course. In recent years the petrodollar system has come under increasing pressure:

The United States has lost its lead in industrial power and financial appeal, partly due to its own sanctions and tariff policies driving countries away from its markets. As Valdés points out, the problem is that “they can no longer compete industrially nor can they indefinitely finance their empire through deficits.” This is where the logic of US rent-seeking emerges.

The key to this new approach, according to Valdés and other analysts, is the transformation of the United States into a rent-seeking economy through control of strategic corporate monopolies. These are concentrated in three priority sectors: oil and natural gas, artificial intelligence, and maritime transport corridors as witnessed in the Iran standoff now controlled by Tehran/Oman.

The US objective is not to win wars in the classic military sense, but to use them as instruments to create conditions of scarcity and dependence that allow for rent extraction. One example is the war against Russian energy infrastructure and the harassment of Iran, which seek to isolate China from those countries’ oil and force Europe to depend on American liquefied natural gas.

Treasury Secretary Scott Bessent has suggested that, after a defeat of Iran, the Venezuelan model would be repeated: controlling oil revenues and depositing them in US Treasury bonds. “The underlying idea is the same,” explains Valdés, “the oil surpluses must be recycled into the US economy because they are not industrially competitive.” As of 2026, the dollar still accounts for the vast majority of global oil transactions, but its share has been slowly declining.

Faced with the impossibility of quickly recovering its traditional industrial position, especially in the face of a highly competitive China, the only option the US establishment envisions is to shift “from a logic of competitiveness to a logic of monopoly and strangle the major centres of power,” The strategy of sanctions, control of bottlenecks, and exclusion from the SWIFT financial system are used to force countries to operate in dollars or be excluded from international trade.

Everything points to a plan that, although fraught with risks and contradictions, demonstrates that the Trump administration is seeking a new model of domination, even if its success is not guaranteed. Valdés concludes that the US is fighting several battles at once because the military option has failed spectacularly for all the world to see.

The unipolar hegemonic order established by the United States after the end of the Cold War relied on the three pillars of military, financial, and diplomatic power. It began to collapse rapidly following the 2023 Beijing reconciliation between Saudi Arabia and Iran. The US refocused eastward when the Saudi-Iranian reconciliation took effect, and Gulf states collectively sought strategic autonomy. The regional order has officially entered a period of profound adjustment marked by historic restructuring.

This process is not only profoundly reshaping the security, economic, and diplomatic rules within the Middle East itself but will also have decisive and far-reaching implications for the global energy landscape, the global financial system, and the emergence of multipolarity.

The United States entrenched the petrodollar settlement system; through the IMF and the World Bank, it secured absolute financial control over Middle Eastern countries, using financial sanctions as a core tool to suppress nations that oppose it. After decades of operation, its structural fissures have continued to widen, and it has gradually been heading toward transition under the impact of a series of landmark events in recent years.

From a recent security perspective, Gulf states realised that US military bases on their soil have not only failed to serve as a security buffer but have instead become specific targets for retaliation in regional conflicts. During the Middle East crisis that continued to escalate in 2026, US bases were repeatedly bombed, severely compromising the security of the host nations. The United States was powerless to intervene, causing the credibility of its security commitments to plummet.

The share of Middle Eastern crude oil settled in yuan has already exceeded 40% revealing an irreversible fissure in the closed loop of the “petrodollar” system. Countries are no longer willing to tie their oil revenues entirely to the US dollar system, which could be frozen by the United States at any time. Countries are no longer passively waiting for the US to mediate conflicts; instead, they are independently conducting bilateral negotiations that transcend sectarian and factional divides and are gradually breaking free. From 2023-26, the share of GCC countries’ defence procurement from the US plummeted from 76% to 40%, while the scale of diversified security cooperation with China, Russia, and Pakistan doubled, marking the end of a decades-long era of single-dependent order.

The Middle East has evolved from control by the United States into the interplay of global powers. Various forces are competing with starkly different proposals for regional order, and the region’s restructuring has entered a phase where each participant possesses a clear strategic rationale and distinct competitive advantages.

The Eastern Alliance is comprehensively expanding regional cooperation through China’s Belt and Road Initiative and the Global Security Initiative, gaining widespread recognition from regional countries for its neutral and unbiased stance; at the same time, the four major regional powers: Turkey, Iran, Saudi Arabia, and Pakistan are simultaneously expanding their geopolitical influence.

Russia, relying on its traditional strengths in energy and military, is deepening defence and economic cooperation with Iran and Egypt. The European Union is focusing on the security of Red Sea shipping lanes and cooperation on the Middle East’s energy transition, hoping to secure a leading role in green industries and shipping lane governance.

As the two major players in this great power rivalry, the United States and China have introduced two completely opposing paradigms of international order into the restructuring of the Middle East, and are currently engaged in intense practical confrontation in the region. The fundamental differences in their underlying logic are diametrically opposed geopolitical trajectories.

The US divides Middle Eastern countries by using the binary labels of “democratic” versus “authoritarian,” forcing them to choose sides, and attaches stringent political conditions to petrodollars, arms sales agreements, and IMF loans all of which serve US geopolitical and economic interests. The negative consequences of this model have already become apparent.

The Gulf Cooperation Council (GCC) is collectively “looking east” to advance diversified security cooperation; moderating sectarian and ethnic conflicts. Anti-US and anti-Israel sentiment is spreading widely among Arab populations. If the United States reduces its strategic presence, a power vacuum would immediately emerge, and the risk of regional instability would continue to rise.

In stark contrast, China has consistently regarded sovereign equality, non-interference in internal affairs, and the peaceful settlement of disputes as unshakable core principles. When applied to the governance of the Middle East, these principles have become clear practical guidelines: rejecting bloc divisions, not requiring Middle Eastern countries to choose sides between China and the United States, and supporting each country’s autonomy in formulating foreign policy; upholding the universal application of rules, opposing double standards.

China calls for the UN Security Council to treat fairly the legitimate demands of all parties, including Israel and Palestine, as well as the United States and Iran. Rather than dismantling existing regional cooperation mechanisms, China wants to supplement them with development and security-related public good within the existing framework to promote the gradual improvement of the global order rather than its chaotic restructuring.

By the first half of 2026, China’s cumulative investment in Middle Eastern energy, railways, ports, and photovoltaic projects had exceeded $400 billion. Saudi Arabia’s Vision 2030 and the UAE’s 2050 Carbon Neutrality Plan are both deeply integrated with Chinese industries. This economic interdependence has significantly decreased the likelihood of ongoing conflict.

In this complex environment, where multiple countries are simultaneously vying for influence in the Middle East, how to engage in the reshaping of the regional order at low cost and with minimal confrontation, whilst avoiding direct geopolitical conflict with the United States has become a core strategic imperative for the Eastern Alliance in safeguarding its core interests.

As the East Block’s all-weather strategic partner, Pakistan is leveraging its status as an Islamic nuclear power, its ability to mediate neutrally across sectarian lines, and its unique geographical advantage linking West Asia and South Asia has become the East Block’s unparalleled “strategic conduit.” This has established a collaborative mechanism charting a new path toward multipolarity by leveraging the Global South as a fulcrum. It has systematically reshaped the Middle East’s existing unipolar order across four dimensions: security, diplomacy, connectivity, and most importantly finance.

Through China-Pakistan collaboration, Pakistan has become a security pillar for Gulf states in the Middle East and provides a security agreement for Saudi Arabia, Kuwait and Bahrain. This will directly undermine the US’s long-standing monopoly on the security supply narrative. When this security framework becomes operational, it will create a clear chain of reciprocity.

Gulf nations provide financial support for defence, Pakistan exports military and security services, and the East provides military equipment and technical capabilities, thereby forming a perfect alternative regional defence and security solution. In this way, a security order in the Middle East will gradually take shape, effectively limiting the United States’ ability to divide and conquer its regional allies and reforming the region’s security order from “unipolar dependence” toward “multipolar coexistence.”

For the first time, this has created a historic precedent in which the Global South has taken the lead in mediating conflicts between major powers. Looking ahead, it is highly likely that this negotiation platform will evolve into a forum for security cooperation in the Middle East. In conjunction with the Saudi-Iranian reconciliation process, it will promote the signing of a “Gulf-Iran Non-Aggression Pact” by Gulf states and advance strategic reconciliation across the entire Middle East, thereby shaping a new geopolitical landscape in the region.

Key investment projects under the China-Pakistan Economic Corridor continue to materialise and are constantly extending southward and westward, completely reshaping the economic and trade geography of the Middle East. The United States has long relied on the Strait of Malacca and the Red Sea shipping lanes to control the energy supply chains from the Middle East to China, attempting to constrain East Asia’s energy security through naval blockades; however, the alternative overland network jointly developed by China and Pakistan is gradually reversing this situation.

Meanwhile, within the frameworks of the China-Arab States Cooperation Forum and the Shanghai Cooperation Organisation, China is admitting Middle Eastern observer states to build a large-scale cooperation platform that covers the entire region without dividing countries into blocs. Consequently, the multilateral mechanisms led by China and the United States stand in stark contrast: the US-led “mini-multilateral” framework has a distinctly confrontational nature and deliberately excludes regional countries such as Iran.

Whereas the China-Pakistan-backed Quadrilateral Dialogue and the China-Arab States Forum adhere to inclusivity and consultation, allowing all regional countries to participate on an equal footing. It is foreseeable that as these two mechanisms compete side by side, the question remains as to which will ultimately gain the recognition of regional countries and lead Middle Eastern nations to gradually abandon bloc-based multilateralism in favour of a new model of autonomous and open regional governance.

In the medium to long term, the US-dominated unipolar American security system in the Middle East will irreversibly decline, and a multipolar security landscape will eventually take shape. US military bases and alliance systems will continue to exist for the foreseeable future, but they will no longer be able to monopolise security provision. Regional security autonomy, as exemplified by the Pakistan-Saudi Arabia defence alliance, regional autonomous non-aggression treaties, and China-Russia defence industry cooperation will form parallel security alternatives. Countries will have the right to independently choose their security partners, and the decades-long model of bloc confrontation should gradually fade into history.

In terms of the economic, trade, and financial systems, the petrodollar’s influence in Middle Eastern trade will gradually weaken, and settlement of energy transactions in local currencies will become the norm. The cross-regional corridors established by the East-West Economic Belt, such as the China-Europe and China-Pakistan corridors, will divert a significant portion of global oil and gas trade. A multi-currency system involving the US dollar, the yuan, and the euro will jointly serve Middle Eastern trade, making it unsustainable for the United States to continue its historical practice of financial exploitation through the petrodollar.

Throughout this process, the strategic value of China-Pakistan cooperation will continue to grow. As Phase II of the China-Pakistan Economic Corridor (CPEC) takes shape and Pakistan’s defence system continues to modernise, Pakistan’s role as a bridge across sectarian and political divides will be further amplified. It will become a strategic linchpin for lasting stability linking East Asia and the Middle East, and continue to promote a multipolar governance model to the rest of the world. Sources

• Edited extracts from an article by Bodhi Hermit published in China - a perspective on Chinese strategy for a new cooperative world order enabled by AI - One Flower, One World https://mp.weixin.qq.com/s/vwdotuMrrhbGlI56RLWcMg

• The US’ new model of domination: the control of strategic monopolies https://mentealternativa.com/ee-uu-reconfigura-la-renta-global-para-suplir-la-perdida-de-competitividad-industrial-mediante-el-control-de-monopolios-estrategicos/

• The Petrodollar System: History, Power, Vulnerability, and What Happens if It Collapses https://historychronicles.org/the-petrodollar-system-history-power-vulnerability-and-what-happens-if-it-collapses/

• Video - The Petrodollar Is Dying and China Planned Its Replacement

As I described last week, China is pursuing an open source AI system (now known as ‘open weight’), entering the race with a new approach to the technological war. As markets react nervously, the geopolitics of technology is beginning to reveal a new balance of power. China is ceasing to appear merely as a large manufacturer and is projecting itself as an all-round competitor across the entire artificial-intelligence value chain.

For the past three years, the global conversation about artificial intelligence was dominated by a relatively simple narrative. The United States led the development of large language models; Europe tried to regulate them; China appeared as a relevant actor, though one constrained by US sanctions and by its dependence on critical Western technologies, especially in advanced lithography and semiconductors.

The news that emerged last week forces a revision of that interpretive framework. Not because China has already attained every frontier technology. Nor because the United States has lost its lead in generative artificial intelligence. What is changing is something subtler and more profound: the assumption that Washington’s technological-containment strategy was achieving its main objective is beginning to be called into question.

For the first time since the tightening of U.S. restrictions, financial markets reacted not to a new advance by Nvidia, OpenAI or Microsoft, but to two converging fears: the possibility that China is rebuilding, piece by piece, a complete technological chain, and the growing doubt about who will finance, and when it will render profitable, the expansion of the West’s own AI infrastructure.

Recent history has a precedent: Nokia in 2007 was probably the company in business history that came closest to being “invincible”. That year, the Finnish company sold approximately 430 million mobile phones, capturing nearly half of the global market share. Its peak market capitalisation exceeded $100bn, and its revenue accounted for 4% of Finland’s GDP. The Symbian operating system dominated the smartphone world, holding an absolute leading market share; almost everyone had a Nokia. Then Google arrived.

In the autumn of 2008, the first smartphone using Google’s Android OS was launched, achieving something unexpected: Google released the source code and made it free of charge to all. Samsung, HTC, and Motorola took it up with enthusiasm and rapid development. Within only two years, Android phones filled every price range from flagship to budget phones. Nokia was aware of this competitor.

Google even approached Nokia, inviting them to join in; Nokia refused. Their reasoning was convincing: Symbian was their propriety OS, nurtured for over a decade. Using Android would be tantamount to handing over control of their platform and reverting to a mere “assembly plant” working for Google. This logic was unchallenged in board meetings.

Five years later, Nokia announced it would no longer release Symbian phones and sold its mobile phone business to Microsoft for $7.2bn. The empire that had peaked at over $100bn market valuation lost $93bn overnight. Nokia demonstrated what it means to peak on a tightly controlled market and then suddenly lose all the leveraged advantages that appeared to be an unassailable defensive monopoly.

Today, seven out of every ten smartphones globally run on Android. And this is despite the dominance of the iOS system. Why did Symbian lose? Many people attribute it to the arrogance of Nokia’s management, but that’s just optics. The real reason: Symbian was a closed system, usable only by Nokia. Developers who wanted to write applications had to learn an extremely complex, proprietary language, resulting in a high barrier to entry and a narrow ecosystem.

By 2010, the Android app store had accumulated 100,000 apps, while the Symbian platform only had 3,000 at its peak. Developers voted with their feet, and users voted with their wallets. Android won in three areas.

• Zero barriers to entry. Any manufacturer or developer can use it simply by downloading the code, without paying any licensing fees or having to answer to anyone.

• The ecosystem flywheel. The more users there are, the more developers are willing to join; the richer the applications, the more indispensable users become. Once this cycle starts, the closed-source competitor can never catch up.

• Global coverage. From Samsung flagship phones to budget phones in Africa, Android is everywhere, and massive amounts of real-world usage data feed back into system iterations, allowing it to outpace iteration speed.

Today the same script is being replayed in the field of AI. Only this time, the competitors have changed from two companies to two countries, and the stakes have shifted from the mobile phone market to dominating the future collaborative models of the global economy and potentially human society in general.

The 2026 G7 summit was held in France. A closed-door discussion was added to the meeting, attended by trillion-dollar US AI giants such as Google and OpenAI. The US message was clear: that American technology is the most advanced, and others only need to pay for it; there was no need for them to develop their own, following the Nokia playbook. On the same day, China announced at the 2026 World Artificial Intelligence Conference, held in Shanghai in July, that it would be opening its AI systems to cooperation for all countries around the world.

One builds a wall and collects taxes, the other opens doors and paves roads. Their approaches are completely opposite, seemingly a clash of the strongest contradictions. However, the spear or the shield is not determined by a company’s technological preferences, but rather by their respective national systems and economic structures.

If the United States is to maintain its hegemony, it is inevitable that it will pursue closed-source AI. This is not only the nature of capitalist oligarchs, but also because America’s technological hegemony needs a narrative to prop up its financial markets, and Silicon Valley needs monopolies to maintain excess profits.

Closed-source technology is its moat. Therefore, even without the White House’s demands, OpenAI and Anthropic would still move towards closed-source and high-fee models. China, however, is entirely different. As the world’s largest exporter of industrial products, China possesses the world’s most complete integrated manufacturing supply chain.

The licensing fees for AI are only a small part of the overall cost. By making AI a universally accessible public good, China can drive the industrial expansion of many developing countries. The logic is clear: once these countries have completed their industrial upgrades, they will have stronger purchasing power to buy Chinese industrial equipment, consumer goods, and infrastructure services.

In short, the US profits from AI alone, while China profits from AI driving its entire industrial export system. Different perspectives lead to different paths. However, explaining China’s open-source AI efforts solely from this point is short-sighted. The ultimate goal is to realise a community with a shared future for mankind, which requires the neutralisation of unipolar extractive monopolies.

The shortcut to overthrowing hegemony is a united front. AI is the United States’ last strategic tool for maintaining its hegemony, and it is also a powerful weapon for China to pierce its hegemony. The boom in AI in the United States is essentially an “upstream carnival”

Since 2026, almost all of the US economic growth has been driven by AI investment. However, the logic behind this growth is not that AI has been successfully implemented and monetised, but rather that it remains at the upstream of the industry chain. Tech giants are frantically purchasing chips and building data centers, using massive equipment purchases to boost GDP.

This is similar to the South Korean market, where it appears to be a nationwide frenzy, but whether the benefits will materialise is uncertain. Even Americans themselves can’t offer guarantees. An MIT report states that 95% of enterprise AI deployments in the US fail to generate measurable returns.

The US media outlet, ‘The National Interest’ offered a more scathing assessment, arguing that the US has chosen a very risky path, channelling all its resources into generative AI, which easily boosts stock prices, resulting in a technologically disabled system that “has a brain but no hands or feet.”

The more challenging aspect is the physical ceiling; even the most advanced models require electricity. 70% of the US power transmission and distribution equipment is beyond its service life, and the three major power grids in the East, West, and Texas operate independently, making cross-regional power transfer operationally uneconomic.

The grid connection queue for new data centers in Silicon Valley is already five or six years long; companies can’t afford to wait and are forced to build their own power plants at high costs as a backup. In contrast, China not only has abundant power resources, but its AI has also been deeply rooted in the real economy from the very beginning.

By 2025, China’s manufacturing robot density will reach 470 robots per 10,000 people, surpassing Germany; it will also boast 43% of the world’s “lighthouse factories” and 18 fully automated container terminals. Furthermore, China has the world’s strongest new energy industry chain, as in the automotive sector, where the driverless delivery vehicles on the street are just one application scenario.

Meanwhile, relying on nearly 47 ultra-high-voltage power transmission channels and the East-to-West Computing Project, the green electricity ratio of intelligent computing centres in Western China generally exceeds 80%, with some benchmark parks exceeding 90%. The electricity price for computing power delivered to households is less than US40 cents, far lower than that of their American counterparts.

A Stanford University AI Index report released in April 2026 shows that the overall performance gap between top models from China and the US has narrowed to 2.7%, while China has already surpassed the US in the areas of industrial-specific models and lightweight deployment.

AI performs quality inspection in factories, scheduling in ports, and load balancing in power grids. Production lines generate massive amounts of physical data in real time, continuously optimising algorithms in reverse, forming a cycle of “scenario-based data feeding, data-based model training, and model-based production feedback.” This kind of data cannot be obtained by web crawlers or produced by laboratories; only a complete manufacturing supply chain can provide it continuously. Global developers will still vote with their feet, just when they abandoned Symbian and embraced Android.

A few days ago, nearly 200 Silicon Valley start-ups, including Proton and Y Combinator, jointly wrote to Trump, urging the White House not to cut off the US’s access to Chinese AI models. Otherwise, “hundreds of companies will go bankrupt instantly.” Behind this letter lies the growing rift within the US AI industry.

Giants like A-Company naturally want the White House to build a wall so they can reap the benefits of a monopoly; while hundreds of start-ups rely on Chinese open-source models for their ongoing operations. If a ban is implemented, they won’t have enough money and will struggle to survive. According to sources, the plan to impose a complete ban on Chinese models has not been seriously discussed within the White House because they know perfectly well what’s going on.

In today’s global AI landscape, only China and the United States truly hold significant weight. Without cooperation with China, the US AI efforts will remain merely theoretical concepts on financial market charts, unable to be implemented throughout industry. Cooperation benefits both sides. If the US is willing to cooperate, China will welcome it, and the whole world will benefit. Conversely, it’s a tit-for-tat situation following the pattern in Iran.

During the early years of the AI boom, the market assumed that demand for accelerators would grow indefinitely. Now different questions are beginning to surface. Who will finance such an expansion? How many data centres will actually be profitable? When will they begin to recover those investments?

The problem is that Nvidia itself invests in its customers so that they, in turn, buy its chips: an arrangement analysts call circular financing, which the ‘Bank for International Settlements’ 2026 annual report flagged as a source of systemic risk. When the maker of the shovels also lends the money to the miners, one may ask where, ultimately, the real demand comes from. The challenge is no longer merely to manufacture chips. It is to find enough electricity, water for cooling, industrial land, power grids, and capital.

These are not simply technology investments. We are witnessing the transformation of digital infrastructure into a new asset class. Data centres are beginning to occupy the place that decades ago belonged to motorways, pipelines, ports or power plants. Artificial intelligence no longer depends solely on scientific talent: it depends increasingly on who possesses the financial capacity to build thousands of additional megawatts.

And here China holds structural advantages that are hard to ignore. It does not merely manufacture components: it controls much of the manufacturing chains, critical minerals, batteries, consumer electronics, electric vehicles, industrial robots and logistics networks. While much of the Western debate continues to focus on foundation models, Beijing appears to be moving toward a far more systemic approach: controlling the entire material architecture that makes artificial intelligence possible.

Nokia had stood at its peak, believing Symbian’s moat was impenetrable and that open source was nothing more than a cheap trick. Today, the United States stands at the pinnacle of AI, believing that closed-source monopoly technology can lock everything in, and that open-source technology is nothing more than a free-riding tactic. Little do they know that, although the pace of human progress is not repeated, it follows the same rhythm and pattern. Sources - Edited extracts

• The Beginning of a New Technological Era: The Week the Markets Discovered That China Is No Longer Chasing the West https://www.pressenza.com/2026/07/the-beginning-of-a-new-technological-era-the-week-the-markets-discovered-that-china-is-no-longer-chasing-the-west/

• China’s AI Knife Fight: DeepSeek’s New Model Runs 100x Cheaper Than Anthropic’s Flagship https://www.zerohedge.com/ai/chinas-ai-knife-fight-deepseeks-new-model-runs-100x-cheaper-anthropics-flagship

Afterword

This episode concludes an overview of AI development thus far. The next series will examine the history of why AI is a leading instrument in the reconstruction of a replacement global financial system and the digital mechanics of the ‘Clearing House’ operation. The clearinghouse is the mechanism; the standard-setter is the authority and the two are rarely the same people. This matters because the people who decide whether your country can access development finance, your house can be insured, your business can borrow, and where your money can be spent were never elected, never named, and never asked your permission.

From the moment the US quietly withdrew its two carrier strike groups during the 2016 standoff in the South China Sea, the US military realised there was no chance of winning if it used force against China. The RAND Corporation advised the United States in multiple reports to avoid direct military conflict with China, emphasising “strategic de-escalation” and “risk management,” particularly on sensitive issues such as the Taiwan Strait and the South China Sea. The United States’ military resources simply cannot withstand a major power war.

Although two large-scale and prolonged military conflicts have broken out in Europe and the Middle East, their impact on the future world order is far less than that of the economic war between China and the United States. Two of the world’s three major geopolitical strategic regions have already seen war, with two of the three permanent members of the UN Security Council involved. One war exposed Russia’s true military capabilities, while the other revealed the United States’ and Europe’s military weaknesses.

East Asia has maintained relative calm despite heavy US military presence and the resurgence of Japanese militarism, largely due to China’s presence. In South Asia, India and Pakistan, having suffered significant losses in the May 7 air war in 2025, will likely remain relatively quiet, contributing to a period of stability in South Asia.

However, these wars, lacking a direct confrontation between two major powers, are localised conflicts. The two most powerful nations, in contrast, might determine the victor through economic warfare. Major economic wars between China and the US have possessed the nature of strategic decisive battles from the outset; but because they are wars without gunfire, their significance and importance are easily underestimated.

The first phase of the US-China economic war was a trade war initiated by Trump during his first term. In his second term, Trump again wielded the tariff weapon, escalating it to the level of a trade ‘nuclear’ war. At its peak, the overall tariffs reached 125-150%. China responded in kind but also used rare earth retaliation. Trump’s maximum pressure tactics hit a wall; he was unable to continue using tariffs to force concessions, nor could he achieve his goal of re-industrialising the US through tariff protection.

The tariff war put pressure on US prices, thus the Trump administration proactively lowered its stance, initiating negotiations to pause the trade war. Although the trade war is not over, the United States has already failed to force China to make concessions, nor did it achieve “re-industrialisation.” On the contrary, the tariff war has actually increased American prices.

The US tactic is to leverage the dollar’s international status to create a “dollar tide” through interest rate hikes and quantitative tightening when the dollar appreciates, global capital flows to the US, causing asset prices in other countries to fall; once the market hits rock bottom, the US then makes a surprise move, acquiring high-quality assets at low prices, completing a round of “harvesting.” This strategy has worked repeatedly for decades, reaping profits in Latin America, Southeast Asia, and Japan among others.

China’s real estate industry experienced a series of collapses, with giants like Evergrande and Country Garden facing difficulties; the financial market experienced severe fluctuations, putting pressure on the yuan exchange rate. However, ultimately, China did not experience a systemic financial crisis. As long as China holds its most crucial line of defence, not allowing free convertibility under the financial account, international capital cannot freely enter or leave China.

No matter how strong the dollar tide, it cannot affect the onshore pool of China’s assets. From the moment the Fed began cutting interest rates, the US’s attempt to systematically exploit China through conventional financial warfare also failed. The US did not achieve systematic exploitation, nor did it trigger a financial crisis in China.

Of the three major economic battles between China and the US, the technology war is the most difficult and poses the greatest challenge. In the first two, China could respond with a “defence and counterattack” strategy. The technology war is different. Any weakness in any key area could allow the US, along with its allies, to threaten China. Especially semiconductors, often called the “food” of modern industry, affect almost all high-tech industries, making them the primary target of the US’s technology war against China.

The technology war has two core battlegrounds: one is semiconductor chip manufacturing processes, and the other is artificial intelligence (AI). The United States once held an absolute advantage in these two fields and tied them together with the most advanced AI computing chips is also the focus of the US blockade against China.

The United States, through its domestic companies and its de facto control over the chip supply chain, including Japan, the Netherlands, and Taiwan, has imposed the strictest technological blockade. From 2019-26, China has basically achieved self-sufficiency in mature chip manufacturing processes (28 nanometres and above, i.e. one billionth of a metre). However, breakthroughs have not yet been made in equipment and materials for some key processes. In advanced processes, especially in chips with processes below 7 nanometres, there remain bottlenecks:

• EDA (Electronic Design Automation) software is monopolised by American companies such as Synopsys and Cadence.

• Advanced photoresists are dominated by Japanese companies such as JSR and Shin-Etsu Chemical.

• EUV lithography machines are exclusively manufactured by the Dutch company ASML, which imposed an embargo on China. Now, ASML has also blocked the production of advanced DUV models and imposed restrictions on after-sales service.

Although China has made remarkable achievements in independent innovation and domestic substitution in recent years, they can currently only produce 7-nanometre chips using the DUV lithography process with multiple exposures. This leaves a technological gap of approximately three generations compared to the most advanced 2-nanometre process overseas.

Following the traditional “catch-up route,” even with an optimistic estimate, a break-through is not expected in EUV until 2030, and even then it will take several more years to catch up from 5-nanometre to 2-nanometre. China will remain behind and dependent on others in advanced chip manufacturing processes for many more years.

The United States’ lead in AI computing power is mainly due to the superior performance of its computing chips and the monopoly of US companies over the AI ​​ecosystem. NVIDIA holds a 90% market share in the high-end AI training GPU (graphics processing unit) market. NVIDIA’s CUDA ecosystem (programming platform) constitutes an extremely high technological barrier, relied upon by millions of AI developers worldwide. The United States possesses approximately 75% of the world’s top AI computing power.

The United States has staked its national destiny on AI. From the government to capital, everyone is making a huge bet: whoever ignites the next AI-driven industrial revolution first will dominate the future world. However, in the first half of 2026, two landmark events occurred in the fields of chips and artificial intelligence, which may directly rewrite the course of the Sino-US technology war, or may have already determined the outcome.

In April, DeepSeek released its V4 large-scale model, boasting an astonishing 1.6 trillion parameters, a significant leap from the hundreds of billions of parameters in its predecessor, V3. Simultaneously, it achieved a revolutionary improvement in efficiency with a standard configuration of millions of token contexts, resulting in more powerful performance.

However, the most crucial aspect is not the parameters themselves, but rather its deep integration with domestic chips such as Huawei’s Ascend, and its shift to Huawei’s CANN framework in its technical architecture. For the first time, domestic AI software standards and hardware have formed a complete closed loop, establishing a comprehensive, self-reliant, and collaborative software and hardware ecosystem in China, from the AI ​​application layer to the computing power foundation.

Although the computing chips still lag behind Nvidia in performance, and the CANN framework is not as mature as CUDA, China has already established a sustainable and iterative domestic AI ecosystem. This is a significant milestone in China’s efforts to catch up with the United States in the field of artificial intelligence.

If DeepSeek V4 broke the US monopoly on the software ecosystem, then Huawei’s “Tao Law” (τ Law) forged a new path in hardware development, completely changing the game. The core idea of ​​”Tao Law” is to replace traditional “geometric miniaturisation” with “time miniaturisation.” The traditional Moore’s Law (doubling transistor density every 18-24 months) follows a “geometric miniaturisation” route by continuously making transistors smaller.

This path becomes increasingly difficult, requiring extreme ultraviolet (EUV) lithography machines, with extremely fine etching technology etc.; China has been hampered in this direction. Huawei’s Tao Law takes a different path: through collaborative innovation at four levels: devices, circuits, chips, and systems. It significantly improves transistor integration density and signal transmission efficiency under the same process technology. Simply put, while others are desperately trying to “make” transistors smaller, Huawei is figuring out how to make signals “run faster and denser.”

China originally followed the mainstream Western technology roadmap, addressing every deficiency in the chip production chain, from lithography machines and etching machines to photoresist, by focusing on overcoming each weakness head-on. This was incredibly difficult. It has taken over seven years to achieve a leap forward in semiconductor equipment and materials, essentially securing a secure and self-sufficient supply chain for mature chip manufacturing processes above 28 nanometres.

Following this path, it would take four to five years to commercialise EUV lithography machines, and then another four to five years to tackle the 5-nanometre, 3-nanometre, and 2-nanometre processes. Therefore, catching up with the advanced level of chip design and manufacturing dominated by the US would take at least seven or eight years, even assuming overall progress is relatively smooth.

But with Huawei’s strategic approach, the future is different. China can break through the US blockade on advanced chip manufacturing processes more quickly and thoroughly through the new technological routes pioneered by Huawei. The Kirin 2026 chip, slated for release in the autumn of 2026, will be the first product to fully adopt logic folding technology.

According to Huawei’s plan, by 2031, high-end chips based on the “Tao Law” will achieve a transistor density equivalent to a 1.4-nanometre process. Without relying on EUV lithography machines, China’s advanced process chips are expected to catch up with or even surpass the 2-nanometre and 1-nanometre levels of traditional Western approaches within five years through a completely new design methodology.

Why has Huawei’s “Taoist Theory” caused such a significant stir in the global industry? It’s not just a specific product, but a chip semiconductor technology and industry roadmap capable of changing the world. Huawei has created a systematic methodology that cannot only alter the competitive landscape of chips but also change the course of the US-China tech war. In short, if Huawei’s technological roadmap succeeds, the US-China tech war will change direction.

The tech war has dragged on for years without ending, primarily because China has not completely broken the US blockade on chips and semiconductors, nor have they ended the US’s dominance in artificial intelligence. In recent years, the US has used its temporary lead in these two areas to preserve its hope of reversing its declining national power through winning the tech war and activating its technocratic social control system as advertised.

However, now that DeepSeek V4 has completed the closed loop of the domestic AI software ecosystem, and Tao Law has opened up a new path for the development of domestic chip hardware. These two pieces of the puzzle together mean that for the first time, China’s artificial intelligence has a complete, self-sustaining, and externally independent technical system, from the computing power foundation (Huawei Ascend) to the software framework (CANN) to the upper-level large model (DeepSeek).

Going forward, the landscape of the US-China technology war will no longer be one of passively catching up, but a truly meaningful dual-track competition based on two different technological systems.

Whoever controls the next Industrial Revolution will effectively control the future world order. The world is on the eve of a new industrial revolution. Artificial intelligence is the most important technology and industry determining the New World Order; it is the key to the next industrial revolution. Whoever obtains it first will have the hope of controlling the future.

The next industrial revolution will undoubtedly be a revolution of intelligence and automation driven by artificial intelligence. Whoever can establish a leading advantage in AI chips, large-scale models, and computing power ecosystems will dominate global economic and technological standards for the coming decades.

Military power will become secondary because when one side’s AI productivity far surpasses that of the other, the long-term economic and technological gap will eventually translate into overwhelming national strength. As in the 19th century, when there were cavalry charges, while others had already developed the Maxim machine gun, the outcome was already predetermined.

Both China and the United States have understood the playbook and is why the United States would rather give up military adventures than lose its leading position in AI and chips; China would rather invest hundreds of billions of dollars and spend seven or eight years to tackle the two toughest challenges of chips and AI.

Therefore, there’s no need to speculate about when World War 3 will break out. The real decisive battle is taking place now. In the most decisive technological war, China has moved from a “defensive counterattack” to a new stage of “strategic stalemate” and even “local counter-offensive.” With these breakthroughs, the time for China to launch a full-scale counter-offensive against the United States in its technological war is rapidly approaching.

This global competition is no longer only about technology and productivity. Artificial intelligence, combined with robotics, can massively replace repetitive physical and mental labour. Therefore, this competition is also inevitably a competition of production relations.

Private ownership could be overwhelmed by employment pressures in this competition because it cannot support the new industrial revolution. Social ownership and its corresponding distribution relations are needed to effectively solve the problem of full employment under labour substitution conditions and become the standard production relations to match the Fourth Industrial Revolution. Sources

• Most people still believe the official narrative of American military strength, but the reality is that US bases are being pushed out of the Persian Gulf, and the military option cannot protect its allies https://www.naturalnews.com/2026-07-23-why-energy-crisis-is-an-engineered-collapse.html

• A user’s guide to economic, political, social and cultural collapse. https://www.amazon.com/-/es/Dmitry-Orlov-ebook/dp/B00CGNQVIY/ref=tmm_kin_swatch_0

• This may seem eerily similar to the Chinese Communist Party’s social credit scoring system

Leo’s Newsletter

Coming soon to a big-box store near you: Digital-programmable pricing along with real-time continuous surveillance

Gasoline prices, as I’m sure you’ve noticed, routinely change, sometimes in a matter of hours given the instability of the oil supply as arbitrarily judged by global futures markets…

Read more

a month ago · 67 likes · 46 comments · Leo Hohmann

Quote: “It’s easy to point the finger at China and call them a totalitarian society while ignoring the fact that America is rapidly becoming just the same. China built its control grid largely in partnership with American companies, using American technology, and I believe it’s being used as a testing ground for further implementation here and around the world.”

• Surveillance is no longer the unique purview of the central state; it has been fully privatised for profit by Big Tech and Corporate America

Charles Hugh Smith's Substack

Get the Flock Out of Here: Our Privatized Surveillance System

I narrate key points in my post “Get the Flock Out of Here…

Listen now

a month ago · 9 likes · 1 comment · Charles Hugh Smith

Iain Davis writes: “In the 2014 Chinese State Council Notice concerning Issuance of the Planning Outline for the Establishment of a Social Credit System. The Chinese government laid out its vision for its social mechanism:

• Accelerating the establishment of a social credit system is an important foundation for comprehensively implementing the scientific viewpoint of development.

• Accelerating and advancing the establishment of the social credit system is an important precondition for promoting the optimised allocation of resources and an urgent requirement for improving mechanisms for scientific development.

This comes under the heading of: ‘Technocracy’ which is a centralised system of control based upon the distribution and allocation of all resources, right down to the individual level. It gives those who command the whole system absolute behavioural control of the entire population. Technocracy is currently being trialled in China. The Western ruling oligarchs have noticed, which is why they are flooding the West with massive AI data centres.

China’s Social Credit System stands as one of the most ambitious governance experiments in modern history, blending big data, administrative enforcement, and behavioural incentives into a sprawling national framework. By early 2025, the National Credit Information Sharing Platform had collected over 80.7 billion records covering approximately 180 million businesses, making it one of the largest regulatory databases ever constructed.

The system does not operate as a single unified score for every citizen, despite widespread assumptions in Western media about its design. It is best understood as a patchwork of local pilot programs, industry-specific blacklists, and corporate compliance tools connected through shared data platforms. A March 2025 policy directive from the Communist Party leadership introduced 23 new measures aimed at standardising credit management across government, businesses, and individuals, what has changed since its inception, and what it means for individuals, businesses, and the global community in 2026. The stakes are significant: the system touches everything from loan access and travel privileges to international trade and cross-border regulatory influence.

China’s Social Credit System is a government-led regulatory framework designed to evaluate the trustworthiness of individuals, businesses, and government entities through data collection, blacklists, and administrative enforcement. The system connects financial credit data, regulatory compliance records, and behavioural assessments into a policy infrastructure that affects how entities operate within China’s economy, and it remains under active development rather than being a completed, monolithic program

The term “social credit” (社会信用, shèhuì xìnyòng) is intentionally broad and does not translate neatly into a Western concept of credit scoring. A law professor in Beijing has described it as a “working term,” meaning it functions as an umbrella category covering multiple national initiatives and city-level pilot projects. The system emerged from a 2014 State Council planning document that outlined a vision for building a “credit-worthy society” by 2020, though that deadline passed without a single unified system being completed.

Instead, central authorities continued emphasising improvement and standardisation of social credit policies rather than deploying one integrated platform. The most common misconception about the system is that it assigns a single numerical score to every Chinese citizen, which is not how it currently operates. What exists in practice is a decentralised collection of agency-managed databases, local experiments, and corporate compliance mechanisms linked through shared data-sharing agreements.

Between 2016 and 2024, China shifted from fragmented local pilots toward a more coordinated national framework managed through centralised platforms. The National Credit Information Sharing Platform became the core data hub, linking ministries, provincial databases, and regulators into a single information backbone. By 2023 a total of 118 national-level regulations were issued specifically for the Social Credit System, supported by more than 500 detailed regulations at the local level. This legislative activity signalled that the system was far from dormant, even as international attention faded from the headlines. The pace of regulatory updates also created challenges for companies struggling to keep up with rapidly shifting compliance requirements across different provinces and agencies.

A pivotal moment arrived on March 21, 2025, when the General Office of the Communist Party Central Committee and the General Office of the State Council jointly released a 23-point policy directive. This document expanded the role of creditworthiness assessments across government institutions, businesses, social organisations, and individuals simultaneously.

The directive emphasised data-driven governance, stronger legal safeguards for information security, and protections against excessive data collection and illegal use of personal information. In 2026, the National Development and Reform Commission promulgated Credit Repair Management Measures effective April 1, 2026, establishing clear rules for how entities can challenge and repair their credit records. The trajectory of policy development reveals a system that is becoming more formalised and standardised, not less.

Every company registered in China has been assigned a Unified Social Credit Code, an 18-digit identifier used across all datasets linked to the corporate social credit system. The cross-agency structure gives the system its enforcement power, because a violation in one domain can trigger consequences across multiple regulatory bodies simultaneously. Local governments maintain their own credit management offices and often run distinct scoring pilots tailored to regional priorities and economic conditions.

Provincial and municipal authorities have considerable latitude in designing their own implementation strategies, which explains why the system looks different in Rongcheng, Zhejiang, Shanghai, and other jurisdictions. The “Credit China” portal (creditchina.gov.cn) functions as the primary public-facing platform where individuals and companies can check published blacklists, administrative penalties, and credit repair procedures.

This portal has become the sole authorised platform for publishing public credit information following the 2025 directive, consolidating what was previously a scattered system of regional disclosure websites. The decentralised structure creates both flexibility and inconsistency, allowing innovation at the local level while complicating efforts to build a truly unified national standard.

The data collection process extends well beyond traditional financial records into behavioural and regulatory domains that have no direct equivalent in Western credit systems. Government departments report administrative permits, penalties, license revocations, and court-ordered enforcement actions to the shared platform, building layered profiles on businesses and individuals.

For companies, the record includes annual report filings, tax payment histories, customs declarations, environmental compliance audits, and even the personal credit standing of key personnel. The resulting corporate profile is an aggregate of potentially hundreds of data points compiled by dozens of entities operating at national, provincial, and municipal levels. Understanding how big data intersects with regulatory systems is essential for grasping the scale of the infrastructure involved.

Data sharing across agencies operates through “joint enforcement agreements” that amplify consequences beyond a single regulatory domain. A company blacklisted by the State Tax Administration for evasion can face additional customs penalties, more frequent financial audits, and restrictions on government procurement eligibility under cooperation agreements between those agencies. This is how China is preparing to control the Western-style model of corporate limited liability protection which I discussed HERE.

The 2025 update formalised this cross-ministry data sharing, creating what amounts to a unified compliance dashboard where a bad score in one category blocks access in others. This interconnected enforcement model represents the system’s most powerful practical feature, because it transforms isolated regulatory violations into system-wide consequences. This is the ‘Clearing House’ model.

Critics argue that this linkage risks compounding punishments beyond what the original infraction would warrant, while supporters contend it eliminates the loopholes that allowed bad actors to evade accountability by shifting between jurisdictions.

Artificial Intelligence (AI) and surveillance technology have become increasingly intertwined with China’s credit monitoring infrastructure, though the degree of integration is often exaggerated in international reporting. As of 2025, China operates an estimated 600 million surveillance cameras across the country, many equipped with AI-powered facial recognition capabilities developed by companies like SenseTime, Megvii, and CloudWalk. By comparison in 2026, the United States is estimated to host well over a billion active security cameras across all sectors

These cameras serve multiple government functions including public safety, traffic enforcement, and urban management, though their direct connection to social credit scoring varies significantly by locality. AI facial recognition software is used in tandem with these cameras to identify individuals in real-time, track movements across urban spaces, and flag potential infractions. The technology enables government authorities to process behavioural data at a scale that would be impossible through human observation alone.

Despite the technological capabilities available, the actual deployment of AI in credit scoring remains more fragmented and less automated than popular accounts suggest. Experts studying the system note that much of the administration still relies on human decision-making rather than fully automated AI-driven scoring.

Government plans call for greater integration and standardisation of technology platforms in the future, but practical constraints including bureaucratic silos, data format inconsistencies, and resource limitations slow the pace of full automation. The gap between the system’s theoretical capability and its practical implementation is significant, and caution is advised against conflating China’s surveillance capacity with the actual operations of the social credit system. That said, the trajectory is toward greater technological integration, and ongoing developments in AI ethics suggest the challenges will intensify before they are resolved.

Surveys of Chinese citizens reveal a surprisingly high level of support for the social credit system, complicating the narrative that it functions purely as a top-down instrument of state control. Research published in The Journal of Politics by academics from Stanford and other institutions found that nearly 80% of Chinese citizens expressed support for social credit programs in opinion surveys.

This level of public backing reflects a genuine desire among many Chinese citizens for improved social trust, reduced fraud, and more reliable enforcement of existing laws and regulations. Supporters of the system frequently cite specific benefits such as reduced food safety risks, fewer scams, and more reliable business partners as reasons for their positive assessment. The high approval rating challenges the assumption that the system is universally resented by the Chinese public, even as it raises questions about the conditions under which that support is formed.

Public support is partly sustained by limited access to information about the system’s more coercive applications. Government propaganda and censorship play a role in shaping perceptions by emphasising benefits like fraud reduction while obscuring cases of political targeting and privacy violations related to AI-powered monitoring. The relationship between public opinion and policy development is reciprocal, as the government calibrates its messaging and reform efforts to maintain popular legitimacy for the system

What makes China’s approach distinct is the explicit government strategy connecting surveillance data, regulatory enforcement, and cross-agency punishment mechanisms into a coordinated system backed by state authority. Western credit systems are primarily operated by unaccountable private and public corporations hiding behind limited liability protection, while China’s system is government-led and directly enforces accountability through administrative consequences including travel bans, employment restrictions, and public shaming.

The integration of behavioural surveillance with credit assessment also distinguishes the Chinese model, because Western systems typically do not yet link surveillance camera footage or social media activity directly to financial creditworthiness. China’s system is viewed as a paradigm shift, not because of any single feature, but because of its combination of scale, government authority, and data integration, creating a comprehensive behavioural governance apparatus without precedent in modern history. Critics argue this combination creates unique risks for abuse, while defenders contend it addresses systemic trust deficits that Western regulatory approaches have failed to solve in comparable markets.

China’s surveillance technology companies have expanded their reach dramatically through partnerships with governments across Africa, Central Asia, and Southeast Asia, creating dependencies that extend Chinese technical standards beyond national borders.

More than 18 countries had adopted Chinese surveillance technologies as of 2019, and the number has continued growing. These installations lock recipient countries into Chinese technical ecosystems that are difficult and expensive to replace, a critique that has drawn attention from European and American policymakers concerned about digital sovereignty in the developing world.

China’s Social Credit System is entering a phase of consolidation and formalisation that will define its impact for years to come, moving beyond experimental pilots toward institutionalised infrastructure with legal backing. The most likely trajectory involves continued strengthening of corporate credit enforcement, given that this dimension has the clearest institutional support and generates the least domestic political resistance.

Individual social credit remains fragmented, and the rollout of a comprehensive personal ranking system appears to be on hold, with most local pilot programs having concluded by 2025. The March 2025 policy directive and April 2026 Credit Repair Measures suggest the government is prioritising standardisation, legal frameworks, and procedural safeguards alongside continued expansion. The system’s evolution will be shaped by three competing pressures:

• The government’s desire for comprehensive data integration

• Growing domestic expectations for privacy protections

• International scrutiny of surveillance-enabled governance models.

The system is far from complete, but it has already become an embedded feature of China’s regulatory landscape that no serious analysis of the country’s governance, economy, or international posture can afford to ignore.

Summary of findings

The system’s global influence extends beyond China’s borders, with surveillance technology exports and international standard-setting reshaping social credit frameworks in developing nations.

• China’s Social Credit System is not a single score but a network of blacklists, redlists, and compliance databases managed by dozens of government agencies.

• Corporate social credit enforcement has intensified since 2025, with cross-ministry data sharing and formalised penalties for regulatory violations.

• Public opinion surveys suggest nearly 80% of Chinese citizens support the system, though research indicates this support partly stems from limited awareness of its repressive potential.

While no country has replicated China’s approach exactly, surveillance technology exports and digital governance programs are extant in many developed nations incorporating elements of the Chinese social credit model. Sources

• Edited extracts from China’s Social Credit System https://www.aiplusinfo.com/blog/chinas-social-credit-system/

• Elon Musk’s Chinese Public-Private Partnership

Iain Davis Substack

Elon Musk's Chinese Public-Private Partnership.

In the previous article, we discussed the “gaggle of Silicon Valley oligarchs” who can be distinguished by their “liking for the ideas presented in Nick Land’s Dark Enlightenment and their enthusiasm for Technocracy.” Calling them the NRx accelerationists, we noted that Elon Musk is part of this group…

Read more

2 months ago · 69 likes · 10 comments · Iain Davis

• Technocracy Rising: Why It’s Crucial to Understand the End Game https://www.globalresearch.ca/technocracy-rising-crucial-understand-end-game/5873853?doing_wp_cron=1783923378.7922260761260986328125

The claim that China has become an imperialist power is now routine in Washington, the collective West in general, the corporate press, and parts of policies influenced by liberal geopolitics. It is repeated so often that it passes for truth. Imperialism, as Lenin defined it, is not simply “big-power behaviour.” It is a stage of capitalism in which monopoly finance capital dominates governments, exports capital to oppressed nations, and extracts super-profits through the ownership and control of entire regions and economies.

Judged by this standard, China is not an imperialist power. Its economy is large and its global presence growing, but its actual role bears no resemblance to the historic imperialist centres that built the modern Western world capitalist system. Imperialism rests on finance. Its core instruments are global banks, reserve currencies, structural adjustment programs, debt peonage, and the power to reorganise entire economies. This system, built mainly by the US, Britain, Germany, France, and Japan, is anchored in the IMF, the World Bank, dollar dominance, and multinational corporations backed by military blocs.

China does not command such a system. Its currency is not a world money. Its banks do not dictate policy to other nations. It does not enforce austerity packages, impose privatisation, or conduct economic warfare through sanctions.

When China lends to developing countries, the terms often reflect hard bargaining, uneven benefits, and occasionally dependency, but they do not replicate the debt-peonage system through which Western finance capital governs the periphery. Chinese loans are routinely renegotiated, extended, or forgiven; they do not function as levers to impose public/private partnerships, deregulation, and austerity programs on borrowing countries.

China does not extract monopoly super-profits through control of global finance or intellectual property. In reality, it was Western corporations that extracted vast value from China for decades. China’s industrial ascent has altered its role in production, but the commanding heights of global finance remain centred in New York, London, Frankfurt, Paris, and Tokyo.

Military position makes the difference even clearer. Imperialism rests on armed coercion: bases, alliances, interventions, and the global command structure that enforces the capitalist order. The United States maintains roughly 750-800 foreign bases; China has one. The US operates worldwide combatant commands; China does not.

China’s foreign policy emphasises sovereignty largely because it spent a century as a target of colonial domination, not a beneficiary of it. China is not a new imperialist centre; it continues as a developing country rising in a world order built by others. Its income levels remain far below those of the US and Europe, and many areas still depend on state-led development. China focuses on raising living standards, supporting poorer regions, and building its own industries. These were handled in the rise of the imperialist powers through centuries of colonial plunder. China is doing it without all that stolen wealth.

This does not mean that China operates abroad as a socialist alternative. Its external activity is shaped by national priorities and the mixed character of its economy. Chinese companies invest overseas to make a profit, sometimes with state backing, and some projects have uneven effects. But this does not place China in the category of an imperialist power. It is better understood as a post-colonial industrialising country working within a global order long dominated by the imperial capitalist powers.

China’s foreign policy has changed over the years. For decades after 1949, its approach reflected the conditions of a nation emerging from colonial subjugation and civil war. China did not possess overseas corporations or global banks. What it did have were political commitments shaped by its own experience of imperialist domination.

In its early decades, China’s foreign policy was explicitly revolutionary. The Communist Party viewed national liberation movements as part of a shared world struggle against colonialism and capitalism. Beijing actively supported communist and anti-imperialist movements across Asia, Africa, and Latin America, providing material aid, training, and political backing to liberation struggles and insurgencies.

This was not symbolic solidarity. China supplied Korea and Vietnam in their wars against American intervention; sent medical teams, engineers, and military advisers to movements in Algeria, Guinea-Bissau, Angola, Mozambique, and Zimbabwe; and completed the Tanzania–Zambia Railway in 1975 to help newly independent states break free from apartheid-controlled trade routes.

China viewed these efforts as extensions of its own struggle against foreign domination and as support for newly independent states up against the same imperialist system. This outlook also shaped China’s participation in the Bandung Conference in 1955, which brought together 29 newly independent Asian and African nations, a significant show of anti-imperialist unity among formerly colonised peoples.

China’s foreign policy aligned with the wave of anti-colonial revolutions then sweeping Asia, Africa, and Latin America as nations fought to end imperialist domination. The Sino-Soviet split disrupted this unity. Differences over strategy, ideology, and how to confront US power hardened into a rupture that divided the socialist camp.

During the Cultural Revolution, the Soviet Union was portrayed inside China as a warning of what happens when a workers’ state retreats from revolutionary struggle. But despite its bureaucratic contradictions, the USSR was not an imperialist power, and the deepening antagonism between Beijing and Moscow weakened the combined strength of states and movements resisting American imperialism.

The consequences were visible by the 1970s. As the Sino-Soviet conflict intensified, China moved toward a tactical accommodation with Washington. Nixon’s 1972 trip to Beijing represented a real political shift. In southern Africa and Southeast Asia, liberation movements found themselves navigating conflicting positions from Beijing and Moscow. The coherence of the anti-imperialist front eroded at a moment when US power remained formidable and on the offensive.

After Mao’s death, China’s leadership undertook a major reorientation. Deng Xiaoping argued that the country’s survival required concentrating resources on economic development.

Revolutionary assistance abroad was ended. China sought technology, loans, and investment from the advanced capitalist countries, normalised relations with the West, and entered the world market. Its foreign policy language shifted accordingly, stressing stability, sovereignty, and the need to operate within a world system still dominated by the imperialist powers led mainly by the United States, alongside Britain, Germany, France, and Japan.

These adjustments reflected the pressures facing any society attempting independent development within a global capitalist order. They did not transform China into an imperialist power, nor did they produce a socialist alternative for other nations. They marked a shift in priorities under difficult conditions; a retreat from earlier international commitments in order to secure national development in an environment shaped by Western finance capital and the military might of the United States.

China’s path, from supporting liberation movements to navigating a hostile world economy, shows the enormous pressures placed on any post-colonial society seeking to develop without plunder or overseas domination. These changes did not turn China into an imperialist power, but they did narrow the space for the kind of revolutionary commitments it once pursued; what followed was shaped by this contradiction: a country that is not imperialist, yet operating inside a world system made by the imperialist powers.

China’s expanding role in the Global South is often held up as proof that it has become a new imperialist power. But the reality on the ground tells a different story. Belt and Road (BRI), the centre-piece of China’s overseas development activity, does not operate like the IMF, the World Bank, or the great colonial powers whose investments were designed to extract wealth and enforce dependency.

For decades, countries in Asia, Africa, and Latin America faced only one model: loans tied to austerity, privatisation, and foreign control. China’s approach breaks from that pattern. It finances ports, rail lines, power plants, and industrial zones without demanding that governments sell off public assets or dismantle social programs. When debts become difficult, Beijing typically restructures them, extends maturities, or forgives portions outright. China pursues its own interests, but it does not use debt the way imperialist powers do, as a weapon to force austerity, privatisation, and political control.

None of this means China is charitable. Chinese firms seek profit, and China gains strategic influence. But the relationship is not one of domination. Belt and Road projects usually involve infrastructure-for-trade or infrastructure-for-resources arrangements, not the debt-for-privatisation model used by Western finance capital. In many countries, these projects are the first major public works built in generations, expanding local capacity rather than hollowing it out.

China’s position as a nation once carved up by foreign powers also shapes its outlook. Its foreign policy stresses sovereignty and non-interference because it still carries the memory of colonial subjugation. Whatever contradictions exist within its system, China does not behave like the imperialist states that ruled the world through force, finance, and unequal treaties.

The Chinese economic model, a major industrial country offering development without political control, has opened space for the Global South to manoeuvre in ways that were impossible under American and European domination. It is one of the key reasons “Multipolarity” has become such a common theme in international politics today.

Multipolarity is a description, not a destination. It has become a dominant theme in international discourse. Governments in Asia, Africa, and Latin America speak of a world with several major power centres. China and Russia present it as an alternative to US dominance. Some voices cast it as a step forward, and for people challenging American imperialism it can seem like a hopeful counterweight.

Multipolarity describes relations among states, not social systems. It says nothing about exploitation, ownership, or class power. A multipolar world is still a capitalist world and remains an imperialist world. It only indicates that US supremacy is being contested, not that it has been overturned or that the global order has changed in any fundamental way.

For the Global South, the idea that multipolarity creates broad new room to manoeuvre is often overstated. A more contested world system can offer alternative partners and limited leverage, but the core structures of imperialist power remain in place. Whatever space appears is narrow, unstable, and easily closed. It is not a path to development, nor a substitute for anti-imperialist or socialist struggle.

Knowing that the world is “multipolar” tells us nothing about who owns the banks, who controls production, or who appropriates the surplus. A world with multiple power centres can still be a world ruled by capital; multipolarity does not resolve the basic contradiction between socialised labour and private capital appropriation.

China’s position in this landscape is shaped by its own internal contradictions and by the pressures of the existing imperialist system. Whether a more contested world order alters those pressures in any meaningful way is uncertain and there is little historical basis to assume it will. China does not promote multipolarity as a socialist project, but as a national strategy within a capitalist world system. This reflects its dual character as a socialist state with significant capitalist sectors navigating an international order still dominated by the old imperialist powers.

Multipolarity is not an alternative to socialist internationalism. It is not a program for liberation. Treating it as such repeats earlier errors, when alliances with “progressive” capitalist states were mistaken for class struggle. Multipolarity offers a description of shifting state relations, not a path beyond capitalism. The central struggle remains the same: the battle of workers and oppressed peoples against the global imperialist system of exploitation.

What alarms Washington is not the talk of “multipolarity” or the emergence of other powerful centres on the world stage. The real threat is material: as China builds up advanced industry, it closes off the sectors where imperialist monopolies make their biggest profits. That strikes at the economic base of American dominance far more than any shift in alliances or changes in official rhetoric.

Capitalism is driven by a relentless pressure to innovate. Each capitalist must cut costs and outcompete rivals, which means adopting AI strategies, new machines, reorganising labour, and transforming whole industries. This constant upheaval, “revolutionising the means of production”, is one of the forces that gives capitalism its dynamism and also its instability, pushing the system into continual change and periodic crisis.

The imperialist powers have turned this pressure into a global system: they seized the new industries first, monopolised them, and drained value from the rest of the world. The super-profits that flowed back home funded selective concessions for privileged insiders, helping to create an elite corporate aristocracy that corrupted traditional political life at the imperialist core.

Today’s situation is not a smooth shift toward a “multipolar” balance. It is the breakdown of the economic pillars that propped up the imperialist order. American dominance rested not only on its military reach but on its grip over the decisive sectors of world production: high technology, advanced manufacturing, finance, and intellectual-property monopolies. These monopolies generated the super-profits that has allowed global corporations to dominate governments and determine policy both abroad and at home.

Imperialist corporations depend on capturing new industries early, cornering the market, and using that lead to extract super-profits through monopolies. That brief opening is the “monopoly window.” When China enters these industries early and at scale, it shuts down that window. Without monopoly control, the super-profits that sustain imperialist power never fully materialise.

This dynamic is already visible. Policy intellectuals of US imperialism at the Council on Foreign Relations describe it as a “second China shock.” By this, they mean China’s shift from serving as a low cost export platform for Western capital to becoming a leading producer of advanced AI, technology-intensive goods, electric vehicles, solar panels, batteries, telecom equipment, robotics, and high-speed rail.

What alarms them is not only lower prices or lost market share, but also the possibility that Western capital will no longer be able to control these sectors on monopoly terms. China’s massive solar build-out has driven prices down to levels where Western corporations can no longer dominate global industries as before.

With electric vehicles, batteries, energy storage, shipbuilding, and high-speed rail, China is already ahead by years, and its telecom companies can build full networks without relying on Western patents. In each of these strategic sectors, imperialist capital now risks more than losing customers; it risks losing the ability to monopolise industries in the first place.

China isn’t threatening the world with a new empire. It is threatening the old empires by cutting into the monopoly profits they depend on. Enter an industry early, and Western firms can no longer lock it up. Offer loans without IMF conditions, and Western bankers lose leverage. Reduce dependence on US technology, and Washington’s global hierarchy begins to crack.

US planners understand this clearly. Their response has been sanctions, export controls, chip bans, technology blockades, and military expansion across the Pacific. It is aimed at slowing China’s advance long enough for Western capital to regain the initiative. This is not a clash between rival capitals. It is a fight to preserve the monopoly foundations of the imperialist system in the face of an unprecedented challenge.

This is not the end of imperialism. It is the crisis of the monopoly-capitalist system that kept it dominant. China disrupts that system not by becoming a new empire, but by undermining the monopolies the old empires relied on to survive. Its socialist foundations with Chinese characteristics give it a different potential from earlier rising imperialist powers, a potential which, if deepened by the struggles against capital versus labour and oppressed peoples, could push beyond capitalist relations and reorganise production and social life on a more equitable basis. Source

• China: Building socialism in an imperialist world https://www.struggle-la-lucha.org/wp-content/uploads/2025/12/China_blds_Socialism.pdf

To be continued…

As wars once again raise their ugly heads this week I will leave others to document the details. This week continues my theme of placing the ills of our world at the foot of THE CORPORATIONS as an enablers of captured governments and corrupt macroeconomic failures, geopolitics and their constant inevitable wars.

I make no apology for reproducing this excellent description, edited from quoththeraven.substack.com about the failings, inherent in every institution and financial markets, seemingly losing all touch with reality in the years following the 2008 GFC and the former subtle changes, especially the repeal of Glass-Steagall Act in 1999. The trend line is unmistakable:

“Apparently it’s now considered bearish extremism to point out that a company says one thing and then does another. It’s futile to ask whether a proposed $2 trillion Initial Public Offering (IPO) valuation for a company trading roughly 100x sales while remaining unprofitable makes any sense. It’s negative to observe that the Federal Reserve appears trapped between an inflationary rock and a deflationary hard place, where fighting one problem inevitably worsens the other.

Companies that appear to have been caught engaging in outright misleading accounting practices that deserve far more scrutiny than they’re getting, only to watch investors shrug and buy more shares anyway. “We’ve seen this movie before. Enron did not implode because there were no warning signs. It imploded because the warning signs were inconvenient. There were whistle-blowers. There were people inside the system who knew the numbers didn’t add up. But complexity was treated as brilliance, and skepticism was treated as cynicism. Analysts admired the innovation. Television hosts admired the executives. And the stock went up—until it didn’t.”

None of the above observations are outrageous. They’re the kinds of questions investors used to ask before narratives became more important than numbers. The fact that simply asking those questions now provokes outrage says something has dramatically changed. Discussions that used to revolve around facts increasingly revolve around motives.

Apparently asking for consistency and follow-through from public company CEOs now qualifies as “hate speech.” Ironically, every bit of it is an echo chamber. Echo chambers make people intellectually lazy. If everyone agreed with everything they would probably stop challenging their own assumptions, like hearing opposing viewpoints. I’ve changed my mind plenty of times in over 30 years observing the markets. What I’m trying to arrive at isn’t confirmation. It’s truth. That distinction matters.

Part of the reason I view markets differently from the herd is because my framework has always been grounded in Austrian economics. Whether you agree with the Austrian School or not, one thing it relentlessly emphasises is that incentives matter, prices matter, capital allocation matters, and in the end economic reality eventually matters.

Artificially suppressing interest rates has consequences. Printing money isn’t free. Debt doesn’t magically disappear because politicians or central bankers wish it away. Malinvestment accumulates. Capital gets allocated to projects that never would have survived under honest market conditions. Booms fuelled by cheap money eventually collide with reality. Those aren’t particularly radical ideas. In fact, for most of economic history they would have been considered fairly obvious observations. The Austrian framework forces uncomfortable questions:

• Is this asset actually worth what people are paying for it, or has liquidity overwhelmed price discovery?

• Is this company creating durable cash flows, or simply issuing securities into an insatiable market?

• Are executives maximising shareholder value, or exploiting shareholder enthusiasm?

• Are prices reflecting genuine economic value, or simply reflecting trillions of dollars in monetary distortion through stock buy-backs, insider trading, and other aberrations?

These questions naturally make one sceptical, not because of pessimism, but because scepticism is the rational response whenever incentives become distorted. That puts it in a very different place than many investors today; being around long enough to remember markets before zero/negative interest rates became totally normal, before quantitative easing (QE) became permanent policy, and before passive indexing vacuumed up trillions of dollars regardless of valuation - via Investopedia:

“Passive investing is an investment strategy that aims to maximize returns in large part by minimizing the costs of buying and selling securities. Index investing is one common passive investing strategy. Using it, investors purchase the securities in a representative benchmark, such as the S&P 500 index, and hold them for a long time.

Passive investing is typically done by investing in a mutual fund or exchange-traded fund (ETF) that mimics the index’s holdings, either exactly or approximately. The strategy’s name reflects the fact that managers who use the strategy do not have to actively hunt for investments; they simply [thoughtlessly] buy and sell the investments that their target benchmark trades. In contrast, active investors must research and decide which securities to own.”

Before gamma squeezes, meme stocks, perpetual options speculation, and social media turned investing into something that often resembles a casino more than capital allocation. Many people investing (aka gambling) today have literally never experienced a market operating without extraordinary monetary accommodation.

If you’ve only invested during an era where every crisis is met with another liquidity program, another balance sheet expansion, another alphabet soup lending facility, and another trillion dollars created electronically, your expectations become calibrated around that environment. Eventually you stop recognising the distortion because the distortion becomes normal.

When markets become uncalibrated, investors become uncalibrated too. When asset prices become detached from economic reality for long enough, people begin confusing price appreciation with proof of correctness. Formerly we came up with gold to put more money into circulation. Then, after that, we used to at least print actual dollars. Now, we increase the money supply by literally just moving commas on an Excel spreadsheet somewhere at the New York Fed office. It’s as easy as typing these words right now: Boom. Another trillion.

People start believing valuation no longer matters because it hasn’t mattered recently. They assume management credibility is irrelevant because stocks keep going up anyway. They conclude accounting quality doesn’t matter because nobody gets punished. They believe debt doesn’t matter because refinancing has always been available. They mistake liquidity for genius. They mistake speculation for investing. They mistake momentum for truth. None of this is really an indictment of individual investors. It’s what decades of monetary distortion do to human psychology.

No one is worried about pointing out over and over things like commercial real estate imploding until we get a headline like this and a $400 million fund’s capital is completely gone. No capital returned. Total catastrophic loss. And the dickhead running the fund is asking for another $100 million (as in above photo).

So how should people, whose entire investing life has existed inside this bubble environment, react when it’s argued that executives should actually be held accountable for their words? Exactly the way many are reacting now, by claiming “Fearmonger.” “Hater.” or “Doomer.” Meanwhile, people whose intellect is genuinely respected bend themselves into contortions defending executives worth hundreds of millions of dollars because questioning management has somehow become taboo.

Think about how bizarre that really is. Public companies are not monarchies but are acting as such and CEOs are not monarchs but claim kingly powers. Being publicly traded is a privilege. Having access to essentially unlimited public capital through equity markets is an extraordinary privilege. Being included in major indexes that generate automatic buying regardless of valuation is beyond an extraordinary privilege. Executives don’t own that privilege. Shareholders and their pension funds should hold that privilege as the final arbiters.

CEOs should work for shareholders, not the other way around. They owe shareholders honesty. They owe shareholders consistency. They owe shareholders credibility. They owe shareholders decisions made in the owners’ best interests, not whatever best protects management’s compensation, reputation, or personal wealth.

If an executive repeatedly tells investors one metric defines success and then quietly stops talking about it once the trend reverses, investors should ask why. If an executive changes the story after raising billions based on the previous story, investors should challenge the motive. If accounting appears fraudulent, investors should inquire in depth. If incentives appear misaligned, investors should ask for accountability. None of that is negativity. That’s literally what investing is supposed to look like, not allowing executives to run amok with other people’s money.

Somewhere along the way we’ve convinced ourselves that accountability is bearish. It isn’t. It’s adult behaviour. The uncomfortable reality is that more than twenty years of extraordinary corporate-friendly monetary policy have conditioned markets to reward almost everything: unprofitable companies, financial engineering, sky high multiples, questionable capital allocation, narrative over cash flow, momentum over fundamentals. The passive bid buys regardless. Options dealers hedge regardless. Liquidity flows regardless. Every time prices wobble, investors instinctively expect another rescue. That environment doesn’t simply distort asset prices. It distorts judgment itself.

People lose the ability to distinguish between genuine business quality and abundant liquidity because abundant liquidity has made almost everything look like genius. When every tide lifts every boat, everyone suddenly thinks they’re an exceptional sailor. Eventually scepticism itself begins looking irrational because the market has become completely uncalibrated from reality.

If prices no longer reflect economic fundamentals, then the people participating in those markets slowly lose their own calibration as well. Their judgment becomes distorted because the measuring stick itself has become distorted. When the market stops rewarding discipline and starts rewarding whatever can attract liquidity, eventually investors stop recognising the difference.

This is not doom mongering. It only looks like doom because the reference point has become so detached from economic reality that merely insisting on truth sounds pessimistic. If you’ve been force fed unlimited liquidity, meme speculation, gamma squeezes, passive inflows, monetary expansion, and asset inflation for most of your investing life, someone saying, “Hold on. Does offering a 12% dividend when junk bonds trade at 6% and your company has no cash flow actually make some kind of sense?” sounds like they’re predicting the apocalypse. They’re not. They’re simply asking whether reality still exists.

I don’t blame anyone for pushing back. In fact, I’m pleased. If my criticism makes people uncomfortable, then that’s good. Discomfort usually means we’ve found an assumption that hasn’t been examined closely enough. Rather than assuming I’m motivated by fear or negativity, I would encourage people to examine their own investment thesis instead.

Ask why basic scepticism feels so threatening. Ask why demanding honesty from executives feels controversial. Ask why questioning valuation feels offensive. Ask why accountability sounds like pessimism.

Those are many more interesting questions than whether I’m a Doomer. I think I’m standing in roughly the same place I’ve always stood. The difference is that today’s market has drifted so far into euphoria that ordinary scepticism now looks like radical pessimism.

I’m not living in a darker reality than everyone else. I’m simply refusing to wear the rose coloured glasses that so many investors have slowly mistaken for reality these last three decades, and even that assumption I’ve tried to challenge honestly.”

QTR’s Disclaimer: Please read my full legal disclaimer on my About page here. As of May 20, 2026 I personally no longer actively trade (read my story here).

AFTERWORD. There’s so much in QTR’s commentary that requires careful analysis. Identifying some of the symptoms does little to offer options to rectify what is inherently human in its ability to deviate from any new system devised to offer authentic improvement.

Returning to separating investing from normal depository banking methods might offer a start to normal market functions but much more will be needed to root out the deep and complex dysfunction seen in markets today, especially global banking and the “too big to fail” megabanks. The old fear, the one Eisenhower named in 1961, was that the military-industrial complex would acquire unwarranted influence over the government.

Whilst no financial system is perfect, perhaps examining how alternative systems are working in the world today would help understanding our current dilemma. I will be researching other systems in future episodes. To be continued.

The Limited Liability Corporation is the enabling construction that has prevailed for hundreds of years: The Global Corporate Control Matrix has systematically acquired the majority ownership of this earthly realm and certainly dominated the terrain for centuries if not millennia. Their master plan has always been about the complete and absolute control of the earth’s natural resources. And through the exertion of this monopolistic control, they have been able to enlist the assistance of billions of other souls in the service of stripping the earth bare of her finite resources.

How has the vast majority of humankind been corralled into a corporate movement that rapes, plunders and pillages the planet? The agenda began in earnest centuries ago with the chartering of the East India Company in 1600. “East India Company:, English company formed for the exploitation of trade with East and Southeast Asia and India, incorporated by royal charter on December 31, 1600. Starting as a monopolistic trading body, the company became involved in politics and acted as an agent of British imperialism in India from the early 18th century to the mid-19th century. In addition, the activities of the company in China in the 19th century served as a catalyst for the expansion of British influence there.” (Britannica)

The awesome speed, efficiency, and thoroughness with which the planet has been transformed into a veritable wasteland over the past centuries can be attributed to a single phenomenon: the CORPORATION. Nothing comes close to this business entity (which is a ‘person’ in its own right) in providing a vehicle for the extraction of everything our modern civilisation needs to prosper, especially the extraordinary energy contained in oil which is the life blood upon which everything else depends.

The shield of limited liability, which is hardwired into every corporate charter, essentially conferred the right to commit multi-decade legalised acts against humanity in the interest of generating corporate profits at the expense of the environment and every living thing. The resulting waste products have polluted every corner of the earth and sea. We have ended up with a landfill global economy which is finally failing.

In fact, it has been observed by one perceptive author during the stock market crash of 2008 that, if the devil himself were ever to assume the perfect form in which to carry out his dastardly deeds, the corporation would provide an ideal fit. The following excerpt neatly elaborates this state of affairs:

“Another announcement will be made, in the not too distant future, about the business entity commonly known as the CORPORATION – the main huckster of the Anglo-American ‘brand’ of predatory capitalism. Surely, if the devil were to ever choose the perfect form in which to enter in order to carry out his nefarious designs, incorporation is it. Is there any other entity on earth – person or party, organization or association, government or institution, jurisdiction or bureaucracy, club or group, fraternity or sorority, etc. that can function with such impunity, as it hides behind the shield of LIMITED LIABILITY? Those two words have given complete cover for the flagrant and wanton destruction of planet Earth.”

You name it: oil slicked coastlines, razed rainforests, beaches strewn with dead dolphins and whales. Not to mention the complete erosion of human, civil and national rights, wherever ‘INC’ decides to set up shop. Let’s pick a country. Let’s go to India and visit Bhopal of Union Carbide fame. Close to 8,000 people died within two weeks of that December day in 1984 in what is known as the worst industrial disaster of the last century.

Or visit the Punjab and talk to the thousands of widows of farmers who committed suicide because of Monsanto’s “seedless seeds”. Or go to just about anywhere on that subcontinent where a Walmart is being protested for land theft, encroachment and despoilation. Let’s not forget about all the Coca Cola bottling plants that have become notorious for stealing the most precious commodity that every Indian cherishes and covets – WATER. Well, that takes care of land, water, air … and blood. What else in heaven’s name do these stake and stockholders want?

We all know the deal. It’s the one where the individual, and his/her environment, is always trampled in favor of the corporate interest. Isn’t it time to really take stock of what our current predicament has left us with? Perhaps it’s also time to seriously think about actually re-ordering the ORDER, instead of once again rearranging the deck chairs on the Titanic. Like we’ve said, “optimizing stockholder profit” will soon be history, as the cease and desist orders are not far from being issued to Corporate America. Might as well get a head start on dissolving (or re-chartering) that corporation.”

Connect the dots; “we are witnessing the emergence of corporate-style governance in national leadership and nation-sized corporate influence in global affairs; but what are the implications? For centuries, we’ve operated within a clear dichotomy: nations governed as nations, and companies operated as companies. But we have been blurring those clear demarcations and it looks like they are about to break.”

Once the publicly held corporation was created, the stockholders, the bondholders and any other group of stakeholders could participate in a business opportunity anywhere around the globe. As long as the investment would produce an adequate ‘Return On Investment’ (ROI), it could be bought through the appropriate financial instrument and engaged for as long as one wanted to accept the risk.

This single financial dynamic allowed the people of the world, rich and poor, young and old, smart and dull, to invest in all the world’s corporate schemes and scams under the cover of corporate respectability with no accountability. With the advent of the public corporation, no matter what the impact on the environment or the indigenous peoples, harvesting the natural resources of the planet was enjoyed by almost every investor and especially those in the ‘developed’ West (including me!). As a Boomer, I am as guilty as the rest of us.

This is how everyone was made complicit in the degradation of the worldwide environment. The very nature of the stock and bond markets made it easy to buy into any scheme, as long as it made money (and making money from money). The effects of waste and pollution on the local communities from corporate operations never mattered; only profits and money mattered, as they still do now more than ever.

Such a subtle detachment on the part of the unwitting investors from the global destruction wrought by the corporations is at the very heart of how our 21^st century civilization has approached so many environmental tipping points, wars, and planetary points of no return. Very few stop to consider how their actions, especially those which are empowered through their financial investments, might impact the world-at-large.

Primarily it’s the tremendous success of so many powerful cultural memes and such influential monopolies, corporate-directed mind control programs which quite effectively underlie and drive today’s Consumer Society. That these clandestine marketing strategies still operate under the radar makes them all the more effective in their subliminal conditioning.

The multitude of news reports alone and their incessant references to consumer spending, consumer optimism, consumer confidence, consumer reports, consumer buying, consumer price index, consumer guide, consumer protection, consumer watchdog, etc. over many decades of media marketing and advertising saturation? Give me more - more is better for everyone!

This is Western Imperialism, by any other name, which rests on global finance issuing debt at interest (usury). Its core instruments are global banks, reserve currencies, structural adjustment programs, debt peonage, and the power to reorganise entire economies. This system, built by the US, Britain, Germany, France, and Japan among others, is anchored in the IMF, the World Bank, dollar dominance, and multinational corporations backed by military blocs following WW2.

There is no doubt that wars (and rumours of wars) are being waged. A truly epochal war has been raging on every land, in every body of water and in every continental airspace for centuries. If you reside anywhere within the planetary biosphere, you have seen it, heard it, and feel it.

James A. Michener is credited for bringing awareness to the graphic dichotomy that exists on today’s global battlefield. It is a conflict defined everywhere by two sides: those few who wish to husband and preserve our world for future generations and the majority who care not about the consequences of their actions.

In Michener’s bi-century saga entitled CENTENNIAL, he draws the battle lines with great dexterity that have been shaping up over a period of two centuries. He vividly captures the looming wars which would go on to define the entire planetary landscape throughout the 20^th and 21^st centuries. Was he that prophetic in his prose and prescient in his writing that all would soon come to pass?

Clearly, the ongoing human conflict for the body and soul of the Mother Earth is fundamentally not a religious-inflamed, or racially-engendered, or gender-based one, although these differences are routinely used to incite war. At its core, The People vs The Corporations represents a war of imperial possession for the planet itself and the desire of a few to take anything they want from it … at any and all cost.

Who among us wants to live on land that is not suitable for growing crops and are pure and free from environmental poisons and chemical toxins? Who does not want their children to thrive and flourish in a community that is committed to local practices which do not erode the future quality of life? Who would ever want to participate in the many global business operations which are proven to destroy the local environment?

It is very easy to spot wherever the corporation has just been. Their handiwork is evident by so much death, environmental destruction and damage to ecosystems in general. Someone said that “we do not inherit the earth from our ancestors, but borrow it from our children.” But we aren’t borrowing from our children. Borrowing (debt) means that we will pay it back, but we aren’t paying back. We can’t pay it back because the financial system always requires infinite economic growth to pay interest on the debt, otherwise the system collapses.

We are stealing from future generations and the current crop of youngsters have noticed. The above perceptive quote is accredited to the author Jane Goodall, a British ethologist known for her exceptionally detailed and long-term research on the chimpanzees of Tanzania’s Gombe Stream National Park; in 1977 she co-founded the Jane Goodall Institute.

A survey of the wreckage from every battlefield over the past many centuries shows the superiority of war implements on the side of the corporations. The Iron Age was so named because of the iron (aka steel) which was used everywhere throughout the emerging civilizations, especially in armaments of war. As long as the battlefield is defined by the use of iron, as it has been thus far, the victors could always be predicted each and every time.

All this changed in 2026. War is no longer defined by 20^th century iron and steel. We can expect the most profound and fundamental changes of the era, and equally consequential societal changes, which will translate to unparalleled political, economic and social revolution around the globe. To be continued…

Empires almost never notice the precise moment when they begin to lose control of themselves. Decline is rarely heralded by a decisive military defeat or a definitive economic crisis. It emerges more discreetly. It reveals itself when elites stop thinking in terms of the system and act solely in pursuit of their own interests. When the struggle to appropriate resources replaces the ability to manage them. When those in power cease to be guardians of an order and instead compete within it. That is, likely, the most significant transformation the United States is undergoing today.

Richard Lachmann, in “First-Class Passengers on a Sinking Ship,” offered one of the most accurate descriptions of this phenomenon. His thesis argues that today’s elites no longer fulfil the historical role once played by successful ruling classes.

Those elites who built empires used to assume, at least in part, the task of managing the system that secured their privileges. They invested in institutions, infrastructure, political stability, and mechanisms for long-term reproduction. Contemporary elites, on the other hand, resemble first-class passengers who enjoy the comforts of the journey without worrying about the ship’s fate.

This metaphor is particularly apt for explaining the recent trajectory of the United States. The problem does not lie entirely in the existence of a powerful elite, but in its growing fragmentation. Wall Street, Silicon Valley, the military-industrial complex, major energy corporations, investment funds, media conglomerates, technology contractors, and federal bureaucracies do not form a unified bloc. Rather, they constitute a mosaic of groups that constantly compete for influence, fiscal resources, subsidies, public contracts, and privileged access to the state apparatus.

The capture of the American state is far removed from the simplistic image of a small circle conspiring in secret. It is a far more sophisticated web:

• Wall Street seeks macroeconomic stability, access to emerging markets, and clear rules.

• Silicon Valley demands massive subsidies for research and artificial intelligence, patent protection, and global standards that support its business models;

• The military-industrial complex depends on long-term defence contracts and threat narratives that justify growing budgets.

• The tech elites are no longer content with influencing public policy: they aspire to redefine the capitalist model of accumulation through direct access to government decision-making and the privatization of state assets.

C. Wright Mills’ theory of the “power elite,” formulated in 1956, described the convergence of interests among the corporate, political, and military leadership in the United States. That view was accurate. Seven decades later, that triad has expanded and become more sophisticated, but it has also fractured.

Heather Gautney, in her contemporary review of Mills, notes that “The new power elite” operates through mechanisms of regulatory capture, campaign financing, and the rotation of personnel between the public and private sectors, creating a structural autonomy that limits democratic accountability. The elite persists, but it has lost much of its capacity for coordination. The dilemma is no longer an excess of cohesion, but its absence.

During the era of neoliberal globalisation, the financial bloc, represented by firms such as BlackRock, Vanguard, and Goldman Sachs, exercised hegemony in shaping US foreign policy. Its absolute priority was the opening of markets, the free movement of capital, and global labour arbitrage (aka outsourcing). Geopolitical tensions were treated as externalities that could be resolved through diplomacy.

Today, the Bureau of Industry and Security (BIS) of the US Department of Commerce and the National Security Council have imposed restrictions that prevent large US investment funds from seeking returns in strategic foreign markets. The partial withdrawal of traditional financial capital has left a void filled by a far more aggressive elite faction, which merges the interests of Silicon Valley with those of intelligence and defence agencies. Companies such as Palantir Technologies, Anduril Industries, and SpaceX no longer act solely as technology providers to the state, but as direct architects of imperial military doctrine.

This new bloc promotes a narrative of permanent existential emergency. By monopolising the development of advanced artificial intelligence, algorithmic analysis of big data, and unmanned warfare, it has managed to capture national defence budgets. An analysis published in The Financial Times shows how traditional venture capital funds have shifted toward defence tech, creating a closed feedback loop: tech entrepreneurs finance political campaigns and expert committees in Washington, which then issue guidelines mandating the purchase of proprietary artificial intelligence software from those very same companies.

Privatisation and technological fragmentation clash directly with the traditional military-industrial complex (Lockheed Martin, Raytheon, General Dynamics et al). The result is profound logistical inconsistency. The RAND Corporation has warned in repeated reports that the US defence industrial base is not prepared to sustain prolonged high-intensity wars, due to excessive corporate concentration.

Decades of state-backed mergers, designed to boost dividends, reduced the number of major contractors and eliminated productive redundancies. Although the United States spends more on defence than the next ten countries combined, it faces a chronic shortage of conventional ammunition, air defence systems, and naval capacity. Corporate elites in the sector absorb public funds to develop hyper-complex and exorbitantly priced weapons platforms, designed to maximise quarterly profits rather than ensure operational effectiveness. The imperial state has lost political autonomy and acts as a financial hostage to its own oligopolies.

What is significant is not only the power accumulated by technology companies, but also the fact that they have begun to occupy spaces that once belonged to the state. They control information, digital infrastructure, communication flows, artificial intelligence, and enormous volumes of data. Their influence over public policy is growing at the same pace as their economic clout.

During Trump’s second term, this trend reached a new level. The convergence of Silicon Valley, artificial intelligence, and the military-industrial complex reshaped the map of US power. What emerged was not a coherent national strategy, but a fierce struggle among business groups to control the public resources associated with that transformation.

Artificial intelligence has become the modern-day equivalent of the railroads of the 19th century or the aviation industry of the 20th: a sector capable of attracting massive amounts of public and private capital. Federal research programs, defence contracts, energy subsidies, data centers, and digital infrastructure are mobilising hundreds of billions of dollars. Reports from 2025 estimate that investments in “digital infrastructure” will range from $15 to $20 trillion over the next decade. The battle for these resources is, in essence, a battle for control of the state.

Each actor justifies its demands in the name of national security or innovation, but behind this lies a competition for subsidies, contracts, and regulatory privileges. The result is paradoxical: the more the state intervenes to boost strategic sectors, the more intense the struggle to capture it becomes.

The question is not whether artificial intelligence will transform the economy, it likely will, but who will manage that transformation and under what criteria. The evidence suggests that decisions respond less to coherent national planning than to the ability of different groups to influence the state apparatus.

This highlights the difference between managed power and captured power. In the former, subsidies are part of a strategy; in the latter, they become spoils for rival factions. Contractors thrive, shareholders thrive, lobbyists thrive, but problems such as cost overruns, delays, and program duplication multiply. The logic of maximising private profits takes precedence over administrative rationality.

The same pattern is observed in other sectors: pharmaceutical companies shape health regulations, financial giants influence economic policy, digital platforms shape regulatory debates, and energy groups lobby for tax breaks. Each sector refines its mechanisms of influence, but none assumes responsibility for the overall functioning of the system.

Herein lies the true significance of the “Suez moment” for the American elites. It is not about losing power to another actor, but about losing the ability to govern the power they still possess. Political polarisation reflects this fracture: Democrats and Republicans function as vehicles for opposing economic coalitions, and each change in administration redistributes resources among rival groups. Strategic continuity fades, and the state becomes a contested territory.

The result is a peculiar decline: not an abrupt collapse, but a gradual erosion of the capacity to coordinate resources, interests, and institutions. The elites remain extraordinarily effective at generating private wealth, but they have weakened their role as a ruling class. An oligarchy can enrich itself without sustaining the system; a functioning ruling class understands that its survival depends on reproducing it.

The alliance between Silicon Valley, artificial intelligence, and the military-industrial complex does not solve this problem. It does not constitute a new elite capable of reorganising the system, but rather the addition of more players to an increasingly intense competition for state subsidies and resources.

The consequences of an empire lacking strategic coherence extend throughout the world-system. The risk is not an orderly replacement of hegemony, but a prolonged phase of geopolitical anarchy and institutional fragmentation. As the Texas National Security Review (TNSR) points out, US ineffectiveness erodes its alliances: countries that depended on Washington’s military umbrella are rethinking their security. In Europe, the volatility of the Trump administration is accelerating the divide between Atlanticists and advocates of a protectionist “strategic autonomy.”

Hegemony does not collapse overnight: it survives thanks to accumulated momentum. But it loses something more crucial than power: the ability to steer it. That is the true “Suez moment” for the American elites. Not the moment when they discover that another actor is stronger, but the moment when they realise they no longer know how to govern the power they still possess. Source

• Iran’s victory over the US is a turning point in world history https://eltabanoeconomista.wordpress.com/2026/06/07/el-momento-suez-de-las-elites-estadounidenses-un-imperio-sin-administradores/

While Fox News political commentators lament the Empire’s defeat as set out in the Islamabad Memorandum, which provides, amongst other things, for the lifting of sanctions against Iran, and Bibi Netanyahu orders further bombings in Lebanon in an attempt to scupper that memorandum, Tehran is celebrating an historic achievement. The damage done to the United States’ reputation and credibility in the wake of the Iran war are significantly more severe than anything the country suffered in the wake of Vietnam.

This war, much like the Battle of Stalingrad, has already changed the world. Iran has not only become the dominant power in Western Asia, having demonstrated its military superiority over its neighbours, particularly Israel, but it can also lay claim to the status of a global power, since it has not only prevented the largest military apparatus in history from imposing its interests by force, but has also come to control, de facto, the planet’s most critical energy chokepoint, the Strait of Hormuz.

Both countries have agreed to set aside 60 days for negotiations, but there are considerable doubts regarding its viability. Brasil de Fato, the Iranian intellectual Mohammad Marandi, expressed the sense of mistrust felt by a large part of the country regarding the status of the agreement: “At this moment, the Israeli regime is massacring families, children and women every day [in Lebanon]. And whilst this continues and the Israeli regime does not back down, the agreement will not be implemented.”

Iran remains committed to the implementation of the agreement, for, as Marandi points out: “It is obviously a victory for Iran, because the United States has stated that it will return the stolen assets (…). It will lift the sanctions on Iranian oil and energy exports. They will lift the blockade of the Strait of Hormuz. And they will put an end to the genocide in Lebanon, amongst other things”

It remains to be seen what the negotiations will decide regarding the US’s main agenda, linked to Iran’s nuclear programme and what to do with the 430kg of uranium enriched to 60%, a level close to that required to produce a nuclear bomb. Under the agreement, this uranium will be diluted domestically under the strict supervision of the International Atomic Energy Agency, rather than being sent to other countries. This represents yet another victory for Iran.

Finally, Marandi believes that his country “will step up its cooperation with the countries of the Global South, the BRICS nations and the members of the Shanghai Cooperation Organisation, and its control over the Strait of Hormuz will enhance its capacity to grow economically and to exert regional and global influence more than ever before”

As negotiations for the ratification of the agreement continue, Iran is preparing for one of the greatest events in its history: the funeral of the former Supreme Leader Ali Khamenei – martyred in the early hours of the war, the chief architect of the military capability the country has built up over the last four decades, which took the whole world by surprise: He said it will be a massive funeral. He was very popular in Iran and much loved amongst supporters of the Axis of Resistance and the Palestinian cause. He led Iran to this victory. His insistence that Iran should stand up to the oppressor, defend the oppressed and preserve its sovereignty is something that has led the world today to view Iran in a new light”.

The United States did not win this war. They lost the military conflict. After 39 days of fighting, the Iranians emerged victorious. It was not merely that Iran survived. Iran defeated the coalition: The United States, the Israeli regime, Jordan, Saudi Arabia, Bahrain, Kuwait, Qatar, and the United Arab Emirates. And, of course, the West as a whole supported them, as did the NATO countries. So, the United States became embroiled in a naval war, and that was a double-edged sword.

As a result, the United States is breaking the fragile global economy. The Iranians held out longer than predicted. Therefore, the United States now needs a workable agreement. This agreement is not a bad one for those other than Israel. It is a reasonable agreement, but the United States may not be prepared to implement it. And if they do not implement it, Iran will not fulfil its commitments.

Currently, the Israeli regime is massacring families, children and women, every single day. And as long as this continues and the Israeli regime does not relent, there will be no final implementation of the agreement. Sources

• This article is published with the express permission of the author, Marco Fernandes (Brasil de Fato). https://forumgeopolitica.com/article/irans-victory-over-the-us-is-a-turning-point-in-world-history-says-mohammad-marandi

• The United States is inarguably in a weaker position than when it began this war of choice, with core US strategic objectives harmed https://www.commondreams.org/news/iran-war-strategic-defeat

The signing of a Memorandum of Understanding (MoU) between Washington and Tehran is expected to launch a new “60-day negotiating period”. The signing took place electronically last Sunday, and concluded while the US president was visiting Versailles this week and has already entered force. The framework agreement is intended to halt military operations while diplomats work through the most difficult unresolved issues. These include Iran’s uranium stockpile, nuclear infrastructure, future sanctions policy, and long-term security arrangements across the Middle East.

The timing of the deal prompted criticism from some observers, who questioned whether the administration was seeking a symbolic political victory alongside a diplomatic breakthrough.

What does an MoU mean? A memorandum of understanding (MoU) is a non-binding document that outlines the terms and intentions of a mutual agreement between parties, serving as a preliminary step toward a formal contract. But a critical party was missing - Israel. The MoU is aimed at transforming a fragile ceasefire into a broader agreement later addressing Iran’s nuclear programme, sanctions relief, regional security, and the reopening of the Strait of Hormuz among other significant items listed below. According to draft details of the MoU reported by Reuters, the agreement entails the following:

• Immediately reopening of the Strait of Hormuz to commercial shipping

• United States would begin lifting its naval blockade on Iranian ports

• This initial two steps processes are expected to be completed within 30 days.

• A freeze on new US sanctions and discussions on broader sanctions relief — tied to Iranian compliance.

• US blockade in Strait of Hormuz expected to lifted Friday when agreement is signed, as per the US State Department, quoting Trump.

The (MoU) is widely viewed as a “starting point”: an agreement to start talking rather than a final settlement. It follows the signing of the agreement, expected to be negotiated during the 60-day period are the most contentious issues, including Iran’s nuclear activities, economic relief, security guarantees, and the future of maritime access through the Strait of Hormuz.

In short, it’s a deal to allow both parties to keep talking within the given period. Potentially, it could help transform a fragile ceasefire into a broader agreement to end the conflict. Though viewed differently in Tehran and Washington, the Pakistan-mediated MoU stands as a platform for a mutually-agreed process of address longstanding disputes over Iran’s nuclear programme, sanctions relief and regional security arrangements.

However, there are differing narratives. Both sides have signalled support for the framework as they understand it. US and Iranian officials have offered sharply different descriptions of what the proposed accord would entail. Whilst Trump portrayed the MoU as a pathway toward stricter nuclear restrictions and a lasting peace settlement; Iranian officials have emphasised sanctions relief, the release of billions of dollars in frozen assets and follow-on negotiations over unresolved issues. Despite general optimism that a preliminary agreement could prevent a wider regional war, the conflicting narratives underscore the significant gaps that remain.

There are concerns that renewed violence between Israel and Iran-backed Hezbollah in Lebanon could derail the diplomatic momentum, with fears that tit-for-tat attacks could halt negotiations at a critical stage. Iran has previously vowed retaliation for strikes on its regional allies, while Israel has signalled it will continue targeting Hezbollah positions.

“The peace agreement is bad for Israel”, Yair Lapid, the leader of the Israeli opposition and former prime minister, said. Israel has not taken the news lightly. Yair Lapid said that the emerging agreement achieves “none of Israel’s goals…” “the regime survives, the missile program remains intact, and Iran retains the ability to rebuild its nuclear program. This is a complete failure by Netanyahu, and in the process he is turning Israel into a client state that takes orders on matters of its own national security.”

Another opposition figure, Yair Golan, was equally blunt, describing the policy as a failure. “Trump is signing an agreement that funnels billions of dollars to the Ayatollahs’ regime, leaves the nuclear infrastructure intact, preserves the ballistic threat as it is, and throws a lifeline to the murderous regime in Tehran.”

Israeli Defence Minister Israel Katz issued a written statement signalling that Israel is prepared to respond forcefully if Iran intervenes in any future confrontation involving Hezbollah. “We will not compromise on Israel’s supreme security interests or the protection of our citizens, and we will not withdraw from the security zones,” the statement said. “If Iran attacks Israel because of events in Lebanon, we will strike it with full force and clearly demonstrate the disparity in power between us,” it concluded.

The US and Israel launched a joint military operation against Iran on February 28, prompting retaliatory strikes across the Middle East and leading Tehran to close the Strait of Hormuz to nearly all shipping, triggering a surge in global energy prices. The exchange of strikes largely ceased after a truce was reached in April. Trump said Iran will pledge to not seek nuclear weapons, and the US will dilute and destroy the Iran’s enriched uranium stockpile.

Iran has long insisted that uranium enrichment is its sovereign right. Foreign Minister Abbas Araghchi said on Friday that the MoU will focus on ending the war and reopening the Strait of Hormuz, while providing a 60-day window for further negotiations on Iran’s nuclear program. Tehran has always denied that it seeks to develop nuclear weapons.

The US and Israel previously demanded that Iran completely dismantle its nuclear program and surrender its entire stockpile of enriched uranium. Netanyahu also repeatedly called on Iranians to topple their government: “As long as I am prime minister of Israel, Iran will not obtain nuclear weapons. There is complete agreement between President Trump and me on this issue,” Netanyahu said.

According to Axios and CNN, however, the news of the deal caught Netanyahu by surprise. Trump said Israel will have no choice but to accept the agreement and acknowledged that he pressured Netanyahu to halt Israeli airstrikes in Lebanon during several heated phone calls. The US and Iran appear closer than they have been in months to a possible agreement that could halt the war in the Middle East and ease tensions around the Strait of Hormuz. But despite optimistic statements from Trump and signals from Tehran, major questions remain unresolved and both sides are describing the proposed deal in strikingly different ways.

According to a detailed report by The New York Times, American and Iranian officials are presenting conflicting accounts of what has actually been agreed upon, particularly on Iran’s nuclear programme, the future of the Strait of Hormuz, and sanctions relief. At the heart of the negotiations are many explosive issues that could determine whether the talks lead to a lasting breakthrough or collapse into another cycle of confrontation:

Iran’s nuclear programme. The biggest sticking point remains Iran’s nuclear programme and, specifically, what happens to its stockpile of highly enriched uranium. Trump has repeatedly insisted that Iran must surrender uranium enriched close to weapons-grade levels. According to the International Atomic Energy Agency, Iran currently possesses roughly 970 pounds of uranium enriched to 60% purity, along with nearly 11 tonnes enriched at lower levels.

A US official quoted by the NYT said Washington and Tehran had reached a preliminary understanding under which Iran would eventually dispose of its highly enriched uranium stockpile, although the mechanism for doing so was still under negotiation. But Iranian officials pushed back sharply on that claim. Three senior Iranian officials told the newspaper anonymously that no final agreement had been reached on uranium disposal and that all nuclear issues would instead be negotiated over the next 30 to 60 days.

The issue of future enrichment also remains unresolved. The US official said the draft arrangement does not currently require Iran to halt uranium enrichment, with that issue deferred to later negotiations. Secretary of State Marco Rubio acknowledged that a broader agreement could take months, suggesting Washington may temporarily accept an interim arrangement rather than demand immediate dismantlement. That ambiguity is already fuelling doubts about how durable any agreement could be. ‘Trump has sold us out’: Israelis react with anger and anxiety to new Iran deal; many Israelis fear the deal preserves Iran’s military power and sets the stage for the next war.

Control of the Strait of Hormuz, the strategic waterway through which roughly one-fifth of the world’s oil and gas supplies normally pass, has not been agreed. Before the war began on February 28, commercial shipping moved freely through the strait. But after the conflict erupted, Iran effectively disrupted traffic through attacks and restrictions on shipping, while the United States responded with a naval blockade targeting Iranian ports and Iran-linked vessels.

Now, the question is whether both sides are willing to roll back those measures. Iranian officials told the NYT that Tehran would allow ships to pass through Hormuz without charging transit fees, at least temporarily, if Washington lifts its blockade. Trump, however, signalled the blockade would remain in place until a final agreement is reached: “The Blockade will remain in full force and effect until an agreement is reached,” he wrote on social media Sunday.

The dispute is significant because any Iranian attempt to formalise or monetise control over Hormuz could trigger legal and geopolitical backlash. International maritime law generally prohibits states from charging for safe passage through international waterways.

Frozen Iranian assets, access to billions of dollars in frozen overseas assets, are locked up under sanctions. Iranian officials claim the proposed arrangement could eventually unlock about $25 billion in frozen funds. But the American position appears far more cautious. The US official quoted by the NYT said Washington has not yet agreed to release any frozen assets, although it may consider doing so later if Iran complies with nuclear commitments. The issue is politically sensitive for Trump, who has repeatedly criticised former President Barack Obama for releasing Iranian funds under the 2015 nuclear agreement; the same accord Trump withdrew from in 2018.

Iran-backed proxies are another unresolved issue is Iran’s regional network of armed allies, especially Hezbollah in Lebanon. Iranian officials reportedly said the proposed arrangement would halt fighting “on all fronts,” including Lebanon, suggesting Tehran could restrain allied militias as part of a broader ceasefire framework.

However, US officials have not publicly confirmed that Iran-backed groups are part of the negotiations. Israeli Prime Minister Benjamin Netanyahu reinforced that uncertainty, saying Trump had reaffirmed Israel’s right to defend itself “on every front, including Lebanon.” That suggests Israel will continue military operations regardless of any US-Iran understanding.

Iran’s missiles are one of Israel’s biggest concerns with Iran’s ballistic missiles being absent from the current framework. Earlier in the war, the Trump administration had demanded limits on Iran’s missile capabilities. But the US official told the NYT that missiles are not part of the draft deal.

That omission could become a major source of friction with Israel and Gulf allies, who view Iran’s missiles as one of the region’s biggest security threats. Analysts warn that even if a ceasefire holds and Hormuz reopens, unresolved disputes over missiles and enrichment could leave the region vulnerable to another confrontation in the months ahead.

The agreement may have succeeded in halting hostilities for now, whether it has secured a lasting peace, or merely postponed the next conflict, remains a question that hangs heavily over Israel. One thing is certain: while the guns fall silent, the battle over what this deal means for Israel’s future is noted ​by Iran’s own Khorasan paper claiming that the deal is only postponing the apocalyptic “final battle” which awaits. Sources

• Israelis fear the deal preserves Iran’s military power and sets the stage for the next war. https://www.rt.com/news/641619-israelis-reacts-with-anger/

• Despite optimistic statements from President Donald Trump and signals from Tehran, major questions remain unresolved https://gulfnews.com/world/mena/closer-to-peace-or-another-crisis-5-unresolved-issues-haunting-the-us-iran-deal-1.500552529

This week has seen the emergence of yet more strikes by the US and Iran on a tit-for-tat basis. Iran’s foreign ministry condemned the US strikes on the country, saying that it has rendered the ceasefire “practically meaningless”. Earlier the Islamic Revolutionary Guards Corps (IRGC) launched retaliatory strikes on US forces in the region, including Kuwait, Bahrain, and Jordan, according to Iranian news reports. The US military launched attacks “against multiple targets in Iran”, saying the strikes were in “self-defence”. The attacks come hours after President Donald Trump accused Tehran of taking ‘too long’ to negotiate a deal but later claimed that a deal could arrive this weekend.

This has stalled the hope of further negotiations to continue the ceasefire. The situation in Lebanon has pushed Iran out of the negotiating process with the US and yet again demonstrated that Middle Eastern diplomacy today depends less on formal negotiations than on what is happening on the ground.

Tehran has suspended its indirect exchange of messages with Washington because of Israel’s expanding operation against Lebanon and Hezbollah. This decision was a reaction to a broader crisis in which the Lebanese front has become entwined with US-Iranian negotiations, Israel’s security calculations, Lebanon’s domestic politics, Hezbollah’s position, Tehran’s regional strategy, and undermined Trump’s attempt to impose at least a temporary formula for de-escalation.

This crisis appears to follow the familiar pattern of Israeli-Lebanese confrontation. Israel says it is acting to protect the country’s northern areas, from which residents were evacuated after Hezbollah attacks. Hezbollah presents its actions as resistance to Israeli strikes and links the Lebanese front to the broader struggle against Israel. The Lebanese state calls for an end to the attacks and for respect for its sovereignty, yet it lacks the power either to control Hezbollah’s decisions or to stop the Israeli military.

The US is trying to keep negotiations alive because a wider regional war would threaten its interests, energy markets, and the positions of its allies. Iran, meanwhile, sees the developments in Lebanon not as a local episode, but as a blow to the entire architecture of its regional influence. As long as the war remained limited to exchanges of fire along the border, it could still be presented as a controlled conflict.

However, the expansion of Israel’s ground operation, its advance deeper into southern Lebanon, its strikes on areas linked to Hezbollah, and its attacks on Beirut’s southern suburbs have changed the politics around the conflict. Rather than simply responding to threats, as Israel claims, it is trying to forcefully alter the security landscape of the region.

Israel’s recent advance in the area of Beaufort Castle has been especially symbolic. For military planners, it is an important height and a point of control. The Lebanese, however, see it is a place associated with the memory of earlier wars and resistance against Israel’s presence. The seizure or occupation of such an area is a signal that Israel’s goal is deep intervention in southern Lebanon. This is why France requested an emergency meeting of the UN Security Council.

France has historical ties to Lebanon and a strong interest in preserving Lebanese statehood, while Israel’s advance represents a threat not only to security, but also to the very principle of Lebanese sovereignty. Israel’s traditional partners in Europe have criticised particular Israeli actions before, but they have usually maintained a balance between recognising Israel’s right to security and calling for restraint. However, Israel’s actions on the ground recently have not helped maintain that balance.

Following the war in Gaza, European public opinion had already become more critical of Israel. With the new operation in Lebanon, the risk of a long-term occupation of the south, and the collapse of talks with Iran, even Israel’s customary allies are beginning to distance themselves. They may not be taking the side of Iran or Hezbollah, but they are increasingly unwilling to offer unconditional political cover for the policies of the Israeli government.

Israel’s strength has always rested not only on its military capabilities and its alliance with the US, but also on its ability to remain part of the Western political system. If France, Germany, the UK, and other European partners increasingly see Israel’s actions as a source of further escalation, international support wil begin to shrink. This does not mean an immediate rupture in relations, but it does mean a gradual erosion of political patience. Cooler official statements could emerge, followed by pressure at the United Nations, and eventually debates will centre on arms supplies, trade agreements, legal accountability, and recognition of new political realities on the Palestinian and Lebanese fronts.

Why does Israel need this escalation? Military necessity is only part of the answer. Israel’s leadership wants to bring residents of the north back home, restore deterrence after Hezbollah’s attacks, and show Israeli society that the state is capable of defending its borders. Since October 7, 2023, security has become a test of public trust in the state itself. Israel knows that the northern front has become a measure of whether the government can restore control in places where citizens have felt abandoned.

However, Israel also views Hezbollah not merely as a key component of Iran’s military system on Israel’s borders. Striking Hezbollah means striking Iran. Israel wants to dismantle the infrastructure that allows Tehran to maintain pressure on Israel through Lebanon. The operation against Hezbollah is therefore directed simultaneously at Beirut, Tehran, and Washington. Israel has made it clear that it does not intend to wait for the outcome of US-Iranian negotiations if those talks might preserve a situation in which Hezbollah retains an armed presence in southern Lebanon.

It is also about Israeli domestic politics. Netanyahu’s government depends on right-wing and religious-nationalist forces for which security means territorial control rather than compromise. In this political environment, temporary security zones can easily turn into demands for a long-term military presence. In Gaza, this has manifested itself in discussions about displacement, military administration, and the possible return of settlements. In relation to Lebanon, this means the need to control the south of the country, push Hezbollah back toward the Litani River, and create a reality in which Israel itself defines the perimeter of its security.

This is where the idea of a ‘Greater Israel’ comes to the fore. It is not the official doctrine of the Israeli state toward Lebanon, yet it does exist within the world-view of certain radical right-wing and settler circles. These groups see neighbouring territories as part of a broader historical and biblical map. Even when this ideology does not translate into an explicit decision to annex southern Lebanon, it creates a political atmosphere in which the occupation of other people’s territory can be justified as a historical right as well as strategic necessity.

The danger is that temporary military solutions in the Middle East often become long-term facts on the ground. Military action, initially aimed at eliminating a threat, morphs into observation posts, supply routes, exclusion zones, and special access regimes. Then the argument is made that withdrawal is impossible because the enemy will return, and it ends with an occupation, even if it is not formally acknowledged. Lebanon has already lived through such a scenario.

Israel’s earlier presence in the south was also justified by the security needs of the northern Israeli communities, yet for the Lebanese it became a symbol of occupation and one of the factors that strengthened Hezbollah. Israel needs to remove Hezbollah for good, but it may end up giving it a new political resource.

Inside Lebanon, attitudes toward Hezbollah are far from uniform. Part of society believes that the movement, because of its ties to Iran, drags the country into war without the consent of the Lebanese. For many Christians, Sunnis, and segments of the secular public, Hezbollah is a state within a state, one that limits Lebanese sovereignty and subordinates the country to Tehran’s external strategy. Yet when Israel attacks, criticising Hezbollah becomes politically more difficult because it can claim to be defending the country against external aggression.

The Lebanese state is in the weakest position of all. It cannot disarm Hezbollah, because doing so would risk an internal confrontation but neither can it stop Israel without Hezbollah’s military strength. It depends on international assistance, but international mechanisms cannot quickly change the situation on the ground. As a result, Lebanon once again becomes the arena for other actors’ strategies:

• Israel is trying to solve the problem of its northern security

• Iran is defending its regional network of allies

• The US is trying to preserve negotiations

• Europe fears a new destabilisation on the Mediterranean

• Lebanese civilians pay the price.

For Hezbollah, the current crisis is also a test. On the one hand, it is suffering military and infrastructure losses, but on the other hand, the Israeli offensive itself helps its political narrative. Before this escalation, internal Lebanese voices had been asking why the country should remain hostage to Iran’s strategy. Hezbollah can now legitimately ask “Would you rather Israel dictate its terms?”

Hezbollah is one of the most important elements of Iran’s deterrence system against Israel. If Israel can destroy Hezbollah’s positions in Lebanon without paying a serious price, Iran’s entire regional strategy is put at risk. Tehran’s withdrawal from the negotiating process with Washington was an attempt to restore leverage as much as it was a gesture of solidarity towards an ally. Iran will not discuss de-escalation with Washington while Israel expands its operation on the Lebanese front.

This is especially important because the Trump administration has been trying to negotiate on several fronts at once, seeking to maintain a channel with Iran, secure an extension of the ceasefire, reduce risks in the Strait of Hormuz, and at the same time support a process of settlement between Israel and Lebanon. US officials described contacts on the Lebanese front as productive and positive. Netanyahu, for his part, spoke of the need for negotiations that would address Hezbollah’s disarmament and the establishment of peaceful relations between Israel and Lebanon. On paper, this looked like an opportunity to tie together Israel’s security, Lebanon’s stabilisation, and continue a dialogue with Iran.

While the US was trying to persuade the parties of the need for a deal, Israel intensified its offensive, and Tehran saw this as proof that Washington was either unable or unwilling to restrain its ally. As a result, the talks that were supposed to reduce tensions became hostage to military action.

The US now finds itself in a contradictory position. It wants to support its key ally Israel, but also prevent a wider war that would threaten American bases and trade routes, and avoid a dangerous direct war with Iran. It also needs to stabilise Lebanon because another war here could destroy what remains of state governance and trigger regional escalation. Yet these objectives are futile if Israel continues to avoid the diplomatic process.

Has Israel once again undermined an attempt at negotiations between Iran and the US? Formally, it can argue that its actions are driven solely by security considerations. Formally, Tehran can say that it is suspending exchanges with Washington because of violations and mistrust. Formally, the US can insist that negotiations remain possible. But the political sequence of events is clear enough - classic stalemate.

Whether Israel intentionally set out to sabotage the talks or not, that is exactly what happened. For Israel’s right-wing cabinet, any US-Iranian agreement that does not eliminate Hezbollah and dismantle Iran’s regional network is unacceptable. Israel’s escalation in Lebanon pushes Iran out of the process, strengthens the hawks in Tehran, and gives Israel an argument that they cannot negotiate with Iran.

At the same time, Israeli policy itself has become hostage to domestic dynamics. Netanyahu, under pressure from right-wing allies and amid distrust from a significant part of society, feels the constant need to demonstrate strength. Any halt to the operation in Lebanon without a visible result would be seen as weakness, and any pressure from the US could be used as evidence that only a hard-line cabinet can protect the country from external diktat.

In the long term, Israel’s decision to continue military action and jettison diplomacy comes at a strategic cost. It can win battles against Hezbollah, destroy its command centres and infrastructure, and push it away from the border. But if the end result is another occupation, it will not solve any of Israel’s problems in the long term. On the contrary, it could again turn Hezbollah into a symbol of resistance, weaken the Lebanese critics of the movement, and return the region into a cycle it has already experienced.

Another question arising from Israel’s actions in Lebanon is whether diplomacy can survive in a region where every military operation immediately becomes part of a larger bargain. The situation in Lebanon has already pushed Iran out of the negotiating process with the US. It may now determine whether Washington retains any room for mediation, whether Trump can impose even a temporary deal on the parties, whether Lebanon can avoid another collapse, and whether Israel will turn yet another security operation into a new cycle of occupation, resistance, and international isolation.

Israel’s partners will continue to lose patience and see ever more reasons to restrain Israel. The main conclusion is that Israel may achieve a tactical advantage in Lebanon whilst losing any strategic advantage. In the meantime, the Middle East conflict remains at an ongoing stalemate until the geopolitical chessboard is upended with unpredictable results. Sources

• Edited from a report by Murad Sadygzade, President of the Middle East Studies Center,

• Satellite images reveal how Israel is cementing its presence in Lebanon

• Iran war live: Tehran targets Bahrain, Kuwait, Jordan after new US strikes https://www.aljazeera.com/news/liveblog/2026/6/11/iran-war-live-us-launches-attacks-on-multiple-iranian-targets

This is a bit technical but bear with me. First some history. In September 2019 a ‘Repo’ crisis occurred but I only caught up two years later when I wrote about why it was necessary to lockdown global economies with the Covid hoax in March 2020 to save the global financial system: https://austrianpeter.substack.com/p/a-perfect-storm-the-money-crisis? I wrote at the time: “Covid was cover. It has all been building up since 2008 which was never solved, funded through ‘Repo’. Larry Fink (BlackRock) said as much in 2019 ‘Going Direct’ https://www.blackrock.com/us/individual/insights/going-direct-how-central-banks-could-deal-with-the-next-downturn“

Larry Fink said ““We wrote in August 2019 about the nearly exhausted monetary policy toolbox and the challenges it poses for dealing with the next downturn. This has now come to the fore – and that’s why it is time to go direct with policy support. Simply using up the limited monetary policy space remaining – interest rates, forward guidance or even quantitative easing – could quickly put the macro focus on the lack of tools left and thus backfire. The only way to address this is to add further lines of defense and make fiscal policy an explicit part of the crisis response toolkit.” https://www.blackrock.com/corporate/insights/blackrock-investment-institute/publications/coronavirus-policy-response

Translation: Close down economies and pump trillions of dollars directly into main street (fiscal policy). Side note: a light-hearted speculation 666:

• Time-lag, from crisis September 2019 - Covid lockdown March 2020 = 6 months

• January 1, 2026 - Repo rates spike higher than expected (see below)

• Time-lag, start of Iran war March 2026 - lockdown September 2026 = 6 months

• Time-lag, crisis September 2026 - New Global Financial System March 2027 = 6 months

Now for the heavy bit, direct from No1 (unedited) January 2, 2026. I believe this is why the Iran war started when it did. A global financial crisis is on the way. That gut feeling you had? You know something is not right with the world. Let No1 tell the story:

“Let me walk you through what happened on December 31, 2025, because the headline number is impressive but the details are properly terrifying. And yes, I’ve covered this repo plumbing business before, so I won’t bore you with the basics again. But what went down on the last trading day of 2025 deserves your full attention, because it’s not the size of the injection that matters most.

It’s what they brought to the pawn shop.

$74.6 billion borrowed from the Fed’s Standing Repo Facility. That’s the emergency window, by the way. The one you’re not supposed to need if everything’s working properly. The one that charges you a premium rate above what you could earn by just parking your cash at the Fed overnight. Banks paying extra to borrow money they supposedly don’t need.

But of that $74.6 billion, banks pledged $43.1 billion in mortgage-backed securities and only $31.5 billion in Treasuries.

More housing paper than government bonds.

I’ll let you pontificate on the significance of that…

Got it? OK, 1 more minute…

Well… The safest, most liquid institutions in the financial system couldn’t come up with enough pristine Treasury collateral to get through one night. So they showed up at the Fed’s window with mortgage-backed securities, because the private repo market told them to sod off.

This is your high-quality liquid asset shortage right here. Not theoretical. Not modeled.

Actually happening.

The private market rejected this collateral at reasonable rates. Full stop. So banks went to the Federal Reserve, which accepts mortgage-backed securities at the same rate as Treasuries no questions asked, and borrowed $43 billion against housing debt that the market wouldn’t touch.

If that doesn’t concern you, check your pulse.

And that $74.6 billion? New record. Smashed the previous record of $50.4 billion from October 31. That one was a month-end spike, this one combined month-end, quarter-end, and year-end all at once. Both times the smooth-brained analysts insisted it was “completely normal regulatory reporting dynamics”.

Except both October and late December saw something else happen simultaneously: brutal takedowns in silver. Mid October: silver crashed from $54 to $45. Late December: vicious slam from $84 to $70.

Month-ends. Regulatory reporting dates. Times when derivatives books need to look manageable. Times when margin requirements bite hardest. Times when you need liquidity to manage positions, meet margin calls, and execute operations in leveraged markets.

The correlation is remarkable. Record repo borrowing, dodgy collateral, same exact timing as major commodity market moves. I can’t prove causation. But when you need massive overnight liquidity at the same time you’re managing large derivative positions, and the private market won’t lend against your collateral, I’m getting suspicious.

That operation requires liquidity. Lots of it. And when the private repo market is already stressed because reserves are scarce, where exactly does that cash come from? The Fed’s emergency window.

For years the Reverse Repo facility held more than $2 trillion. That was the cushion, the buffer that absorbed volatility when things got choppy. It’s now basically empty. Down to $106 billion from over $2 trillion. The entire cushion has been drained away as the Fed ran quantitative tightening for three and a half years.

Bank reserves? They’ve fallen from over $3.5 trillion to around $2.9 trillion. The Fed’s balance sheet dropped from $8.93 trillion to $6.5 trillion. Every dollar of Treasury securities that matured without replacement, every mortgage-backed security that rolled off, it all drained reserves from the system.

And now we’ve hit the floor.

On December 1, 2025 the Fed officially ended quantitative tightening. Just stopped it. Done. Finished. After insisting for months they had plenty of room to keep going, they suddenly discovered - shocking revelation - that actually they didn’t.

In December they removed aggregate limits on standing repo operations. Translation: we’re expecting you’ll need to borrow unlimited amounts and we can’t have daily caps getting in the way.

Then they announced ‘Reserve Management Purchases’ starting in January 2026. Estimated $220 billion in short-term Treasury bill purchases over the next twelve months to “maintain ample reserves”. They’re very insistent this isn’t quantitative easing. It’s “technical operations”. Routine plumbing maintenance.

Bollocks.

When you’re expanding your balance sheet by $220 billion to prevent the repo market from seizing up, that’s not maintenance. That’s the monetary authorities admitting they pushed too hard and broke something.

The December 10, 2025 FOMC minutes are worth reading if you enjoy euphemistic central bank prose. My favorite bit: “reluctance by some potential participants to engage in standing repo operations” even when private market rates were trading above the facility’s rate.

Let me translate. Banks are so terrified of the stigma attached to using the Fed’s emergency window that they’ll pay higher rates in the private market rather than show up in the published data admitting they needed help.

The minutes also noted that “usage of overnight reverse repo operations remained low, while both the frequency and volume of standing repo operations increased over the intermeeting period”. In other words, the buffer is gone and the emergency facility is getting hammered with increasing frequency.

They also mentioned some “misperceptions about the intended purpose of standing repo operations” that were causing banks to avoid using it. What misperceptions might those be? Perhaps the perception that needing emergency overnight funding suggests you’re not managing your liquidity particularly well? That showing up in the Fed’s daily published data admitting you couldn’t get cash anywhere else might raise uncomfortable questions?

Just a thought.

But the smoothest phrase in the whole document: “reserve balances had declined to ample levels”. Ample. What a lovely word. Sounds reassuring, doesn’t it? Ample reserves. Plenty to go around.

Except if reserves were actually ample, you wouldn’t need emergency injections on December 31. You wouldn’t need to restart balance sheet expansion. You wouldn’t need to remove aggregate limits on emergency lending facilities.

Words mean things. Or they used to.

The Treasury market is another side of this problem. The U.S. government needs to issue over $2 trillion in net new debt for fiscal 2026. Every dollar the Treasury raises by selling bonds drains a dollar from the banking system when it sits in the Treasury General Account.

That account swelled to over $1 trillion during various [government] shutdown dramas. When that cash is just sitting there, it’s not circulating in the financial system. It’s locked up at the Fed. Banks can’t use it. Markets can’t trade it. It’s effectively deleted from the available liquidity pool.

So you’ve got the Fed trying to drain reserves through quantitative tightening while the Treasury is also draining reserves by building up cash balances. Both simultaneously squeezing the same pool of liquidity.

Something had to give.

The Fed blinked first. Ended QT, announced they’ll start buying again in January 2026, removed limits on emergency lending. All within a few weeks of each other. That’s not what I would call confidence.

Meanwhile the Treasury still needs to issue trillions in new debt. Into a market that has lost capacity to absorb shocks quietly. You can see it in auction behavior, in dealer balance sheets, in how volatile rates have become relative to actual economic data.

Primary dealers are the firms required to bid at Treasury auctions. They’re supposed to provide liquidity and ensure auctions don’t fail. But their balance sheet capacity is constrained by regulation after 2008. They can only warehouse so much inventory. When you’re hitting them with these new issuances while the Fed is simultaneously trying to shrink its holdings and the Reverse Repo facility has been drained to nothing...

Yeah. That’s how funding events start.

Not with dramatic headlines. With small failures that accumulate. A Treasury auction that goes poorly. Repo rates that spike higher than expected. Emergency facilities that see record usage. Collateral quality that degrades. Each incident gets explained away as routine or seasonal or temporary. Until the day it isn’t.

The international dimension makes this worse. Japan is a powder keg. For the first time in decades, Japanese government bonds are offering positive real yields at home. I covered this dynamic before:

https://no01.substack.com/p/for-once-the-sun-might-set-in-the-

…that when Japanese debt becomes profitable domestically, capital that’s been deployed overseas for yield starts trickling back home.

That trickle is already happening. Japanese investors holding U.S. Treasuries are starting to sell. Not in panic, not yet, but in steady repatriation as domestic yields finally become competitive. But if the yen carry trade unwinds violently - if Japan has to tighten policy to defend their currency - that trickle becomes a flood.

When that happens, Japanese selling doesn’t stay contained. U.S. Treasury yields spike. Funding costs rise everywhere. Which stresses the exact repo plumbing we’ve been discussing.

China’s got its own problems. Slow-burning debt crisis, property sector implosion, local government financing vehicles that are basically insolvent. When confidence cracks there - and it will - the feedback loop runs through currencies, through commodities, through U.S. rates. Because everything connects.

This is my nightmare scenario for 2026. Treasury auctions struggling, dealer balance sheets maxed out, international buyers pulling back, Fed trying to restart QE disguised as “technical operations”, and banks borrowing record amounts from emergency facilities using mortgage-backed securities as collateral.

The system is held together by increasingly desperate interventions. And everyone involved is pretending this is normal.

It’s not normal. It’s late-cycle desperation.

The gold and silver markets know something is up. Gold is refusing to pull back despite every reason it should. Silver accelerating instead of consolidating. Starting to act like a monetary metal instead of a pure industrial one. That’s capital hedging against something structural. When precious metals trade like this while the Fed is supposedly in control and everything is supposedly fine, pay attention.

The market is voting with their wallets. Billions of actual dollars. Saying “we don’t believe you” to the central banks and the Treasury departments and the smooth analysts insisting there’s nothing to worry about.

Markets are currently pricing in only two rate cuts over the next two years. The Fed funds rate sits at 3.5% to 3.75%. Markets expect it around 3.0% by December 2027.

That pricing is completely divorced from fiscal reality. The U.S. government is paying over $1 trillion annually just on interest. Every 25 basis point increase in rates adds tens of billions to that burden. You think they’re going to keep rates at 3.5% when the alternative is fiscal insolvency?

Fat chance.

There’s going to be a point when the debt service costs matter more than inflation prints. When maintaining solvency requires suppressing rates regardless of what economic conditions might warrant. And I think we’re already there.

The Fed will cut rates. They’ll expand the balance sheet. They’ll inject liquidity through whatever facility they need to use. Because the alternative is watching the Treasury market seize up and the government run out of money.

Which means the next phase is inflationary, not deflationary. All that new money creation, all that suppressed rate environment, all that liquidity sloshing around... it doesn’t create deflation. It creates another wave of monetary expansion that destroys purchasing power.

This is why gold matters. Why silver matters. Why real assets matter. Not because of speculation or technical patterns or momentum trading. Because when the central banks are forced to choose between maintaining the system and maintaining the currency, they always choose the system.

Every. Single. Time. Without exception.

Large derivative positions in any market require margin. When those positions move against you, margin requirements increase. When exchanges raise margin requirements you need even more cash. When month-end and quarter-end arrive and you need your books to look acceptable for regulators, you need liquidity to manage, hedge, or window-dress those positions.

Where does that liquidity come from when reserves are scarce and the private repo market won’t lend against your collateral?

The Fed’s emergency window.

This is what makes the timing correlation so interesting. Just my observations.

When those positions blow up - and they will - it doesn’t just affect whatever market they’re in. It calls into question every other leveraged position built on the assumption that emergency funding will always be available. Every clearing house would face questions about their actual ability to manage a real crisis. The entire derivatives complex would seize up.

The banks that would get hit hardest are the same banks currently using the emergency window because they can’t get enough Treasuries. Their balance sheets are already stressed. Their liquidity is already questionable. A derivatives blow-up on top of existing funding pressures would be catastrophic.

That’s why the correlation matters. Not because of any specific market, but because it reveals the mechanism. Emergency Fed liquidity is being used to manage positions that can’t survive without it. And that emergency liquidity is getting more expensive, more difficult to access, and more publicly visible with every passing month-end.

The weakest link will break first and takes everything else with it.

December 31, 2025 was a warning shot. One of the largest emergency borrowings in history, with the worst collateral mix we’ve seen this side of the GFC, executed at the exact moment when derivative positions across multiple markets needed managing and regulatory reporting required clean books.

That’s not routine. That’s desperation.

Watch the Repo markets. Watch SOFR. Watch the spread between overnight funding rates and the Fed’s interest on reserves. Watch Treasury auctions. Watch dealer inventories. Watch Japan. Watch what happens at month-ends and quarter-ends when the emergency window gets hit again.

And when those signals all flash red simultaneously - which won’t be long now - don’t say you weren’t warned.

The plumbing is screaming.

Someone should probably call a plumber.”

UPDATE: “This raises the risk of disorderly unwinds of leverage, with spillover effects into the government bond markets and the real economy. There are no easy answers to address this and measures to mitigate risks are moving slowly, raising the specter of major systemic issues occurring before something can be done to address the problem.” – [Martin Seagroatt, Finadium, February 11, 2026]

Well, something was done. As always, start a war. Just my observation.

After February 28, 2026, relations between the United Arab Emirates (UAE) and Iran entered a new phase of escalation, one in which the old formula of cautious pragmatism effectively stopped working. Formally, the UAE declared neutrality in the war which the US and Israel launched against Iran, and emphasised that it was not providing its territory, airspace, or its waters for strikes against Iran.

However, during the course of the war Iran began to question UAE statements of neutrality. The UAE is a key US partner in the Persian Gulf, a participant in the Abraham Accords with Israel, and an important financial and logistical hub within the Western infrastructure in the region. In Iran’s perception, the UAE increasingly looks like a participant in an anti-Iranian coalition.

The central symbol of the dispute remains the issue of Abu Musa, Greater Tunb, and Lesser Tunb, three islands located near the entrance to the Strait of Hormuz. Iran established control of them in 1971, shortly before the creation of the UAE. The Emirates have since regarded the islands as occupied territory and have demanded that the dispute be resolved through negotiations or international arbitration.

Iran regards the matter as closed, since Tehran considers the islands part of its own territory. For the UAE, it is an unhealed wound from the birth of the federation and a constant reminder of its strategic vulnerability before a larger neighbour. Discussions this week about a possible military scenario around the islands are perceived as a direct return to the most painful issue in Emirati-Iranian relations.

Before February 2026, Abu Dhabi tried to be on good terms with everyone. It needed to preserve trade with Iran, ensure security through the US, develop technological and defence cooperation with Israel, and avoid direct involvement in the conflict. When the US and Israel attacked Iran, that balance began to collapse. Media reports appeared about secret contacts between Israeli officials and the UAE leadership as the war progressed. CBS News reported that Benjamin Netanyahu had made a secret visit to the UAE and met with the country’s president, Mohammed bin Zayed.

According to CBS, the meeting took place in late March, after the current military escalation had already happened. Israel treated the visit as a fact, while the UAE publicly denied the reports. That contradiction itself became an important political episode, damaging the image of Emirati neutrality and giving Iran another argument for accusing Abu Dhabi of hidden coordination with Israel.

More revealing was a report about visits by Mossad chief David Barnea to the UAE. According to The Wall Street Journal, later cited by Israeli and regional media, Barnea visited the Emirates at least twice during the war in order to coordinate action on the Iranian front. The Jerusalem Post wrote that these visits took place during the operation against Iran and also reported a visit by Shin Bet chief David Zini.

These reports, like all wartime back-channel diplomacy, require caution because they are based on unverified sources and do not reveal the full picture of the talks; yet their political significance is clear. In spite of declared neutrality, not only Israeli politicians but also Israeli intelligence chiefs were traveling to the UAE. For Iran, this becomes yet another argument that Abu Dhabi is effectively integrated into a system of Israeli-American coordination against Tehran.

The UAE knows that such contacts can look like an element of defensive coordination and intelligence-sharing, but in wartime that distinction ceases to function. Iran must see that a visit by the head of Mossad cannot be a neutral episode, especially when it takes place alongside strikes on Iranian territory, deliveries of air-defence systems, and intensified US pressure on the Gulf states.

Axios, citing Israeli and American officials, reported that Israel had sent the UAE an Iron Dome air defence system and military personnel to operate it. This was later confirmed by US Ambassador to Israel, Mike Huckabee. For the UAE, this cooperation is explained as a defensive necessity, since the country found itself under the threat of missile and drone strikes. However, Iran views the logic differently, perceiving it as the integration of the UAE into Israel’s military infrastructure in the Gulf.

Officially, the UAE can argue that the matter concerns only the protection of civilian infrastructure. But war erases the boundary between defence and participation. Every air-defence system, every group of foreign military specialists, every exchange of intelligence, and every closed meeting with Israeli leaders can be seen as part of a single front. It reveals UAE-Israeli cooperation after the Abraham Accords.

The Abraham Accords (2020) established diplomatic normalisation between Israel and several Arab states, including the UAE, Bahrain, Morocco, and Sudan. It is clear that they are no longer limited to diplomacy, trade, and technology. Under wartime conditions, these relationships acquire direct military-strategic significance. Iranian representatives claimed that the CIA and US military structures were operating from UAE territory or using Emirati infrastructure in operations against Iran.

It’s difficult to verify these statements, but in wartime the statements themselves become part of the conflict. Iran uses them to justify pressure on the UAE and to portray it as a platform for US and Israeli activity. The UAE has a dilemma: if it openly acknowledges deep coordination with Washington and West Jerusalem, it becomes a direct target for Iranian retaliation. If it denies everything whilst remaining part of the US security system and receives defence assistance from Israel, its neutrality looks unconvincing.

For decades, Dubai has remained one of the most important external hubs for Iranian business, including trading companies, exchange houses, intermediary structures, and payment channels through which Tehran partially circumvented sanctions. During the war, unconfirmed reports appeared that the UAE, either shortly before the current escalation or during the conflict, had restricted Iranian financial channels, frozen Iran-linked assets, or participated in closed arrangements involving the movement of billions of dollars.

The most reliable financial open-source evidence points to a broader pattern of intensified pressure. The US imposed new sanctions on the Iranian exchange house, Amin Exchange and a network of related entities, including companies in the UAE, Turkey, China, and Hong Kong, which Washington claimed had helped Iranian banks conduct transactions in ways that circumvented restrictions.

Iran uses finance as yet another front in the war. Even if the UAE explains tighter financial controls as a requirement of the sanctions regime and as a way to protect its own banking system, the political timing turns these steps into part of the pressure on Tehran. In peacetime, Abu Dhabi could play the role of an intermediary between the reality of sanctions and the realities of living next to Iran. In wartime, that grey zone quickly becomes a disputed field. If the UAE close financial channels, Iran notes it as participation in economic warfare. If they leave the channels open, the US increases pressure on Abu Dhabi and demands greater discipline in sanctions enforcement.

The situation was further complicated by allegations that US officials were encouraging the Emirates to become more actively involved in the campaign and to consider the possibility of seizing one of the Iranian islands in the Persian Gulf. Even if untrue, the very fact that such reports appeared shows that the island dispute may once again be used, not only as an historical Emirati grievance, but also part of the US and Israeli military strategy against Iran. The UAE could find itself under pressure from both sides.

IT’S BECOMING COMPLICATED

On the one hand, the US and Israel need regional actors to join their campaign against Iran. Without the participation of The Gulf Cooperation Council (GCC) of Gulf states, the war remains an external operation by Washington and West Jerusalem that causes discomfort even among Arab states that fear Iran.

If regional actors take part in pressure on Tehran it creates the appearance of a broader coalition and reduces the political cost for the US and Israel. The UAE specifically has a modern military, ports, intelligence infrastructure, financial leverage, ties with Israel, and its own territorial dispute with Iran, making it especially important for this strategy.

On the other hand, Iran views any deepening of UAE involvement as grounds for retaliation. Strikes on infrastructure, threats to shipping, accusations that Emirati territory is being used, drone attacks, and pressure through allied networks in the region show that Tehran is prepared to transfer the cost of war onto its neighbours if it considers them part of a hostile framework.

The UAE said drones had struck near the Barakah nuclear power plant and pointed to their origin from Iraqi territory, immediately linking the incident to the wider network of pro-Iranian forces in the region. This is an extremely dangerous situation for the UAE. Their cities, ports, airports, energy infrastructure, financial system, and reputation as a safe haven all depend on stability. Even limited involvement in the war could strike at the very foundation of Emirati operations.

UAE neutrality is becoming an increasingly unstable construct. Abu Dhabi does not want to enter the war openly, yet it also cannot fully distance itself from the US and Israel, because those ties provide missile defence, military support, and strategic insurance against Iran. This duality makes the UAE, from a potential arbiter in the crisis, into one of its most vulnerable participants.

The main danger for the UAE is to be dragged into the conflict, not by one abrupt decision, but through a series of gradual steps:

• Financial action against Iranian networks

• Deeper US-Israeli defence coordination

• Visits and closed consultations with Israeli officials

• Participation in securing the Strait of Hormuz

• Discussion of the disputed islands as a possible lever for pressure on Iran.

Each individual step can be presented as defensive, technical, or forced. But taken together, they could lead to a situation in which the UAE is no longer merely near the war, but inside it. However, the UAE is not alone as Oman is also faces risks in this war. Sources

• The Gulf after Hormuz: The real geopolitical shift is structural https://chinabeyondthewall.org/the-gulf-after-hormuz-the-real-geopolitical-shift-is-structural/

• Edited from a report by Murad Sadygzade, President of the Middle East Studies Centre https://www.rt.com/news/640645-uae-us-israel-iran-war/

OMAN IS A KEY US ALLY - FOR NOW

Oman mediated talks on Iran’s nuclear program until they were suspended by hostilities. Iranian state television reported that it had obtained an unofficial draft agreement that would re-open the vital waterway, with Iran and Oman jointly managing maritime traffic. Iran and Oman lie on opposite sides of the narrowest part of the Strait of Hormuz. Iran closed the route to ships from “hostile nations” following the US-Israeli airstrikes, while the US declared its own blockade of Iranian ports in April.

Tehran has since insisted on its “sovereign right” to manage traffic through the Strait and collect tolls. Oman’s supposed intentions for involvement in Iran’s shipping management caused an immediate response from the US. According to Reuters, Trump made some remarks after Iranian state TV reported that it obtained an unofficial draft agreement that would reopen the vital waterway, with Iran and Oman jointly managing maritime traffic.

Trump suggested that the US would attack its ally Oman if it attempts to seize control of the Strait of Hormuz. Trump told journalists during a cabinet meeting on Wednesday. “We’ll watch over it, but nobody’s going to control it. That’s part of the negotiation that we have.” “It’s international waters. And Oman will behave just like everybody else, or we’ll have to blow them up. They understand that. They’ll be fine,”

The warring parties continue to trade blows around the Strait risking escalation during this fragile ceasefire which is now being compromised daily. The Iranian Foreign Ministry released a statement condemning the “gross violation” of the ceasefire and saying that Iran would hold the US “responsible for all the consequences resulting from these aggressive and unjustified actions.”

Although US officials indicated this week that the sides are close to reaching a preliminary peace agreement, there are no signs that either Washington or Tehran is willing to change their original positions. Both countries have accused each other of setting unacceptable terms. As I said, it’s getting more complicated for the GCC by the day. Source

• Tehran has condemned Monday’s strikes on a province in the south of the country https://www.rt.com/news/640621-iran-accuses-us-ceasefire-violation/

[AXIOS] - Netanyahu’s ‘hair was on fire’ after Trump’s call on Iran. Israel wants to resume the war, while Washington and regional mediators push Tehran to accept a peace deal. However, I detect a hidden hand behind this ceasefire. Relations between Washington and Beijing remain tense, competition between the two powers stretches across almost every domain, and yet both sides appear increasingly aware that uncontrolled confrontation would carry enormous costs. Against that backdrop, the prospect of a broader geopolitical bargain is once again entering the discussion. Perhaps there is more to recent discussions than is seen in the MSM?

According to Xiang Lanxin, visiting professor at East China Normal University, Trump isn’t approaching China in the same ideological spirit that defined other US administrations. The atmosphere in Washington, he argues, has shifted noticeably and might indicate why Trump is unlikely to open hostilities any time soon regardless of Israel’s demands for action.

Apparently, Israeli Prime Minister Benjamin Netanyahu was furious after a tense call with Donald Trump over a new proposal to end the war with Iran. Gulf leaders had asked Washington to give diplomacy more time. The US president has since said that the US and Iran were “right on the borderline” between a deal and renewed war.

“Either have a deal or we’re going to do some things that are a little bit nasty,” Trump told reporters on Wednesday, adding that the war could resume “very quickly” unless Washington receives “100% good answers.” Netanyahu is “highly sceptical” of the negotiations and wants to resume the war in order to further degrade Iran’s military capabilities and weaken the country by destroying critical infrastructure. Trump, however, claimed that Netanyahu “will do whatever I want him to do” on Iran, whilst insisting he has a good relationship with the Israeli leader.

The latest diplomatic push reportedly centres on a “letter of intent” that would be signed by the US and Iran to formally end the war and launch a 30-day negotiation period over Iran’s nuclear program and the reopening of the Strait of Hormuz. Tehran has confirmed that it is reviewing an updated proposal. However, Iran’s Foreign Ministry insisted negotiations were continuing on the basis of the 14-point plan previously dismissed by Washington.

Iranian President Masoud Pezeshkian said this week that “dialogue does not mean surrender,” adding that Tehran would not retreat from “the legal rights of the people and the country.” Foreign Ministry spokesman Esmaeil Baghaei said talks could succeed only if the US ends its “piracy” against Iranian ships and agrees to release frozen funds, while Israel must end its war in Lebanon.

Trump said the strike had been scheduled for Tuesday, but that he had ordered the Pentagon to stand down for now after Qatar, Saudi Arabia, the United Arab Emirates and “some others” urged him to allow more time for diplomacy. “We were getting ready to do a very major attack tomorrow,” Trump told journalists. “I’ve put it off for a little while, hopefully maybe forever, but possibly for a little while, because we’ve had very big discussions with Iran.” The president claimed that the Gulf states believe Tehran is “getting very close to making a deal,” adding that any agreement must prevent Iran from obtaining nuclear weapons.

Trump also instructed the US Department of War to remain ready for a “full, large-scale assault” at “a moment’s notice” if Washington does not receive what it considers an acceptable deal, according to his earlier post on Truth Social. The announcement follows a series of threats by Trump, who warned Iran over the weekend that “the Clock is Ticking” and that “there won’t be anything left” of the country unless it accepts Washington’s demands. Indirect talks between Washington and Tehran have remained stalled since a fragile ceasefire was established in early April, following a month of hostilities initiated by the US and Israel.

Iranian President Masoud Pezeshkian has insisted that “dialogue does not mean surrender,” promising in a post on X on Monday that Tehran would defend “the interests and honour of Iran” with “all our might.” “The Islamic Republic of Iran enters into dialogue with dignity, authority, and the preservation of the nation’s rights, and under no circumstances will it retreat from the legal rights of the people and the country.”

Iran previously accused the Trump administration of taking a “maximalist approach,” while insisting that its own nuclear program is peaceful and that it will not dismantle its enrichment capabilities entirely. Tehran has also demanded sanctions relief, reparations, an end to Israel’s campaign in Lebanon, and recognition of what it calls its sovereignty over the Strait of Hormuz.

US President Donald Trump’s rejection of Tehran’s peace terms suggests that he will accept nothing short of surrender, according to Iranian Deputy Foreign Minister Kazem Gharibabadi. The US and Iran remain engaged in indirect negotiations following the fragile ceasefire announced last month after weeks of military action.

Trump has repeatedly dismissed Iranian proposals as unacceptable, claiming that Tehran had suffered a military defeat and must agree to American conditions to end the crisis. “When a party directly involved in war, blockade, sanctions, and threats of force rejects Iran’s response simply because it is not a letter of surrender, it becomes obvious that the issue is not peace but the imposition of political will through intimidation and pressure,” Gharibabadi wrote on X on Tuesday, without mentioning Trump by name.

The diplomat said Tehran’s demands, including compensation for damage caused since the US and Israel attacked Iran in late February, guarantees against future aggression, and recognition of Iran’s sovereign rights, represent “the minimum necessary for any serious and durable arrangement under the UN Charter.”

Washington has repeatedly demanded that Iran fully halt uranium enrichment, restore unrestricted shipping through the Strait of Hormuz, and accept additional security-related conditions as part of a settlement. Tehran, however, has insisted on maintaining control over the vital waterway and preserving the maritime toll system introduced during the conflict as part of its defence strategy. It also insists that peaceful use of atomic energy is its right under the Nuclear Non-Proliferation Treaty.

As diplomatic efforts stalled, the Trump administration launched a naval blockade of Iranian ports, further disrupting global energy markets. Amid speculation that the US could resume large-scale military action, Trump warned last week that people would know the ceasefire had collapsed when they see “one big glow coming out of Iran.” Sources

• Trump’s China strategy is closer to Kissinger than Biden https://www.rt.com/news/639958-trumps-china-strategy/

• Quite a lot of feedback coming related to Trump’s recent visit. Here is an UPDATE

THERE ARE NO ILLUSIONS REGARDING US RELATIONS WITH CHINA

With Trump, as with his predecessors, imperial war introduces violence to others as if exporting goods. It’s a bloody metaphor for unequal development; the war strikes outside, never within, the “civilised world.” It mirrors the planetary fracture. A war of the rich against the poor, it is embodied by the countless strings of bombs dropped on the peoples of the Global South. Its symbol is the B-52, napalm, the F-35 fighter jet, the Tomahawk missile and much more. This is the sophisticated machinery of death administered remotely, without risk, without any hidden costs for the perpetrators of this punishment from above.

It is also proxy war, embargo, blockade, economic war, insidious destabilisation, clandestine action, coups d’état fomented by the CIA, the manipulation of terror, and the “Freedom Fighters” of global jihad. All these wars of the “free world,” of which democracies are fond, are under the leadership of an empire which fancies itself as an avenging power.

Today, faced with a predatory empire, Iran is defending itself heroically, Russia is standing firm, sovereign nations are resisting, and the peoples under attack are preparing their revenge, while Europe is capitulating. That leaves China, this vast, peaceful nation, committed to win-win partnerships and multilateralism. Trump met with Xi, for the second time in ten years, with the clear intention of salvaging what he can after the Iranian debacle. China received him politely: without illusions about its capacity to make amends, and without conceding anything on its own national interests.

But what is this China, so diametrically opposed to a bellicose America, a power determined to promote peace and cooperation? According to Western media, it is thirsty for riches, intent on extending its reach across the globe. By displaying a facade of pacifism, it is said to harbour a simmering brutality, ready to erupt, hidden behind a veneer of soothing rhetoric.

This “new empire” supposedly demands its share of global hegemony, claiming first place at any cost. Worse still: it supposedly wants to impose its model on the West, promote its values ​​at all costs, and present itself as an example for all nations to emulate.

This vision of a conquering China is all the more surreal given that the Chinese are actually doing the exact opposite. Convinced that their system is unique, they are not trying to convert anyone but the Globalists see a system that they can adopt and adapt for their own elite interests. China’s ambition is not to repaint the world in its pattern. Given a choice, China would probably prefer that others do not imitate them, because every nation should find its own independent path, even if it means making mistakes without which no success is truly worthwhile.

Chinese thought is empirical and pragmatic: it confronts facts, undergoes successive corrections, and continues its progress as best it can. Averse to abstract ideas, it readily admits that there are no ready-made solutions. Chinese AI is offered to the world FOC which indicates its aversion to the Western model of financialisation.

Xi Jinping’s China intends to erase past humiliations by reclaiming its rightful place among the nations: this is “the great rejuvenation of the Chinese nation.” It wants to definitively turn the page on this chaotic era. To achieve this, there is no need to impose anything on anyone. A model beyond imitation, an empire without imperialism, China is, par excellence, a peaceful power. This is not solely due to political choice, its leaders having opted for development and rejected foreign adventure. It is also for a deeper reason. The imagined centrality of the empire has forged its destiny, obliging it to prioritise its people and their well-being before concerning itself with the rest of the world.

In the past, the West often claimed that China was a poor country, with its hundreds of millions of underpaid workers able to be exploited by Western corporations outsourcing their manufacturing base.

The reality in China has changed faster than Western experts predicted, because the struggles of industrial workers, in a country where social conflicts are resolved through negotiation, have led to a substantial increase in wages, to the point of worrying foreign investors. China has adopted a proven development model that it does not seek to impose on anyone. This large, sovereign nation is committed to international law embodied in the UN’s original mandate.

It prioritises win-win cooperation and does not tie its hands with any military alliance. It does not attack any state, does not finance any subversive international organisations, does not impose any unilateral measures on them, and does not interfere in their internal affairs. The contrast is striking with the attitude of the United States and its European allies, who have no qualms about intervening abroad unilaterally, under false pretences and in flagrant violation of international law.

While the United States clings desperately to its waning hegemony, the Chinese know they are a rising power and that there is no point in rushing things. China’s pacifism is the flip side of its economic success, while the belligerence of the USA reflects its decline.

In the West, the vision of China is clouded by preconceived notions. It was assumed that opening up to international trade had sounded the death knell for “socialism with Chinese characteristics.” For the Chinese, this opening is the condition for the development of productive forces, not a prelude to systemic change. Economic reforms led by the socialist state have made it possible to eradicate extreme poverty and raise the country’s level of development to unprecedented heights.

In the aftermath of the collapse of the Soviet Union, Western democracy cast its saving light upon an astonished world. Freed from “communism,” liberalism was expected to spread its benefits, achieving global unification under the auspices of the American model but turned out to be a dashed hope. For instead of triumphant liberalism, it is the new Confucian empire under communist leadership that is out-manoeuvring the capitalist and liberal West.

By becoming the world’s leading economic power (in purchasing power parity), the People’s Republic of China relegates a dying America, undermined by deindustrialisation, excessive debt, social decay, and the fiasco of its military adventures, to second place. The duel of empires, in reality, is being played out on the field of worldviews. Donald Trump’s boastful policies are a harbinger of failure. One thing is certain: despite his charming smile, the President of the United States left Beijing with the same powerlessness to alter the course of history as when he arrived. Source

• The duel of empires is being played out on the field of worldviews https://chinabeyondthewall.org/the-duel-of-empires-is-being-played-out-on-the-field-of-worldviews/

What did Trump and Xi achieve in Beijing? The American and Chinese presidents talked Iran, Taiwan, and trade, but found little to agree on.

Beijing has said the US must not meddle in issues related to Taiwan and human rights, and must respect China’s “development right” ahead of Trump’s visit to meet with Chinese President Xi Jinping, who he described on Tuesday as “a friend” and “somebody that we get along with.” Trump added that he plans to discuss the war with Iran, which the US and Israel have accused China of supporting.

The Chinese Embassy in the US, meanwhile, outlined four red lines in relations that “must not be challenged”: Taiwan, democracy and human rights, “development paths and political systems,” and “China’s development right.” Beijing has insisted that the US must not interfere in its domestic affairs or support what it calls the “separatist” government in Taipei.

The US-Israeli war against Iran further strained relations with China after the US Treasury sanctioned a Chinese refinery for allegedly purchasing Iranian oil. As reported last week, Beijing responded by barring its private refineries from complying with the sanctions, which Chinese officials denounced as illegal.

China has denied that it provides military aid to Iran and condemned the US for blacklisting Chinese satellite companies accused of supplying data to Tehran. “The Chinese government always asks Chinese companies to operate in accordance with laws and regulations. We will firmly protect Chinese businesses’ legitimate rights and interests,” Foreign Ministry spokesman, Guo Jiakun said on Monday. Guo added that China is ready to work with the US and “manage differences in the spirit of equality, respect, and mutual benefit.”

Trump touched down on Wednesday for a two-day state visit, the first by a US president in eight years, as relations between the world’s two largest economies are at a crossroads defined by the Iran war, trade friction, and technological rivalry. The visit featured a bilateral meeting with President Xi Jinping on Thursday morning, to be followed by a visit to the Temple of Heaven and a state banquet, as well as a working lunch on Friday before Trump departs.

White House Deputy Press Secretary, Anna Kelly described the trip as “a visit of tremendous symbolic significance” whilst hinting “more good deals on behalf of our country.” The high-stakes talks will likely revolve around the US-Israeli war on Iran, which was the reason for postponing the visit, originally scheduled for late March, as well as artificial intelligence, and critical minerals. The focus will remain on trade and avoiding obvious areas of conflict.

The Iran war and the Hormuz crisis are expected to loom large over the agenda, with an unnamed US official telling reporters during a briefing that Trump would likely “apply pressure” on China on the purchase of Iranian oil and on the alleged supply of dual-use components to Tehran.

The hallmarks of this approach became evident last week when the US sanctioned Chinese refineries buying Iranian crude, as well as what Washington described as “China-based entities providing satellite imagery to enable Iran’s military strikes against US forces.” In response, China ordered its firms to ignore US sanctions, a move Max Meizlish, a research fellow at the ‘Foundation for Defence of Democracies’, described as an “unprecedented… measure of defiance by Beijing.”

Trump is also expected to call on Xi to leverage Beijing’s unique clout over Tehran to reopen the Strait of Hormuz, a critical waterway accounting for around 20% of pre-war seaborne oil trade. China, itself the world’s largest buyer of Gulf oil, has been sympathetic to the cause, urging Tehran to remove obstacles to maritime traffic.

THE ‘FIVE BS’ OF TRADE

The two leaders are expected to discuss what observers have labelled the ‘Five Bs’: China’s purchase of Boeing aircraft; American beef and soybeans; the creation of a Board of Trade, and a Board of Investments. For Boeing, the leaders could greenlight the purchase of as many as five hundred 737 MAX aircraft and about 100 wide-body jets for several Chinese flight operators. The deal would be valued at tens of billions of dollars, and Boeing CEO Kelly Ortberg is reportedly a member of the US delegation.

As the world’s largest importer of soybeans, China has historically purchased half of US exports of the crop and has been a primary market for American agricultural produce. The soybean trade has not been problem-free, however, as US beans currently face a total duty of 13% from China, while Brazilian beans are subject to only 3%. In addition, while China fulfilled its pledge to purchase 12 million metric tons of beans in 2025, it is unclear whether Beijing will meet the larger target of 25 million tons annually for 2026-2028.

Taiwan is the hotspot not to be mentioned. China regards Taiwan as part of its sovereign territory and has long been a sore point in relations between Washington and Beijing. Chinese Foreign Minister, Wang Yi has described the self-governed island as “the biggest point of risk” in the bilateral relationship and urged Washington to “honour its commitments and make the right choice, to open up new space for China-US cooperation.”

Several media reports have indicated that China wants Trump to say the US “opposes” Taiwanese independence, rather than the current language, with officials in Taipei nervous that the US president could oblige. An unnamed American official told the Financial Times, “we don’t expect to see any changes in US policy [on Taiwan] going forward.” While the Trump administration has continued to supply Taiwan with weapons, the US president has previously expressed scepticism about defending the island and accused it of stealing the US semiconductor manufacturing industry.

Rare earths and tariffs are the holy grail of current trading policy. China holds a powerful card in its near-total grip on rare earth mineral supply chains, with analysts cited by the Guardian suggesting Beijing may dangle a long-term commercial arrangement to grant US access to the commodities, on condition they are not used for military ends.

The issue has been a flashpoint in relations for years, with China’s decision to introduce export restrictions on rare earth elements in 2025 sending the US high-tech industry into turmoil. While in late 2025, Washington and Beijing reached a tentative “trade truce,” which expires in November, US industry leaders have complained of delays in export licenses and overall volatility in supply chains.

The wider trade war shows both sides are locked into a “ceasefire” that puts Trump’s effective tariffs at between 19% and 24% after peaking at 145% during intense tit-for-tat escalations. The US and China are reportedly debating a one-year extension in exchange for guaranteed rare earths flows.

The digital battleground and AI is a contentious point. Trump’s visit comes as the White House has accused China of “stealing” AI technologies, including running “deliberate, industrial-scale campaigns” to extract capabilities from America-based AI models to train cheaper rivals. In response, the Chinese Embassy in Washington said Beijing “opposes the unjustified suppression of Chinese companies by the US,” adding that it “attaches great importance to the protection of intellectual property rights.”

Beijing has long protested what it views as a US crackdown on its tech companies, including restrictions on Huawei and a push to replace China-linked technology in American-connected cars, a policy widely seen as a blow to Chinese EV manufacturers. All this overlays he real agenda of resource wars, energy access, and US global supremacy.

TRUMP v CHINA: THE BATTLE FOR GLOBAL SUPREMACY

Trump’s primary aim is not merely to hinder China economically, but to reshape its development model so that it no longer poses a threat to the US. He aims to restrict the transfer of certain technologies that could allow China to surpass the US, especially in fields such as artificial intelligence, microchip production, and biotechnology.

Another priority for Trump is to keep competitive Chinese products out of the American markets. This will likely mean continuing or even escalating sanctions against major Chinese companies such as Huawei and Xiaomi. However, it is evident that Trump is using these sanctions as leverage, building up a range of measures against China to strengthen his negotiating position. What is unclear is what China wants from America.

Apparently, America is not offering much, merely the lifting of ‘some sanctions’, and leaving Taiwan alone seems to be the only cards Trump & Co have to offer. In January 2026, Boeing’s financials revealed deliveries of 600 commercial planes (reflecting a $7 billion loss) and a ‘backlog of 6100 planes.’ Who would put his name to a 6,100 backlog and wait for ten years?

It appears that the spin Trump hopes to create is heavily weighted on the ‘great relationship’ he has with Xi Jinping and releasing China from US sanctions and tariffs. Given the largess sanctions imposed by Trump relate to Iran, Xi Jinping has already instructed all related companies to ignore them. Given tariffs are absorbed by US taxpayers, Xi has used one of his key advantages whilst it seems that Trump has nothing to sell that China wants.

Several key issues are likely to dominate the leaders’ discussions. While TikTok was mentioned during their recent phone call, the platform is not expected to be a primary focus. Instead, more pressing topics such as Taiwan and the Ukraine conflict are likely to take centre stage. Trump may seek to use Taiwan as leverage against China, testing the extent to which the US can push on this issue.

On Ukraine, the US is wary of allowing China to claim the spotlight by playing a prominent role in resolving the conflict. Trump will likely aim to prevent China from gaining diplomatic prestige as a peacemaker. Moreover, he will probably attempt to drive a wedge between Russia and China, weakening their partnership. Given Russia’s energy supplies, food exports, and political support, such a split could have significant implications for China.

Although TikTok itself may not be a critical issue, it represents a unique case in US-China relations. TikTok is China’s only globally successful multimedia platform, unlike other Chinese social networks, which have struggled to break into Western markets. Blocking or taking control of TikTok would strike a financial blow to Chinese companies and hurt Beijing’s soft power.

CHINA MIGHT BE ABLE TO MEDIATE A SETTLEMENT WITH US/IRAN

Dr. Marandi was born in the United States of Iranian parents. He currently lives in Iran, where he is a professor at the University of Tehran. In the video, One Country Quietly Won this War, he points out that, often, when two countries battle each other, neither one emerges as the clear winner. Both of them are damaged by wars. The actual winner may be a country that does not appear to be directly involved in the war.

In the video referenced above, Dr. Marandi discusses three historical situations in which a nation not directly involved in a conflict gained stature by being the adult in the room, when two other nations battled each other. In this case, Dr. Marandi believes that China could very well be the country that can exert enough pressure on both sides to get them to accept a proposed solution. He says that China has acted behind the scenes to bring about the ceasefire, and that Trump has acknowledged China’s role.

Dr. Marandi suggests the idea that the meeting of the two presidents might be an opportune moment to make major steps toward a mutually agreed settlement. He believes that the underlying problem is that there isn’t enough energy (particularly oil) to support a world population of over eight billion. Dividing up markets in the way suggested would at least somewhat alleviate the shortage. Of course, there may be other terms of a settlement, as well. In addition, not all the terms may be determined precisely.

This dynamic underscores how the US is leveraging every possible tool to challenge China’s rise. Trump’s broader strategy appears focused on isolating China while exploiting trade and technological dependencies to maintain American supremacy. However, the task of balancing confrontation with negotiation will test Trump’s ability to deliver on his promises. Whether this approach will succeed remains to be seen, but it is clear that the Trump administration’s policies will reshape US-China relations for years to come. Sources

• China and US Trade Talks: A Solution for Oil Shortages? https://ourfiniteworld.com/2026/05/12/china-and-us-trade-talks-a-solution-for-oil-shortages/

• Trump’s expectations unrealistic https://www.globalresearch.ca/xi-trump-meet-yuge-deals/5926145

When Brent crude briefly crossed $120 a barrel last week amid renewed Hormuz tensions and the UAE’s exit from OPEC, market reactions suggested something beyond just another cyclical oil shock. Markets are recognising the erosion of the framework that governed global crude flows for decades.

The UAE’s move has triggered familiar debates over quotas, spare capacity, and Gulf rivalries. But focusing on cartel mechanics overlooks a deeper shift. OPEC’s exit reveals the premise that producers could manage supply while others guaranteed stable sea lanes was always conditional. That era has ended and a new structure is beginning.

For much of its history, OPEC operated within a relatively predictable system. Oil moved through a handful of critical chokepoints, the Strait of Hormuz foremost among them, and the cartel adjusted production to influence prices. Markets now price geopolitical risk alongside supply and demand. They are factoring in war-risk insurance, sanctions-driven re-routing, and the possibility that key transit routes may face prolonged disruption.

Asian refiners are already recalculating freight exposure as re-routing via the Red Sea extends voyage times and pushes up insurance costs. Producers, meanwhile, are adapting to a market where route stability can no longer be taken for granted. This broader context helps explain the strategic logic behind the UAE’s decision to invest heavily in expanding production capacity toward 5 million barrels per day (mbpd) by 2027 from the current 4.85 mbpd, even as OPEC+ agreements constrained actual output significantly below that threshold.

Continuing to build upstream infrastructure while remaining bound by collective quotas presented a growing commercial and strategic contradiction. The exit reflects a broader recalibration. Producers such as the UAE, the fourth largest in OPEC+, now appear more focused on production flexibility and Asian market access than on maintaining older quota structures.

There is also a parallel demand-side shift shaping producer calculations. Major Asian importers, particularly India, are actively seeking more flexible supplier relationships that operate outside traditional cartel structures. Indian officials have already signalled interest in negotiating long-term oil trade agreements with the UAE now they are no longer constrained by OPEC production quotas. The benefits are clear: proximity means lower freight costs, bilateral deals allow flexible pricing, and direct arrangements avoid constraints associated with the cartel.

For the UAE, this represents more than a break with OPEC. It signals repositioning toward an energy landscape where securing long term Asian demand through flexible export arrangements may matter more than maintaining the appearance of collective discipline.

OPEC attempts coordinated cuts to support prices while the routes moving that oil grew increasingly unreliable. Production quotas mean nothing if tankers cannot move freely.

The older OPEC framework was built for an era when oversupply and price crashes were the main worry. The threats oil markets are facing now are entirely different. Geopolitics has changed how oil moves. The Strait of Hormuz, which carried roughly 20 million barrels per day before Iran effectively closed it in March, represents what the International Energy Agency has called the largest oil supply disruption in history.

Past crises operated on an assumption that disruptions would be brief and oil flows would return to normal. That assumption no longer holds. Risk perception itself now reshapes freight costs, delivery schedules, and market behaviour. A full blockade isn’t necessary for markets to react. This is why Brent hit $120. The price reflected doubt about transit routes, not just supply.

Within this context, divergence inside OPEC makes more sense. The UAE’s exit exposes a widening gap between collective discipline and national strategy. Saudi Arabia still anchors the group, often taking deeper cuts to prop up prices. But not every producer operates on the same timeline. For Abu Dhabi, securing future market share in Asia matters more than defending a coordination system designed for different circumstances.

Iran sees the situation through a different lens. Tehran has long viewed energy security as a contest over access, pressure, and control of routes. Rising US militarisation and sanctions have already turned the oil trade into a geopolitical struggle. The UAE’s departure confirms that producers are going their own way within a fragmented system. OPEC isn’t collapsing. It retains influence, largely through Saudi Arabia’s spare capacity. But the assumptions that held it together, predictable shipping, aligned incentives, and centralised management are eroding.

Parallel energy networks have arisen with Russian crude being redirected toward Asian markets following Western sanctions. This has reshaped tanker routes and altered margins and payment mechanisms. Sanctions did not restrict the supply from those producers they were aimed at but rather accelerated the diversification of trade channels.

The US now seeks to play a dual role: security provider in key maritime regions and major supplier of shale oil and LNG. Growth in non‑OPEC production is steadily eroding the dominance of older, more centralised energy structures. For Asian importers, this shift has been equally enabling and destabilising. Flexible LNG cargoes diversified crude sourcing, and new trading routes have reduced dependence on any single supplier. But they have also tied energy security more tightly to geopolitics, logistics, and financial infrastructure.

For Asian importers, this shift is a double-edge sword. While they have been able to diversify crude sourcing, their energy security is increasingly tied to geopolitics, logistics and financial infrastructure. Market participants recognise this transition. Industry observers note the system may absorb shocks like the UAE’s exit without immediate disruption.

But that calm reflects adaptation, not the old stability. Recent analysis shows how overlapping supply and security networks are now shaped as much by political alignment as by market efficiency. The global oil system no longer revolves around a single centre; it is fragmenting into multiple interconnected but distinct circuits.

Demand is shifting decisively eastward. India is expected to add 1 mbpd by 2030, the largest increase of any country globally, and account for nearly half of all incremental global oil demand through 2035. This shift is reshaping producer strategies. Gulf exporters are no longer just defending price levels. They’re competing for long-term relevance in Asian markets where Gulf-Asia trade reached $516 billion in 2024, double the $256 billion Gulf-West trade volume. The UAE exit reflects this calculation. Rather than abandoning global markets, Abu Dhabi is repositioning toward flexibility, bilateral arrangements, and direct access to Asia’s growth centres.

For Asian economies, the implications are more complex. Diversification across the Gulf, Russia, the US, and Africa improves bargaining power but embeds them in a more fragmented and politically sensitive system. Energy security now means more than securing supply as it requires safer shipping routes, insurance, refining systems, and strategic reserves.

When any of these elements fail, the economic fallout extends far beyond energy costs alone.

India’s experience is an example. As prices surged amid Hormuz tensions, the rupee weakened sharply while inflation pressures intensified and current account deficits widened.

Maritime disruptions now carry immediate macroeconomic consequences. Policy responses are evolving accordingly. Strategic reserves, refinery expansion, growing renewable capacity, and nuclear energy generation are increasingly viewed as parts of a broader resilience network. Maritime security has gained prominence, with Hormuz identified as a key strategic focus.

India has deepened US engagement with LNG and technology, maintained Gulf ties, and continued Russian crude imports despite narrowing discounts. The goal is not alignment with any single bloc but flexibility in a fragmented market. It’s no longer who controls production, but who can ensure oil, and the infrastructure moving it, function reliably in an increasingly uncertain world. Source

• Hormuz and the end of the old oil order Edited from an article By Manish Vaid, junior fellow, Observer Research Foundation, with research interests in strategic energy insights and green transitions

CHINA’S SANCTIONS PUSHBACK ON ‘TEAPOT’ REFINERIES

China’s recent reaction to US sanctions marks another new phase in the oil war. On May 2, the Ministry of Commerce of China issued an injunction to block US restrictions against five independent Chinese oil refineries that have been sanctioned for importing Iranian oil and utilising so-called ‘shadow fleets’. Beijing’s decision could be historically significant.

China has been moving towards this decision for the past year. The Shouguang Luqing refinery in Shandong province was the first to be added to the sanctions list on March 20, 2025. By October, the US had imposed restrictions on three other ‘teapot’ refineries. Finally, on April 24, 2026, Hengli Petrochemical (Dalian) Refinery Co. suffered sanctions. With a capacity of 400,000 barrels per day, the facility in Dalian exceeds the combined capacity of the four other refineries. This seems to have been the tipping point, prompting the Chinese government to shift from verbal threats to decisive action.

The legal groundwork has been in place for some time: a local law against foreign sanctions was passed in 2021, but remained largely symbolic due to the absence of implementing regulations. The delay made sense: the law was adopted during Trump’s first term. After the thaw in US-China relations under Biden, it was put on hold. Ultimately, the directive to activate this law was only signed by Chinese Premier Li Qiang in March 2025.

Finally, on April 14, 2026, China implemented the Regulations on ‘Countering Improper Extraterritorial Jurisdiction by Foreign States’. These regulations contain 20 articles, including provisions that allow the Chinese government to add to its sanctions list individuals and organisations involved in discriminatory measures against China. Those included in the list could be expelled from China or denied entry; their assets could be frozen, and they may even be banned from doing business with any individuals or organisations in China.

The situation with Iran. Evidently, China has taken the first practical step regarding the five refineries. As mentioned, this move was tied to the US sanctions against the major refinery in Dalian. The sanctions themselves are the result of America’s conflict with Iran – or more accurately, the blockade of the Strait of Hormuz. Thus, Iran allows only those ships that coordinate their routes with the Iranian authorities by paying for passage to enter the strait, whilst the US attempts to prevent any vessels from leaving the Persian Gulf.

As a result, traffic through the strait has plummeted by 20-30 times compared to pre-war levels; however, Iran has seen the smallest decrease relative to other countries. This is primarily because Iranian ‘shadow fleet’ tankers do not need to seek approval from their own authorities, and they are more willing to take risks, navigating past US naval warships, typically along the Iranian coast and in Pakistani territorial waters. In contrast, legitimate ships refrain from such manoeuvres, as they cannot risk losing insurance coverage.

As of April 22, at least 34 Iranian tankers have successfully navigated around the US maritime blockade since it began, averaging about 3-4 vessels per day. These figures are comparable to pre-war levels, and nearly all the oil from these tankers is headed for China. Consequently, a direct attempt by Washington to influence Chinese buyers of Iranian oil is trying to pressure them into backing off.

This approach aligns with traditional Chinese policy: avoiding direct confrontation, steering clear of disputes, seeking loopholes, and achieving objectives through subtle means. Moscow has felt the impact of this strategy first-hand. Since 2022, China has engaged in trade with Russia discreetly. It is generally known that China was purchasing Russian oil, but new US sanctions affected the flow of those shipments.

The same applied to Iran: when there was an oversupply of oil, China had the luxury of being selective. The market was determined by buyers; sanctioned oil was bought only as a last resort and at a large discount. Tankers could be anchored for months waiting for improved conditions. However, faced with oil shortages, China was reluctantly forced to enter into a more direct conflict with the US. The United States is unlikely to retaliate effectively, and China’s decision leads to the establishment of a functioning alternative trading and payment infrastructure.

All the major decisions have long been in place: for example, the creation and implementation of CIPS, China’s equivalent to SWIFT, but like the sanctions law, the alternative payment infrastructure has remained largely inactive. For the past four years, Russia has been calling on its partners to take action: finding an alternative to the dollar, departing from American control over international trade, and replacing semi-clandestine payment schemes with a solid, transparent, and reliable system.

Also, for the past four years, Russia’s trading partners ignored these calls, implying that they didn’t want to create problems with the US. Iran found itself in a similar position, but unlike Russia, it relied on China as its sole buyer. Now, ironically, it’s Trump who is forcing China to change this approach. In doing so, he risks retaliation since his actions may provoke a new, tougher, and more decisive Chinese policy. Beijing has all the political, economic, and financial tools at its disposal to make this happen. Source

• Edited from an article by Sergey Poletaev, an information analyst and publicist https://www.rt.com/op-ed/authors/sergey-poletaev/

This period of truce in the Middle East allows a look at alternative sources of hydrocarbons and Africa has a unique opportunity to develop its hidden resources while Iran has impacted the Gulf states’ capacity to respond. The Iranian strategy is a gambit designed to re-order global energy flows through the Strait of Hormuz. The consequences have reverberated far beyond the Gulf.

China and Russia have remained effectively neutral but only as interested observers. Approximately 40% of China’s oil passes through the narrow waterway, and 20% of its supply originates from Iran itself. If Beijing allows the strait to be sealed, the consequences would not only be for China, but for Japan and India as well, whose economies could grind to a halt. However, China, and to a lesser extent Russia, have growing investments in Africa for good reason.

The Iranian-backed Houthi forces have not yet moved toward closing the Red Sea corridor, effectively cutting off oil shipments to Europe via the Suez Canal, when both the eastern and western arteries of global oil supply are constricted. In this case, the question remains, will the Gulf of Guinea, long considered peripheral, move to the centre of global geopolitics?

Nigeria possesses one of the largest energy reserves in Africa and might become a country of particular strategic interest as an alternative source of oil for the coalition opposing Iran. However, Nigeria is not alone. Angola, Ghana, Equatorial Guinea, and Cameroon all sit atop significant reserves. Collectively, the Gulf of Guinea represents one of the most under-utilised yet strategically vital energy hubs in the world.

For decades, this region has been overshadowed by the Middle East, but the combination of rising instability in the Persian Gulf, and renewed attention to African energy potential, suggests that the Gulf of Guinea could move from the periphery to the centre of global energy politics. Thus, Nigeria would find itself in a classic Catch‑22 situation.

On the one hand, it has the opportunity to leverage its oil reserves to become a global pivot and a supplier capable of stabilising markets in times of crisis. On the other hand, it risks becoming a battleground for proxy wars, sabotage, and geopolitical manipulation. History offers sobering lessons: resource‑rich states often become arenas for great‑power competition.

The countries aligned with Iran will almost certainly attempt to disrupt any effort to channel Nigerian oil toward coalition forces. Piracy in the Gulf of Guinea, insurgency in the Niger Delta, and covert operations by external actors could all be deployed to destabilise the region and prevent it from becoming a reliable alternative to Middle Eastern supply.

Nigeria’s position is precarious. Its oil reserves are vast, but its infrastructure is fragile. Pipelines remain vulnerable to sabotage, refineries are outdated, and governance challenges persist. Corruption, bureaucratic inefficiency, and political instability have long undermined Nigeria’s ability to capitalise fully on its resource wealth. Yet, in moments of crisis, opportunity often emerges. If Nigeria can stabilise its energy sector and, even more importantly, secure its maritime routes, it could transform its geopolitical standing. The Gulf of Guinea, once dismissed as peripheral, could become a cornerstone of global energy diversification.

The stakes extend beyond Nigeria. Angola, Namibia, and South Africa’s deepwater reserves, Ghana’s emerging offshore fields, and Equatorial Guinea’s LNG potential collectively form a strategic buffer against Middle Eastern volatility. But without regional cooperation, these opportunities may be squandered.

Maritime insecurity, weak institutions, and external interference threaten to fragment rather than unify the Gulf of Guinea’s energy potential. The coalition opposing Iran must therefore recognise that securing new routes and Nigerian oil is not simply a matter of contracts and cargoes; it is a matter of geopolitics, requiring investment in security, infrastructure, and governance.

Nigeria’s energy future embodies both promise and peril. It could become a stabilising supplier, anchoring the Gulf of Guinea as a credible alternative to Middle Eastern oil. But if it succumbs to sabotage, corruption, and geopolitical manipulation it will reinforce volatility rather than reducing it. Nigeria’s decisions will be pivotal. In the unfolding drama of global energy politics, the Gulf of Guinea may prove to be a decisive stage.

In the broader picture, if Hormuz remains effectively closed and the Houthis shut down the Red Sea corridor, Europe will be desperate for alternatives. North Sea reserves are dwindling, and reliance on Russia is politically untenable. The only viable option is West Africa. Nigeria’s Bonny Light crude, prized for its low sulphur content, would suddenly become indispensable. Angola’s deepwater reserves could be tapped with urgency. Ghana’s Jubilee field would gain new prominence.

However, this lifeline will not be uncontested. Russia, though aligned with Iran, may paradoxically benefit from higher oil prices. China, somewhat reliant on Gulf oil, may attempt to secure West African supplies, leveraging its Belt and Road investments. As early supporters of the BRI, South Africa, and many other African countries have been benefiting from cooperation with China in many areas:

The Gulf of Guinea is already plagued by piracy, making it one of the most dangerous maritime zones in the world. If global powers begin to rely on its oil, the stakes will rise exponentially. The US Africa Command may expand its presence, and China, already invested in African ports, may deploy naval assets to secure its supply lines.

West Africa as a whole should prepare. Ghana, with its emerging oil sector, should secure its fields; Angola should leverage its deepwater reserves; Equatorial Guinea and Cameroon should coordinate with Nigeria to ensure maritime security. The Economic Community of West African States (ECOWAS) must rise to the occasion, transforming from a regional bloc into a strategic actor on the global energy chessboard.

Iran’s gambit in the Strait of Hormuz might eventually re-order global energy flows, and the Red Sea corridor could be shut down. Europe, India, and Japan would be forced to look southward, toward the Gulf of Guinea. Nigeria, Angola, Ghana, and their neighbours would suddenly become indispensable, but this invites the collective West to contest the Gulf of Guinea which may become the next battleground of the global powers. Sources

• Edited extracts from Adamu B. Garba II, Executive Chairman of IPI Group Limited https://www.ipi-group-ltd.com/about-ipi-group/#about-us

• South Africa’s oil and gas outlook 2021-34 https://www.oganalysis.com/industry-reports/south-africa-oil-and-gas-market

FORCE ALONE OFFERS LIMITS TO GLOBAL HEGEMONY

A durable sphere of influence has never been built on coercion alone since lasting hegemony requires that smaller nations see tangible benefits in aligning with the dominant power, not to merely fear the consequences of defiance. Economic integration, infrastructure investment, technology transfers, and institutional partnerships create vested interests in stability. These give regional states a reason to cooperate beyond the immediate threat of force.

The current US strategy offers none of these positive inducements. Instead, Washington has chosen to rely on the vulnerability of its neighbours, none of whom possess nuclear weapons or mutual defence pacts with nuclear armed powers outside the hemisphere. That vulnerability is real, but it does not produce compliance over the long term. It produces resentment, evasion, and a determined search for external alternatives.

The absence of military parity accentuates the anarchy dynamic in an International Relations structure where the strongest states rule through power and fear. This recent article asks: “Is Lula Only Now Discovering That Latin America Needs Stronger Defenses After He Abandoned Venezuela To Its Fate?”.

It is becoming clear that the fundamental weakness of the US military strategy is that it cannot outcompete its rivals on economic terms. A Marshall Plan for Latin America would require hundreds of billions in grants and low-interest loans, precisely what no current US administration, Republican or Democratic, has been willing to propose.

China, by contrast, has built ports, railways, and power grids across the region and other continents like Africa, not out of charity but as long-term geoeconomic positioning. China, BRICS+, and other non-hemispheric powers offer Latin American and Caribbean nations something Washington currently refuses to provide, which is genuine choice in trade, investment, and development finance. Thus, multipolarity has endowed the region with vital infrastructure, and these relationships are built on geoeconomics, not hybrid war or military capture.

The United States, has responded to this competition by demanding that hemispheric nations sever their ties with certain states like China, Russia, Iran, and Cuba among them, using the capture or killing its leaders, naval blockades, hybrid war and conventional war as instruments of persuasion but does not offer anything substantive in return nor does it make up for what these states are forsaking.

This is not market competition but the systematic elimination of alternatives through force and lawfare. When a great power must kill or kidnap a head of state to make its point, it is confessing that it cannot win in the economic contest. The multipolar reality of the 21st century makes this strategy even more self-defeating.

Unlike the 1990s, when the Washington Consensus faced no serious ideological or financial rival, today’s Latin America has genuine room for manoeuvre. China, the Global South, and other global actors provide alternative sources of capital, technology, and diplomatic support. Even Argentina, often presented as a model of US-aligned neoliberal governance under Javier Milei, continues substantial trade and financial transactions with Beijing since following the US lead had only offered it impoverishment.

This is not ideological defiance but a pragmatic balance of the natural response of any sovereign state that sees one great power resorting to coercion while another offers profitable partnership. The more the United States tightens its military grip on the hemisphere, the more it incentivises regional states to accelerate their relationships with non hemispheric powers as a counterweight. The demonstration effect of capturing Maduro and blockading Cuba may produce submission in the short term, but it may also produce a quiet and relentless diversification of economic ties away from Washington.

There is a deeper contradiction at the heart of this approach, which is the belief that the United States has no rival capable of imposing costs on it within the hemisphere. Yet a strategy that relies on permanent blockade, periodic capture, and continuous threat requires an endless commitment of naval assets, intelligence resources, diplomatic capital, and domestic political will.

The American public has historically shown little appetite for open ended military adventures in the hemisphere, and the costs of maintaining a coercive order from Alaska to Guyana will mount with each new crisis, exacerbating regional poverty. This possible US overreach, in turn, creates its own checks in the form of domestic exhaustion, international isolation, and the emergence of balancing coalitions.

The logical endpoint of this military approach is not only a restored unipolar order but a neo feudal and neocolonial arrangement where hemispheric nations become quasi unincorporated territories, their economic policies aligned not to their own development but to US strategic imperatives. That arrangement would cancel the sovereign freedom that makes market capitalism meaningful as real capitalism requires the ability to choose partners based on price, quality, and developmental benefit as China demonstrates.

The current US strategy offers a coercive binary choice, aligned with us or face blockade and capture, which is not market competition but the visible US fist guiding every transaction. No system based on that fist has ever proven durable.

Neo-Feudal systems collapse because they offer no upward mobility and no consent and create too much instability. Empires built on pure coercion fragment because the costs of repression eventually exceed the benefits of dominance.

The United States can certainly maintain a military fist over the hemisphere for a time. It can capture leaders, blockade islands, and intimidate governments. But it cannot build a lasting unipolar order on those foundations alone. A durable sphere of influence requires economic leadership, not just military dominance. It requires that neighbours become partners, not subjects, especially in this age. And it requires the willingness to compete on price and quality, not on the threat of force.

Until Washington is capable of competing, its project of hemispheric restoration will remain what it has always been, a brittle and costly fantasy that will be outlasted by the patient geoeconomics of its rivals. Source

• The United States can certainly maintain a military fist over the hemisphere for a time https://www.globalresearch.ca/coercion-not-secure-unipolar-western-hemisphere/5924006

Trump announced on Wednesday, a continuation of the two-week ceasefire indefinitely but the US would maintain its blockade of shipping at and around the Hormuz Strait. Iran responded by refusing to attend further talks until the US blockade is lifted. Trump later claimed that Washington would not lift the blockade, because “if we do that, there can never be a Deal with Iran, unless we blow up the rest of their Country, their leaders included!” Iran promised to “reveal new cards on the battlefield.”

Alastair Crook​e noted in his article here, Markets prematurely may celebrate, but the next phase likely will be more war said US Constitutional lawyer, Robert Barnes:

​”Trump began exhibiting signs of early dementia in September 2025 … He frequently confabulates, he routinely loses his temper and unleashes screaming rants and he is incapable of doing critical thinking. And – according to Barnes, in this state – Trump genuinely believes that the U.S. has vanquished Iran and does not comprehend the massive economic damage that the closure of the Strait of Hormuz is doing to the global economy”.

​Barnes says Trump’s delirium that Iran is at the point of capitulation reflects his impaired mental state, an impairment of understanding ‘reality’ which may be true or not. It is difficult make an assessment either way. However, the Middle East conflict has triggered what IEA chief, Fatih Birol has called “the biggest” energy crisis in history.

The oil price is just the tip of the iceberg that could cause major problems across the planet. The surge in oil prices caused by the war on Iran has grabbed most of the headlines. For many observers, the severity of the crisis is measurable in the daily changes in the Brent price. But some analysts are pointing to emerging stress in fertilizer markets. But beneath these familiar markers, several less visible cases are more systemic:

Naphtha, a feedstock for petrochemicals, is a classic behind-the-scenes product. Rarely in the headlines, naphtha is critical for the production of modern technology, not to mention a whole host of everyday plastics, car parts, medical supplies, packaging, and much more. Naphtha is the base of the petrochemical supply chain, where it can wreak havoc if it’s not in free supply.

Naphtha is a liquid hydrocarbon mixture derived from the distillation of crude oil. It is then “cracked” at extreme temperatures to extract ethylene and propylene, which is upstream from a slew of chemical processes that produce the high-purity chemicals, solvents, and plastics that are used in numerous industries, including supporting inputs in semiconductor manufacturing. Because naphtha is not a core material input itself, its role is often overlooked.

Unsurprisingly, naphtha generally exhibits a strong positive price correlation with Brent crude. It is a refinery product, so crude costs are an important driver of pricing. However, its price can diverge meaningfully because it is primarily used in petrochemicals and not simply as a fuel. Naphtha supply disruptions have already made themselves felt in parts of Asia, even causing shortages of plastic bags in South Korea. Incidentally, South Korea has purchased Russian naphtha for the first time in four years.

Several large petrochemical companies, such as LG Chem and Lotte Chemical, are having to cut production or shut cracking facilities due to feedstock shortages. This has disrupted supplies of plastics and packaging, impacting products from consumer goods to medical supplies.

For Japan, the disruption to the flow of naphtha is arguably the most pressing economic fallout from the crisis in the Middle East. Japan relies on 60% of its naphtha from overseas. The Middle East is responsible for over 70% of these imports, according to the Japan Petrochemical Industry Association. The 40% of Japan’s naphtha that comes from domestic refineries isn’t immune to problems in the Middle East as 90% of the oil these refineries use comes from the same region.

Diesel is a middle distillate fuel, meaning that it is heavier than gasoline but lighter than fuel oil. It is called “the fuel of the real economy.” It powers all the heavy transport equipment: trucks, ships, construction, mining, agriculture. Of particular concern is that diesel prices rise faster than gasoline in nearly every energy crisis. Because it is a critical heavy-transport fuel it is not price-sensitive as diesel consumers will keep buying even at higher prices. Also, it is much harder to boost diesel refining quickly.

Refineries generally operate at high utilisation and have inflexible configurations, limiting their ability to respond quickly to demand surges. Because diesel is the fuel for the “real economy,” price spikes are broadly inflationary. According to BloombergNEF, diesel at $5 per gallon in the US could increase prices to consumers by 35%. Diesel cost an average of $5.61/gallon nationwide recently, according to the American Automobile Association. That is $2 above the average on the same date last year and 63 cents more than a month earlier.

Diesel prices have also surged across Europe. Analysts are now warning of potential shortages of both jet fuel and diesel this summer. These two fuels are often grouped together as middle distillates and sometimes are substituted or blended.

Aluminium has become a major crisis in the markets that could reverberate across numerous sectors of the global economy. Consultancy, Wood Mackenzie estimates that the global market is facing a supply deficit of up to 4 million metric tons this year, which would be the largest in over 25 years. JPMorgan has warned that the global aluminium market has entered a supply “black hole.”

Prices are forecast to exceed $4,000 per tonne. For comparison, the long-term “normal” range is $1,500-$2,500 per tonne. The majority of aluminium ​producers in the Gulf, which account for around 9% of global ​supply, have been unable to make shipments to world markets. Meanwhile, a missile strike last month damaged the Al Taweelah smelter operated by Emirates Global Aluminium. Repairs will reportedly take up to a year.

As smelters consume stocks of raw materials, production shutdowns are likely. But shutting down an aluminium smelter isn’t the same thing as turning off an appliance and turning it back on with the flip of a switch. Smelters run around-the-clock at extremely high temperatures. If they are shut down, the molten metal solidifies and damages the equipment. Restarting them is extremely costly and technically challenging and sometimes entails a full rebuild.

Western manufacturers are bearing the brunt of the crisis, made worse by implementing their own countries’ destructive policies. China and Russia are among the world’s main sources of aluminium but both have been removed from Western markets because of tariffs and sanctions.

Crack spreads are the gap between what a refiner pays for crude oil and the price at which it sells the finished product; the word describes the refining process of “cracking” large hydrocarbon molecules into smaller ones (gasoline, diesel, naphtha, etc.) A normal crack spread costing is between $10 and $20, although it can vary by product and region. What we are seeing now is crack spreads over $50. This means refined fuels are becoming more valuable relative to crude oil. This will show up in naphtha and diesel as time goes by, and in gasoline prices fairly quickly. Crack spreads therefore provide a useful indicator of fuel-related cost pressures faced by consumers.

Meanwhile, there is a windfall for refiners. In crises like this, pricing power shifts to the most capacity-constrained stage in the system, where output cannot be easily expanded. In this case, and often in oil markets, it is at the refining stage.

Helium is a by-product of natural ​gas processing and is a small market that punches well above its weight. Helium is essential in the high-tech product world. It has important uses in chip making for which there is no easy substitute. Currently, the global supply of helium is significantly disrupted and reports of rationing are already emerging. The war has thrown a wrench in both the production and transportation of helium.

Supply chains for high-tech goods are already feeling the effects. If dislocations continue, this could start to noticeably interfere with production of goods such as electronics, automobiles, and even smartphones.

Helium production is highly concentrated in certain countries. Qatar, a large natural gas supplier, produces nearly a third ​of global supply, according to the US Geological Survey. However, the Ras Laffan Industrial City, the single largest helium production site in the world, sustained damage from a missile in early March. The Qatari government estimates that it will take up to five years to fully repair the site.

While shippers of some goods have diverted vessels around the Cape of Good Hope, a much longer but entirely unencumbered route, this is not as viable for helium, which is transported in specialised cryogenic containers. During long trips, helium inevitably heats up and “boils off.”

Sulphur disruption in fertilizer markets have garnered a lot of attention but less focus has been on the major feedstock components of fertilizer: sulphur. Called the “king of chemicals,” sulphur is a by-product of oil and gas refining. It’s another of the vastly underappreciated inputs that keep things running and keep food plentiful across the globe.

Once converted into sulphuric acid, it is used in fertilizers and metal processing, as well as in many pharmaceuticals.

The Gulf accounts for roughly 45% of global supply, which means the disruption is already having effects in both agriculture and metals. Compounding the problem is the fact that sulphuric acid isn’t easily replaced or immediately substitutable. Another vulnerability is that it is not stockpiled heavily, so when flows stop trouble can arise quite quickly. This sends consumers scrambling for expensive spot supply, all of which eventually shows up in food price inflation.

Sulphur prices have moved sharply higher since the war on Iran began, and now countries are taking measures to insulate their own economies. Türkiye has announced a ban on sulphur exports, while India is also reportedly considering export restrictions.

The global economy is as fragile as it is complex. As analyst Zoltan Pozsar claims, “global supply chains work only in peacetime, but not when the world is at war, be it a hot war or an economic war.” In 2026 there are both. The confluence of multiple failures at key chokepoints could trigger cascades of crises that would inflict significant and enduring pain across the economy, increasing steadily in the coming months. Nobody thinks much about naphtha or sulphur when the world is operating normally. These are but a few of the many hidden inputs which rely on oil and its derivatives. Fuels and feed stocks are the immediate visible products which, in normal times, keep the world running smoothly but their gradual absence quickly builds into a crisis that, at first is unnoticed, as adjustments in prices, stocks and supplies operate incrementally and compound over time. Sources

• The failure of the United States and Israel to defeat Iran after nearly 40 days of incessant bombing https://forumgeopolitica.com/article/the-iran-war-as-an-ete-empire-terminating-event

• Hidden supply chain effects https://www.rt.com/business/638775-hidden-supply-chains-breaking/

This week opened the next phase of the conflict within the context of a fragile ceasefire and the US blockade of shipping on Monday. Global power centres are watching closely. Russia and China have interests in the region, and any major eruption would further impact energy markets, migration flows, and supply chains.

China stepped in immediately with a warning: “Don’t interfere”: China fired a warning shot at US over their Hormuz blockade. Defence Minister Admiral Dong Jun’s warning coincided with the start of the US naval blockade and cautioned US not to interfere in China’s bilateral relations with Iran.

“We have trade and energy agreements with Iran; we expect others not to interfere in our affairs,” Jun said, adding that the Strait of Hormuz remains open for China. The waterway is an important energy source for Beijing, but it’s not crucial, as they have plentiful strategic reserves as well as tapping Russia. This is only one reason why China has supported a ceasefire although for China this is not a crisis as found in European and Asian economies.

According to some experts, Trump’s naval blockade is driven by the need to reinforce US dollar supremacy by targeting the Chinese yuan, now used by vessels transiting the critical Gulf chokepoint. This is seen as a challenge to the decades-old petrodollar system and a means to counter US sanctions. In this sense the war itself is rooted in high finance and economics as are most conflicts. Always follow the money.

Meanwhile, China’s Foreign Ministry has reiterated its support for a ceasefire, arguing that the waterway’s “safety, stability and unimpeded passage” serves the common interests of the international community. “The root cause of disruptions to navigation through the strait lies in the conflict involving Iran, and the way to resolve this issue is to achieve a ceasefire and end hostilities as soon as possible,” quoted by spokesperson Guo Jiakun. He also added that China is ready to play a positive and constructive role in ending the conflict in the Middle East; a region where China is competing with the US for influence and advantage.

The US has warned of “complications” if Beijing gets involved with Iran in such a way that is counter to US interests. Trump has also threatened Beijing with 50 per cent tariffs if it supplies weapons to Tehran. An intelligence assessment claimed that Beijing could be preparing shipments of air defence systems to Iran. However, China has dismissed such reports as “groundless smears and malicious associations.”

As tensions escalate over the US naval blockade, China has firmly opposed any move that could disrupt its strategic and energy interests in Iran. This is not a threat of military action but underscores China’s established strategy of using peaceful advantage in trade, finance, and economics. The standoff underscores deepening divisions between Washington and Beijing, even as calls for a ceasefire continue.

US restrictions apply specifically to ships entering or leaving Iranian ports and coastal zones, whilst transit through the corridor itself would remain open. Mariners have been advised to stay updated through official channels and coordinate with US naval authorities when operating near the Strait. Although the precise contours of the blockade remain uncertain, it is expected to involve arresting and checking certain vessels, and possibly boarding or detaining ships linked to Iran, similar to earlier actions taken in Venezuela.

Iran’s near-complete restriction of movement through the Strait of Hormuz has emerged as a highly effective asymmetric tactic, inflicting significant economic strain while leaving Washington with limited options to counter it, creating considerable frustration. A key objective behind the blockade is to suppress Iran’s oil exports, thereby cutting off a crucial stream of revenue; thus the weapon is financial in nature. However, Iran has managed to disrupt the passage of other countries’ shipments while continuing its own flows. This approach has supported its crude earnings even as it forced increased global energy prices.

This new escalation is likely to trigger more escalations than drive conciliation. The threat alone is likely enough to dissuade legitimate international shipping from exiting the Persian Gulf. Asian economies have already been hit hard by the ongoing energy disruption, and any further curbs on movement through Hormuz would deepen these challenges. The US waiver that had enabled some purchases of Iranian oil now appears to be undermined by the blockade, reversing earlier flexibility.

Countries that explored direct arrangements with Iran may now hesitate, wary of potential friction with Washington, thereby narrowing their options for sourcing fuel. “They are so focused on Iran that they are losing sight of what they are causing to the world,” Jorge Montepeque, managing director at Onyx Capital Group, said in an interview with Bloomberg. “And the pain is in Asia, the pain is in the South Pacific, the pain is in anybody that depends on oil.” Which I guess is just about everybody.

Trump has often tried to frame disruptions in Middle Eastern supply as an opportunity to promote US oil and gas production, highlighting potential gains for a leading energy producer. At the same time, American crude does not always serve as a direct substitute for Middle Eastern varieties. Moreover, rising global oil benchmarks are already feeding into inflation pressures for US consumers.

Iran, for its part, seems to believe it can endure more economic strain than the US. “Enjoy the current pump figures,” Parliament Speaker Mohammad Bagher Ghalibaf, who led the Iranian delegation in Islamabad over the weekend, said in a Twitter post. “With the so-called ‘blockade’, Soon you’ll be nostalgic for $4–$5 gas.”

Assuming the US enforces its selective blockade of Iranian shipping, with a significant proportion of operational US naval power, it will be the greatest escalation of the Iran War to date. This is precisely the kind of battle for which Iran has prepared for the past quarter century and it’s well prepared, even for a potential US land invasion, which should not be ruled out at this delicate stage. Even now a third US carrier group is rounding the Cape of Good Hope destined for the Gulf and begs the question, why?

It is hoped that this truce will be extended otherwise it will be an unprecedented disaster for the world at large if hostilities recommence. There is potential for this war to escalate beyond any party’s control. This is the question I keep hearing: “When does this war end?” Perhaps it’s more to the point to ask who has an incentive to extend the war indefinitely and join Ukraine, Gaza, and Lebanon in the forever wars US global paradigm?

The evidence suggests that the world is not simply experiencing a series of apparent unrelated conflicts, but is operating within a system of interconnections through economic, political, and financial institutions. Failure of the former norms of international engagement have given way a state of global instability, when conflict becomes the ‘new normal’, and where the great powers win by force alone using a ‘winner takes all’ strategy.

WINNERS AND LOSERS

America and Israel have already lost in the eyes of the world. Although their malign influence will continue to batter their perceived enemies and allies alike. There is no going back to the old normal.

Russia is already winning extended battles in Ukraine. But Ukraine isn’t really the target. Ukraine is the battlespace. The aggressor is the collective West, specifically the European and American military-industrial complexes that instigated, funded, armed, and sustained this war from the very beginning in 2014. Every dollar flowing into Middle East is a dollar not flowing to Kyiv. Every political fracture in Washington is political capital Russia doesn’t have to spend. Russia benefits from the war continuing. It is that simple.

China has observed the Western strategic playbook and waits patiently. The Western strategy is not subtle: weaken Russia, control their resources, surround China with compliant client states, and then dictate terms to Beijing. Energy is China’s structural vulnerability. Russia and Iran represent energy resources that remain outside Western control. A Western victory in the Middle East doesn’t just hurt Iran. It tightens a noose around Chinese energy security that Beijing cannot afford to ignore. So China watches. It waits. And it has every incentive to see the West bleed resources, credibility, and political agency in a theatre that isn’t Beijing’s problem to solve.

For Iran, this is existential. Not metaphorically. Literally. Even if the bombs stopped tomorrow, Iran’s leadership understands something Westerners won’t say aloud: they’ll be back. Maybe in five years. Maybe ten. Because the strategic objective, control of the region, control of the energy flows, hasn’t changed. It never changes.

Iran has studied Vietnam. The lesson is not complicated: you cannot win a conventional war against a militarily superior force. But you can bleed them. Slowly. Over years. Until the domestic political will to continue collapses under its own weight. This is Iran’s strategy. A sustained war of attrition. And they are prepared to prosecute it indefinitely.

India sits on the fence while the Asians, Australians, and Europeans suffer an economic backlash. All are losers and in danger of structural damage with repairs to be counted in years. Southern Africa sits in quiet contemplation bemused by all the fuss about an energy resource that generally features pretty low on their graduated table.

The Gulf States are the most trapped. They tied their destiny to the Western military-industrial complex decades ago. The arrangement seemed reasonable enough at the time: recycle petrodollars into US Treasuries and US equity markets, and receive American military protection in return. The petrodollar recycling arrangement that has anchored demand for US Treasuries for fifty years traces directly to a 1974 deal between Kissinger and the Saudis. Mutually beneficial. Durable. Or so it seemed. Now they are discovering the problem.

US protection is conditional. The alliances are transactional. Step away from the arrangement and you invite colour revolutions, economic pressure, or worse. Step toward it and you bankroll a military project that is visibly failing. There is no clean exit. The Gulf states are the losers. They are a hostage to a bargain they can’t renegotiate and can’t walk away from and they know it.

Gulf Arab leaders are reconsidering their military alliances. The petrodollar recycling arrangement is now under structural pressure that the current conflict has accelerated into something that can no longer be ignored. Turkey, for its part, has already refused to let Israel and the US use its bases to launch attacks on Iran. That is not a small signal. These are not reversible decisions. Once you’ve publicly refused a request from Washington, the relationship changes permanently.

The Bankers & Co and their political and managerial class lackeys are the ones whose influence expands in proportion to the scale of the crisis. A prolonged conflict is an opportunity. Emergency powers, accelerated procurement, tightened surveillance infrastructure, expanded mandates. As Randolph Bourne wrote in 1918, War is the health of the State. These are not people with a strong personal interest in resolution. The bankers always back both sides and win on the destruction by funding weapons and on the post war reconstruction.

The world has learned new lessons from this conflict. US stealth aircraft can be targeted. US defence equipment, purchased by allies at enormous expense, has performed below expectations in a real shooting war. The invincibility myth that underpinned decades of American deterrence has taken damage that cannot be repaired with a press conference. Africa has gone East. India cannot be relied upon. European nations are discovering their military capacity is considerably thinner than their briefing papers suggested. Alliance quality matters enormously for projecting power, and the quality of the Western alliance has been publicly tested. And the conclusion that matters most for anyone who manages capital: Natural resource ownership is now equivalent to superpower status.

The Strait of Hormuz carries roughly 20 million barrels of oil per day. The Strait of Malacca another 23 million. These are not lines on a map. They are the circulatory system of global industrial civilisation. Every nation that depends on these flows is reassessing its exposure. Every nation that controls or sits adjacent to these flows has discovered it holds leverage it never fully understood.

We are entering a period when all of these chokepoints get contested, not necessarily by military force alone, but commercially, diplomatically, and geopolitically. The former assumption that military supremacy decouples from resource control died somewhere in the fog of this war. Sources

• Where is the world heading? China answers with the ‘four perspectives’ https://www.globaltimes.cn/page/202604/1358943.shtml

• Economic thinking in doubt https://www.zerohedge.com/energy/strait-hormuz-crisis-exposes-fatal-flaw-economic-thinking