Bottom lines up front

• US temporary protected status for Haiti is set to expire, and Haiti’s governing Transitional Presidential Council will soon reach the end of its mandate.
• The combined result could result in more dysfunction in Haiti and an increase in emigration to the wider region.
• The Trump administration, which has prioritized security in the Western Hemisphere, has options among existing programs to help create a safer, more stable Haiti.

WASHINGTON—Two deadlines in the first week of February—the end of US temporary protected status (TPS) for Haiti and the expiration of the mandate for Haiti’s Transitional Presidential Council (TPC)—threaten to intersect in ways that could further destabilize Haiti and the broader region. 

Since the assassination of President Jovenel Moïse in July 2021, Haiti has found itself mired in turmoil. The government is largely nonfunctional, the economy is effectively paralyzed, basic services are collapsing, and gangs now control nearly 90 percent of the capital, Port-au-Prince. More than 1.4 million people are internally displaced, according to the United Nations International Organization for Migration, while close to two million are facing acute food insecurity. The result, United Nations (UN) Secretary-General António Guterres warned the Security Council this past August, is “a perfect storm of suffering.”

Haiti’s slow decline isn’t occurring in isolation. For the United States, a top destination for Haitians, the country’s continued deterioration is not a distant tragedy but a policy challenge with profound consequences. For the Trump administration, which has reasserted the importance of the Western Hemisphere in its strategy documents and actions, this is an opportunity to continue those efforts. To prevent Haiti’s further collapse, the Trump administration should focus on leveraging pre-existing, common-sense policies to stabilize the country in the short term and build state capacity to lay the groundwork for its longer-term recovery. The result would be a safer, more stable Haiti—and a safer, more secure Western Hemisphere. 

TPS expires . . .

The primary US policy tool—and the more immediate deadline—is TPS, a bipartisan humanitarian protection program that allows migrants from countries deemed unsafe to live and work in the United States for a temporary but extendable period. Haiti was first designated for TPS just days after a catastrophic earthquake struck the country in January 2010, and it has since remained eligible amid worsening political and security crises. As of March 2025, 330,735 Haitian nationals living in the United States had TPS, according to US Citizenship and Immigration Services. The US-based diaspora sends billions of dollars home each year in remittances, an economic lifeline for Haitians facing economic deprivation. 

Barring further extensions, which are not expected at this point, TPS for Haiti is set to expire on February 3. After that date, Haitians in the United States will need to have another lawful status to remain in the country or risk deportation, even though crisis conditions persist in Haiti. 

. . . and so does the TPC’s mandate

Just days after TPS ends, Haiti faces an internal deadline that reveals another layer of dysfunction: governance. 

This year marks the country’s fifth without a president, its tenth without holding presidential elections, and its third without a single democratically elected official in power. On February 7, the TPC—the nine-member interim body currently running the Haitian government—will reach the end of its mandate.

Since 2024, the TPC’s principal duty has been to create the conditions needed to hold free and fair elections by the time their term expired. Despite undertaking several notable efforts, the TPC stated that the country’s unfettered security situation rendered elections “materially impossible” by the February deadline. The first round of elections is now set for August 2026, though experts warn the timeline will be difficult to meet absent meaningful security gains. 

As the clock winds down on the TPC’s mandate, some members have launched a last-ditch effort to remove the sitting prime minister, Alix Didier Fils-Aimé. Appointed by the TPC and viewed as Washington’s preferred pick to run the government after February 7, Fils-Aimé has become the target of members’ efforts to maintain influence beyond the transition window. In response, US Secretary of State Marco Rubio called Fils-Aimé to offer support and restricted the visas of multiple members of the TPC. 

There is little consensus on what will replace the TPC when its term inevitably ends. Will there be a power vacuum, and if so, will gangs fill it? Fils-Aimé has ruled out negotiations with powerful gangs regarding Haiti’s political future. This lack of clarity risks undermining legitimacy and further weakening the state’s capacity to combat the security crisis.

Consequences of these looming deadlines

While the expiration of both TPS and Haiti’s interim government in the same week is coincidental, the possible consequences of each could exacerbate Haiti’s internal crisis and expand the risks it poses to regional security. 

In this context, the Trump administration’s decision not to renew TPS for Haiti risks accelerating the country’s decline and backfiring by fueling additional migration. In the absence of a stable government in place to manage returns, large-scale deportations to an already fragile country—even though the Department of Homeland Security (DHS) has deemed it “safe” enough for return—could deepen internal displacement and drive more irregular migration, including to the Dominican Republic and the United States. 

Early signs of this strain are already visible on the ground. With Toussaint Louverture Airport in Port-au-Prince closed for more than a year due to gang violence, US deportation flights have arrived in Cap-Haitien, a comparatively stable northern city already strained by internal displacement and limited municipal services. Cap-Haitien is also home to Haiti’s vital textile sector, which the US Congress recently voted to continue supporting through reauthorization of the HOPE and HELP Acts. Any large-scale increase in deportations could further overwhelm local capacity, risking the destabilization of one of the country’s most stable regions. 

And the repercussions of these deadlines would extend beyond increased migration. According to the Organized Crime Index, Haiti’s porous borders and weak enforcement mechanisms have enabled transnational criminal networks to thrive, engaging in drug and weapons smuggling that is likely to continue. As of May 2025, two Haitian gangs—the powerful Viv Ansanm coalition and the Gran Grif gang—have been designated as foreign terrorist organizations by the US government, underscoring the security threat that they pose. 

What Washington can do

Haiti’s overlapping crises are multi-pronged and deeply rooted, and no single policy measure will remedy years of state collapse. Amid renewed discussions of the Monroe Doctrine, past US involvement in Haiti—from the 1915 occupation to later interventions in the 1990s and 2000s—can rightly be critiqued for contributing to the erosion of Haitian institutions. Despite these challenges, it remains in the United States’ best interest to help restore a measure of stability in Haiti. 

Redesignating Haiti for TPS would help advance the administration’s broader goal of ensuring the Western Hemisphere “remains reasonably stable and well-governed enough” to prevent mass migration to US borders. Extending TPS would provide humanitarian protection and create economic opportunity for Haitians while also giving Haitian authorities time to rebuild governing capacity after the TPC’s mandate expires. However, the Trump administration is unlikely to pursue this option. 

But the administration has options to improve state capacity beyond immigration policy.

One is the UN-authorized Gang Suppression Force (GSF), which has received US support in its aim to both suppress violence and pave the path for eventual elections. Although intended to improve previous models, critics warn that the GSF, which is expected to reach full strength by summer, is still unlikely to produce meaningful results. 

The GSF illustrates a long-recurring pattern in Haiti policy, in which external actors construct parallel structures separate from Haitian institutions to address short-term challenges, only to leave little to no state capacity once funding or political support inevitably dissipates. Rather than repeating this pattern, a comprehensive vision for US-backed security policy should explicitly prioritize training and supporting Haitian forces—whether that be the Haitian National Police or a revitalized national military—so that security gains can endure long after international forces depart. 

The same logic should guide US thinking on a democratic transition. While holding elections is politically necessary and could help re-establish the rule of law, conditions on the ground mean a vote is currently infeasible and could result in a worse outcome than the status quo. 

To ensure elections are the result of stability rather than a substitute for it, the United States should prioritize institution-building approaches such as the Global Fragility Act (GFA), which was signed into law by US President Donald Trump in 2019 and implemented under the Biden administration. Although the GFA has since lapsed (and Haiti is no longer listed as a target country), a similar whole-of-government approach would align US diplomatic, security, and development tools around bolstering Haiti’s resilient civil society and the preliminary work done by the TPC. The framework for this involvement already provides a clear roadmap—now it is up to lawmakers and policymakers to follow it.

Critics of US involvement in Haiti often argue that the country is beyond repair. Yet, if the United States wants to send Haitian temporary residents home and build a more prosperous Western Hemisphere, it should support positive change rather than compound Haiti’s crises.

The United States may not be able to deliver immediate prosperity in Haiti, but promoting stability through coordinated action that strengthens Haitian state capacity is firmly in the US strategic interest. 

The post Haiti’s week ahead is the next test for Trump’s Western Hemisphere focus appeared first on Atlantic Council.

On January 30, Atlantic Council vice president and Scowcroft Center senior director Matthew Kroenig was quoted in The Wall Street Journal on Russian and Chinese nuclear capabilities amid discussions on renewing New Strategic Arms Reduction Treaty.

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Matthew Kroenig

Vice President and Senior Director, Scowcroft Center for Strategy and Security

Scowcroft Center for Strategy and Security

China Defense Policy

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On January 29, Forward Defense Nonresident Senior Fellow Paul Amato published an article in RealClearDefense on the Trump administration’s ambiguity on nuclear deterrence in the Korean peninsula. In the article, Amato argues that silence on the regime ending policy risks emboldening North Korea and unsettling South Korea and Japan.

Fellow

Paul Amato

Nonresident Senior Fellow

Forward Defense Scowcroft Center for Strategy and Security

Missile Defense Nuclear Deterrence

Forward Defense leads the Atlantic Council’s US and global defense programming, developing actionable recommendations for the United States and its allies and partners to compete, innovate, and navigate the rapidly evolving character of warfare. Through its work on US defense policy and force design, the military applications of advanced technology, space security, strategic deterrence, and defense industrial revitalization, it informs the strategies, policies, and capabilities that the United States will need to deter, and, if necessary, prevail in major-power conflict.

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That misses the real story behind the dollar’s slide to its lowest value in almost four years—and a more than 10 percent decline since US President Donald Trump’s inauguration. As The Economist argues this week: The world isn’t selling America, it’s hedging it.

If global investors were abandoning the United States, then you would see capital flight, surging Treasury yields, and a scramble for alternative safe havens. Perhaps the clearest indication of that has been the price of gold increasing by more than 25 percent so far this year.

Writes The Economist, with a nod to gold buyers: “Trading floors are abuzz with talk of the ‘debasement trade,’ a broad term for bets on the deterioration of American financial exceptionalism. If the debasement traders are right, then the sell-off in the greenback has barely begun.”

Yet even as the dollar has declined, US stocks have remained strong. The S&P 500, for example, has risen by 15 percent in the past year, briefly hitting an all-time high earlier this week. The yield on the United States’ ten-year Treasury bonds is lower than when Trump began his second term, which is a sign of enduring demand. The dollar could further decline if Trump’s just-announced nominee for Federal Reserve chair—Kevin Warsh—cuts interest rates as the president desires, but there’s no guarantee that Warsh will do so. “It’s still early and there’s no need for alarmism, as any other competitor is light-years behind the dollar,” says Josh Lipsky, the Atlantic Council’s chair of international economics. “But these trends didn’t appear overnight.”

The Atlantic Council’s GeoEconomics Center, which Lipsky leads, has been tracking these shifts for the past three years with its Dollar Dominance Monitor. The data show that the “hedge America” trade, while accelerating in recent months, is not new. In fact, the first demand signal predates Trump and has its roots in the search for alternative payment systems to work around sanctions. Interest in de-dollarization picked up, for example, after the Group of Seven (G7) sanctions response to Russia’s invasion of Ukraine. “What’s new in the past year is that the movement is growing beyond payments and now into currency trading and even the bond market,” says Lipsky.

Dollar Dominance Monitor

This monitor analyzes the strength of the dollar relative to other major currencies. The project presents interactive indicators to track BRICS and China’s progress in developing an alternative financial infrastructure.

Robin Brooks of the Brookings Institution points to “policy chaos” as a driver of the dollar’s fall, most recently including Trump’s threat to “buy” Greenland, which he backed off of in Davos last week. “In a nutshell,” writes Keith Johnson in Foreign Policy, “in much the same way that countries are hedging their geopolitical exposure to the United States—such as the EU and India inking a historic trade and defense deal as part of a quest for new partners in an uncertain world—foreigners are hedging their bets against too much exposure to the dollar.” 

Last July, I issued “an Independence Day warning about the US dollar” in this space, writing, “For decades, the world chose the dollar without thinking about it all that much, and that was not only because of unrivaled American economic strength. Most of the world’s major economic players also trusted the United States’ financial leadership—its rule of law, its institutions, its predictability.” 

That trust is what’s eroding. Part of the problem in recent days has been that Trump has crowed that the dollar’s fall is “great,” making US products cheaper on global markets. These comments stirred rumors about a US scheme to weaken the greenback, which Treasury Secretary Scott Bessent dispelled by reinforcing the country’s strong dollar policy.

The Economist warns that “‘hedge America’ may eventually turn into full-blown ‘sell America.’ If Mr. Trump keeps undermining the credibility of America’s financial system, that moment could come sooner.” Though I still side with those who argue that it’s never been smart to bet against the US economy, it’s concerning that a growing number of traders and allies are deciding that it’s prudent to hedge.  

Frederick Kempe is president and chief executive officer of the Atlantic Council. You can follow him on X @FredKempe.

This edition is part of Frederick Kempe’s Inflection Points newsletter, a column of dispatches from a world in transition. To receive this newsletter throughout the week, sign up here.

The post Markets and allies aren’t ‘selling’ America. They’re ‘hedging’ it. appeared first on Atlantic Council.

There’s a new chair in town. On Friday, US President Donald Trump announced that he will nominate Kevin Warsh as the next Federal Reserve chair. If confirmed by the Senate, Warsh, who was a member of the Federal Reserve Board of Governors from 2006 to 2011, will replace Jerome Powell, who has publicly sparred with Trump over interest rates and other issues. Below, Atlantic Council experts share their insights on what a Warsh chairmanship could mean for the US economy.

• Martin Mühleisen (@muhleisen): Nonresident senior fellow at the GeoEconomics Center and former International Monetary Fund chief of staff
• Josh Lipsky (@joshualipsky): Chair of international economics at the Atlantic Council, senior director of the GeoEconomics Center, and former International Monetary Fund advisor

Who is Kevin Warsh?

• “Warsh brings real credentials,” Martin says. Given his experience on the Fed board during the 2008 global financial crisis, “he understands the institution’s machinery and the weight of its decisions.” 
• Josh calls Warsh “a curious choice for a president determined to get lower interest rates,” since he was considered “one of the most hawkish members” on fighting inflation during his time as a Fed governor.  
• However, Josh adds, the “prevailing wisdom is that Warsh has changed his views since then and is now focused on an artificial intelligence-induced productivity boom,” which could allow for lower interest rates. 

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A reset at the Fed

• Like US Treasury Secretary Scott Bessent, Warsh has been critical of “what he sees as the Fed exceeding its mandate and using a range of expanding tools outside setting interest rates, including buying bonds and mortgage-backed securities,” Josh explains. According to this view, such quantitative easing has “helped assets on Wall Street at the expense of Main Street.” 
• Not everyone will see it that way. “Critics will recall that [Warsh] urged premature tightening after the financial crisis, a view that, in hindsight, could have slowed recovery,” Martin says. 
• Picking up on how Warsh responded to the 2008-2009 crisis, Josh looks ahead: “If you’re a country looking to the Fed to jump into the fray during an economic crisis, you may be in for a rude awakening” with Warsh at the head of the Federal Reserve, Josh argues, reflecting on Warsh’s response to the financial crisis. He adds that Warsh would put the onus on Congress or the US Treasury to act in those circumstances. 
• At the same time, Martin explains, Warsh’s “previous skepticism toward prolonged ultra‑easy monetary policy would bode well should the Fed come under pressure to subordinate monetary policy decisions to the federal government’s financing needs”—as borrowing costs rise with the soaring national debt. 

The word on the street

• “Wall Street will breathe a small sigh of relief,” about Trump choosing Warsh, Josh tells us. “Whatever his views on the balance sheet and Fed overreach, he is a relatively conventional pick—especially given some of the other names that were in the running.” 
• Josh expects “to see mortgage rates going higher this week,” as a result of Warsh’s past hawkishness on interest rates. 
• But the big question is Federal Reserve independence. Warsh’s “proximity to the first Trump administration, where he served as an economic adviser, will invite scrutiny,” Martin notes. 
• Markets and governments will view the Federal Reserve’s independence and credibility as inextricably linked. “If Warsh wants to cement the Fed’s standing,” Martin advises, “he will need to act—and be seen to act—as an independent guardian of price stability and full employment.” 

The post What Kevin Warsh means for the Federal Reserve and the US economy appeared first on Atlantic Council.

WASHINGTON—US President Donald Trump just made one of the most consequential decisions of his presidency—one that will impact the global economy long after he leaves office. To Trump, the selection of a Federal Reserve chair is the ultimate mulligan. It’s a chance to fix what he sees as one of the worst decisions of his first term, the selection of Jerome Powell as Fed chair.

At first glance, Powell and Kevin Warsh, whom Trump announced on Friday morning as his nominee, are strikingly similar. Both are former Fed governors, both are lawyers (not economists), both worked for Republican presidents (Warsh for George W. Bush and Powell for George H.W. Bush), and both made their careers on Wall Street. But that’s where the similarities end.

The most important part of Warsh’s selection has nothing to do with monetary policy (even though that’s the single factor Trump has said was most important in his decision). Warsh has been vocal for years about what he sees as the Fed exceeding its mandate and using a range of expanding tools outside setting interest rates, including buying bonds and mortgage-backed securities. These tools are referred to as quantitative easing and have grown massively over the past fifteen years in the wake of the global financial crisis and the COVID-19 pandemic. Warsh believes the Fed has distorted the healthy functioning of the US economy through its injections of money into the market, helped assets on Wall Street at the expense of Main Street, and taken on the role of implementing fiscal policy.

Guess who else thinks exactly the same thing? Treasury Secretary Scott Bessent. In fact, Bessent wrote an article last year about Fed overreach that was closely read across Wall Street and inside the White House. Bessent and Warsh are completely in sync on the need to limit the Fed’s use of unconventional tools, and this could lead to a significant change and scaling back in the way the Fed does its work in the years to come. Donald Trump got his man—but Scott Bessent did as well.

What does this mean for the global economy? If you’re a country looking to the Fed to jump into the fray during an economic crisis, you may be in for a rude awakening. This is not going to be the “committee to save the world” Fed of Ben Bernanke, Janet Yellen, and Jay Powell. Warsh has said before that it is the US Treasury and Congress that should act first in a crisis—not the Fed. Warsh’s Fed will be a narrowly focused one, and that means the next moment of stress for the global economy might unfold very differently with him at the helm.

On monetary policy, Warsh seems like a curious choice for a president determined to get lower interest rates. During his previous tenure as governor from 2006 to 2011, he was considered one of the most hawkish members of the committee on fighting inflation. In fact, in April 2009, in the depths of the global financial crisis—when inflation was just 0.8 percent and unemployment was at 9 percent—he said he was concerned about high inflation. (I was working at the White House at the time, and I remember those comments standing out.) He was clearly out of consensus with his then-colleagues at the Fed.

The prevailing wisdom is that Warsh has changed his views since then and now is focused on the artificial intelligence-induced productivity boom, which he says means rates can be lower than they otherwise would be. It’s also fair to ask whether his more dovish comments are meant to appeal to Trump’s well-known preferences. But whether the dovish talk holds throughout his tenure remains to be seen. Bond markets are similarly skeptical, with yields rising several weeks ago when his name returned to the top of the list. Given his views on reducing the Fed’s balance sheet and at least the potential for him to be a slightly more hawkish chair than Trump’s other options would have been, expect to see mortgage rates going higher this week—precisely the opposite of what Trump and his economic team have wanted going into the midterm elections.

But don’t mistake higher bond yields for market skepticism over Warsh himself. Wall Street will breathe a small sigh of relief. Whatever his views on the balance sheet and Fed overreach, Warsh is a relatively conventional pick—especially given some of the other names that were in the running. He is from Wall Street, a former Fed governor, and well known both in Washington and New York. Ultimately, markets believe he is someone they can trust with the most important economic policymaking job in the world. And in the end, that may be one of the most meaningful signals from this selection: It appears that market forces—as we were reminded after the “Liberation Day” tariff announcement and just last week over Greenland—may be the most potent constraint on the Trump presidency.

Warsh will likely be confirmed by the Senate and take up his role in May. He will have to prove to markets that central bank independence is core to his chairmanship. The first test might come as soon as the summer, when tariffs may keep inflation somewhat sticky, a divided Fed committee may want to keep rates steady, and Trump will expect his new chair to deliver.

Nine years after his selection of Jay Powell, Donald Trump believes he finally got his man. We will all know soon enough whether he did or not.

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For years, Zelenskyy had kept the Belarusian democratic opposition at arm’s length as part of Ukrainian efforts to avoid angering Belarusian dictator Alyaksandr Lukashenka and pushing him further toward the Kremlin. That approach has brought few benefits. Ukraine now appears to have recognized that a new strategy to bilateral relations may be more appropriate.

Sunday’s meeting did not come as a complete surprise. Days earlier in Davos, Zelenskyy had identified Belarus’s 2020 pro-democracy protests as a turning point for the region and a missed opportunity for Europe. The Ukrainian leader argued that the democratic world made a mistake by failing to support nationwide protests in Belarus. As a result, the country now poses a threat to all Europe and serves as a forward base for Russia’s hybrid war against the West.

During his recent visit to Lithuania, Zelenskyy addressed the Belarusian population directly and expressed his support for their European future. He also met with recently released Belarusian political prisoners and paid tribute to Belarusian volunteers serving alongside Ukrainian forces in the fight against Russia’s invasion.

Ukrainian officials have recently made clear that Lukashenka and his regime must be held accountable for complicity in Russia’s aggression. Meanwhile, in a further indication that Ukraine is moving toward more systemic engagement with the Belarusian democratic opposition, plans have emerged to potentially appoint a special envoy and host Tsikhanouskaya in Kyiv.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

Some analysts believe this recent change in tone toward Belarus may reflect the growing influence of former Ukrainian spymaster Kyrylo Budanov, who was recently appointed as President Zelenskyy’s new chief of staff. Budanov has long been involved in contacts with the Belarusian side and helped facilitate the transfer of released political prisoners to Ukraine in December 2025.

Kyiv’s apparent pivot may also reflect the fact that Russia’s military footprint in Belarus continues to grow. Ukrainian officials claim Russia uses Belarus to conduct drone attacks on Ukraine and evade air defenses. Lukashenka recently announced the deployment of nuclear-capable Russian Oreshnik missiles to Belarus, which Zelenskyy described as a threat to both Ukraine and the European Union.

Meanwhile, Russia’s integration of the Belarusian military industrial complex continues, with up to 80 percent of Belarusian enterprises reportedly now engaged in production for Russia’s military needs. Belarus is accused of supplying ammunition, providing repair services for Russian equipment, and channeling sanctioned technology to Russian defense companies.

Lukashenka is understandably eager to distance himself from any direct ties to the Russian invasion of Ukraine. However, the available evidence indicates that his regime is becoming more deeply embedded in the Kremlin war effort. This is the reality confronting the Ukrainian authorities. As long as Belarus remains firmly under Kremlin control, it will continue to pose a serious security threat along Ukraine’s northern border.

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Europe should be paying particular attention to indications of a new Ukrainian approach to Belarus. As US foreign policy priorities shift, responsibility for managing relations between Belarus and the West will increasingly fall on the European Union. EU officials must decide between freezing the Belarus issue or recognizing the country as a strategic challenge that requires European leadership.

Belarus has most recently made headlines due to a series of prisoner releases tied to partial US sanctions relief. The humanitarian impact of these deals should not be underestimated, but it is also important to underline that more than one thousand Belarusian political prisoners remain incarcerated. Some skeptics have argued that without a broader strategy, reducing sanctions pressure on Minsk in exchange for prisoner releases risks strengthening the current regime and reinforcing an oppressive system that imprisons political opponents.

This presents opportunities for Europe to demonstrate its ability to take the lead on the international stage. While the US seeks practical short-term results such as the release of political prisoners, Europe can push for more systemic change and democratic transition in Belarus. In this context, sanctions should be seen as a tool to undermine authoritarian rule rather than locking in the current status quo. This can be achieved by closing existing loopholes while targeting the revenue streams and logistical networks that sustain the Lukashenka regime and support the Russian war machine.

In the current geopolitical climate, any talk of a neutral Belarus is delusional. Lukashenka will not turn away from his patrons in the Kremlin voluntarily. If European policymakers wish to see genuine change in Belarus, they will need to demonstrate a readiness to increase the pressure on Minsk. The enticing prospect of future European integration can play a crucial role in these efforts.

Belarus now occupies a strategic position in Europe’s rapidly shifting security landscape. The country remains deeply involved in Russia’s invasion of Ukraine and also represents a key challenge for European leaders as they seek to prove that the continent is capable of defending itself in an era when US support can no longer be taken for granted. The Ukrainian authorities clearly feel the time is right for a more proactive approach to Belarus. The question now is whether Europe will follow suit.

Hanna Liubakova is a journalist from Belarus and nonresident senior fellow at the Atlantic Council.

Further reading

UkraineAlert Jan 15, 2026

Veterans can shape the future of Ukrainian democracy

By Vasyl Sehin

The participation of military veterans in Ukraine’s political life has the potential to dramatically strengthen Ukrainian democracy and safeguard the country’s historic transition from centuries of Russian autocracy, writes Vasyl Sehin.

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Unable to win on the battlefield, Putin escalates war on Ukrainian civilians

By Peter Dickinson

A war crime of staggering proportions is currently unfolding in full public view across Ukraine as Russia methodically bombs the country’s utilities in a calculated bid to freeze millions of civilians in their own homes and spark a humanitarian catastrophe, writes Peter Dickinson.

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UkraineAlert Jan 15, 2026

Ukraine’s enhanced fortifications are increasing the cost of Putin’s invasion

By David Kirichenko

As Ukraine focuses on preventing further Russian advances, Kyiv is investing in a major upgrade of the country’s defenses. This has resulted in what The Economist recently described as a “massive fortification system” covering much of the Ukrainian battlefield, writes David Kirichenko.

Conflict Defense Technologies

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

Read more from UkraineAlert

UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values, and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia, and Central Asia in the East.

Learn more

The post Ukraine changes tone on Belarus and engages exiled opposition appeared first on Atlantic Council.

A national cybersecurity strategy will require an operational road map for offensive and defensive campaigning and significantly enhanced resilience for key critical infrastructures built upon the development and adoption of safe coding and the implementation of zero trust architectures. Establishment of such capabilities will provide the president and the national leadership with the necessary capabilities to deter and defeat nation-state and criminal activities in cyberspace.

Franklin D. Kramer is a distinguished fellow and board director at the Atlantic Council. Kramer has served as a senior political appointee in two administrations, including as assistant secretary of defense for international security affairs.

Robert J. Butler serves as the Managing Director for Cyber Strategies LLC.

Melanie J. Teplinsky is a cyber law and policy expert with over thirty years of experience spanning the private sector, government, and academia. She is an adjunct professor at American University, Washington College of Law (WCL); a senior fellow in the Technology, Law and Security Program at WCL; and a faculty fellow at American University’s Internet Governance Laboratory.

Report Jun 25, 2025

Crash (exploit) and burn: Securing the offensive cyber supply chain to counter China in cyberspace 

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If the United States wishes to compete in cyberspace, it must compete against China to secure its offensive cyber supply chain.

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Cyberattacks are hurting US businesses. Here’s how Congress can upgrade cybersecurity information sharing.

By Tanner Wilburn, Sara Ann Brackett, and Urmita Chowdhury

Hackers are targeting small and medium-sized businesses, and the existing framework for sharing important information is leaving these US companies out of the loop.

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Unpacking Russia’s cyber nesting doll

By Justin Sherman

The latest report in the Atlantic Council’s Russia Tomorrow series explores Russia’s wartime cyber operations and broader cyber web.

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The Atlantic Council Technology Programs comprises five existing efforts—the Digital Forensic Research Lab (DFRLab), the GeoTech Center, the Cyber Statecraft Initiative, the Democracy + Tech Initiative, and the Capacity Building Initiative. These operations work together to address the geopolitical implications of technology and provide policymakers and global stakeholders necessary research, insights, and convenings to address challenges around global technology and ensure its responsible advancement.

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The post The US needs a cybersecurity roadmap appeared first on Atlantic Council.

Scowcroft Strategy Scorecard:
Grading Trump’s second National Defense Strategy

On January 23, the Pentagon released the 2026 National Defense Strategy (NDS), a document that builds on the previously released National Security Strategy. The NDS gives the Trump administration a chance to define the military threats facing the United States and how it plans to counter them. Read on to see how our experts grade the latest strategy.

Matthew Kroenig

Vice president and senior director, Scowcroft Center for Strategy and Security

This strategy marks a shift from past National Defense Strategies, with a distinctive focus on the Western Hemisphere. It correctly recognizes the risk of a simultaneous conflict, but would have benefited from more clearly defined goals.  

Distinctiveness

Is there a clear theme, concept, or label that distinguishes this strategy from previous strategies?

Prioritizing the homeland and the Western Hemisphere is distinctive and marks a shift from the past two National Defense Strategies, which both prioritized great power competition with China. The strong focus on both the Western Hemisphere and the Indo-Pacific, however, raises the question of whether hard decisions were taken about prioritization, or does this document instead reflect compromises between different factions within the administration focused on different theaters. 

Sound strategic context

Does the strategy accurately portray the current strategic context and security environment facing the United States? Is the strategy predicated on any specious assumptions?

Yes, this strategy contains a dedicated section on the current security environment that outlines the challenges posed by China, Russia, Iran, and North Korea, and importantly recognizes the challenge of strategic simultaneity, the risk of multiple conflicts occurring in overlapping time frames. This section risks downplaying the threat from Russia and Iran. Several past administrations, going back to at least President Barack Obama, had also hoped to do less in Europe and the Middle East in order to pivot towards Asia, only to have serious security crises erupt and thwart their plans.  

Defined goals

Does the strategy define clear goals?

The strategy would have benefited from a dedicated goals section. Past NDSs have laid out broader, global defense goals, such as deterring attacks against the United States and its allies, defeating adversaries if deterrence fails, and assuring allies. This strategy does not articulate such overarching goals. To be sure, it mentions more specific goals in the sections on lines of effort, such as deterring conflict in the First Island Chain, but would have benefited from providing a clearer vision of success.     

Clear lines of effort

Does the strategy outline several major lines of effort for achieving its objectives? Will following those lines of effort attain the defined goals? Does the strategy establish a clear set of priorities, or does it present a laundry list of US foreign policy activities?

The strategy very clearly identifies four important lines of effort: defend the US homeland; deter China in the Indo-Pacific through strength, not confrontation; increase burden-sharing with US allies and partners; and supercharge the US defense industrial base. The section on China seems to incorrectly imply that a confrontational US stance raises the risk of conflict, when in fact the problem is the Chinese Communist Party’s stated revisionist goals.  

Realistic implementation guidelines

Is it feasible to implement this strategy? Are there resources available to sustain it?

For more than four years, I have argued that the United States needs to do three things to resource the strategic simultaneity problem: revitalize the US defense industrial base, strengthen nuclear deterrence, and get allies to step up and do more. This strategy recognizes and affirms all three of these steps, with a heavy emphasis on revitalizing the US defense industrial base, which will be supported by US President Donald Trump’s promised $1.5 trillion 2027 defense budget, and increased allied burden sharing. 

Joe Costa

Director, Forward Defense Initative, Scowcroft Center for Strategy and Security

The strategy reaffirms longstanding US principles, such as nuclear deterrence, preventing adversary dominance in key regions, increasing burden-sharing, and reinvigorating the defense industrial base. It rightfully articulates the perennial problem that global requirements consistently outpace the demand of military forces, and therefore ruthless prioritization is required. The biggest risk is the reward and punishment approach toward allies and partners. Unquantifiable factors such as unity of purpose, trust, cohesion, and reliability are the essential elements for creating these durable military alliances. By largely ignoring the core values that hold US military alliances together, and explicitly stating that the Department of Defense (DOD) will prioritize cooperating with “model allies,” this strategy could create long-term structural risks that significantly limit the DOD’s ability to deter and prevail against adversaries. 

Distinctiveness

Is there a clear theme, concept, or label that distinguishes this strategy from previous strategies?

Yes. Homeland defense is explicitly tied to border security and US “military dominance” in the Western Hemisphere. Allies and partners are implicitly rewarded or punished to take primary responsibility for their own defense. Economic interests prevail over core values that underpin military cooperation, and the threats posed by the United States’ adversaries are deemphasized in favor of the main message, which is: keep your “demands reasonable and cabined,” and we can maintain a “sustainable balance of power.” 

Sound strategic context

Does the strategy accurately portray the current strategic context and security environment facing the United States? Is the strategy predicated on any specious assumptions?

Persistent threats posed by the United States’ adversaries are deemphasized in favor of the larger message on deconfliction and deescalation. The strategy makes three key assumptions that deserve serious examination:  

1. the DOD can achieve NDS objectives absent a coherent approach to allies and partners across the US government (e.g., if allied economies are hurt by tariffs, will they still spend more on defense?);  
2. allies and partners will respond to US rewards and punishments in a way that aligns with NDS objectives; and
3. US adversaries will adjust their longstanding goals and accept the DOD’s “gracious offer” in favor of a “sustainable balance of power.”   

Defined goals

Does the strategy define clear goals?

Yes. The four priorities are clearly stated throughout the document. 

1. Defend the US homeland 
2. Deter China in the Indo-Pacific through strength, not confrontation  
3. Increase burden-sharing with US allies and partners  
4. Supercharge the US defense industrial base

Clear lines of effort

Does the strategy outline several major lines of effort for achieving its objectives? Will following those lines of effort attain the defined goals? Does the strategy establish a clear set of priorities, or does it present a laundry list of US foreign policy activities?

Lines of effort are defined with varying degrees of specificity. Tradeoffs exist between the four priorities. For example, forces off the coast of Venezuela, and the naval “armada” recently redeployed from the Indo-Pacific to the Middle East, limit what’s available now and potentially degrade future readiness to deter China in the First Island Chain. If this new strategic approach erodes trust with allies and partners, it could adversely impact their collaboration in areas that are essential to achieving the strategy’s end states. How the DOD manages and balances the risks that come with these tradeoffs will determine the success of the overall strategy.  

Realistic implementation guidelines

Is it feasible to implement this strategy? Are there resources available to sustain it?

Further analysis is required, but aspects of the strategy likely will have to be modified. For example, the Congressional Budget Office estimates the Golden Dome could cost more than $800 billion over twenty years, with other estimates going even higher. In addition, the full impact of the DOD’s personnel actions is still unclear—including reported reductions to the cyber workforce, which could adversely impact homeland defense. Lastly, it remains an open question how allies and partners will react to this shift in US defense strategy.  

Alexander B. Gray

Nonresident senior fellow, Geostrategy Initiative, Scowcroft Center for Strategy and Security

The NDS builds usefully upon the National Security Strategy (NSS) by carefully reflecting on the primary security threats to the United States and prioritizing those threats alongside the regional areas of greatest importance to core US interests. This exercise, while contrary to nearly four decades of US strategy, is both overdue and salutary in an era of rising great power threats and diminishing domestic resources. The NDS’s call for a wartime-level mobilization of the defense industrial base (DIB) reflects the seriousness of the challenge and the DIB’s criticality in meeting even the whittled-down priorities found in the NSS and NDS. Taken together, the NSS and NDS are an epochal shift in US strategy and represent a decisive break with post-Cold War conceptions of the United States’ limitless strategic bandwidth. 

Distinctiveness

Is there a clear theme, concept, or label that distinguishes this strategy from previous strategies?

As with the National Security Strategy, the NDS represents an abrupt break from the strategic documents from previous administrations of both political parties. The NDS rejects explicitly the need to uphold the “liberal international order” and instead prioritizes the capabilities and requirements needed to implement the core US interests outlined in the NSS: defense of the homeland, the Western Hemisphere, and a “free and open” Indo-Pacific.

Sound strategic context

Does the strategy accurately portray the current strategic context and security environment facing the United States? Is the strategy predicated on any specious assumptions?

Building upon the NSS, the NDS captures both the greatest challenges facing the United States, beginning with China and its threat to the three core regions of US concern (the homeland, the hemisphere, and the Indo-Pacific), and the need to prioritize in a world of limited resources and domestic political constraints. By understanding the threats but also the limitations facing Washington, the NDS captures the unique environment at this moment in US security policy.  

Defined goals

Does the strategy define clear goals?

The NDS forces clear priorities and largely explains how the administration envisions converting those priorities, whether regions of focus or a renewed emphasis on a revitalized defense industrial base, into actionable policy. In its ruthless focus on avoiding previous periods of strategic overstretch, the NDS (like the NSS) succeeds in a goal-oriented approach to strategy.  

Clear lines of effort

Does the strategy outline several major lines of effort for achieving its objectives? Will following those lines of effort attain the defined goals? Does the strategy establish a clear set of priorities, or does it present a laundry list of US foreign policy activities?

The NDS is anything but a laundry list, and the prioritization exercise it represents will have a cathartic effect on both resource allocation and the time and attention of government officials across the chain of command. For each priority, the NDS explains broadly how the administration will define success, which will be useful in holding officials to account for execution.  

Realistic implementation guidelines

Is it feasible to implement this strategy? Are there resources available to sustain it?

The strategy can be implemented but will face fierce congressional and institutional resistance by forcing prioritization on a bureaucracy and larger national security apparatus that has become accustomed to avoiding hard choices and doing everything, everywhere, simultaneously. The NDS is appropriate to available resources but must be advocated for consistently to avoid the inevitable mission creep that will be encouraged in many parts of Washington.  

Imran Bayoumi

Associate director, GeoStrategy Initiative, Scowcroft Center for Strategy and Security

The National Defense Strategy makes clear the priorities of the Department of Defense. It has clear goals and lines of effort but lacks detail in how it plans to achieve these stated outcomes. The strategy overlooks key regions and allies, such as Taiwan and Australia, and risks underestimating the threat posed by China. Failure to account for the strategic reality and the nature of the threats that the United States finds itself facing will make it harder to achieve the goals set out within the strategy.

Distinctiveness

Is there a clear theme, concept, or label that distinguishes this strategy from previous strategies?

The 2026 National Defense Strategy builds on the 2025 National Security Strategy with its clear focus on defending the homeland, with the claim that “for decades, America’s foreign policy establishment neglected our nation’s Homeland defenses.” But past NDSs have also prioritized the homeland, including the 2022 NDS, which listed “Defending the homeland” as its top priority, albeit while recognizing the People’s Republic of China (PRC) as a pacing threat. The strategy is distinct through its continued promotion of the “Trump Corollary” to the Monroe Doctrine, but this concept is not expanded on throughout the document.  

Sound strategic context

Does the strategy accurately portray the current strategic context and security environment facing the United States? Is the strategy predicated on any specious assumptions?

The strategy rightly recognizes that China, Russia, Iran, and North Korea all pose threats to the United States, but it does not mention China’s position towards Taiwan and seemingly downplays the global threat posed by Russia in Africa, the Arctic, and elsewhere. In Africa, the focus only on the threat from “Islamic terrorists” ignores the support provided by China and Russia to governments across the continent. At the same time, the strategy overstates some threats, saying that in the past “U.S. access to key terrain like the Panama Canal and Greenland was increasingly in doubt,” which is not true.  

Defined goals

Does the strategy define clear goals?

The strategy has four clearly defined goals that build on the priorities set forth in the National Security Strategy.  

Clear lines of effort

Does the strategy outline several major lines of effort for achieving its objectives? Will following those lines of effort attain the defined goals? Does the strategy establish a clear set of priorities, or does it present a laundry list of US foreign policy activities?

The strategy clearly lays out four lines of effort that build on the defined goals, but some are more detailed than others. More clarity on how the DOD seeks to deter China or supercharge the defense industrial base would be helpful.  

Realistic implementation guidelines

Is it feasible to implement this strategy? Are there resources available to sustain it?

The strategy calls for having allies in Europe, in the Middle East, and on the Korean Peninsula take on more of a role in their own defense but does not detail changes in US force posture or presence that would likely be expected with such an announcement. The lack of details makes it difficult to understand how exactly the strategy will be implemented and how challenging it will be to do so.  

New Atlanticist Dec 5, 2025

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By Atlantic Council experts

Atlantic Council experts delve into the newly released document outlining the Trump administration’s principles and priorities for US foreign policy.

Defense Policy Politics & Diplomacy

Memo to… Sep 9, 2025

Memo to Congress: Capabilities matter more than numbers for US forces in Korea

By Adam Kozloski, Markus Garlauskas

When it comes to the US military presence in South Korea, what the US force is capable of doing matters more than exactly how many troops are stationed there. As the US Senate and House draft this year’s must-pass National Defense Authorization Act, they should focus on requirements, not setting a floor for USFK.

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Scowcroft Strategy Scorecard: What grade does Biden’s National Security Strategy get?

By Atlantic Council

Our strategy experts praised the document for being clear-eyed about the challenges posed by Russia and China, but downgraded it for a lack of focus as well as concerns about how to implement its ambitious aims.

National Security Politics & Diplomacy

The Scowcroft Center for Strategy and Security works to develop sustainable, nonpartisan strategies to address the most important security challenges facing the United States and the world.

Learn more

The post Scowcroft Strategy Scorecard: Grading Trump’s second National Defense Strategy appeared first on Atlantic Council.

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The NDS’s emphasis on allies is reassuring for Japan, but questions over commitments remain

For Japan, the United States’ new NDS and its emphasis on working with Indo-Pacific allies to strengthen “collective defense” in the First Island Chain provided some assurance. But the NDS also further underlined long-standing questions about the Trump administration’s intentions and expectations toward allies. 

To some extent, the NDS brought a sigh of relief in Japan, given that there were concerns about how the Trump administration’s focus on the Western Hemisphere and the administration’s arguably somewhat softer posture toward China in recent months would impact Washington’s defense efforts and regional partnerships in the Indo-Pacific. In this light, the NDS was reassuring, as it did not completely de-prioritize the Indo-Pacific region.

Still, some concerns remain. Above all, while the NDS suggests that the United States will deter full-scale aggression by China, much remains unknown about Washington’s posture toward the gray-zone situations that persist in the Indo-Pacific. Moreover, the NDS makes clear its demand that allies and partners “take on a greater share of the burden,” adding pressure on states like Japan to increase defense expenditures and take on a more proactive defense role. Combined with the United States’ strategic ambiguity toward China and North Korea, Japan remains concerned about when and how Washington will respond if a contingency were to erupt. Such ambiguities and gaps undermine progress toward enhancing strategic, operational, and tactical readiness of the bilateral alliance US-Japan alliance, as well as US-Japan-South Korea trilateral cooperation and other vital frameworks in the Indo-Pacific region.

—Ryo Hinata-Yamaguchi is a nonresident senior fellow with the Indo-Pacific Security Initiative.

The NDS’s call for collective defense of the region is thin on details 

From Seoul’s vantage point, two phrases stood out most: “critical but limited support from U.S. forces” and “collective defense” along the First Island Chain.  

If the premise is that Seoul—and other regional allies—assume primary responsibility in the conventional domain, a central question is whether (and how far) that logic could bleed into the nuclear backstop. This would mark, not a “shift” in declaratory terms, perhaps, but a perceptible change in the visibility, tempo, and scope of the United States’ provision of extended deterrence.

At the same time, while the latest NDS and National Security Strategy both prescribe building “collective defense” in the region, both documents are notably thin on how Washington intends to operationalize it. The NDS states that the United States will seek to “make it as easy as possible for allies and partners to take on a greater share of the burden of our collective defense, including through close collaboration on force and operational planning and working closely to bolster their forces’ readiness for key missions.” Yet it avoids specifying the connective tissue—South Korea–US–Japan trilateral cooperation, or other mini- or multilateral pathways—that could be the key means to implement the concept.

None of this, however, makes me doubt that the South Korea–US alliance will keep adapting; if anything, Seoul’s description in the NDS as a “model ally” reinforces that expectation. But precisely because adversaries look for seams, the United States and South Korea need tighter communication, coordination, and signaling—so that capability shifts or posture adjustments do not create deterrence vacuums or generate unnecessary provocation in the region. 

—Bee Yun Jo, PhD, is a nonresident senior fellow at the Indo-Pacific Security Initiative and research fellow in the Security Strategy Division at the Sejong Institute. 

Manila has a ‘pragmatic’ response to the NDS amid tensions with China

The reaction in Metro Manila to the Pentagon’s 2026 NDS has been largely pragmatic and firmly Philippine-focused. The softer language on China has not generated public backlash among government officials, politicians, and policymakers. This is largely because Philippine policy debates are driven less by Washington’s terminology than by concrete security conditions in the West Philippine Sea, domestic development imperatives, and existing military cooperation with the United States anchored by the National Defense Authorization Act.

At the same time, there has been a subtle recalibration among some Philippine policymakers toward a more pragmatic approach to economic engagement with China. This shift has been hinted at by the Philippines’ ambassador to the United States, Jose Manuel “Babe” Romualdez, who has argued that persistent geopolitical frictions should not preclude selective economic cooperation with China. This recalibration reflects growing concern that the Philippines is falling behind regional peers, particularly Vietnam, whose manufacturing sector has expanded rapidly through export-oriented growth and deeper integration into global supply chains. Economic underperformance has also become increasingly visible in tourism vis-à-vis neighboring countries, prompting policy responses aimed at stimulating demand. One such measure has been the introduction of fourteen-day visa-free entry for Chinese citizens, a move widely interpreted in Manila as economically motivated rather than geopolitical signaling.

However, this pragmatism has not translated into accommodation toward Beijing on sovereignty issues or political influence. This week, Philippine senators across party lines signed a resolution condemning what they describe as verbal attacks and intimidation by Chinese officials against Philippine institutions defending the West Philippine Sea. In addition, the publicly disclosed meeting between the Chinese ambassador to the Philippines and Davao City Mayor Sebastian “Baste” Duterte drew scrutiny in Manila political circles. The meeting’s timing coincided with heightened tensions in the West Philippine Sea, reinforcing concerns about political signaling and elite influence pathways, anxieties that have been shaped by China’s prior patterns of elite engagement across Southeast Asia.

—Alvin Camba is a nonresident fellow in the Indo-Pacific Security Initiative at the Atlantic Council’s Scowcroft Center for Strategy and Security. 

Australia will welcome clear messaging on China and an emphasis on re-industrialization 

On the surface, the 2026 NDS is a radical departure from its predecessors. Its bombastic rhetoric, political focus, and sharp tone make it an unconventional document and in key areas it represents significant policy shifts, particularly as it relates to European allies and the threat Russia presents. Moreover, while it repeatedly states that it is not isolationist in nature, the document also heavily emphasizes a refocus to its own region through the “Trump Corollary” to the Monroe Doctrine. Beneath the surface, however, there is also a lot of continuity, and for allies and partners in the Indo-Pacific there is a lot in the document to be reassured by.

For Australia, the clear articulation of the threat China poses, the need to deter rather than confront, along with a clear message to China on what the United States considers an acceptable balance of power in the region will be encouraging, particularly as China has often exploited the strategic ambiguity of previous policy documents. However, the lack of any mention of Taiwan or how the United States will view a potential crisis there will create uncertainty and anxiety.

But the acknowledgment of the speed and scope of the threat China poses, and reassurances that the United States will continue to support efforts to stand up to it will be well received in Canberra. The need for increased burden sharing and re-prioritization of effort have reverberated throughout the national security community for over a decade and will come as no surprise to Australian policymakers. Moreover, the emphasis on re-industrialization is a trend already under way there, and the NDS’s language will be viewed as a seriousness of intent on the part of the United States. While the document is simplistic and short on details, its strength is the clarity of messaging and pragmatic views on the reality of regional and global threats. For those in Australia, that statement will be well received.

—John T. Watts is a nonresident senior fellow in the Forward Defense program at the Scowcroft Center for Strategy and Security. He previously served as a senior policy advisor to the US Office of the Secretary of Defense for Policy and a staff officer at the Australian Department of Defence.

The NDS leaves unanswered questions about what a ‘decent’ US-China peace would mean for Taiwan

Taiwan is concerned about being left out of US defense perimeters and becoming seen as primarily an economic issue, rather than a security one, for Washington.

The clearest sign is that the 2026 NDS does not mention Taiwan by name at all. There is also the softening in NDS language concerning China. The 2018 NDS from Trump’s first term referred to China and Russia as “revisionist powers”; the 2026 NDS no longer does. This raises the question of whether China’s repeated claim that it will annex Taiwan, by force if necessary, is no longer considered an act of revisionism.

The NDS does talk about the importance of deterrence by denial and pledges to “make clear that any attempt at aggression against U.S. interests will fail.” But is defense of the peace and stability of the Taiwan Strait still a US interest?

The answer is unclear. The NDS mentions five areas where the United States will prioritize the provision of “critical but limited support from U.S. forces,” and the Taiwan Strait is not one of them.

Furthermore, while it may be reassuring for some to read the NDS’s promise “to prevent anyone, including China, from being able to dominate us or our allies,” Taiwan is not a US ally.

The NDS does say that all nations should “recognize that their interests are best served through peace and restraint.” Is “restraint,” then, what the United States expects from Taiwan?

The NDS also calls for reaching a “decent peace” with China, stating later that such an accord “on terms favorable to Americans but that China can also accept and live under is possible.” This language brings back the long-standing specter of a US-China “grand bargain” over Taiwan. Especially since Beijing has long seen Taiwan as nonnegotiable and a core interest, Washington seeking to strike a deal on “terms that China can accept” is not generating much optimism inside Taiwan.

Yet with crisis comes opportunity. Taiwan’s strategy should be threefold. First, Taiwan needs to reassure domestic audiences that Taiwan is not mentioned in the NDS because strong US-Taiwan relations are now a given. Second, increase Taiwan’s defense spending to show that Taipei is not a security free-rider and is doing its fair share. To this end, Taiwan’s defense spending is set to reach 3.32 percent of gross domestic product (GDP) in 2026, and Taiwanese President Lai Ching-te has pledged to reach 5 percent of GDP on defense spending before 2030. Third, Taiwan needs to contribute to the Trump administration’s reindustrialization agenda. Taiwan has made progress in this area as well. This month, Taiwanese companies committed to investing at least $250 billion in the United States, especially in the semiconductor and technology sectors.

Taken together, Taiwan is seeking to signal that it is an understanding, responsible, and helpful partner to the United States, one that is too valuable to let fall into Beijing’s hands.

—Wen-Ti Sung is a nonresident fellow with the Atlantic Council’s Global China Hub.

The post What the Indo-Pacific thinks of the new US National Defense Strategy appeared first on Atlantic Council.

Jason Brodsky and Danny Citrinowicz have years of experience working on Iran and thoughtful but significantly different viewpoints. After they engaged in a fascinating back-and-forth on X, we asked if they would expand the conversation about the opportunities, uncertainties, and risks associated with a US military strike on Iran. 

Click to jump to a question and answer:

1. What’s the most likely outcome if Trump acts on his pledge to protect the Iranian protesters?

2. How might regime change in Iran happen?

3. What happens if the Iranian regime hangs on? 

4. What would you recommend to the US president?

1. What’s the most likely outcome if Trump acts on his pledge to protect the Iranian protesters?

Brodsky: I urge humility in predictions of what will ensue should Trump decide to militarily intervene in Iran following the protests. In the lead-up to the decision, I think the president is engaging in his usual approach of simultaneously issuing confrontational and conciliatory messages towards Tehran. This forms the basis of a psychological operation to confuse Iranian decision-making, and it feeds into the Islamic Republic’s impression of Trump as unpredictable. That has benefits, as it keeps US adversaries off base.

Nevertheless, the president has a documented record in his first term of such military interventions following human rights abuses among autocratic regimes in the Middle East. He authorized airstrikes against the Assad government in Syria after it used chemical weapons against its people in 2017 and 2018. Trump criticized his predecessor former President Barack Obama for setting a red line and then retreating from action in 2013. Therefore, I believe this, coupled with the Islamic Republic’s historic weakness and his very public messaging that help is on the way, will motivate the president to act. He favors quick, surgical, targeted, dramatic, and decisive military operations, and this will be his likely approach, potentially combining leadership decapitations with degradation of Iran’s military and security apparatuses. 

Such a US military operation in Iran would be unprecedented. Thus, it is difficult to assess with great precision what might follow it in Iran. It depends on the extent of the US strikes. The Islamic Republic is bigger than Supreme Leader Ayatollah Ali Khamenei, and it has institutions, plans, and procedures to fill the void should he be eliminated. Nevertheless, Khamenei has personalized his power to a significant degree in Iran, and that, coupled with the longevity of his rule, could have short-term destabilizing impacts. It is true that observers also speculated whether the Islamic Republic would be able to survive following the death of Ruhollah Khomeini, Iran’s first supreme leader, in 1989, given the singularity of his leadership. Yet the system endured. But Khamenei’s leadership style is different from Khomeini’s era, especially in his centralization of power around him and his office.

Questions remain: If the US government decides to target Khamenei, does it also target his son Mojtaba Khamenei, who is a key lieutenant of his father and considered by some to be a potential successor? There are also clerics such as Alireza Arafi, Hashem Hosseini Bushehri, Mohsen Qomi, Mohsen Araki, Ahmad Khatami, Mohammad-Mehdi Mirbagheri, Mohammad-Reza Modarresi Yazdi, Hassan Rouhani, and Ali and Hassan Khomeini, who are potential contenders to replace Khamenei. 

Does the Trump administration target other military and political personalities in Iran, such as members of the Supreme National Security Council (SNSC) and Defense Council? This would have the potential of being doubly destabilizing should Khamenei perish, as it is from this cohort that a constitutional interim leadership council is formed—the president, chief justice, and a member of the Guardian Council—if the Office of Supreme Leader is vacant. This could spark confusion and demoralization within the armed forces and security services as to the chain of command.

Citrinowicz: The latest wave of protests in Iran caught the United States by surprise, much as it did the rest of the world. Despite tough rhetoric from Washington, the reality is that the US government had no coherent plan for regime change in Tehran—and no meaningful operational capability to engineer political transformation inside a highly repressive, tightly controlled state.

Even now, it remains unclear how Trump intends to translate rhetorical support for Iranian protesters into effective policy. His statements and social media posts leave open two competing interpretations: that Washington seeks to leverage its substantial military presence in the Persian Gulf to pressure Iran on specific issues, such as its nuclear program and conventional military buildup, or that it harbors broader ambitions of undermining or even toppling the regime itself. The latter, however appealing rhetorically, is not grounded in strategic reality.

It is critical to recognize that US military action, limited or large-scale, is unlikely to catalyze mass political mobilization inside Iran. On the contrary, a strike would more likely consolidate elite cohesion around the regime, marginalize protesters, and reinforce Tehran’s long-standing narrative of external siege.

2. How might regime change in Iran happen?

Brodsky: Should there be a leadership void, there is the very distinct possibility of an Islamic Revolutionary Guard Corps (IRGC) takeover, anointing an IRGC commander such as the speaker of the parliament, Mohammad Bagher Ghalibaf, to assume power.

There are other potential scenarios, including a total collapse of the regime. Yet this would require mass defections within the armed forces and security services. Iran’s own history has a precedent, in February 1979, when Air Force commanders from the pre-revolutionary government pledged allegiance to Khomeini, in an episode called the Homafaran Allegiance.

Crown Prince Reza Pahlavi is relevant here. His name has been invoked during the protests—he is apparently the only specific opposition leader for whom Iranians have chanted. Iranians demonstrating view him as not only a symbol but also a potential transitional leader. This does not mean every Iranian protesting for the fall of the Islamic Republic wants a return to the monarchy per se. But it would be a mistake to dismiss him as he embodies an enduring nostalgia for the Pahlavi era among younger generations. These Iranians view the Islamic Republic as a historic mistake.

Citrinowicz: Iran lacks a credible, organized opposition capable of governing the country, even in the unlikely event of regime collapse. For Washington, regime failure without a viable successor would represent not a victory but a strategic liability.

Any attempt by the United States to impose regime change by force, whether through the assassination of Khamenei or the dismantling of the regime would almost certainly produce catastrophic outcomes. The most likely scenarios would be a full takeover by the IRCG or a descent into civil war. Iran currently lacks a viable domestic opposition capable of governing the country. At the same time, the exiled opposition, including figures such as Pahlavi, remains fragmented, weak, and organizationally unprepared to assume power.

Consequently, externally imposed regime change would likely result in a more repressive and unstable Iran, not a democratic and prosperous one. A more realistic strategy is strategic patience: allowing internal dynamics to unfold in the post-Khamenei era while maintaining and improving the enforcement of crippling sanctions. Sanctions should not be lifted prematurely. They remain one of the few effective tools for pressuring the regime until it is either forced to reform or collapses under its own weight. At present, there is no credible alternative pathway to a stable and democratic Iran.

3. What happens if the Iranian regime hangs on? 

Brodsky: The baseline for US policy moving forward should be that these protests have not stopped. They are merely paused because of severe repression. The drivers motivating Iranians seeking to oust the Islamic Republic have remained unchanged, and the grievances have only grown with time, with the system reaching a dead end and facing an economic crisis, a water crisis, an energy crisis, a deterrence crisis, and a crisis of confidence between state and society.

The Iranian system aspires for the United States and its allies to operate from the assumption that Tehran has the situation under control, there is nothing to see here, and the regime is going nowhere. But it would be misguided to center US policy on this regime-driven narrative.

Citrinowicz: Absent a fundamental change in Iranian regime policy, and despite its short-term success in suppressing recent protests, the Islamic Republic lacks the capacity to meet the basic economic and social needs of its population. As a result, regime change in Iran is highly likely in the long term, almost certainly following Khamenei’s death. The current system is not sustainable. This process may take months or even years, but as with the Soviet Union, continued stagnation without a dramatic ideological shift will eventually lead to collapse. Such a shift, however, is highly unlikely under Khamenei’s leadership.

This process may take weeks, months, or even years, but the outcome is inevitable. Iran is facing deep and persistent structural pressures: severe economic distress, deteriorating infrastructure, a collapsing energy sector, and recurring natural disasters. None of these challenges are temporary, and none are being meaningfully addressed.

While change is unlikely to be immediate, as long as the regime refuses to alter its policies and international economic and diplomatic pressure remains in place, its prospects will continue to deteriorate. Deeper ties with China, Russia, or the BRICS group cannot offset the impact of sanctions or structural mismanagement. Without sanctions relief, Iran’s economic situation will not improve, and renewed domestic unrest or internal change is only a matter of time.

4. What would you recommend to the US president?

Brodsky: The Trump administration should adopt a whole-of-government approach aimed at weakening the Iranian regime, using diplomatic, economic, military, kinetic, cyber, and covert tools.

First, the US government should freeze all diplomacy with the Islamic Republic. If the United States were to agree to a nuclear deal with Tehran now, the Iranians protesting would view it as an external US intervention to bolster the Islamic Republic when they want it gone. It would be seen as a betrayal. The Iranian protesters largely view the regime as irredeemable and incapable of reform. 

Diplomacy between the United States and Iran since 1979 has repeatedly failed because of the ideological nature of the Islamic Republic, whose leadership has no interest in a rapprochement with the US government. It is also highly unlikely the current system of power in Iran will agree to the far-reaching concessions the Trump administration is demanding, as historically the existence of protests have not moderated Iranian negotiating positions. 

The Iranian regime aspires to entrap the United States in a negotiating process because the process itself offers protection—in bolstering the currency and thwarting US military action—even without a deal. Iranian diplomats get something for just showing up. Whereas the US government would not.

In addition to putting diplomacy on ice, the Trump administration should work with its allies and partners to more fully isolate the Islamic Republic diplomatically. They should seek to bar its representatives from leadership roles in international organizations, downgrade diplomatic ties with Tehran, especially in Europe, and work to deport regime-linked individuals residing in the West and freeze their assets to the extent permitted by law. In doing so, the US government can form an Iranian Elites, Oligarchs, and Proxies Task Force (IEPO), modeled after what it constructed with respect to Russia after it invaded Ukraine in 2022. 

Second, the United States should continue levying economic sanctions against the Iranian regime—especially implementing the MAHSA Act to sanction the supreme leader personally for human rights abuses. Such designations deprive the Iranian regime of revenue, and the economic tailspin Tehran is facing is proof that US sanctions are eroding the power of the Islamic Republic. The Trump administration should proceed with this sanctions pressure for as long as this system endures. Designations of Iran’s supreme leader would also send an important symbolic signal to the Iranian people that the US government hears their calls and views Khamenei as an illegitimate leader.

Third, the US Justice Department and its partners around the world should seek to criminally indict Iran’s supreme leader and members of the Supreme National Security Council (SNSC). Khamenei reportedly issued an order to the SNSC to “crush the protests by any means necessary” and to show “no mercy,” according to The New York Times. Such steps implicate these officials in crimes against humanity. Khamenei and the SNSC members should also be made to face additional legal exposure for their roles in approving assassination and terrorism operations throughout the West spanning years. 

Fourth, the Trump administration should pursue targeted military action against Iran’s regime. The goal here would be to hold it accountable for its abuses of the Iranian people, deter the regime from further aggression, erode its ability to retaliate and repress its people, and provide the time, space, and resources to even the playing field for the Iranian people to reclaim their country. Right now, unarmed Iranians are facing off against a highly armed state apparatus. That power differential should be reduced. Along with such operations, the Trump administration and its allies should deploy their formidable cyber and covert capabilities to assist in this effort.

If the regime limps along after such military operations, the US government should maintain pressure on the system—especially using economic pressure and diplomatic isolation—to ensure that Iranians are one day able to fulfill their national aspirations. The goal here is to give Iranians the time, space, and opportunity to take their country back from the Islamic Republic.

Citrinowicz: The dilemma facing US policymakers is stark. Military action carries a high risk of regional escalation, threatens US partners and assets in the Gulf, and could draw the United States into yet another prolonged Middle Eastern conflict. Such an outcome runs counter both to American public fatigue with endless wars and to Trump’s own preference for short, decisive engagements with clear endpoints.

As a result, the most effective tools available to Washington remain economic and diplomatic pressure. Sanctions, international isolation, and sustained constraints on Iran’s access to global markets do not guarantee political change, but they do force the regime toward a strategic crossroads: either moderate its behavior and make limited concessions to reduce pressure, or maintain ideological rigidity at the cost of a deepening economic crisis and the long-term erosion of domestic legitimacy.

From a US standpoint, encouraging political change from within the existing system is far preferable to attempting to impose regime change from without, the latter a goal that is costly, unpredictable, and historically fraught. Even if Trump ultimately opts for military action, US interests would be best served by a symbolic, tightly calibrated strike, one aimed at preserving deterrence while enabling a controlled de-escalation and maintaining broader pressure on Tehran.

Ultimately, the challenge for the United States is not to overthrow the Iranian regime, but to manage a long-term confrontation in a way that constrains Iran’s ambitions, protects US interests, and leaves the burden of internal political change where it belongs: with Iranian society and Iran’s own political system.

The US administration should leverage its significant military presence in the Gulf to strengthen the enforcement of sanctions on Tehran, with a particular focus on preventing Iranian oil exports to China. The sanctions regime should be preserved and tightened wherever possible, until the Iranian regime demonstrates a genuine willingness to make the necessary concessions.

In any renewed engagement with Iran, Washington should reassert clear and non-negotiable demands: a complete abandonment of Iran’s enrichment capabilities, including the removal of all enriched material, alongside meaningful restrictions on its missile program. At the same time, it would be counterproductive to condition diplomacy on Iran’s stance toward Israel or the Abraham Accords. Introducing such demands would likely foreclose the possibility of a diplomatic breakthrough that, under certain circumstances, could help prevent escalation.

Accordingly, as long as Iran does not fundamentally alter its behavior, the United States should maintain and intensify sanctions enforcement while continuing to project deterrence and military credibility without resorting to direct military action. US demands should focus narrowly on constraining Iran’s military and nuclear capacity, rather than on its regional posture toward Israel. Military strikes should remain a last resort, as any attack carries a high risk of triggering a broader regional escalation.

The post The expert conversation: Should Trump strike Iran? What happens next if he does? appeared first on Atlantic Council.

Bottom lines up front

• Venezuela’s post-Maduro economic reopening will require massive reconstruction, especially in energy and infrastructure.
• Colombia is well positioned to help with this due to its proximity and existing trade links, though political tensions and border insecurity pose risks.
• With the right safeguards in place, increased US coordination with Colombia can lower barriers to private investment in Venezuela’s reconstruction, benefiting the wider region.

WASHINGTON—The recent arrest of Nicolás Maduro following a US-led operation has created a fundamentally new geopolitical scenario in Latin America. Beyond its political symbolism, the event may mark the beginning of a structural reconfiguration of Venezuela’s economy, particularly its energy sector, which has historically been the backbone of the country’s productive capacity and external revenues.

After years of production collapse, underinvestment, infrastructure degradation, and international sanctions, any meaningful economic opening in Venezuela would require a large-scale reconstruction effort. This would encompass not only oil fields, refineries, and export infrastructure, but also electricity, transportation, logistics, and basic public services. The magnitude and complexity of this task suggest that the United States, while central to any reconstruction framework, will need reliable regional partners with operational experience, market knowledge, and logistical proximity.

The role Colombia can play

Within this context, Venezuela’s neighbor Colombia emerges as a potentially critical partner, despite recent diplomatic frictions between Washington and Colombian President Gustavo Petro. Colombia’s relevance is grounded less in political alignment and more in structural and economic factors that make it uniquely positioned to support a Venezuelan recovery process. A recent example is the unexpected call between Petro and US President Donald Trump, which official readouts described as constructive. The conversation reportedly paved the way for an official visit by the Colombian president to the White House on February 3, with Venezuela’s economic recovery and cross-border security coordination among the issues slated for discussion.

First, Colombia has functioned for years as a regional operational hub for US and multinational firms with historical exposure to Venezuela. Following Venezuela’s economic collapse, many of these companies relocated personnel, assets, and regional headquarters to Colombia, maintaining limited but continuous engagement with Venezuelan markets. In a scenario of gradual liberalization, Colombia could serve as a low-risk platform for re-entry.

Second, geographic proximity and existing transport links give Colombia a natural logistical advantage. These connections significantly reduce transaction costs for the movement of raw materials, machinery, equipment, and technical personnel required for reconstruction efforts, positioning Colombia as a gateway economy rather than a direct competitor.

Third, Colombia’s productive structure complements US industrial capabilities. Its intermediate manufacturing base and professional services sector, spanning food processing, chemicals, textiles, electrical equipment, engineering, and logistics, could integrate into binational or trinational value chains supporting Venezuela’s recovery.

Fourth, Colombia’s long-standing Free Trade Agreement with the United States provides a stable regulatory framework for US firms operating from Colombian territory. This legal certainty reduces investment risk and facilitates the structuring of supply chains linked to Venezuelan projects.

Recent trends in Colombia–Venezuela trade reinforce this potential. Despite political volatility, bilateral commerce has rebounded, with Colombian exports reaching almost one billion dollars in 2024, led by food products and manufactured goods. This recovery suggests that commercial channels can expand rapidly if political and security conditions improve.

Constraints and risks ahead

Despite these advantages, Washington faces legitimate concerns regarding Colombia’s reliability as a strategic partner. The Petro administration’s foreign policy signals, domestic political dynamics, and perceived ideological proximity to certain Venezuelan actors introduce uncertainty into long-term planning.

More critically, border security remains a binding constraint. The Colombia–Venezuela border has long been characterized by weak state presence and the activity of nonstate armed actors, including the National Liberation Army (ELN), Revolutionary Armed Forces of Colombia (FARC) dissident groups, and criminal organizations involved in narcotics trafficking and smuggling. Without credible improvements in territorial control, any reconstruction strategy involving Colombia would face elevated operational and reputational risks.

From a US policy perspective, meaningful Colombian participation would likely require demonstrable progress in border governance. This includes expanded military and law enforcement presence, improved intelligence-sharing, and the deployment of advanced surveillance and cybersecurity capabilities, potentially supported by US assistance. Enhanced maritime control could further strengthen confidence among private investors, as well.

What’s in it for Washington

If these constraints are addressed, then closer US–Colombia coordination could yield substantial strategic benefits:

• It would lower barriers to private investment in Venezuelan reconstruction, enabling US and Colombian firms to participate in energy rehabilitation, infrastructure development, logistics services, and light manufacturing.
• It would expand US exports to northern South America, particularly in high-value sectors such as pharmaceuticals, technology, agribusiness, and professional services, reinforcing US economic influence in the region.
• It would facilitate the reactivation of regional value chains that historically linked Venezuela, Colombia, and the Caribbean, enhancing overall regional productivity and resilience.

Venezuela’s reopening represents one of the most consequential opportunities in Latin America in decades. Realizing this opportunity will require not only political change in Caracas, but also a coordinated regional strategy anchored in security, institutional credibility, and economic integration.

Colombia can serve as a pivotal intermediary in this process, not as a substitute for US leadership, but as a regional platform that reduces costs, mitigates risk, and accelerates implementation. For US policymakers, the central question is not whether Colombia should play this role, but under what conditions and with what safeguards. Clear benchmarks on security and governance will be essential to transforming potential alignment into a durable strategic partnership.

The post To boost Venezuela’s economic recovery, the US should lean into Colombia appeared first on Atlantic Council.

At the same time, Trump’s current NSS is more explicit than its 2017 predecessor in delineating a hierarchy of regions and interests. Whereas earlier versions still treated the Middle East as a central theater of policy execution, the new strategy bluntly states that not all regions matter equally at all times—and that the Western Hemisphere and the Indo-Pacific should receive the lion’s share of strategic attention. The NSS also reinforces the notion that economic security, energy dominance, and revival of the defense industrial base are fundamental to national security, not peripheral to it. Although the NSS is a statutory planning document and therefore binding on departments for implementation, Trump’s foreign policy style has always been adaptive, personalized, and operationally flexible. Thus, the NSS should be treated as a reliable directional guide, one that shapes expectations, alliances, budgeting, and bureaucratic activity, while leaving room for Trump’s preference for personal diplomacy and transactional deal-making where needed.

It is in this context that the Middle East—and particularly the Gulf Cooperation Council (GCC)—emerges not as a downgraded region, but as a strategically redefined one: less central to day-to-day US force planning, yet still pivotal to the administration’s concepts of burden-sharing, deterrence, and regional stabilization.

The Middle East: Enduring interest, but no longer central

Among the most striking elements of the new NSS is its recalibration of the Middle East’s place in US foreign policy. For decades, the region consumed disproportionate diplomatic attention, military deployments, and crisis-management resources because it supplied vital energy, served as a Cold War battleground, and generated conflicts with global spillover potential. Today, those foundations have weakened: the United States is a net energy exporter with greater resilience to supply shocks, and great-power competition now plays out far more in the Indo-Pacific and in technological and economic domains than through Middle Eastern proxy wars.

However, the fact that the Middle East no longer dominates US strategic planning does not imply disengagement or irrelevance. The NSS is careful to define the Middle East as a region of enduring interests that must not be relegated to instability or hostile domination. The United States retains core objectives: preventing any adversarial power from controlling Gulf hydrocarbons or the chokepoints through which they transit, ensuring freedom of navigation of waterways such as the Red Sea and the Strait of Hormuz, countering terrorism and radical movements, supporting Israel’s security, and expanding the normalization dynamic of the Abraham Accords.

The regional focus is therefore shifting from militarized management toward political stabilization, strategic deterrence, investment collaborations, and cost-efficient conflict management. The NSS frames the Middle East increasingly as a zone of partnership, innovation, and capital exchange rather than as the site of long, resource-intensive wars. The NDS adds an important nuance: while confirming that the Middle East is no longer the central theater for US force planning, it explicitly commits to retaining the capability for “focused, decisive action” in the region, illustrated by operations such as Midnight Hammer against Iran’s nuclear infrastructure and Rough Rider against the Houthis, while expecting regional actors to manage most of the security workload between such interventions.

Burden-shifting: The GCC as regional security providers

One of the clearest implications for GCC states is the NSS’s burden-shifting logic. Washington does not intend to underwrite regional security in the same way it once did. Instead, the White House expects capable regional actors, particularly Saudi Arabia, the United Arab Emirates (UAE), and to a lesser extent Qatar, to assume leadership in securing maritime routes, deterring hostile adventurism, stabilizing proximate conflict zones, and countering terrorist networks. The United States will remain a strategic backstop, especially at the high end of military power, but the NSS encourages a division of labor where Washington leverages diplomatic influence, advanced deterrent capabilities, and intelligence, while expecting Gulf capitals to provide financial, logistical, and regional operational support. The NDS makes this division of labor more explicit by directing the Department of Defense to “empower regional allies and partners to take primary responsibility for deterring and defending against Iran and its proxies,” while the United States concentrates on high-end enablers, surge operations, and global priorities such as homeland defense and the Indo-Pacific.

This is not a sudden change, but rather a deeper institutionalization of trends that have been emerging for a decade. The GCC has long demonstrated an increased appetite for autonomous security roles, whether through counter-piracy patrols, Yemen interventions, Red Sea stabilization efforts, or investments in Central African and Horn of Africa equilibria. Trump’s NSS validates these ambitions and situates them within a US strategic architecture, rather than treating them as ad hoc regional experiments. For Gulf capitals, this recognition is beneficial: their regional activism is not only tolerated, it is encouraged as a core element of maintaining regional stability in lieu of direct US military domination.

From conflict theater to economic and technological platform

Another significant shift in the NSS narrative is the re-casting of the Middle East as an economic, technological, and financial platform, rather than a theater for perpetual conflict. The NSS recognizes that regional leaders have embraced diversification, industrial development, and sovereign wealth strategies that expand beyond hydrocarbons. It also emphasizes US opportunities in nuclear energy, artificial intelligence (AI), defense industrial cooperation, logistics networks, and supply chain localization. The Middle East is treated as an increasingly strategic geography for future economic corridors, especially those linking Africa, South Asia, and the Mediterranean.

This framing aligns neatly with GCC trajectories. Saudi Arabia, the UAE, and Qatar have long sought to position themselves as global logistics hubs, aviation nodes, sovereign wealth investors, and technology accelerators. With the NSS emphasizing US economic security, energy dominance, and domestic manufacturing revival, Gulf states can leverage bilateral partnerships to show how investment projects, whether in nuclear energy, AI, aerospace, or critical minerals, support American jobs, reindustrialization needs, and technological gains. If packaged correctly, a Gulf-US economic deal now has political value in Washington that goes far beyond foreign direct investment: it can be framed as contributing to domestic industrial revival and strategic supply chain safety. The NDS reinforces this economic-security linkage by treating arms sales and defense industrial cooperation with GCC states as part of a broader effort to “supercharge” the US defense industrial base, making Gulf procurement and potential co-production not only a regional stabilizer but also a mechanism for sustaining US military capacity.

From deterrence to decisive operations: The NSS–NDS approach to Iran

The NSS conveys a strong view that Iran’s disruptive influence has weakened due to Israeli military pressure and to targeted US actions designed to degrade Iran’s nuclear potential. However, the situation has shifted dramatically in recent weeks. Widespread protests across Iran, triggered by deep socioeconomic grievances and political repression, have created an atmosphere of internal volatility not fully captured in the NSS released in late 2025. The Trump administration has responded with forceful rhetoric, warning Tehran that further repression or attempted regional escalation could trigger additional US military strikes. These warnings, coupled with reports that Washington is actively considering another limited, targeted strike on Iranian military infrastructure, have generated both reassurance and unease in GCC capitals. Here, the NDS adds two revealing elements: first, it publicly frames Operation Midnight Hammer as having “obliterated” Iran’s nuclear program and weakened the regime and its Axis of Resistance. Second, it explicitly states that Gulf partners and Israel are now expected to carry primary responsibility for containing Iran’s conventional and proxy capabilities, with the United States stepping in episodically when decisive force is required.

The ongoing instability in Iran introduces a new variable into the regional equation. While the NSS presents Iran as strategically weakened, current developments demonstrate that internal unrest can make the regime simultaneously vulnerable and unpredictable. The possibility of US kinetic action raises concerns about Iranian retaliation across the Gulf, whether through drones, cyberattacks, missile strikes, or activation of regional proxies. GCC leaders therefore view current tensions through a dual lens: understanding that US pressure aligns with long-standing Gulf concerns about Iran’s nuclear ambitions, yet also wary of the escalation risks that accompany any US–Iran confrontation.

The NSS balances deterrence with an emphasis on pursuing peace deals and post-conflict stabilization, including in Gaza and Syria. Trump’s political style is highly confident about presidential diplomacy and conflict resolution, and the NSS treats mediation as a strategic tool to bring difficult bilateral environments into a more stable architecture. This dynamic underscores that while the NSS prioritizes stability and “realignment through peace,” the Trump administration remains fully prepared to use force when it believes core US and allied interests are threatened, a stance entirely consistent with the NSS’s emphasis on “peace through strength.”

Although this is broadly reassuring for the GCC, residual anxiety remains. If Washington chooses to secure regional stability through big-ticket diplomatic bargains, especially where Russia or Israel are involved, Gulf capitals will expect assurances that their security will not be traded for conflict de-escalation. However, many Gulf leaders now possess significant diplomatic capacity and mediation credibility of their own. The NSS creates an opening for GCC states to position themselves as mediators or stabilizers rather than as passive recipients of US decisions. The Gulf’s growing diplomatic centrality, from Gaza cease-fire talks to Sudan, Libya, or the Horn of Africa, fits well with an NSS that prefers localized responsibility and regional realignment rather than direct US intervention. Still, the current crisis underscores a critical reality: any US–Iran confrontation, even a limited one, will have immediate consequences for Gulf security, energy markets, and maritime stability, reinforcing the importance of GCC preparedness, joint air and missile defense integration, and sustained coordination with Washington as the situation continues to evolve. In this sense, the NDS largely confirms the NSS’s direction of travel but narrows the margin for ambiguity: it signals that future Iran-related crises will be handled through short, sharp US operations nested within a regional architecture in which the GCC and Israel shoulder greater routine responsibility.

Will GCC capitals be surprised or concerned?

Little in the NSS will shock senior decision-makers in the GCC. Most regional governments have already experienced Trump’s approach firsthand, benefitted from strong bilateral ties, and understand that Washington’s foreign policy has permanently moved away from nation-building, democracy promotion, and open-ended security commitments. The more consequential shift in recent weeks has been the intensification of US–Iran tensions, which has temporarily elevated the Gulf within Washington’s strategic focus despite the NSS’s assertion that the region is no longer central. GCC capitals now find themselves preparing for multiple scenarios, ranging from a calibrated US strike on Iran to potential Iranian retaliation, even as they recognize that none of this contradicts the NSS’s underlying logic of deterrence, burden-shifting, and threat-management rather than long-term occupation or nation-building.

Overall, the NSS is more likely to produce re-calibration than alarm. The strategy is consistent with Gulf countries’ expectations that they will be treated as indispensable pillars of regional stability and as partners in defense technology, energy investment, and maritime security. The NDS largely reinforces this assessment: it does not downgrade GCC importance, but instead clarifies the price of being central—greater spending, deeper integration with Israeli and US forces, and a willingness to absorb more day-to-day risk in managing Iran and regional crises.

How the NSS will guide GCC responses

The NSS will provide Gulf policymakers with an actionable framework for deepening relations with Washington. First, Gulf capitals can present themselves as regional security providers, offering maritime patrols, counter-terrorism support, Red Sea and Bab al-Mandab stabilization, and specialized capacity-building. Second, GCC countries can frame investment deals as US industrial wins, emphasizing how AI, aerospace, nuclear, and defense co-production create US jobs and secure American supply chains. Third, Gulf states can symbolically align with Washington on sovereignty narratives, emphasizing secure borders, state authority, and skepticism toward external ideological intervention, areas where their domestic priorities already converge.

Finally, GCC states will possibly manage their relationship with China more carefully, offering Washington assurances that high-sensitivity sectors will remain insulated from Chinese involvement while still leveraging Chinese trade and capital where appropriate. In doing so, Gulf leaders can demonstrate that multi-vectorism increases stability and economic growth without jeopardizing strategic trust.

A strategically manageable landscape

The Trump administration’s NSS is a sophisticated refinement of “America First.” It sets clear priorities, clarifies regional hierarchies, and emphasizes economic and technological competition as the foundation of power. For the GCC, the implications are significant, but manageable. Rather than being marginalized, Gulf partners are now expected to assume greater security responsibility, serve as stabilizers, and act as premium platforms for bilateral economic and technological exchange. The NSS ultimately positions GCC countries not as passive dependents of US security guarantees, but as mature strategic actors capable of shaping their region while deepening mutually beneficial ties to Washington.

Read together with the NDS, the picture becomes sharper: the GCC is central to a burden-sharing model in which the Middle East is no longer the main theater of US strategy, but remains a crucial test case for how America First can combine limited, decisive US force with empowered regional allies to deliver “peace through strength” without returning to the era of open-ended wars.

Kristian Alexander is a senior fellow and lead researcher at the Rabdan Security & Defense Institute (RSDI) in Abu Dhabi.

The post Trump’s National Security Strategy doesn’t downgrade the Middle East, it redefines it appeared first on Atlantic Council.

For decades, Brussels and New Delhi circled each other with caution—too many regulatory barriers, too much agricultural protection, and too little urgency held them apart. What brought down the obstacles, a senior Indian official told me as their negotiations advanced, was above all US President Donald Trump and the upset on both sides about his tariffs.

“The EU-India trade deal is part of the European Commission’s diversification strategy, which is a direct response to increasing pressures from the United States and China on the global trading system,” writes Jörn Fleck, senior director of the Atlantic Council’s Europe Center, in a smart roundup of expert reaction.

Michael Kugelman, senior fellow for South Asia at the Atlantic Council, adds, “With all the strain and uncertainty that characterize India’s ties with Washington, the EU is a logical space to embrace.” Kugelman points to shared EU-Indian interests, including the need to counterbalance China, and the fact that France and Germany are already among India’s leading trade partners. 

The deal—covering trade, investment, digital rules, supply chains, climate standards, and technology—also reflects a shared EU-India conclusion: the United States may still be an indispensable economic and political partner for both of them, but it has at the same time become an increasingly unpredictable one. Both sides, for now, have given up on the notion that Washington can anchor the global trading system. It was time to look hard for alternatives.

Together, the EU and India are building something that looks less like old globalization and more like what comes next: large, values-adjacent economies knitting themselves together to hedge against volatility from all sides—China’s product-dumping scale, the United States’ tariff-tinged uncertainties, and, from Europe’s side, Russia’s geopolitical volatility.

What makes this moment an inflection point is that the gravitational center of global trade architecture, once greatly determined by the United States and its democratic allies, is shifting, but where it lands is uncertain. Today, the United States talks more about deal leverage than global leadership. Europe and India are adapting, having learned that excessive dependence invites risk and diversification breeds resilience.   

The Atlantic Council’s Mark Linscott, who served as assistant US trade representative for South and Central Asian Affairs, scoffs at talk about the “mother of all trade deals” as hyperbolic. “The results are incomplete and will require follow-up action,” he writes, noting that both sides set aside the most complicated issues to close the deal in time for von der Leyen’s visit on India’s Republic Day this week. His analysis is worth reading.

Still, concludes Linscott, “When two of the biggest economies of the world agree to eliminate a significant proportion of their trade barriers . . . governments and stakeholders around the world should take notice.” 

No one should take more notice than Trump, whose tariffs on Europe and India without any doubt have been the accelerator for this deal. It’s time to start tallying up the unintended consequences of Trump’s trade policies, and whether the result will be more or less American influence and revenues globally. 

Frederick Kempe is president and chief executive officer of the Atlantic Council. You can follow him on X @FredKempe.

This edition is part of Frederick Kempe’s Inflection Points newsletter, a column of dispatches from a world in transition. To receive this newsletter throughout the week, sign up here.

The post The ‘mother of all’ trade deals in the time of Trump appeared first on Atlantic Council.

Bottom lines up front

• A new entity controlling the social media app TikTok in the United States is being sold as a step toward addressing foreign influence and data security concerns.
• But China’s influence campaigns and access to data on Americans do not rely on TikTok.
• Plus, the Chinese parent company ByteDance will retain control over the TikTok algorithm, leaving the door open to possible manipulation by the Chinese government of what shows up in Americans’ feeds.

TikTok has entered a new era in the United States, but it’s hardly a less risky one.

Last week, the company disclosed the contours of a deal intended to allow the platform to continue operating in the United States, bringing it into compliance with a 2024 US law. The arrangement appears largely consistent with the framework reportedly negotiated between US and Chinese officials last fall. Under the proposed structure, a newly created entity called TikTok USDS Joint Venture would assume responsibility for data security and content moderation, with US investors—including the software company Oracle—holding majority control while ByteDance remains the largest single shareholder at 19.9 percent. TikTok’s existing US-based companies would retain control over the platform’s commercial operations, including advertising, e-commerce, and marketing. While the ownership of TikTok’s recommendation algorithm is not explicitly addressed in the latest announcement, a December memo from TikTok CEO Shou Zi Chew indicated that ByteDance would keep ownership of the algorithm’s intellectual property and license it to the joint venture for a fee.

The deal has been framed by some officials and commentators as a meaningful step toward addressing long-standing US concerns about People’s Republic of China (PRC) information manipulation, foreign influence, and data security. In practice, it does little to alter the underlying risks that animated the debate during the previous US administration.

On disinformation and influence operations, the deal is unlikely to be transformative. As we argued in a 2024 report examining TikTok’s national security implications, Beijing’s ability to conduct influence operations does not depend on ownership of a single platform. While the Chinese Communist Party (CCP) could theoretically attempt to shape content via TikTok’s recommendation algorithm, it already engages in influence campaigns across US-based social media platforms and will continue to do so even with TikTok’s structural reorganization. Restricting TikTok does not dismantle the broader information ecosystem in which foreign influence campaigns operate.

The data security case is even more revealing. The type of data generated by TikTok is not fundamentally different from that collected across the digital advertising ecosystem, which over the past decade has evolved into a system capable of extremely granular micro-targeting. Data brokers routinely aggregate information from mobile advertising identifiers, cookies, location data, and online activity to build detailed dossiers on individuals. Although these identifiers are often described as “anonymized,” it is widely understood that combining multiple datasets makes re-identification fairly straightforward.

This ecosystem enables the creation of highly specific audience segments—such as military personnel with financial vulnerabilities, politically active voters, or individuals likely to participate in protests—drawing on data that includes location histories, credit card transactions, employment records, social media activity, and government filings. Investigations by civil society organizations and journalists have repeatedly demonstrated how easy it is to access such data, often with minimal vetting, and how readily it could be exploited by foreign intelligence services or malign actors.

Importantly, this data is not confined to fringe actors. Major US technology platforms continue to earn significant revenue from foreign advertisers, including Chinese firms, even as they attempt to place guardrails on data flows. While companies such as Google have introduced measures to limit the sharing of certain identifiers with Chinese entities, advertising experts note that these restrictions are often porous. Once an ad is served, advertisers can still infer sensitive information—such as IP addresses and device characteristics—and real-time bidding systems offer no technical guarantee that data will not be misused after it is received.

Compared to this sprawling and still inadequately regulated market, TikTok’s data practices are not uniquely dangerous. Focusing narrowly on this one app risks obscuring the far more consequential vulnerabilities embedded in the broader data economy.

Finally, it is worth underscoring how little ByteDance has conceded in the deal. If ByteDance has in fact licensed the algorithm, as subsequent reporting has indicated, the company has preserved control over its most valuable intellectual property. The principal concession—that is, the loss of majority ownership in the entity overseeing data security—imposes limited strategic costs.

In addition, depending on how the actual licensing deal is laid out, this structure could still hypothetically leave room for PRC influence over the algorithm—though it will likely be more difficult than it would be if ByteDance retained full ownership. The licensed algorithm is a continuously trained system shaped by design choices, training data, model updates, and operational parameters. If ByteDance is retaining control over that core intellectual property, in theory, the PRC government could exert some influence over how the system evolves, even if day-to-day content moderation or data security oversight is localized. Once further details of the licensing agreement are released, this risk will be better understood.

At the same time, it is important not to overstate what that influence could look like in practice. Rather than eliminate the risk of manipulation, this structure redistributes it among a different set of actors. Algorithmic manipulation is unlikely to take the form of overt, platform-wide promotion of pro-CCP content. Should manipulation occur, it would likely take the form of more subtle interventions that would be difficult to attribute to PRC influence or parse out from how the recommender system is working on US user data. This is especially the case now as the handover gets under way and the algorithm is being trained on US user data from scratch; in the short term, the app could exhibit high variability in terms of the content it surfaces while the system learns what users want and curates their “For You” page accordingly.

In essence, this structure largely shifts visible forms of control from Beijing to other actors without eliminating the underlying vulnerabilities inherent in the US social media ecosystem. While the deal may reduce political pressure in Washington and be framed as a decisive step to protect the US information environment from PRC interference, it does little to resolve the systemic challenges of information manipulation, foreign influence, and data exploitation. Those risks are embedded in the architecture of the digital ecosystem itself, and mitigating them will require far more than rearranging the ownership of a single platform.

The post TikTok’s new ownership structure doesn’t solve security concerns for Americans appeared first on Atlantic Council.

Bottom lines up front

• Business and geopolitics collided at last week’s World Economic Forum in Davos, as leaders confronted how deeply markets, national security, and policy are now intertwined.
• US tariff policies forced a sober reassessment of global trade, while AI drew a mix of optimism and concern over risks, ethics, and regulation.
• Despite a US–Europe focus in Davos, other powers were active, too, with Canada’s prime minister warning that the rules-based order is rupturing.

DAVOS—This week Davos, Switzerland, returns to being a charming ski town. The shops and restaurants—temporarily rented by every major tech company on the planet to host events and receptions—return to their owners and will soon be filled with tourists on holiday.  

But what happened at the 2026 World Economic Forum won’t soon be forgotten. This was the year the forum changed policy. As one attendee told us on her way off the mountain, “Imagine what would have happened this week if Trump didn’t have to meet the Europeans face to face.” It’s an intriguing, if chilling, thought.

While Trump’s speech this past Wednesday and his subsequent decision to backtrack on Greenland threats drove the roller coaster news cycle of the week, there were several other notable moments that may have much longer term—and more important—policy repercussions. Here’s what we saw on the ground:

The two Davoses

Davos is always two different things at once. “Business Davos” is the place where executives huddle in Swiss office buildings negotiating deals far away from the TV cameras. This is, actually, what brings most people to the mountain year after year. That Davos traditionally operated independently from “geopolitical Davos.” That’s the Davos most people are familiar with—leaders from around the world speaking in the Congress Center, and academics, journalists, and think tankers debating on panels. 

Most years, those two Davoses can operate in their own spheres. But not this year. Last Monday, as markets swung sharply negative on the Greenland news, business Davos had its eyes glued to the Congress Center. Leaders of some of the largest companies in the world lined up and waited just like everyone else to get a seat. Suddenly, everyone was an expert on Nuuk, the Arctic, and whether military leases were a viable compromise. It was a reminder of a big lesson of the past few years—from the COVID-19 pandemic to Russia’s invasion of Ukraine—that finance and national security are deeply interconnected. In fact, there’s a good word for that—geoeconomics. 

The new reality of tariffs

One year ago Davos attendees watched Trump’s inaugural address and then listened to him virtually address the forum. He hardly said the word “tariffs” once between the two speeches, and the delegates decided that his threats during the campaign were just threats. What a difference a year makes. After twelve months of the biggest shock to the global trading system in decades, which left the world facing the long-term prospect of the US economy having a 10 percent or higher tariff rate, reality settled in on the mountain. Gone was the optimistic talk about how deregulation was going to lead to an investment boom. In its place was chatter about finding new trade arrangements with emerging markets, and forecasting what would happen if the Supreme Court rules against Trump in the tariff case. 

The risk and rewards of artificial intelligence

Few topics were more in the air in Davos than artificial intelligence (AI). Almost every billboard and storefront had a reference to AI—whether for supply-chain efficiency or content creation. On the surface, businesses wanted to project confidence, with AI positioned as the engine of future growth. But step inside these company events and a different picture emerged. Many featured chief risk officers or chief ethics officers, titles that barely existed a few years ago, grappling with questions around the different types of “risks,” whether those were geopolitical risks, economic risks, or climate risks. There was a stark contrast between the glossy AI optimism outside and the sober risk assessment on the inside of these conversations, and a reminder that for all the promise of growth, the industry knows the hard questions are just beginning.

More than a transatlantic affair

On the main stage and in the global news cycle, this Davos felt like a US–Europe affair. Tariffs announced and abandoned on European allies. French President Emmanuel Macron responding directly. US Treasury Secretary Scott Bessent outlining the health of the US economy. California Governor Gavin Newsom sparring rhetorically with Washington. For audiences watching from afar, it was easy to conclude this was a narrow, transatlantic Davos.

On the ground, however, the picture was far more global. Brazil House, India House, Indonesia House, and a dozen country pavilions were packed with programming all day. A large Pakistani delegation arrived on its own official shuttle bus. Philippines House ran cultural programs, including concerts featuring traditional music, alongside policy panels.

India, in particular, projected quiet confidence. Officials framed the country as a durable pillar of global growth, especially on AI. China maintained a low profile, with Chinese Vice Premier He Lifeng offering brief remarks about Beijing’s willingness to buy more foreign goods and services—a notably muted presence compared to previous years.

Yet the US footprint on the promenade was impossible to miss. The US delegation was one of the largest in Davos, anchored by a sprawling USA House with a dense schedule of events and receptions. From the number of officials and security on the ground to the symbolic bald eagle overlooking the promenade, the message was clear: US influence loomed over nearly every discussion. For all the activity in country pavilions, this remained a global forum shaped by great-power rivalry.

From Canada, a clarion call 

Canadian Prime Minister Mark Carney delivered one of the most consequential addresses during Davos, declaring that the post–Cold War rules-based international order is “in the midst of a rupture, not a transition.” Carney argued that great-power rivalry, economic coercion, and unilateral actions by dominant states (not mentioning Trump by name) have weakened longstanding global norms and institutions. He called on middle powers to work together to protect their interests and build new cooperative frameworks rooted in shared values. Simply going along to get along is no longer the answer, he argued. Whether other middle powers respond to that message may be the single most important question from this year’s forum. 

Descending the mountain

As delegates packed their bags and headed down the mountain, few were under any illusions. The convergence between business Davos and geopolitical Davos is the new reality. The tightrope that companies are walking is not getting any less precarious. And the question of whether economic cooperation can survive an era of rising geopolitics remains very much unanswered.

Next year’s forum may face these same tensions. The key question is whether the world will have found ways to navigate them successfully or whether the rupture Carney described will have deepened further.

The post Inside the biggest Davos debates (other than Greenland) appeared first on Atlantic Council.

At the heart of this dialogue was the global energy agenda. Delegates from around the world debated how to reconcile energy security, market stability, climate objectives, and economic competitiveness—all while navigating intensifying geopolitical pressures, divergent national strategies, and the risks and opportunities posed by new technologies. 

What is the path forward for global energy security? Our experts weigh in with key takeaways from the energy conversations at Davos. 

Click to jump to an expert analysis:

Lisa Basquel: The transatlantic energy fault line at Davos 2026

Amy Drake: Under an energy security imperative, global leaders find common ground in nuclear energy expansion

Elina Carpen: Carney positions Canada as a reliable, middle power partner with vast energy resources to offer

Alexis Harmon: At Davos, global leaders treated critical mineral cooperation as economic realism

The transatlantic energy fault line at Davos 2026

Against the backdrop of US-EU tensions over Greenland and trade, Davos 2026 revealed that the transatlantic energy divide is as much about trust as it is about climate targets or fuel choices. Energy policy emerged as a proxy for deeper disagreements over how each side strengthens economic competitiveness, safeguards strategic autonomy, and asserts their authority in an increasingly fractured global order. 

From Washington’s perspective, energy was framed as a source of economic strength and geopolitical influence. US officials emphasized market scale, energy abundance, and affordability. US President Donald Trump pointed to surging oil and gas production and a renewed embrace of nuclear power as evidence of America’s energy dominance, while criticizing Biden-era climate policies as the “Green New Scam.” He singled out wind power as inefficient and expensive, reflecting a broader concern that Europe’s reliance on renewables had weakened its competitiveness. US Energy Secretary Chris Wright echoed these concerns, arguing that global investment in renewables is underdelivering on growth and affordability, calling for a doubling of global oil production and warning that European environmental regulations risk discouraging US exports and limiting market access for American producers. 

Europe, by contrast, spoke the language of strategic autonomy. European Commission President Ursula von der Leyen was explicit that geopolitical shocks should be used to build “a new form of European independence.” Her emphasis on energy security, nuclear power, and homegrown renewables was not just about resilience and climate objectives, but about limiting exposure to external volatility. Her reference to ending “manipulation” in energy markets was a pointed signal: autonomy is no longer aspirational—it is a direct response to Europe’s diminishing trust in transatlantic energy cooperation. 

What emerged most clearly from Davos’ energy debates was that this divide is no longer about hydrocarbons versus renewables. The United States sees energy as leverage; Europe sees it as sovereignty. Energy was just one thread in Davos’ crowded agenda, but it laid bare a deeper recalibration in the transatlantic relationship, with Europe preparing for a future less anchored in US leadership.

—Lisa Basquel is a program assistant with the Atlantic Council Global Energy Center. 

Under an energy security imperative, global leaders find common ground in nuclear energy expansion 

Set against shifting geopolitical tensions and diverging geoeconomic priorities, this year’s WEF annual meeting concluded with a unifying consensus among several world leaders: nuclear energy will play a crucial role in bolstering a diverse and resilient global energy system.   

In his address last Wednesday, Trump praised nuclear energy’s safety and affordability, reiterating the administration’s staunch support of nuclear energy and its role in expanding America’s energy dominance agenda. Trump’s sentiments build on significant actions taken by the administration over the last year to reinvigorate the US nuclear energy industry, including four executive orders to build out the US nuclear fuel supply chain, enhance nuclear reactor testing, streamline reactor licensing, and enable the use of advanced nuclear technologies to support national security objectives.   

Trump’s address marks the latest step in the administration’s strategy to reinvigorate US competitiveness in the nuclear export market while establishing energy independence. Earlier this month, the US Department of Energy announced a $2.7 billion investment to strengthen domestic uranium enrichment, another significant step toward meeting anticipated demand from new nuclear projects and shifting away from US reliance on imported Russian uranium.   

Support for deploying nuclear reactors to secure energy independence was echoed by leaders from across Europe as the region urgently seeks to establish affordable, resilient energy systems. Price volatility and supply shocks continued to play a central role in energy discussions and were key drivers in remarks by von der Leyen, who highlighted nuclear energy’s role in lowering prices and cutting dependencies. Sweden’s energy minister Ebba Busch emphasized Sweden’s plans to orchestrate a “nuclear renaissance” to meet the country’s need for reliable, dispatchable energy, while Romania’s Minister of Energy Bogdan Ivan cited economic competitiveness as a driving factor behind Romania’s planned nuclear energy expansion.   

In addition to government figures, international business leaders shared commonalities in their projections of the future nuclear energy landscape, attributing the success of prospective projects to “coalitions of the willing.” Progress in deploying nuclear reactors to strengthen nations’ energy independence will likely occur through regional and bilateral alliances, such as the EU nuclear alliance, Nordic-Baltic cooperation, renewed Japanese investment, and civil nuclear cooperation between the United States and Canada.  

While the promises and pitfalls of artificial intelligence (AI) were at the center of this year’s WEF agenda, AI’s need for reliable, 24/7 power dominated energy conversations. Meta is the latest of several tech companies that have signed historic partnerships with US nuclear reactor developers to meet data centers’ exponential energy demand. Last March, major tech companies joined a pledge to support the goal of at least tripling global nuclear capacity by 2050. As the global race for AI leadership intensifies, industry leaders acknowledged a key convergence in nuclear technology’s potential to provide secure, baseload power and to establish AI competitiveness.

This year, Davos hosted its first panel focused on nuclear energy in Africa, exemplifying the global momentum surrounding the sector and its potential to meet rising electrification demands. Leaders from countries considering new nuclear energy projects, such as Paraguay and India, expressed intentions to pursue domestic civil nuclear programs, displaying a shared recognition of nuclear energy’s role in catalyzing sustained economic growth and competitiveness in emerging markets. 

The conversations at Davos reveal a growing consensus and a clear market signal—nuclear energy has emerged as an imperative across national energy agendas as nations’ shared visions materialized on the global stage. The successful deployment of nuclear energy technologies at scale rests on dedicated policies, investments, and cooperation to ensure a secure and sustainable energy system.

—Amy Drake is an assistant director with the Atlantic Council Global Energy Center. 

Carney positions Canada as a reliable, middle power partner with vast energy resources to offer  

Amid a series of remarks from global leaders at Davos 2026, Canadian Prime Minister Mark Carney’s address captured international attention. Carney’s speech, “Principled and pragmatic: Canada’s path,” outlined a new course forward for Canada and other middle power countries, pointing to energy as a critical enabler for strengthening emerging bilateral and multilateral partnerships.  

Carney’s address offered a striking assessment of the current rules-based international order, positing that the conventional group of great power countries have taken advantage of their influence over financial mechanisms and global supply chains to coerce their smaller and more vulnerable counterparts into zero-sum relationships. In response, to other middle power countries, Carney offers collaboration with Canada as an alternative to the current global framework. In line with the theme, “A Spirit of Dialogue,” Carney marketed Canada as a stable partner that is looking to redefine its foreign partnerships and establish a new standard for international cooperation. Carney outlines a new strategy of “variable geometry”—creating different coalitions for distinct issue sets—that aims to reduce the economic and security exposure of middle power countries.  

Energy, it appears, will play a key role in Canada’s diversification process. Carney pointed to Canada’s status as a self-proclaimed energy superpower and outlined its ambition to fast track over a billion dollars of domestic investment in critical minerals, AI, and energy development. With vastcritical mineral reserves and energy resources, partnerships with Canada offer a multitude of opportunities for new foreign partners to build on their own domestic energy security initiatives. New agreements already formed with China and Qatar on electric vehicle imports and energy infrastructure projects underscore that Carney’s rhetoric is backed by action.  

As we move forward from Davos, Canada’s prospective realignment away from great power allies raises questions about the future of its traditional trade partnerships. This pivot could play a critical role in the upcoming review of the US-Mexico-Canada Agreement and will shape the future of US-Canada trade and energy cooperation.

—Elina Carpen is an associate director with the Atlantic Council Global Energy Center. 

At Davos, global leaders treated critical mineral cooperation as economic realism 

At Davos 2026, minerals and materials were a common thread underpinning conversations ranging from the expansion of AI to the deployment of additional energy capacity. Overall, discussion clustered around two intertwined themes: scale and cooperation. 

First, there was a recognition of the sheer material scale required to build the future energy and digital economy. Conversations around AI, electrification, and clean energy deployment repeatedly circled back to the physical reality underpinning these ambitions. While policy debates often fixate on niche critical minerals, Davos speakers emphasized that the challenge is far broader, encompassing massive, sustained demand for foundational materials like copper. It was clear that leaders increasingly see the energy transition and AI boom not just as technological revolutions, but industrial ones—and that they recognize current mining and processing pipelines are nowhere near aligned with projected demand. 

Second, and more unexpectedly, Davos 2026 leaned heavily into cooperation on minerals, reflecting the Forum’s theme, “The Spirit of Dialogue.” Despite familiar rhetoric around strategic competition and US–China tensions, many leaders framed collaboration as pragmatic rather than idealistic. Carney pointed to discussions around a G7 critical minerals buyers’ club to reduce volatility and coordinate demand, while Saudi Minister of Industry and Mineral Resources Bandar Alkhorayef described international collaboration on mineral supply as simply the “rational thing” to do. 

Together, these discussions suggest a subtle but important shift from viewing minerals exclusively as a zero-sum geopolitical asset toward seeing them as a shared constraint on global economic growth. With the Trump administration’s inaugural Critical Minerals Ministerial set for February 4, this emphasis on collaboration appears poised to deepen.

—Alexis Harmon is an assistant director with the Atlantic Council Global Energy Center. 

Staff

Lisa Basquel

Program Assistant, European Energy Security

Global Energy Center

Energy & Environment Europe & Eurasia

Staff

Elina Carpen

Associate Director

Global Energy Center

Americas Energy & Environment

Staff

Amy Drake

Assistant Director

Global Energy Center Nuclear Energy Policy Initiative

Energy & Environment Energy Transitions

Staff

Alexis Harmon

Assistant Director

Global Energy Center

Critical Minerals Geopolitics & Energy Security

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Energy security is only achievable through global partnerships

By Elena Benaim, Paddy Ryan

The Atlantic Council’s flagship Global Energy Forum concluded its programming in Washington, DC, today. What emerged as a central theme throughout was the undeniable need for any single country to engage in international partnerships to achieve energy and national security, whether speakers were discussing divergent transatlantic views, nuclear power, or critical mineral supply chains.

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I asked this European official for further explanation. Shock therapy, after all, is more commonly a description of electrical currents treating mental illness than a theory of international affairs. In the context of European-US relations in 2025 and 2026, he said, shock therapy refers to the “rapid, disruptive, and painful transitions” forced on Europe by Trumpian jolts to the traditional transatlantic security and trade partnership. 

Europe isn’t enjoying the treatment, he said, but it is responding to it—more consequentially with every shock. Europeans have long spoken somewhat helplessly about the chronic conditions they suffer: a lack of economic competitiveness, an inability to provide for their own security, and insufficient political unity. Together these conditions have resulted in the continent’s inability to translate the weight of its 450 million people, $22 trillion-plus gross domestic product (GDP), and advanced market into geopolitical heft. 

This diagnosis hasn’t changed. But European leaders now recognize that, in the face of Trump’s United States, the continent must fundamentally treat its maladies or further surrender global relevance. What’s also changed for Europe is a growing recognition that it can no longer rely on the post–World War II global order, whose institutions and rules provided the safe context for the creation and growth of the European Union (EU).

Trump’s dramatic climbdown this week from his ultimatum that Europe either give him Greenland or face tariffs had many sources, ranging from market jitters over EU countermeasures and congressional opposition to a lack of popular American support. Most significant in Europe was that it triggered greater unity among the EU’s twenty-seven members against Trump, even among the right-wing parties that usually back him, than at any time previously.

Even after the immediate crisis was defused in Davos on Wednesday, EU leaders still met at an emergency summit in Brussels on Thursday. The Atlantic Council’s Jörn Fleck and James Batchik write about how that meeting signaled “a quiet yet dogged determination . . . to strengthen Europe’s ability to withstand US pressure in any future scenarios.”

If this change is permanent

It took a Canadian in Davos to best describe the abrupt changes unsettling European countries—and other nations that he referred to as middle powers. “We are in the midst of a rupture, not a transition,” said Prime Minister Mark Carney. Great powers, he continued, “have begun using economic integration as weapons, tariffs as leverage, financial infrastructure as coercion, supply chains as vulnerabilities to be exploited.” His conclusion: “You cannot live within the lie of mutual benefit through integration, when integration becomes the source of subordination.”

However, it was European Commission President Ursula von der Leyen who captured the historic moment at Davos for a continent whose current boundaries, ideologies, and collaborative structure have been forged by the previous shocks of World War I, World War II, and the Cold War. Where she agreed with Carney, without mentioning Trump by name, is that his administration is sweeping away the nostalgia of common cause that has helped hold together the transatlantic alliance for eight decades.

“Of course, nostalgia is part of our human story. But nostalgia will not bring back the old order,” she said in a speech less celebrated than Carney’s but just as consequential. “And playing for time, and hoping that things will revert soon, will not fix the structural dependencies we have. So, my point is, if this change is permanent, then Europe must change permanently, too.”

The will to match the ambition

What many in the Trump administration have missed, with their focus on Europe’s weaknesses, is that the EU has been seizing upon the Trump moment for new trade deals. Von der Leyen came to Davos from Paraguay, where she signed the EU-Mercosur trade agreement, through which the EU and Latin American countries have created what she called “the largest free trade zone in the world, a market worth over 20 percent of global GDP; thirty-one countries with over 700 million consumers.”

Her next lines were aimed at Trump, without naming him. “So, this agreement sends a powerful message to the world that we are choosing fair trade over tariffs, partnership over isolation, sustainability over exploitation, and that we are serious about de-risking our economies and diversifying our supply chains.”

For those paying attention, that was something new. De-risking has been a term that Europe has associated with China until now, but in Davos this past week European political and corporate leaders increasingly applied it to the United States. A few US companies complained privately in Davos that European officials cancelled meetings—presumably to send a message. US companies with big business and investments in Europe sound more alarmed than ever that their European partners will look for ways, wherever they can, to operate without them. One US business leader told me that EU regulators are talking openly about more aggressively reducing their reliance on US technology, social media, and payment giants over the next three to five years. 

Though misgivings about dealing with China remain substantial, European leaders believe they must hedge, if only to signal to Washington that they have alternatives. As evidence of this, European leaders are lining up to visit Beijing to drum up business. Carney was there just before Davos. British Prime Minister Keir Starmer and German Chancellor Friedrich Merz will each visit in the coming days. French President Emmanuel Macron, who visited China in December, said in Davos that Europe needs to seek more Chinese foreign direct investment.

In her Davos speech, von der Leyen spoke about new trade agreements in the past year alone with Mexico, Indonesia, and Switzerland (while Trump has been slapping tariffs on them) and a new arrangement soon with Australia. The EU is also “advancing,” she said, with the Philippines, Thailand, Malaysia, and the United Arab Emirates. This weekend, she is in India, whose officials prioritized the EU after Trump’s tariff hit on them.

“There’s still work to do, but we are on the cusp of a historic trade agreement” with India, von der Leyen said. Then, channeling Trump-like language that no EU leader would have used previously, she said, “Indeed, some call it the mother of all deals. One that would create a market of two billion people, accounting for almost a quarter of global GDP and, crucially, that would provide a first-mover advantage for Europe with one of the world’s fastest-growing and most dynamic countries.” 

At the same time, European Union countries have launched a surge in defense spending of some €800 billion through 2030. That pledged surge, von der Leyen said, had helped triple the market value of European defense companies since January 2022, making them one of the best global investments anywhere in that time.

“All of this would have been unthinkable even a few years ago,” she said. “This now only shows how economy and national security are more linked than ever, but also what we can do when Europeans have the will to match the ambition.”

Interrupting the equilibrium

One of the other quiet takeaways from Davos was just how serious European policymakers are about economic integration. “The long-debated savings and investment union is now on a fast track, and Trump is a major factor,” says Josh Lipsky, chair of international economics at the Atlantic Council, who was in Davos this past week. “The stark realization that the US can’t always be relied on as an economic partner put new urgency in the minds of every finance official. I expect this is finally going to get done.”

NATO Secretary General Mark Rutte, the European who negotiated the deal that defused what might have been the worst transatlantic crisis in decades, gave Trump credit in Davos for a more determined Europe. “I’m not popular with you now because I’m defending Donald Trump,” he said, “but I really believe you can be happy that he is there. He has forced us in Europe to step up.” He added, “Without Donald Trump, this would never have happened.”

Whether Europe’s new steeliness endures beyond Davos remains to be seen. As a life-long Atlanticist, one who runs an institution dedicated to shaping the global future alongside US partners and allies, I regret the nature of the therapy but hope the eventual outcome will be a stronger and more confident Europe within a restored and resurgent transatlantic community, one up to the challenges of the coming century.

One can only hope that it won’t require an ever more severe shock to get there, more than likely administered by autocratic powers such as Russia and China, sensing a moment of opportunity provided by weaknesses among democratic allies. 

Shock therapy succeeds in medicine not because it heals but because it interrupts a potentially fatal equilibrium and creates a window for recovery. Applied to Europe, Trump’s shock has broken decades of strategic complacency and forced long-postponed decisions on defense, trade, and autonomy. Both in medicine and politics, a jolt can restart the system, but only sustained care determines whether it survives.

Frederick Kempe is president and chief executive officer of the Atlantic Council. You can follow him on X @FredKempe.

This edition is part of Frederick Kempe’s Inflection Points newsletter, a column of dispatches from a world in transition. To receive this newsletter throughout the week, sign up here.

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Earlier this month, as anti-regime protests in Iran spread and reports of Iranian security forces killing demonstrators emerged, Trump pledged that the United States would “come to their rescue.” Is the arrival of US naval forces near Iran a prelude to a strike on the regime? For answers, we turned to Nate Swanson, who was the director for Iran at the National Security Council in the Biden White House and a member of the Trump administration’s Iran negotiating team:

1. What are Trump’s options in Iran?

We are in unprecedented territory. Prior to Operation Midnight Hammer in June, the United States had never directly attacked Iran. The United States spent years developing the technology and expertise necessary to successfully carry out an operation against Iran’s nuclear program. Initiating strikes to protect protesters is an entirely different set of targets and objectives that are likely being developed in real time.

As the USS Abraham Lincoln enters the region, Trump likely has a range of options that fall into following broad categories. 

• Symbolic strikes: This could include strikes on conventional targets, such as Iran’s nuclear or missile program. While these strikes would do little to tangibly help the protesters, it will ensure that nobody can accuse the president of drawing “red lines” and then ignoring them.
• Strikes targeting the security apparatus: Trump likely has intelligence on a range of facilities and personnel connected to the Islamic Revolutionary Guard Corps, law enforcement forces, and the paramilitary Basij militia that may be connected to the crackdown on the protest movement. Cyberattacks against the security apparatus also fall into this category. These strikes might provide a measure of revenge and consolation to the protesters, but it’s unclear what impact this would have in preventing the regime from cracking down. Iran has more than a million individuals in its security apparatus. A one-off strike is unlikely to change the regime’s calculus about killing protesters. A sustained campaign against security personnel is plausible, but it would require a durable commitment that the Trump administration has thus far avoided in its use of military force.  
• Economic targets: During confrontations between Iran and Israel over the past year, there was speculation that Israel might attack Iranian economic targets. This could include oil export terminals, such as Kharg Island in the Persian Gulf, as well as critical natural gas infrastructure. Such an operation would be risky and could impact energy markets, but it would also get the attention of a government that is teetering on the brink of economic collapse.  
• The supreme leader: Many protesters in Iran and observers outside of the country are clamoring for a strike that removes Iran’s Supreme Leader Ayatollah Ali Khamenei. While it’s unclear whether such a strike is feasible (much less advisable), it would be a game changer. Iran’s supreme leader is the highest political and religious authority inside Iran. There has only been one prior succession in the history of the Islamic Republic, and there is no consensus successor for Khamenei. Removing him creates an unprecedented power vacuum, and it is impossible to predict what comes next.   
• Non-kinetic options: There are numerous tangible non-kinetic options that the United States can take. Former US Deputy Special Envoy for Iran Abram Paley and I offered our own suggestions for supporting protesters, including pausing non-protest-related policy initiatives. Realistically, none would likely be decisive or would change the trajectory of the current protests. They are geared toward the next round of protests and ensuring protesters have the tools to make their own decisions about Iran’s future.

2. Would a US strike help Iranian protesters?

I am skeptical it will have a major impact, but it’s impossible to predict, because the success of a strike would best be measured on the impact it has on both the protesters’ and the regime’s psyche. Maybe a strike will provide such a significant morale boost to the protesters that they decide to keep protesting to the point that regime fissures emerge, defections ensue, and the Iranian regime collapses. An alternative is that the Iranian regime kills more of its own people. This scenario has parallels to Hungary in 1956 and Kurdish Iraq in 1991, where the United States called for the people to rise up, but had limited resources to offer, and the protesters were brutally crushed. 

In all strike scenarios, the administration will need to consider and articulate a vision for what comes next. The regime might fall and a pro-Western democracy could emerge, but an equally plausible scenario is that an even more hardline government emerges, one that is even more eager to develop nuclear weapons and utilize its missile arsenal. This concern is partially why several Gulf nations have advocated against striking Iran. 

Finally, it seems highly unlikely that US troops would be deployed on the ground in Iran. This means a political transition in Iran won’t happen because US soldiers liberate Iran or because an outside force intervenes. Instead, it will have to be a change driven by Iranians.  

3. What should we expect from the Iranian regime?

Having the USS Abraham Lincoln in theater serves two functions. First it allows the United States to more easily defend against any retaliation from Iran, thus providing greater optionality for a strike. It also provides a psychological advantage. Iran knows that any actions it takes in response to a US action could be met with a further escalation from US forces.  

This dynamic will likely deter Iran from doing anything overly escalatory. The Iranian regime will likely calibrate its response to be proportional (in its estimation) to that of any US action. For example, if the United States hits Iran with symbolic strikes, Iran will likely do something symbolic as well. Iran’s attack against US forces in Qatar in June is a useful example of what a response could look like. This scenario allows both sides to claim victory and de-escalate.   

Alternatively, in regard to a strike on Khamenei, Iranian President Masoud Pezeshkian stated earlier this month that “an attack on the great leader of our country is tantamount to a full-scale war with the Iranian nation.” What this would look like is impossible to predict, but the United States is at least now better prepared to respond to such a scenario.

The post What Trump could do next in Iran appeared first on Atlantic Council.

Bottom lines up front

• Many Europeans view the Davos deal over Greenland as only a temporary reprieve from a crisis in transatlantic relations.
• Europe will now have to swiftly translate the lessons from the past few weeks into building greater resilience and sovereignty, if not strategic autonomy.
• Europeans will be well advised to do more contingency planning for how to resist economic coercion, even from their allies and partners.

WASHINGTON—Relief and exasperation may have been the initial reactions across European capitals as US President Donald Trump folded the cards on his Greenland gamble from Davos on Wednesday. NATO Secretary General Mark Rutte excelled once again as the unrivaled Trump whisperer, helped by a combination of financial market jitters and an unexpectedly united Europe holding its ground. Rutte’s framework deal with Trump, however scarce the details, seemed to vindicate those arguing for Europe to “engage, not escalate” with the US president.

But a day after the news of the Arctic deal from the Alps, the mood among European policymakers is shifting away from mere relief. It was Trump who threatened to remember if he didn’t get his way on Greenland, but it is the Europeans who will remember this dispute even as Trump moves on. Few are celebrating the de-escalation because of how pointless and reckless they view this latest test of the Alliance’s credibility and cohesion. And because they know it’s likely only a temporary reprieve and hardly the last transatlantic crisis they can expect from this US administration. As a result, a quiet yet dogged determination is emerging to strengthen Europe’s ability to withstand US pressure in any future scenarios brought on by a US president who is seen as unpredictable, if not erratic. In a sign of the impression the last few days and weeks have left, European Union (EU) leaders still met at a special summit in Brussels on Thursday despite the immediate issue having been defused.

Trump’s speech in Davos made an impression on European decision makers. The US president appeared to be setting the terms for negotiations, forcing Europe to choose between acquiescing on his acquisition of Greenland and maintaining US support for NATO. While doing away with any potential military action, Trump outlined a nebulous rationale of US control of Greenland: No one else could supposedly defend it, and the United States needed it to protect against adversaries. He reminded Europeans of their dependencies on the United States from energy and trade to security and Ukraine. It all looked like an attempt to boost his leverage in any of these areas. But by the evening Davos time, Trump had struck a preliminary deal with Rutte.

Europeans will want to better understand the details of that agreement and what it means for Greenland, Denmark, and Europe. As long as military options and tariffs are off the table, Nuuk’s and Copenhagen’s sovereignty are respected, and the White House’s sharp rhetoric and threats subside, then NATO and EU capitals will hold back on their criticism for now. Some may even be going back to the pretense of transatlantic dialogue, cooperation, and partnership.

But beyond the diplomatic protocol and time bought, Trump’s ready willingness to engage in brinkmanship with the alliance, Europe’s economy, and personal relationships with key leaders will have a lasting impact. Trump’s approach toward Greenland has destroyed much of the domestic political space for those arguing that Europe has a weak hand and therefore few options but to engage, assuage, and accommodate Trump. That same argument, which led the EU to accept a lopsided trade deal with the United States this past summer in pursuit of “stability and predictability” in the relationship, has taken a major hit, even if few European leaders say this out loud for now.

There are clear lessons here for Europe. Over the past few days, European resolve had been building to stand tall and stay united. Markets took note of the potential costs of that cohesion, including retaliatory tariffs and a “Sell America” turn away from US assets. Europe fared better than many expected in raising the complexity for Trump in Greenland, including by swiftly deploying even just small numbers of troops to prepare joint exercises. Denmark proved resilient and built more effective rapport with Greenlanders over historically difficult relations and, together with Europe, it made important commitments to the territory and Arctic security.

Whatever time the de-escalation over this latest rift has bought Europe, it better use that reprieve effectively. It likely won’t be the last such episode under this president. Europe will have to swiftly translate the lessons from the past few weeks into building greater resilience and sovereignty, if not strategic autonomy. Efforts to strengthen defense capabilities, defense industrial capacity, and long-term support for Ukraine are well underway. But much like Europe’s initiatives at boosting its competitiveness, intensifying trade diversification, and deepening its capital markets, these efforts require greater speed, ambition, and follow-through.

Europeans will be well advised to do even more contingency planning on how to resist economic coercion, even from partners, and make unwieldy tools such as the Anti-Coercion Instrument more effective politically. Other areas to watch in the coming months are progress on new trade and critical raw materials deals or breakthroughs on long-standing initiatives such as the savings and investment union. Front and center for European decision makers’ thinking will be the problem described in Canadian Prime Minister Mark Carney’s Davos speech of a “rupture, not a transition” in the world order. Whether they can act on his remedies of “strength at home [and] diversifying abroad” remains to be seen. 

The post Trump may move on from Greenland. Europe won’t. appeared first on Atlantic Council.

The S&P 500 dropped 2 percent, the dollar weakened, and Treasury yields rose to their highest level since September. While it’s rare for stocks and bonds to fall sharply on the same day, a similar pattern last emerged in April and was seen as one of the reasons why the Trump administration ultimately deferred its “Liberation Day” tariffs.

It was a stark contrast to last week, when we were scratching our heads as to why Wall Street barely reacted to escalating tensions involving Venezuela and Iran, or the Department of Justice’s investigation into Federal Reserve Chair Jerome Powell. There are plenty of reasons why this might be. For one, the capture of strongman Nicolás Maduro and protests in Iran, however dramatic politically, did not pose an immediate threat to global trade flows or major supply chains. Meanwhile, had Trump followed through on his tariff threats, it would likely have marked the end of the United States-European Union trade deal, which was only announced in July 2025 and has since become a partial model for other countries negotiating with the Trump administration.

Why markets have shrugged off most shocks

Over the past decade, markets have weathered a steady stream of geoeconomic shocks—Brexit, trade wars, sanctions, pandemics, and bank failures, to name only a few. And yet, nothing has truly shaken investor confidence. The chart below shows eight major shocks since 2016 and highlights in red the few that coincided with a market contraction of more than 20 percent, triggering a bear market in the United States.

The common thread among those truly market-shaking moments is that they posed a direct disruption to the global economy: supply chains seizing up, trade flows collapsing, or energy prices spiking. But once a credible signal of stabilization emerged—whether through vaccine rollouts or a temporary ninety-day tariff pause—Wall Street quickly went back to business. That is, in part, because markets have internalized a powerful lesson: look past the immediate headlines. Investors have learned that most shocks inflict far less lasting damage than initially feared. That belief has become a guiding heuristic.

This week, however, investors responded forcefully to the renewed risk of a trade war between the United States and the European Union. The transatlantic economic relationship is far denser than the ties between Washington and Caracas or Tehran, totaling roughly $1.5 trillion in goods and services trade in 2024. A sustained escalation would have struck at the core of global commerce. Had tensions continued to rise, there was a real risk that market reactions would have intensified. Instead, as Trump pulled back from his tariff threats on Wednesday, markets recovered swiftly.

The dangers of taking volatility for granted

The risk of the markets adopting a “nothing ever happens” mentality is that it lowers sensitivity to increased political volatility. There are plenty of reasonable explanations for why the Trump administration’s investigation of the Federal Reserve chair failed to move markets, while the prospect of economic conflict with the world’s largest trading bloc has. One reason may be that the issue of central bank independence in the United States has not yet crossed the threshold from concern to crisis, which investors seem to require for a reaction. But if the job of markets is to look ahead and price future risks, then Wall Street may be too complacent about the accumulating cost of shocks.

Jessie Yin is an assistant director at the Atlantic Council’s GeoEconomics Center.

Josh Lipsky is chair of international economics at the Atlantic Council and the senior director of the Council’s GeoEconomics Center. He previously served as an advisor at the International Monetary Fund.

This post is adapted from the GeoEconomics Center’s weekly Guide to the Global Economy newsletter. If you are interested in getting the newsletter, email SBusch@atlanticcouncil.org.

The post When will Wall Street’s tolerance for uncertainty run out? appeared first on Atlantic Council.

Bottom lines up front

• So far, Chinese ambitions in Greenland have been constrained by Denmark and the United States, but that could change as Nuuk moves toward independence.
• The United States, Denmark, and Greenland need a calm and results-oriented conversation that resolves their concerns about potential adversaries’ influence in the Arctic.

BRUSSELS—On Wednesday, US President Donald Trump announced that he would not implement planned tariffs on European allies after reaching a “framework of a future deal” with NATO Secretary General Mark Rutte on Greenland and the Arctic. Coming after weeks of sharp rhetoric and threats that often obscured the strategic issues at play, this development presents an opportunity for the United States and its allies to refocus on what is actually at stake.

Greenland is the world’s largest island, located in an increasingly contested Arctic region, making it a target for Russian pressure and Chinese influence. That reality deserves serious conversation among partners, not a public quarrel that weakens all sides.

Why Greenland matters

As Trump said earlier Wednesday during his address to the World Economic Forum in Davos, the United States has had a long history with Greenland. Washington first made an offer to acquire Greenland in 1867, and the idea has resurfaced repeatedly, including after World War II. Trump, too, has a history with the island. During his first term, Trump described his approach as essentially “a large real estate deal,” and he returned to that language in his speech in Davos.

It is unsurprising that Trump, who has had a long career in real estate, would approach this issue in this manner. But Greenland has never been a simple real-estate transaction. Its strategic location and mineral potential make it consequential to twenty-first-century security and economics. Its position in the Arctic among US allies and Russia introduces important geopolitical factors, as well. The problem is not the underlying interests; it is how they have been presented in recent weeks, through rhetoric and actions that have inflamed emotions and narrowed the path to a diplomatic solution that could strengthen US and allied security.

Not ownership, but alignment

Looking past the recent attention-grabbing rhetoric, there is an important issue here: Without a credible US security guarantee, the world’s largest island—sitting in a volatile and strategically critical Arctic region—is potentially vulnerable against future pressure from Russia and, more importantly, China. 

That is why the central question is not ownership but alignment, especially as Greenland moves toward its expected independence from Denmark. In that event, will Greenland’s political and economic future remain anchored in the transatlantic community, where its natural resources can benefit Greenlanders and strengthen the free world? Or, will an independent Greenland drift into a gray zone of influence and insecurity that the adversaries of the United States and Europe could exploit? 

Trump’s announcement that he would not levy additional tariffs on European allies could offer much-needed diplomatic space for a new approach that would address these questions. Driven by both national security and economic realities, the United States could use this moment to seek strategic certainty that Greenland will remain secure, stable, and anchored in the West. 

For Danish Prime Minister Mette Frederiksen and other political leaders in Denmark in an election year, there is little room for nuance: Greenland is not for sale. Many Greenlanders feel insulted by the mere suggestion of being “bought,” and that reaction is understandable. But the recent outrage has also made it harder to have a rational conversation about the realities shaping Greenland’s future. Moreover, it distracts from the fact that Danish-Greenlandic relations remain complicated, shaped by history and unresolved questions about Greenland identity and autonomy as a nation. 

As Anne-Sofie Allarp, a well-respected Danish journalist and author, wrote ahead of last week’s meeting in Washington between high-level US officials and their Danish and Greenlandic counterparts, “Danish and Greenlandic politicians of the past 30-40 years need a conversation with themselves about the real relationship between Greenland and Denmark.” She goes on to warn that Greenland’s independence could leave this “strategically important area close to the United States, on which the United States has important installations and which has important rare earths and metals, with an absolutely uncertain political future.” 

The China factor

What has been underrepresented in the current debate, however, is that China has previously made overtures to Greenland—something that understandably raises concern in Washington. A 2022 study by the University of Copenhagen concluded that “Greenland views China as a deep-pocketed investor and a huge consumer market, especially in the mining, fishing, and tourism industries. Greenland therefore views China as an important partner in its economic development, which is important for its independence from Denmark.”

Chinese efforts to build infrastructure and gain economic leverage in Greenland have, so far, been held back by Danish and allied pressure. Without Danish insistence, Greenland might have allowed it to move forward. In 2018, for example, the Chinese state-owned company China Communications Construction Company was shortlisted to build three airports in Greenland, in Nuuk, Ilulissat, and Qaqortoq. This effort stalled only after Danish and US officials stepped in. China has also proposed to build “science stations” in the region with dual-use capabilities, consistent with Beijing’s broader ambition to expand its presence in the Arctic through the Polar Silk Road initiative. And the Chinese company Shenghe Resources has sought through other companies to exploit rare earth and uranium mining projects, including Kvanefjeld in Greenland, which was halted on environmental rather than geopolitical grounds. 

For now, Chinese ambitions in Greenland have been constrained by Denmark. But the political trajectory inside Greenland is moving in the direction of independence. Nearly all the major political parties in Greenland support independence, only differing on the timing and the process. A referendum in Greenland to break with Denmark, while unlikely after the recent developments, cannot be excluded in the future. Even if a valid, pro-independence referendum required negotiations with Denmark to move forward, the long-term impact could be precarious. An independent Greenland would be free to pursue partnerships of its choosing, and it might choose to remain outside of the European Union and keep its distance from NATO. It might even attempt to balance between the United States and China, expecting investment and other benefits to be extracted from each. In short, preventing Beijing from gaining a lasting foothold in the Arctic could be far more difficult at that point than it is today. 

There are no simple answers to these challenges. But to avoid an uncertain and dangerous future, the United States, Denmark, and Greenland need a sober and results-oriented conversation that begins to resolve these issues. This conversation must, moreover, treat Greenland’s people with respect while confronting the hard security realities of the Arctic. Those who wish to weaken the transatlantic alliance are watching this process closely. The task now is not rhetorical escalation, but strategic certainty that secures Greenland, anchors it in the West, and protects the long-term interests of all three parties.

The post To get the Greenland issue right, focus on alignment appeared first on Atlantic Council.

Bottom lines up front

• Russia’s “shadow fleet” helps Moscow avoid sanctions and poses a threat to critical infrastructure, such as undersea cables.
• While the US has started stopping suspected oil tankers, European nations have been more restrained in their direct action against such vessels.
• Especially in the Baltic region, European nations should interpret UNCLOS’s provisions broadly and ramp up interdiction of suspected vessels.

WASHINGTON—For years, Russia has operated a so-called “shadow fleet” of sanctions-evading oil tankers, which have provided revenue for the Kremlin to continue its war against Ukraine. For nearly as long, Western maritime policy toward this fleet has been reactive, legalistic, and ultimately permissive. 

That changed late last year, when the Trump administration started taking bold action against the shadow fleet to enforce its blockade of Venezuelan oil exports. By targeting the vessels, logistics, and enablers of this opaque maritime network, the United States flipped the initiative. Instead of allowing Russia to exploit legal gray zones and Western restraint, Washington forced Moscow into a defensive crouch—raising costs, increasing uncertainty, and signaling that abuse of maritime norms would no longer be consequence-free.

This matters well beyond oil tankers. Strategic initiative is not about a single sanctions package or interdiction; it is about shaping the overall operating environment. By introducing ambiguity over what it will tolerate, the United States demonstrated that Russia’s shadow fleet is not an untouchable fact of life but a vulnerability. European states—especially the Baltic and Nordic states—should recognize that this is precisely the approach they should have applied long ago in the Baltic Sea.

Russia’s “shadow fleet” is a malign actor in the Baltics

Russia’s shadow fleet is an instrument of state power operating under civilian cover. In the Baltic Sea, its malign activity has taken several forms.

First, the tankers help Russia evade sanctions. Shadow tankers—often uninsured, aging, and operating under flags of convenience—have become essential to sustaining Russian energy exports in defiance of international restrictions. Their opaque ownership structures, frequent flag-hopping, and noncompliance with safety and reporting standards create systemic risks in one of the world’s most congested and environmentally sensitive maritime spaces.

Second, the shadow fleet poses a threat to undersea critical infrastructure. The Baltic Sea hosts a dense web of pipelines, power cables, and data links essential to European security and economic life. The presence of poorly regulated, state-directed vessels with unusual loitering patterns near such infrastructure has rightly raised alarm. Several pipelines and cables under the Baltic Sea, including the Balticconnector gas pipeline and Estlink 2 power cable connecting Estonia and Finland, as well as fiber-optic cables between Lithuania and Sweden, and between Finland and Germany, have been damaged between October 2023 and December 2024. Even when direct attribution is difficult, the pattern is unmistakable: Russia has both the capability and the incentive to use maritime assets to map, probe, and potentially sabotage critical seabed infrastructure.

Third, the shadow fleet increasingly functions as a platform for hybrid operations. There are growing concerns that shadow fleet vessels serve as launchpads, logistical nodes, or intelligence enablers for drone and electronic operations. Incidents involving unidentified drones near critical sites, including major airports near Copenhagen and Oslo, underscore how maritime proximity can be exploited to project disruptive capabilities ashore while maintaining deniability.

Taken together, the shadow fleet’s actions go well beyond commerce. They are committing acts of hybrid warfare at sea.

Europe’s self-imposed restraint

Europe has taken important initial steps to address Russia’s shadow fleet. To date, the European Union has imposed sanctions on hundreds of vessels, subjecting them to port access and servicing bans. Some European countries—Finland, Estonia, Germany, and France—have boarded some suspicious vessels in the past months but have claimed a lack of sufficient grounds under international maritime law to justify permanent seizure. Most recently, French President Emmanuel Macron announced that the French navy intercepted and boarded a sanctioned Russian-linked tanker in the Mediterranean, reiterating that such operations are necessary to enforce sanctions and disrupt the shadow fleet’s role in financing Russia’s war effort.

Despite these positive steps, European nations have been unable to stop the vast majority of shadow fleet vessels from transiting the Baltic Sea, even though it is known that Russia transports around 60 percent of its seaborne oil exports using this illicit sanctions-evasion network, with many of the tankers crossing the Baltic Sea. The primary justification for this reticence to apply stronger sanctions enforcement is often legal: the United Nations Convention on the Law of the Sea (UNCLOS) and the principle of freedom of navigation. These are important norms—but Europe has turned them into a strategic straitjacket.

UNCLOS was adopted in 1982, in a radically different security environment. It was designed for an era when maritime threats were largely military-to-military and when civilian vessels were not routinely weaponized as tools of sabotage, coercion, and deniable attack. Today’s maritime actors possess a vastly expanded toolkit: drones, cyber capabilities, seabed interference, and hybrid operations that deliberately exploit the protections afforded to civilian shipping. 

More importantly, the legal restraint is one-sided. Russia does not respect the spirit—or often the letter—of the rules Europe clings to. Shadow-fleet vessels routinely operate without proper insurance, obscure their ownership, falsify registries, and sail in conditions that would not be tolerated for legitimate commercial shipping. These practices alone raise serious questions about seaworthiness, environmental safety, and compliance with international law. Europe is not defending UNCLOS by tolerating such behavior; it is hollowing it out. A legal regime that is systematically abused by hostile actors cannot be treated as sacrosanct if it undermines the security of those who follow it in good faith.

Time to join the momentum

By moving decisively against the shadow fleet, the United States, having never ratified UNCLOS but operating largely in accordance with its provisions as customary international law, has established the very strategic ambiguity Europe has long advocated. The US seizure and boarding of the illicit tankers demonstrate that states can reassert deterrence in the hybrid domain when they are willing to broadly interpret UNCLOS’s provisions on boarding and seizing ships, thus defending the intent—not just the letter—of maritime law.

Baltic and Nordic countries are uniquely positioned to act. They possess exceptional maritime domain awareness, capable coast guards and navies, and dense legal and regulatory ecosystems. This enables them to broadly interpret UNCLOS’s legal authority to board and seize shadow fleet tankers, especially as they violate Article 92 of UNCLOS by engaging in flag-hopping and operating without proper insurance. Coordinated pressure can raise the operational and financial costs of shadow-fleet activity and make the Baltic Sea inhospitable to Russia’s illegal and dangerous maritime practices.

By stepping up its measures against shadow fleet vessels, Europe can seize this moment to make a substantive contribution to the reform and modernization of the UNCLOS framework. This does not mean abandoning UNCLOS but interpreting its provisions broadly to uphold the values underpinning it—above all, the obligation to ensure safety at sea. The convention was never designed for a world in which civilian vessels are routinely applied to dual-use purposes. Nor did it anticipate today’s vast networks of undersea critical infrastructure, now central to national security and economic resilience.

Strategic initiative in the hybrid domain is shifting. The United States has set a clear example of the operational possibilities at hand. In this changing environment, Europe should not hold itself hostage to regulations that adversaries openly flout and deliberately weaponize. This is a chance for Europe to act decisively by forcing Russia’s shadow fleet out of the Baltic Sea and helping to reshape the maritime legal order so that it responds to today’s challenges.

Energy Sanctions Dashboard

This dashboard focuses on US sanctions and restrictive measures placed on crude oil from Russia, Iran, and Venezuela—including the unintended consequences and the lessons learned.

The post The US is taking action against Russia’s shadow fleet. In the Baltic Sea, Europe should follow suit. appeared first on Atlantic Council.

Bottom lines up front

• Right to repair legislation would allow warfighters to make timely field repairs themselves rather than having to rely on a contractor or hotline.
• Restrictions on who can repair equipment and technology poses risk to readiness, stifles innovation, and drives up costs.
• US policymakers must strike a balance between military readiness and the defense industry’s concerns over intellectual property.

In my nearly two decades of military service, I have learned that stuff tends to break just when you need it most. To make matters worse, I have encountered instances of mission degradation and increased risk because our maintainers or technicians were not allowed to make needed repairs to systems because the equipment had intellectual property (IP) restrictions and contractual constraints. In many cases today, units either rely on a contracted field service representative or must troubleshoot problems over a hotline and ultimately ship the item back to the manufacturer to make essential repairs.

A growing number of US decision makers have recognized the threat these constraints pose to combat readiness and have advocated “right to repair” laws. Right to repair provisions are intended to provide warfighters access to the necessary technical data, tools, manuals, and permissions needed to make timely field repairs to their advanced equipment and technologies themselves. Ultimately, right to repair is about allowing servicemembers to get their equipment back in the fight more quickly. However, US policymakers have yet to implement this necessary reform.

This past December, right to repair provisions were removed from the National Defense Authorization Act, despite their reportedly having had the support of US President Donald Trump, Pentagon officials, and members of the House and Senate from both parties. As the character of modern conflict evolves, the right to repair is no longer a cost or convenience issue—it’s a combat readiness imperative. A better balance must be struck between the necessities of protecting corporate IP and the military’s ability to sustain a warfighting advantage in dynamic contested environments.

The debate over right to repair

US innovation is the backbone of its military edge. Software-defined capabilities play an increasingly vital role in modern warfare, and data is crucial for sustaining them. That data is not some peripheral concern—it is the oxygen of military maintainers, logisticians, and end-use operators. Without access to this data, the services are paying for critical warfighting capabilities they cannot assure will be at full operational capability or even available at the time of critical need. The importance of data has deepened the US military’s dependency on corporations that have effectively monopolized the sustainment tail through contractual agreements. This model may have worked in more permissive environments such as Iraq and Afghanistan, where the United States had large sustainment bases and faced low-tech threats. But the future challenges of much smaller, distributed military operations against high-tech enemies in often austere and disrupted, degraded, intermittent, and low-bandwidth environments demand a new look at the sustainment ecosystem. Those warfighters at the edge need and deserve the opportunity to troubleshoot and repair critically needed systems in the field.

Opponents of right to repair, such as former US Secretary of the Army Eric Fanning, are right to call for the Pentagon and Congress to address the many problems that plague defense sustainment, including personnel, funding, infrastructure, and supply chain issues. The United States has been working toward solving those issues for decades, yet military readiness continues to languish. The shortage of military maintainers would not be solved simply by adding more personnel who are still contractually barred from repairing equipment that they could under right to repair provisions.

Chronic underfunding for defense sustainment compounds when new warfighting technologies are rapidly fielded, yet their only repair solution remains a costly contracted one. Infrastructure bottlenecks intensify when systems must be shipped to limited proprietary depots simply because the military maintainer is forbidden from opening a panel or running diagnostics without violating the terms of IP regulations. Supply chains are strained because units must wait for contractor-only replacement assemblies when any competent military technician could make a field-level repair if they had the documentation and authority. This could make the difference between simply replacing a $15 control knob and having to pay for a complete $47,000 aircraft screen assembly.

Developing the technical workforce, increasing sustainment funding, expanding depot infrastructures, and capitalizing supply chains for defense corporations and the industrial base are all necessary steps. But to not also enable the military’s ability to repair its fielded systems deepens the Pentagon’s corporate dependencies and does little to ensure sustained combat capabilities at the tactical edge. System readiness in warfighting units is struggling not because they have incapable maintainers, but because current regulations disempower them.

The field service representatives I have worked with on multiple deployments and assignments abroad are all great Americans—many of whom are veterans that decided to continue to serve in a different way. Those technicians, often working solo or in pairs, put in tireless effort to support units comprised of hundreds. They are essential members of the team and mission. But they were usually among the first to be pulled out of the field by their companies following an increased threat, an ordered departure, or a noncombatant evacuation order. There was often no backfill except for a tech support hotline to call someone thousands of miles away. In these cases, no one was left onsite with the technical data, tools, manuals, or authorities to troubleshoot and make repairs at the time that system is likely needed most.

The way forward

When it comes to the challenges the US military is likely to face in the future, this constraint on repairs could lead to several disastrous scenarios: A ship in a contested region of the Indo-Pacific without a critical command-and-control suite; a ground movement in Syria without an operational electronic counter-improvised explosive device or remotely operated weapon station systems; a littoral force on an isolated island without the ability to resolve a datalink communications error; an airfield in eastern Europe without its integrated counter-drone system; or a fifth-generation fighter grounded because the software says it cannot fly.

No one wants to undermine the defense sector and industrial base that delivers the tools the US military relies on, but protecting corporate innovation and IP cannot come at the expense of sustainment, survivability, or combat effectiveness. Right to repair should not be viewed as a threat to innovation, and it does not mean simply handing over defense technology breakthroughs to the government without any IP protection. The information security controls that currently safeguard sensitive and classified technical information could be refined to protect the defense industry’s IP while also enabling US military forces to sustain their systems and equipment themselves.

Could service-level acquisition reforms solve this without legislative intervention? To a degree, yes—and US Secretary of War Pete Hegseth explicitly directed the Army to ensure right to repair provisions are part of future Army acquisition contracts. But there is a stark difference between reversible departmental and service-wide policies and enforceable federal law. Absent each service adopting right to repair policies or having legislation in force to provide access to the necessary technical data, tools, and manuals, the US military is subjected to similar data access restrictions as if it were any foreign nation acquiring defense articles through foreign military sales. The United States needs a better policy or statutory framework that calibrates IP technology transfer risks, preserves industry’s intellectual capital, and allows wider military access to data to sustain its combat capabilities when that data remains within the US defense ecosystem.

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The market volatility highlights growing fragility in the financial system—a development shaped in large part by a buildup of leverage across financial institutions and market activities, as well as their increasing linkages to the banking sector. This situation demands careful monitoring and stronger risk-management measures by financial authorities and market participants to reduce vulnerabilities and mitigate potential shocks.

From retail traders to hedge funds, leverage is rising

Leverage starts with retail investors using margin debt—borrowing from their brokerage firms to buy securities, using their existing investments as collateral. The amount of margin debt in the United States reached a record $1.2 trillion by late December 2025. At the same time, investors have added another $250 billion in leveraged exchange-traded funds (ETFs). While still a relatively small share of total ETF assets under management (AUM)—estimated at $13.4 trillion at the end of 2025—leveraged ETFs account for around 12 percent of daily ETF trading volume.

Leveraged ETFs reset their exposure daily to maintain their target leverage. In volatile markets, this practice causes the fund’s value to erode over time—making leveraged ETFs a risky instrument for investors with holding periods longer than a single day. In essence, the high degree of leverage embedded in these retail investments can multiply both gains and losses. The problem is that the latter can trigger margin calls from brokerage firms, forcing fire sales of securities and further amplifying market turmoil. More importantly, hedge funds—with $12.5 trillion in AUM—have significantly increased their leverage across a range of trading strategies to the highest levels since comprehensive data collection began in 2013. Specifically, their mean gross leverage ratio—defined as total market exposure, including long and short positions and derivatives, relative to net asset value (NAV)—has climbed to eight times NAV, up from around five times in 2016 (see chart).

In particular, the volume of Treasury basis trades—long positions in cash Treasuries combined with short positions in futures to exploit small pricing discrepancies—has risen markedly. Hedge funds’ long US Treasury exposure has reached a new record of $2.4 trillion, equivalent to around 10 percent of all US Treasuries held by the private sector. In recent years, hedge funds have also used the interest-rate swap market to implement these basis trades, with current exposures estimated at $631 billion.

When interest rates and securities prices move contrary to expectations, hedge funds incur losses, prompting them to unwind positions and generating stress in those markets. This dynamic was evident in April 2025, when hedge funds unwound their basis trades following adverse market movements following Trump’s announcement of reciprocal tariffs.

Notably, hedge funds—largely based in the United States—have expanded their basis-trade strategies to the larger and more liquid government bond markets of the euro area, particularly Germany, France, and Italy. Hedge funds face the same challenges in their euro area basis trades, including a potential lack of euro funding and adverse price movements, both of which could trigger fire sales of underlying bonds and cause stress in affected markets. Moreover, hedge funds themselves have become potential transmission channels, spreading stress from the US Treasury market to other sovereign bond markets if losses force them to raise liquidity by selling assets elsewhere.

Private credit introduces new vulnerabilities

Leverage has also risen in the rapidly growing private credit market, with the debt-to-earnings ratio of some borrowers reportedly reaching a historic high. According to the New York Fed, the private credit market has expanded from $500 billion in 2020 to $1.3 trillion by late 2025. Some observers even expect it to reach $5 trillion by 2029.

The private credit market has increasingly relied on covenant-lite loans, a worrisome development reminiscent of the practices that were widespread prior to the global financial crisis. Taken together, these trends raise the risk that private credit could become a source of financial instability if overall conditions deteriorate.

Beyond direct borrowing, private credit funds also invest in leveraged instruments such as collateralized loan obligations (CLOs) to enhance returns. This essentially amounts to a less transparent—or “hidden”—form of leverage.  CLOs issue debt and equity tranches to investors and use the proceeds to purchase diversified portfolios of roughly two hundred loans or corporate bonds, structuring cash flows into tranches with varying risk-return profiles. The CLO market has grown to approximately $1.4 trillion, forming part of a broader $13.3 trillion structured credit-fixed income market, which also includes asset-backed and mortgage-backed securities.

Driven in part by their participation in the private credit market, life insurance companies have also increased leverage, with asset-to-equity ratios approaching the top quartile of their historical range—now nearly twelve times.

Nonbank–bank linkages heighten systemic risk

Commercial banks—while remaining profitable and well capitalized—have increasingly funded leveraged nonbank financial entities and activities. Bank lending to nonbank financial institutions—such as special purpose vehicles, CLOs, asset-backed securities, private equity funds, and business development companies—has grown at a robust pace, reaching $2.5 trillion.

In addition, banks themselves have originated $1.5 trillion in leveraged loans, reflecting an average annual growth rate of 12.2 percent since 1997. While such exposures account for roughly 14 percent of total bank assets, stress among these highly leveraged nonbank entities—or in the leveraged loan market—could generate losses and distress at individual institutions, if not across the entire banking system.

As a result, the Federal Reserve concluded in its November 2025 Financial Stability Report that “when taken together, the overall level of vulnerability due to financial sector leverage was notable.” This assessment underscores the importance of leverage as a key issue for regulators and risk managers when evaluating financial stability risks in 2026—and especially in responding to the current bout of market turbulence.

Elevated leverage increases the fragility of financial institutions and markets and amplifies the severity of potential market corrections. This reality calls on financial authorities to adopt measures commensurate with the risks identified in the November 2025 FSR—particularly steps aimed at reducing the vulnerability of the financial system. Meanwhile, private investors should exercise greater caution to limit exposure and mitigate the fallout from future market disruptions.

Hung Tran is a nonresident senior fellow at the Atlantic Council’s GeoEconomics Center, a senior fellow at the Policy Center for the New South, a former executive managing director at the Institute of International Finance, and a former deputy director at the International Monetary Fund.

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Today started with ice and ended with a thaw. Shortly after a speech at the World Economic Forum in Davos, Switzerland—in which he made his case for why the United States should own the “big, beautiful piece of ice” that is Greenland—Donald Trump announced that he had reached a “framework of a future deal” on the issue. The breakthrough came after Trump met with NATO Secretary General Mark Rutte, and led to the US president dropping his tariff threats against European nations that had opposed the US acquisition of the semiautonomous Danish territory. According to Trump, the deal will concern potential US rights over Greenland’s minerals, as well as the island’s involvement in his administration’s proposed “Golden Dome” missile defense system. Below, our experts shed light on all the transatlantic tumult. 

• Josh Lipsky (@joshualipsky): Chair of international economics at the Atlantic Council, senior director of the GeoEconomics Center, and former International Monetary Fund advisor  
• Matthew Kroenig (@MatthewKroenig): Vice president and senior director of the Scowcroft Center for Strategy and Security
• Tressa Guenov: Director for programs and operations and senior fellow at the Scowcroft Center for Strategy and Security, and former US principal deputy assistant secretary of defense for international security affairs 
• Jörn Fleck (@JornFleck): Senior director of the Europe Center and former European Parliament staffer

Tariff troubles

• Now that Trump appears to have backed down from both his military and economic threats, “Europe is breathing a sigh of relief,” Josh reports from the World Economic Forum, but it’s one that “will be short-lived.”
• Don’t expect Europe to jump back in to last year’s US-EU trade deal, which Brussels paused in recent days. European leaders “feel like they’ve been burned by the volatility, paid a political price at home, and want commitments that next weekend they don’t wake up to new tariff threats,” Josh tells us. “Businesses, many of which said as much privately to the Trump administration this week in Davos, want the same” sort of commitments. 
• “Markets had their say” as well, Josh writes, noting that fears of a US-EU trade war drove up bond yields in recent days. That’s “the exact kind of pressure point that made Trump relent” in April 2025 when he paused his “Liberation Day” tariffs. “With mortgage rates shooting up” in response to the volatility, says Josh, “Trump showed that he can be especially sensitive to the bond markets.”

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NATO’s next steps

• “The idea that Trump would attack a NATO ally was always hard to imagine,” says Matt, who argues that “Trump’s threats were clearly part of his now-trademark style of building leverage to force a negotiation.”
• Matt now expects a future deal to include “increased military presence in Greenland from Denmark and other NATO allies and increased access and basing for the United States.”
• The “hard work” ahead for negotiators, he explains, will be “hammering out an agreement that addresses Trump’s legitimate security concerns while also respecting the sovereignty of NATO allies.”
• Matt identifies several cases that could provide “creative solutions,” including “the United Kingdom’s ‘sovereign base area’ in Cyprus, the bishop of Urgell and the president of France’s ‘shared sovereignty’ over Andorra, and the United States’ possession of a perpetual lease in Guantanamo Bay, Cuba.”

The bigger picture

• But even if a deal gets done, says Tressa, Trump’s pressure campaign against Europe over Greenland could have consequences for security issues that must be solved on both sides of the Atlantic: “A sustained atmosphere of crisis has the potential to detract from Trump’s own success in getting NATO countries to spend 5 percent of gross domestic product on defense and, he hopes, buy American products.” She points out that “many of the countries that he threatened with tariffs are the ones who have stepped up defense spending the most.” 
• Jörn agrees on the lasting impact of “Trump’s willingness to engage in brinkmanship with the Alliance, Europe’s economy, and personal relationships with key leaders.” The approach “has destroyed much of the domestic political space in Europe for those arguing that Europe has a weak hand and therefore few options but to engage, assuage, and accommodate” the US president, “even if few European leaders will say this out loud for now.”  
• Still, while “Davos is sometimes criticized for a lot of talk but little action, this year no one can doubt the forum mattered,” Josh adds. “Having Trump meet in person with leaders—privately—is where the US-European alliance was, at least temporarily, put back on track.”

The post The future of Greenland and NATO after Trump’s Davos deal appeared first on Atlantic Council.

Bottom lines up front

• In Davos, US President Donald Trump pledged not to use force to take Greenland and agreed to a “framework” deal to address the issue further.
• Europeans’ response has been to offer Trump more security cooperation in the Arctic but stand firm against US ownership of Greenland.
• By addressing Arctic security, among other US concerns, the newly announced “framework” deal may be a way out of the current crisis.

WASHINGTON—The best line of Donald Trump’s speech to the World Economic Forum in Davos was his pledge that the United States would not use force to seize Greenland. But the best news of the day was the announcement a short time later that the United States had reached a “framework” deal with NATO Secretary General Mark Rutte on Arctic security, and the US president was therefore rescinding the tariffs against Denmark and several other European countries that Trump had announced just days earlier.

While the details of the deal are still emerging, it may be that when faced with Denmark’s and Greenland’s resistance to US threats, European solidarity against those threats, unease in financial markets, and significant congressional unhappiness with the United States bullying a loyal ally, Trump decided to take a win on Arctic security and forgo a needless fight on Greenland’s sovereignty. 

Taking force off the table

In the speech, Trump took the use of force to seize Greenland off the table. But he continued to demand US sovereignty over Greenland, rooting his argument in dubious history and poor logic. He claimed, for example, that countries that cannot defend their own territory cannot claim the right to possess it. That echoes a similar assertion by White House Deputy Chief of Staff Stephen Miller. But the whole purpose of alliances, including NATO, is that security is greater if responsibility for it is shared. A doctrine that the power to seize territory is its own justification—which is close to what Trump and Miller argue—would legitimize every aggressor.  

Trump also claimed that to defend territory, the United States needs “title” to it. But the United States successfully defended Germany, South Korea, Japan, and hosts of other countries during and after the Cold War without seeking to annex them, and it did so from military bases that were “rented” and not part of the United States. 

Trump argued that the United States was mistaken to “return” Greenland to Denmark after World War II. The United States did put military bases on Greenland during the war after Germany conquered Denmark in April 1940. But the United States never annexed Greenland during the war: it put military facilities on it pursuant to an agreement with the Danish government-in-exile, and that agreement recognized continued Danish sovereignty over Greenland. In 1951, the United States and Denmark concluded the Defense of Greenland Agreement, which enshrined extensive US basing rights. 

While Trump ruled out war to conquer Greenland, he did suggest, albeit obliquely, that continued US support for Ukraine and for NATO depended on European acquiescence in his demands for Greenland. “Now what I’m asking for is a piece of ice,” Trump said of Greenland. “It’s a very small ask compared to what we have given them for many, many decades,” he added about NATO. To underscore the point, Trump said several times in the speech that allies had not been there for the United States. 

In fact, NATO has invoked Article 5 of the North Atlantic Treaty once in its history: that was on September 12, 2001, the day after the attacks on the World Trade Center and the Pentagon. I was in the White House that day as part of my job on the National Security Council staff. “We need this,” is what then National Security Advisor Condoleezza Rice told the French government, referring to the decision to invoke Article 5. So the allies did—and it was not an empty gesture. NATO members, Denmark among them, later sent forces to fight alongside the United States in Afghanistan and Iraq. Some of those soldiers did not come home.  

Trump rightly pointed out that NATO nations have not devoted enough to defense. He also took credit, also rightly, for helping fix that problem by pushing for NATO’s decision at its 2025 summit in The Hague to set new, high targets for members’ military spending. But Trump cannot take a win on NATO defense spending and then demand that NATO members acquiesce to US aggression against a fellow NATO member. 

Trump seemed to be counting on threats of US economic pressure plus US reduction of support for NATO and Ukraine as sufficient leverage to force Denmark’s allies to abandon Greenland. That didn’t happen. 

Getting to a deal in Davos

Europe does need US support against Russia’s aggression. But Denmark did not yield, and its fellow European countries largely held together. In the United States, many Americans seemed skeptical of the administration spending a great deal of time and money to acquire Greenland, especially as economic conditions at home remain uneven. More immediately, an adverse Supreme Court decision on the president’s use of the International Emergency Economic Powers Act statute for imposition of tariffs could attenuate Trump’s economic leverage. And Congress has already passed legislation (the 2025 National Defense Authorization Act) that complicates Trump’s ability to withdraw US forces from Europe. 

The Europeans (and especially the Danes) knew all this, and it bolstered their willingness to resist. Their response from the start has been to offer Trump all the security cooperation he wants in the Arctic but stand firm against US demands for annexation, knowing that they can make the case to Congress and the US public. They were offering security but not surrendering on sovereignty. 

Though details so far are thin, the meeting between Trump and Rutte seems to have settled on just that sort of deal: some arrangement to bolster security in the Arctic and, one hopes, the United States backing off on meritless claims to Greenland. Trump could justly claim such an arrangement as a win for both US and allied security in the Arctic.

Trump’s walk back of the threat of war in his speech and rescission of the tariff threats as part of an apparent framework deal on Arctic security may mean that, after unnecessary drama, a way out of this crisis can be found. 

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Bottom lines up front

• To spend larger defense budgets wisely, European NATO allies will need to develop an ecosystem that fosters innovation.
• To increase innovation and the adoption of new technologies, NATO allies will need to address regulations that too often inhibit cooperation.
• Among other steps, NATO should establish a Defense Innovation Unit modeled after the US organization of the same name.

WASHINGTON—From the specter of US retrenchment to ongoing Russian revanchism, European NATO members must face up to a harsh reality: the Alliance lacks the industrial capabilities to meet today’s security challenges. Their recent promises to increase defense spending, while substantial and welcome, will not be enough alone to change this. 

To adapt quickly enough to confront evolving threats, NATO allies must get the basics right. This means adopting functional and flexible financing mechanisms, streamlining regulatory frameworks, and building production foundations that prioritize scalable and sustainable innovation.

These challenges that NATO faces, as well as the need for the Alliance to get the basics right, are being actively discussed, including at the 2025 Netherlands-US Defense Industry Days conference in Washington, DC, this past October. At this event, organized by the Embassy of the Kingdom of the Netherlands and the Atlantic Council, policymakers, industry leaders, financiers, and experts discussed how transatlantic allies can accelerate defense innovation while strengthening their defense industrial bases. Below are a few of the authors’ major takeaways from this conference on how NATO can meet these challenges.

Don’t just spend more—spend smarter

Increasingly, the battlefields of the future will be won in the realm of innovation. Building ecosystems to support technology development will require allies to use newly unlocked defense dollars to fill immediate capability gaps and build flexible financing pathways to foster innovation. If done right, these defense ecosystems can allocate more resources directly to innovators, boosting returns on investment and generating cutting-edge capabilities in North America and Europe. 

To do this, allies should take a two-pronged approach to financing innovation:

Accept risk to accelerate adoption. Many innovation initiatives—such as NATO’s Defense Innovation Accelerator for the North Atlantic (DIANA) organization—too often fall short because they prioritize immediate return on investment or quick-turn results over long-term innovation development. This places a strain on innovators, limiting their access to seed money and signaling to the private sector that the Alliance does not prioritize lasting defense technology innovation. Instead, NATO should give these initiatives greater latitude to prioritize experimentation and iteration rather than meeting often arbitrary metrics and quotas. 

Protect research and development budgets. From the rise of the space domain to electromagnetic warfare, NATO allies must win not just a single innovation race; they need to win many at once. Research and development (R&D) budgets are critical to this effort. Yet, far too often, as participants at the conference noted, R&D budgets for defense technologies are cannibalized in favor of immediate operational needs, particularly during periods of heightened security pressure. By prioritizing R&D budgets, governments can send a clear signal to defense industries, investment bankers, and venture capitalists that NATO members see investment in defense technology as a long-term and sustainable demand. These signals can help spur greater private-sector investment in these technologies.

To produce at scale, regulate at scale

Current regulatory environments on both sides of the Atlantic are not designed for the speed of innovation or adoption needed in today’s rapidly evolving security environment. Instead, NATO allies must strike a careful balance: NATO countries should impose regulations that protect sensitive technologies and intellectual property while also encouraging cooperation among allies on innovation development. Two main principles should inform this approach: 

Break down barriers to transatlantic defense industrial cooperation. In the United States, having to navigate dense bureaucracy can stifle innovation, hamper collaborative partnerships, and stretch lead times for critical defense technologies. However, US Secretary of War Pete Hegseth recently made several announcements that show promise in this area—including loosening restrictions on defense contractors and emphasizing speed—indicating that the Pentagon will work to streamline defense cooperation for allies looking to buy US capabilities. Despite this positive momentum, meaningful changes to US foreign military sales and armaments cooperation will require sustained efforts to reform these overly burdensome bureaucratic processes. 

Keep agile firms top of mind when writing regulations. Small and medium-sized enterprises (SMEs) will make or break the next era of warfare. Yet defense industrial and innovation regulations often impose disproportionate costs on SMEs because they are designed only for the largest defense companies. For example, the US Cybersecurity Maturity Model Certification rightly protects sensitive data through third-party audit and monitoring requirements. But as written, the cost of compliance with these regulations is prohibitively expensive for SMEs, risking pushing many smaller defense firms out of the market altogether. Therefore, policymakers and military planners must establish more frequent, institutionalized relationships with SMEs to better understand how regulations affect these new players. A good step in the right direction would be for policymakers to apply regulations on a sliding scale, setting thresholds for how large a defense company must grow before it has to comply with certain requirements.

Build integrated innovation ecosystems

NATO should adopt a holistic approach to capability development that marries research, design, and production to turn industrial development into more than just the sum of its structural parts. Three ways to build this holistic approach are: 

Champion defense industrial cooperation. To innovate at the necessary pace, the Alliance must build defense industrial co-development, co-production, and co-assembly pathways. Working industry-to-industry or industry-to-partner, such collaborative efforts can help enable allied industries to scale up production and develop cutting-edge defense technologies. This approach defrays risk for industry, builds stronger transatlantic bonds, and shortens lead times for capability delivery. 

Advance a model that combines expertise across sectors. To build more resilient and sustainable defense innovation ecosystems, allies should foster a defense innovation model that integrates government, industry, and academia. With these three sectors working together, allies can coordinate experimentation, testing, and manufacturing efforts to accelerate development and deployment timelines. Applied across the Atlantic, such a model could replace isolated national pilot projects with a coordinated framework for sustained, interoperable innovation.

Establish a NATO Defense Innovation Unit to spur development. Modeled after the United States’ own Defense Innovation Unit, a NATO version of the institution would help the Alliance coordinate funding, regulation, and capability development. A NATO Defense Innovation Unit would maintain shared test facilities, align technical standards, and guide the transition of prototypes into fielded systems. It would serve as a permanent platform connecting NATO’s innovation initiatives—such as DIANA and the NATO Innovation Fund—with national and private-sector efforts.

Building transatlantic innovation ecosystems must begin with the basics: financing innovation wisely, regulating for speed and scalability, and building integrated defense innovation models across sectors and allied capitals. A roadmap grounded in smart investment, adaptive regulations, and collaborative production can transform innovation into readiness.

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Executive summary

This report’s findings are meant to guide policymakers in making important decisions about safety, security, and sustainability in the space domain, as well as to better inform the public on these issues. The report explains why current US space policy, Department of Defense (DOD) acquisition programs, and commercial integration strategies by themselves are inadequate to address the growing threats from Russia in space. The report makes the case for the development of policies, practical strategies, and more effective acquisition programs to better address a range of potential futures, considering possible space-related actions by Russia’s political leadership.

Beyond recommending changes to US declaratory policy, this report details why the United States needs a more resilient space architecture. It examines how Russia’s nuclear threat—specifically, its designs to place a nuclear weapon in orbit, in clear violation of its obligations under international law—could alter the rationale for pursuing proliferated low-Earth orbit (LEO) constellations. This report also explores the kind of space architecture the United States would need during a conflict against a major power, and how the United States can further integrate the private sector and allies in pursuit of its national security objectives. Each of these issues carries significant near-term policy and acquisition implications.

This report explains why some US policymakers might be reluctant to take the necessary coercive action to compel acquiescence by Russian political and military leaders. This reluctance is driven by a Western sense of morality and “rightness,” an inherent right of self-defense mentality, and current conceptions of international humanitarian law. US anticipatory actions seeking to deter Russian malicious actions might prove unreliable because any anticipatory action will be a political decision based upon a Western mindset and worldview. This observation underscores that deterrence by denial of benefit—including resilience and active defense—should play a substantial role in military strategies, one even more substantial than cost-imposition efforts. Additionally, assurance and reassurance efforts directed toward Chinese and Indian leadership could help dissuade potential Russian aggressive behavior and deescalate crises.

This report’s analysis illuminates important defense and force planning considerations. Its three scenarios span a catastrophic nuclear detonation (NUDET) in LEO to debris-generating anti-satellite (ASAT) weapons to less aggressive action against commercial satellites. A qualitative assessment using a detailed framework highlights the relative importance of the methods used to dissuade potential aggression while also prevailing in conflict. In priority order, the relative importance of affecting Russian leadership’s decision calculus is: deterrence by denial of benefit; assurance and reassurance; and deterrence by cost imposition.

Finally, this report provides fifteen actionable policy and defense acquisition recommendations for advancing a comprehensive and practical framework to counter potential Russian aggression and escalation in space. Should dissuasion efforts fail and conflict in space occur, it is necessary that the United States, its allies, and commercial partners fight through Russia’s irresponsible and aggressive actions in space, while working to deescalate any crisis and seek a lasting peace.

John J. Klein, PhD, is a nonresident senior fellow in the Forward Defense program of the Atlantic Council’s Scowcroft Center for Strategy and Security. Klein is a subject matter expert on space strategy and also instructs space policy and strategy courses at the undergraduate, graduate, and doctorate levels at several universities around Washington, DC. He routinely writes on space strategy, deterrence, and the law of armed conflict. He is the author of the books Space Warfare: Strategy, Principles and Policy, 2nd Edition (2024), Understanding Space Strategy: The Art of War in Space (2019), and Fight for the Final Frontier: Irregular Warfare in Space (2023), along with a score of other book chapters and articles.

Klein is also a retired United States Navy commander, receiving his commission through the Navy Reserve Officer Training Corps program at Georgia Tech. He served for twenty-two years as a naval flight officer, primarily flying in the S-3B Viking carrier based aircraft. Klein supported combat operations in Iraq and Afghanistan. His tours included service as the executive officer of Sea Control Squadron Twenty-Four and the final commanding officer of the Sea Control Weapons School.

Clementine Starling-Daniels is a vice president at Beacon Global Strategies, the former director of the Atlantic Council’s Forward Defense program, and a nonresident senior fellow at the Council’s Scowcroft Center for Strategy and Security. At Beacon, she advises at the intersection of national security and technology policy, helping clients navigate evolving defense, intelligence, and technology landscapes. As a national security expert, her research explores how emerging technologies and operational innovation enhance US and allied deterrence, defense, and joint warfighter capabilities amid strategic competition with China and Russia. Her work particularly focuses on space strategy and policy, and on the role of special operations and unconventional warfare in modern deterrence and conflict.

As founding director of Forward Defense, Starling-Daniels led a team advancing research and thought leadership on the future of warfare. She spearheaded bipartisan commissions on Defense Innovation Adoption and Software-Defined Warfare, developing approaches to leverage technologies—including AI, hypersonics, autonomy, and space systems—to solve complex defense challenges. Earlier in her career, she served as deputy director of the Atlantic Council’s Transatlantic Security Initiative, guiding task forces on NATO force posture, military mobility, contested logistics, and Arctic security. She also supported NATO’s Public Diplomacy Division during key summits and gained extensive experience in NATO and EU defense policy and industrial cooperation.

This report was produced in accord with the Atlantic Council’s policy on intellectual independence, which states that the Atlantic Council and its staff, fellows, and directors generate their own ideas and programming, consistent with the Council’s mission, their related body of work, and the independent records of the participating team members. The Council as an organization does not adopt or advocate positions on particular matters. The Council’s publications always represent the views of the author(s) rather than those of the institution.

The Atlantic Council maintains strict intellectual independence for all of its projects and publications. Council staff, fellows, and directors and those who the Council engages to work on specific projects, are responsible for generating and communicating intellectual content resulting from Council projects. The Council requires all donors to agree to the Council maintaining independent control of the content and conclusions of any products resulting from sponsored projects. The Council also discloses sources of financial support in its annual reports to ensure transparency.

This report does not necessarily reflect the views of the US Department of Defense, the US Department of the Air Force, or any other institution with which either of the co-authors or any of the contributors are now, or have in the past been, affiliated.

The co-authors acknowledge with gratitude the sponsorship of the Smith Richardson Foundation for this project.

Forward Defense leads the Atlantic Council’s US and global defense programming, developing actionable recommendations for the United States and its allies and partners to compete, innovate, and navigate the rapidly evolving character of warfare. Through its work on US defense policy and force design, the military applications of advanced technology, space security, strategic deterrence, and defense industrial revitalization, it informs the strategies, policies, and capabilities that the United States will need to deter, and, if necessary, prevail in major-power conflict.

Learn more

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Bottom lines up front

• The Trump Route for International Peace and Prosperity (TRIPP)—a planned rail and road route through southern Armenia—is poised to reshape Eurasian trade.
• While the TRIPP itself is less than thirty miles, it will be critical in connecting Central Asia to Turkey and Europe while bypassing Russia and Iran.
• TRIPP is also part of larger efforts by the Armenian prime minister to reduce Russian influence over his country—efforts the US should support.

WASHINGTON—A twenty-seven-mile stretch of land running through southern Armenia is poised to reshape the geopolitics of the South Caucasus. On January 13, US Secretary of State Marco Rubio and Armenian Minister of Foreign Affairs Ararat Mirzoyan announced a detailed framework to implement the Trump Route for International Peace and Prosperity (TRIPP). This US-brokered corridor, which promises to become a vital connectivity link between Europe and Asia, could go down as one of US President Donald Trump’s most impressive foreign policy achievements of his second term.

TRIPP’s connectivity potential

The idea for a US-brokered transport route in southern Armenia that would link the main part of Azerbaijan to Baku’s Nakhchivan exclave grew out of 2025 peace talks between the two countries coordinated by US officials. Azerbaijan wanted to implement a crucial element of its 2020 cease-fire agreement with Armenia—unfettered transport access to Nakhchivan. At the same time, Armenia sought to maintain control over its sovereign territory along the proposed twenty-seven-mile route across its land.

In stepped Trump and his team with a creative solution: a US-led consortium would construct and manage the route, in concert with Armenian authorities, that would in turn safeguard Azerbaijani access to Nakhchivan. At a summit at the White House this past August, Armenian Prime Minister Nikol Pashinyan, Azerbaijani President Ilham Aliyev, and Trump agreed to implement TRIPP with a view toward a comprehensive Armenia-Azerbaijan peace deal. This was a significant achievement: Armenia and Azerbaijan had clashed for more than thirty years, and they had fought a handful of wars in that time that killed tens of thousands.

But no details about how TRIPP would be built and managed were made public officially until this past week. In a joint statement, Rubio and Mirzoyan announced a new TRIPP Development Company (TDC) to construct the initial rail and road elements of the project, with the United States taking a 74 percent controlling stake for forty-nine years, which will revert to a 51 percent stake for the following fifty years. The agreement envisions the United States government providing upfront capital to develop the route and making a financial return via the TDC over the life of the project through transit fees and commercial opportunities along the route, in addition to construction contracts to US companies. Armenia will earn revenue based on its minority stake in the TDC, plus taxes and customs duties along TRIPP.

It’s an arrangement that should work well for both parties. The White House can tell Americans that they are getting an economic return for US diplomatic engagement in the South Caucasus and opening new opportunities for US companies. At the same time, Pashinyan can sell the agreement as a means of attracting high-quality Western infrastructure investment—something he had pursued through his Crossroads of Peace initiative—that can help position Armenia as a regional transport hub, all while maintaining control over Armenian territory.

TRIPP could provide spillover benefits to Washington, Yerevan, and the broader Caspian region, as well. The US government has been quietly supportive of the Middle Corridor, a multi-modal trade route that connects Central Asia to Turkey and Europe via the Caspian Sea and infrastructure chokepoints in Azerbaijan and Georgia. Washington and its European partners see the Middle Corridor as a way for overland trade with Asia to bypass Russia, including the potential export of critical minerals and rare earths from Central Asia. The South Caucasus and Central Asian countries seek prosperity through better integration with global markets. TRIPP provides another route across the Caucasus, increasing transport volume capacity as Azerbaijan and Kazakhstan work to build port capacity to meet trade demand.

The successful implementation of TRIPP would make it cheaper and faster to ship products and critical raw materials from Central Asia to Europe and beyond.

But cheaper, faster, better connectivity also carries some risks. The South Caucasus has at times swelled into a hotbed for sanctions evasion to both Russia and Iran, and possibly even evasion schemes between Moscow and Tehran. TRIPP can be a success as a regional trade route, but realizing its full potential relies on demand for trade between Europe and Asia. High transport costs along the Middle Corridor due to geopolitical instability or project economics—or an unforeseen increase in willingness to ship goods via Russia or Iran—could derail TRIPP’s prospects.

Pashinyan looks west

The finalization of TRIPP is not only an achievement of the Trump administration, but also a new peak of Pashinyan’s shift away from Russia. For thirty years, Armenia relied solely on Moscow for its security, leading to Russian domination of the country’s internal and foreign politics. When Russia failed to intervene during the 2020 Karabakh War, Pashinyan made a change. Understanding that a peace deal with Azerbaijan was the only way to remove Russian leverage and therefore achieve true independence, the Armenian prime minister staked his political future on such a deal. Simultaneously, he inked major defense deals with India, France, Greece, and Cyprus, among others.

But the United States is the only power capable of truly offering Armenia an exit ramp from Russian domination. By conducting peace negotiations under US auspices and placing US interests directly over TRIPP, Pashinyan and Aliyev have protected the most sensitive part of the deal with a US deterrent. But more than that, they tied the success of the peace process to closer relations with Washington. As Aliyev attested at the peace summit, “If any of us—Prime Minister Pashinyan or myself—had in mind to step back, we wouldn’t have come here.”

Yet Russia is not the only neighbor disturbed by a growing US presence in the South Caucasus. Iran has consistently called any change of the status quo to its northern border with Armenia a “red line.” In 2022, Tehran even staged large-scale military exercises on the Azerbaijani border when it thought Baku may try to take over the area by force. Recently, Ali Velayati, a senior advisor to Ayatollah Ali Khamenei, threatened to turn the South Caucasus into a “graveyard for the mercenaries of Donald Trump.” However, Iran is weaker than it has been in decades, and Pashinyan has taken advantage. As protests threaten the stability of the Iranian regime, Tehran weakly voiced concern that Washington could use TRIPP “within the framework of its security policy,” a far cry from red lines, graveyards, and military exercises. 

Last month, Pashinyan sent Deputy Foreign Minister Vahan Kostanyan, responsible for TRIPP coordination with Washington, to Israel to discuss the corridor. Kostanyan’s visit showed that Pashinyan would not make the same mistake with Iran as it did with Russia, instead choosing to align with the US-backed regional order.

Such moves come at a key time. With parliamentary elections set for 2026, Pashinyan needs to show that his pursuit of peace and ties with the West have been successful. Already, there are some signs. Azerbaijan has begun to ship oil and gas to Armenia, driving fuel prices down by 15 percent. Meanwhile, incoming stability and regional integration with Azerbaijan and Turkey have the potential of transforming Armenia into a transit country and providing easy access to the European market.

Russia has organized against Pashinyan ahead of the elections in the way it knows best—information operations. Last month, Armenian outlet Civilnet reported a spike in fake news targeting Armenian authorities, often spreading through anonymous social media accounts and Russian-language Telegram channels. Moscow will almost certainly seek to expand these efforts ahead of the election.

Nonetheless, the coming implementation of the TRIPP route looks like a major success in the Trump administration’s commercially focused foreign policy, and it is a model of constructive partnership that the White House should use elsewhere around the world. The project promises openings for American companies to build a small but crucial link to knitting the Middle Corridor together, a boon for the United States, as well as its partners in the South Caucasus and Central Asia. Sidelining Russia and Iran in the process may also decrease their ability to exert economic pressure in the region, giving leaders such as Pashinyan and Aliyev a freer hand to exercise their sovereignty and pursue their countries’ best interests.

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Bottom lines up front

• No fewer than five important leadership positions in Guatemala—ranging from the courts to higher education—could get new leaders in 2026.
• These institutions form the country’s most important line of defense against cartels and organized crime.
• To safeguard US interests in the region, Washington should support an appointment process that reinforces Guatemala’s rule of law.

WASHINGTON—This year, Guatemala will undergo the most consequential institutional reset since its return to democracy in 1986. Five bodies that determine who gets prosecuted, who gets protected, who gets elected, and, ultimately, who governs the country will be renewed within a tight five-month window.

The attorney general, the Constitutional Court, the Supreme Electoral Tribunal, the comptroller general, and the rector of the University of San Carlos (USAC) all come up for selection between February and August 2026—a timing so unusual that analysts have described it as a “planetary alignment.”

Most of the posts are selected by nominating commissions composed of delegates from universities, the Bar Association, and other sectoral representatives that send shortlists to Congress or the president. Others are chosen directly by the legislature or the executive. Although intended to promote merit-based selection, the system is highly vulnerable to manipulation: Its complex composition and the influence of already captured institutions leave commissions susceptible to intimidation, vote-buying, and procedural maneuvers.

This year’s appointments process is not a mere exercise in bureaucratic housekeeping, nor is it an ideological contest between left and right. These institutions form Guatemala’s most important line of defense against cartels and organized crime, help safeguard the rule of law, and ensure fair competition. With illicit interests already moving to influence the process, this is a battle over whether Guatemala’s institutions will serve the public and the wider region or remain instruments of criminal groups for the next decade.

This past weekend underscored just how high those stakes are. On January 18, Guatemalan President Bernardo Arévalo declared a thirty-day “state of siege” after suspected gang members killed seven police officers in Guatemala’s capital. These killings followed sieges by authorities aiming to end riots in three prisons, in which gang-affiliated inmates had taken nearly fifty hostages. Arévalo cautioned that entrenched “political-criminal mafias” created the conditions for such violence, reinforcing the need for clean and capable institutions.

Why these institutions matter—and what has gone wrong

For decades, Guatemala has faced entrenched corruption, with criminal networks penetrating deep into the state, fueling violence and migration. Hopes for change surged with the 2023 election of Arévalo, who won over 60 percent of the vote on an anti-corruption, reformist platform. 

Yet Arévalo’s ability to deliver has been severely constrained by a legislature and, most critically, a judicial system largely captured by the so-called pacto de corruptos, or corruption pact—a loose coalition of politicians, economic elites, and criminal groups. Through the control of key institutions, these actors have shielded allies from accountability and obstructed reform efforts. 

1. The Attorney General’s Office (MP)

The Attorney General’s Office, or Ministerio Público (MP), is the state’s principal weapon against gangs and transnational criminal organizations. Its performance directly shapes public security and regional stability.

Under Attorney General María Consuelo Porras, the MP has faced widespread criticism for obstruction, and she has been sanctioned by the United States, European Union (EU), and United Kingdom for corruption. Over 93 percent of criminal cases go unaddressed, including those involving organized crime, while the MP has aggressively pursued judges, political opponents, and anti-corruption figures.

A captured MP means one thing: Criminal organizations operate with state protection. The 2026 appointment will determine whether Guatemala continues to enable these networks or begins dismantling them.

2. The Constitutional Court (CC)

The Constitutional Court (CC) is Guatemala’s highest judicial authority. Its role is to ensure the rule of law, protect investors, and act as a backstop against executive or congressional overreach.

In the past five years, however, it has moved in the opposite direction. The CC has issued rulings that have been denounced for protecting corrupt officials, weakening accountability and prosecutions, and undermining electoral integrity. 

Co-opting the court is the ultimate prize for any criminal network: With compliant magistrates, illegal acts can be in effect legalized after the fact. 

3. The Supreme Electoral Tribunal (TSE)

The Supreme Electoral Tribunal (TSE) runs Guatemala’s elections and certifies results. Its independence determines whether democratic competition, rather than political mafias, decide who governs.

Despite facing immense pressure from the corruption pact, the TSE validated Arévalo’s victory in 2023. However, the body was immediately targeted by the MP and CC, which suspended magistrates, raided electoral facilities, and sought to annul the election results. Such measures raise serious concerns about institutional stability ahead of the 2027 general elections. 

With many municipalities heavily influenced by criminal groups, a weakened TSE could further destabilize the country and region. 

4. The Comptroller General (CGC)

The comptroller general (CGC) is Guatemala’s financial watchdog. When independent, this office is one of the country’s most effective tools for preventing corruption. 

When captured, it becomes a tool for shielding allies and enabling illicit contracting schemes that directly undermine fiscal integrity and free market competition. Also, given that the law disqualifies any political candidate under investigation by the CGC, a co-opted comptroller’s office can—and has been—used to selectively target political competitors. 

5. Rector of the University of San Carlos (USAC)

The head of Guatemala’s only public university wields significant influence. The rector shapes USAC’s representation in multiple nominating commissions, but the role’s reach extends far beyond academia. The university holds seats in more than fifty-three state bodies—including important financial institutions.

Under the current rector, Walter Mazariegos, who is under US sanctions, the university has appointed aligned actors to influential bodies while sidelining independent academics and students who have mobilized against corruption and fraud at the institution. On January 19, Mazariegos was sworn in as head of the nominating commission for the TSE.

An independent rector is essential for ensuring that Guatemala’s judiciary is staffed by competent professionals rather than political operatives unwilling to confront organized crime.

What role the United States can play

Guatemala is central to US regional interests, as highlighted by Secretary of State Marco Rubio’s decision to include the country in his first foreign trip in early 2025. In recent years, Guatemala has become a major transit route for drugs and other illicit flows, while also serving both as a source of migrants and a transit country for hundreds of thousands more. If the institutions that are meant to address illicit activity and corruption remain captured, these trends will worsen, putting US national security at risk.

Guatemala is also one of the few countries in the region to recently sign a new trade deal with the Trump administration aimed at lowering tariffs and expanding investment and exports. However, reaching these objectives seems unattainable under a Guatemalan judiciary that favors certain interests at the expense of fair competition and foreign businesses. 

For the United States, Guatemala has historically been a “friend in the Hemisphere,” as it is framed in the 2025 National Security Strategy. Guatemala remains a strong partner on issues such as drug trafficking, port security, Chinese influence, and migration. It is now time for Guatemala’s judicial institutions to align with that partnership and work for hemispheric security and prosperity rather than enabling the criminal networks that undermine them.

Here are four steps the United States can take with Guatemala in 2026.

1. Deploy proactive, sustained diplomacy

The United States should directly engage Guatemala’s party leaders, congressional blocs, and judicial elites, as well as members of the nominating commissions. The message should be unambiguous: Manipulating this year’s appointments will have consequences.

Elements of Guatemala’s private sector have financed efforts to influence appointments, largely because the current system shields them from competition and accountability. They must also understand that supporting such efforts risks diplomatic isolation and sanctions, including trade penalties, fines, and the suspension of trade benefits under the Dominican Republic-Central America Free Trade Agreement.  

The US Embassy should be more vocal in calling out intimidation and providing protection or asylum when necessary. It must signal that candidates and commissioners facing threats will not be left alone and help foster reformist coalition-building. 

2. Expand targeted sanctions—and use them early

The US Treasury Department’s Office of Foreign Assets Control has already sanctioned more than fifty Guatemalan actors for corruption and anti-democratic actions. However, given the immense consequences of judicial capture, US sanctions should be broadened to target business elites financing institutional capture, commissioners accepting bribes, judges enabling impunity, and political operators coordinating interference. 

Sanctions must go beyond travel bans to restrict access to banking systems and foreign assets. To be effective, these sanctions should be extended to immediate family members of the primary targets of sanctions, who are often used to circumvent restrictions.

Measures should be coordinated with partners such as the EU and especially Spain, where several sanctioned former Guatemalan officials have relocated.

3. Support observation and transparency efforts

Washington should support the EU and Organization of American States observation missions in Guatemala, as international presence can meaningfully deter manipulation across all stages of the nomination process. 

Additionally, the unusual complexity of the 2026 appointment cycle, coupled with the high probability of illicit influence, warrants investing in transparency. The State Department should provide short-term, targeted grants to local civil society organizations and legal watchdog groups to follow the process and flag concerns in real time.

4. Mobilize the US and Guatemalan private sectors

Guatemala has the largest economy in Central America, and over two hundred US and other foreign firms have active investments in the country. Washington should encourage US businesses to communicate clearly that judicial capture will jeopardize investment and redirect capital to more stable markets. The Guatemalan private sector should also be vocal in support of a clean election process and independent candidates. 

High stakes, high reward

This year’s appointments offer a rare chance to break Guatemala’s cycle of institutional capture. Some actors are deliberately reframing the nominations as an ideological contest between left and right, hoping to shield themselves and cause US hesitation. In reality, the stakes are institutional, not ideological: It is a choice between a justice system that upholds the law and one that continues to serve criminal interests.

With a reformist executive in place and five key bodies being renewed simultaneously, the window for change is real. For US policymakers, safeguarding US strategic interests in the region requires supporting a 2026 appointments process that reinforces Guatemala’s rule of law and, in doing so, strengthens security and prosperity across the Western Hemisphere.

The post What to watch in Guatemala’s year of institutional reset appeared first on Atlantic Council.

Bottom lines up front

• Beginning under Hugo Chávez and then accelerating under Nicolás Maduro, Venezuela experienced one of the most dramatic economic collapses of modern history.
• The Maduro regime triggered the deepest drop in gross domestic product (GDP) per capita seen anywhere in the world since 2013.
• Catching up to the region’s average GDP per capita might require fifty years of consistent high growth—a daunting challenge for the country’s future leaders.

WASHINGTON—Nicolás Maduro is out, but the economic legacy of his policies, and of Chavismo more broadly, remains. In the more than ten years he was in power, inflation soared, businesses collapsed, investment fled and withered, and the overall output of the economy fell by over two-thirds.

The Venezuelan people will feel the effects of these policies for decades. The data available, albeit limited by the regime’s international isolation and autocratic nature, leads to one conclusion: Under Maduro, Venezuela experienced one of the most dramatic economic collapses of modern history.

Below are three charts that show the depth of Venezuela’s economic collapse and the challenge ahead for the country to recover.

Having induced the destruction of Venezuela’s productive sectors, fueled the migration of millions, and aggressively intervened in the economy, the regime triggered what we authors calculate to be the deepest drop in GDP per capita anywhere in the world since 2013. While Venezuelans’ economic woes began under Maduro’s predecessor Hugo Chávez, the full extent of the pain came after his death in March 2013. In the decade after Maduro came to power, Venezuelans lost some two-thirds of their per capita wealth.

The collapse in economic activity made Venezuelans poorer, but in addition, the regime’s policies spurred the deterioration of the average Venezuelan’s overall well-being and the country’s human development. Since 2013, Venezuela’s score has fallen on the United Nations’ Human Development Index, which factors in life expectancy at birth and education, in addition to economic figures. While most of the world, especially developing countries, saw development indicators improve over the past thirteen years, Venezuela moved in the opposite direction, with major drops in indicators even beyond economic figures.

A good way to illustrate the challenge of Venezuela’s economic recovery is by comparing GDP per capita levels with those of regional peers. Venezuela has gone from far outpacing its neighbors in per capita wealth (before Chávez came to power) to becoming one of the region’s poorest countries. Making up this lost ground should be a priority for Venezuela’s future leaders, an objective that will require a monumental economic reconstruction effort and potentially one of the most significant recovery programs of this century.

Multiple scenarios exist, but for Venezuela to catch up with its neighbors and bring its income levels back up to upper-middle income status will require concerted efforts to jumpstart its energy sector, diversify its economy, attract its diaspora, boost foreign investment, and build trust with investors and Venezuelans more broadly. As the chart above shows, catching up to the region (which itself has a lot of work to do to boost its own growth) will require half a century of above-average growth rates.

Maduro and his regime’s policies have left a long shadow, but there is a path forward for the country. Venezuela’s future leaders must set the foundations for a lasting recovery for the country.

This piece is part of “Economic pulse of the Americas,” a series of explainers about the latest trade trends in Latin America and the Caribbean, written by the Atlantic Council’s Adrienne Arsht Latin America Center. To get notified about future editions and other related work on the region, sign up here.

The post Three charts that show the long shadow of Maduro’s economic disaster in Venezuela appeared first on Atlantic Council.

Klaus Schwab founded the World Economic Forum in 1971, a decade after the Atlantic Council’s own birth, with a post-World War II premise that held until recently: that greater security cooperation, economic interdependence, institutional cooperation, and shared rules could prevent another global catastrophe and advance more lasting peace and prosperity in a manner that also served US interests.

Trump travels to Switzerland this week as perhaps the most forceful skeptic of that internationalist assumption ever to occupy the Oval Office. He set the stage on Saturday by threatening new 10 percent tariffs on European nations that stood in the way of his heightened efforts to acquire the Danish territory of Greenland.

Trump has pledged to slap those tariffs on NATO allies Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland on February 1. If those countries don’t yield, Trump wrote on his Truth Social platform, he will jack up the tariffs to 25 percent—presumably atop the tariffs he has already put on Europe—on June 1 “until such time as a Deal is reached for the Complete and Total purchase of Greenland.”

For their part, European leaders are considering a number of possible economic counterstrikes. The Financial Times reports that the European Union (EU) is considering €93 billion of new tariffs, while the French are reportedly pushing for the first-ever use of Brussels’s “Anti-Coercion Instrument.” Known as ACI, it is regarded as the nuclear option in that it could put limits on foreign direct investment, restrict US suppliers’ access to the EU market (excluding them from public tenders), and place export and import restrictions on goods and services.

That turns Davos, whose theme this year is “A Spirit of Dialogue,” into the epicenter of the worst transatlantic economic conflict in memory. European leaders hope they can still reach yet another deal with Trump. That said, one senior allied official told me it is hard to imagine common ground given Trump’s “absolutist” position that the only outcome he will accept is Greenland becoming US property. Another European official described Trump to me as an aberrational bully willing to risk eighty years of accumulated transatlantic trust to achieve territorial ambitions.

A nineteenth-century president in a twenty-first-century world 

To better understand who they’re dealing with, a long-time friend of Trump’s suggested to me that European leaders should look less to the past eighty years and more to the time before the world wars. He calls Trump a nineteenth-century US president governing in a twenty-first-century world—a leader who combines the expansionism of US President James Polk, pushing to enlarge the United States’ territorial realm as part of a “Modern Manifest Destiny,” with the twenty-first-century nationalism of current counterparts like Russian President Vladimir Putin (whom the Kremlin claims has just been asked to join Trump’s Gaza peace board), China’s Xi Jinping, India’s Narendra Modi, and Turkey’s Recep Tayyip Erdoğan.

While it was journalist John L. O’Sullivan who coined the term “Manifest Destiny,” it was Polk who popularized and implemented the notion that the United States was divinely ordained to expand its realm and spread democracy, capitalism, and American values across the entire North American continent.

To refresh your history: Polk, the eleventh US president, presided over Texas’s formal entry into the United States on December 29, 1845, though President John Tyler and Congress had initiated the process before Polk took office. That helped trigger the Mexican-American war that resulted in Mexico’s ceding of the entire American southwest to the United States. After a negotiation fraught with the risk of war, Polk acquired the Oregon Territory from Great Britain in 1846, giving the United States land for the future states of Washington, Oregon, and Idaho, along with parts of Montana and Wyoming, while Britain kept Vancouver Island.

That history lesson won’t hearten the leaders of Denmark or its Europeans allies, who presumably believed the nineteenth century was, well, history. Polk’s era was an age not of global governance but of sovereign states, great power competition, mercantilism, and jealously guarded spheres of influence, followed by two world wars. Diplomacy was personal and transactional—just as Trump likes it. Leaders wielded commitments as conditional and trade as an instrument of power, as was the case this week when Trump upended trade deals he had negotiated with European states to open a new fight over Greenland.

What’s further capturing conversation in Davos is Trump’s military-judicial operation that brought Venezuelan leader Nicolás Maduro to New York to face criminal charges, part of a heightened focus on the Western Hemisphere through his “Trump Corollary” to the Monroe Doctrine; his on-again, off-again threats to strike Iranian targets in response to Tehran’s killing of protesters; the US Department of Justice’s criminal investigation into Federal Reserve Chair Jerome Powell; and a series of domestic events that have made global headlines, most significantly the death of Renee Good in Minneapolis at the hands of an Immigration and Customs Enforcement agent.

A world-historic figure—but in what sense?

Many in Trump’s electoral base charge that he’s paying far too much attention to global affairs at the expense of their own economic struggles. However, don’t expect Trump’s focus to shift—not even in a mid-term electoral year when the Republican hold on Congress is in doubt. Trump’s eye is on history, not congressional seats.

“The world, he thinks, is where a political figure makes his mark,” writes Wall Street Journal columnist Peggy Noonan. “He desires a big legacy, still wants to show Manhattan (not to be too reductive, but there’s still something in it) that the outer-borough kid you patronized became a world-historic figure.” If that’s true regarding Manhattan, it is even more so for Davos, given that it symbolizes for Trump the club of first-tier global business leaders to which he never previously belonged.

If Trump’s aim is to be a world-historic figure—and that’s increasingly beyond dispute early in his second term—then what’s most important to ask is: world-historic in what sense? For that reason alone, it will be worth listening closely to how Trump describes himself this week in Davos and comparing that to his previous three appearances.

In 2018, early in his first administration, he declared in Davos, “America first doesn’t mean America alone. When the United States grows, so does the world.” In 2020, ten months before his electoral defeat, he highlighted two trade deals he had just closed, one with China and the other with Mexico and Canada. “These agreements represent a new model of trade for the twenty-first century—agreements that are fair, reciprocal, and that prioritize the needs of workers and families.”

Then in 2025, three days after his second inauguration, he set a far feistier tone. Appearing remotely via video, Trump declared the beginning of “a golden age of America,” speaking of the most significant US election in 129 years, lambasting his predecessor President Joe Biden, and announcing a storm of executive orders to address a “calamity,” particularly regarding immigration, crime, and inflation. He said little about the tariffs that would follow. “They say that there’s a light shining all over the world since the election,” Trump told the Davos crowd.

The big question chasing Trump this week, as I asked earlier this year in this space, is: “What sticks?”

It’s still uncertain whether Trumpism will usher in a new and enduring ideology of some sort. US President Franklin Delano Roosevelt brought the world New Deal liberalism, an ideology that has remained until this day; US President Ronald Reagan ushered in an era of internationalist conservatism that won the Cold War alongside allies, and it still lingers. When American presidents break with the past and usher in new eras, those trends tend to stick.

Many argue that Trump’s emergence underscores and advances a new nationalist era, one of nineteenth-century tenets laced with twenty-first-century technologies and geographies, even though those who know him best say Trump is not a student of history himself.

If it’s a new nationalism that’s emerging, what brand of nationalism might that be? Autocratic or democratic? Isolationist or internationalist? Realist or imperialist? The range of possibilities is immense.

A new vocabulary

What has stuck over the past year—a shift that’s palpable in Davos—is the erosion of old certainties. Trump’s emphasis on tariffs, industrial policy, and economic security has redrawn global trade rules and attitudes. His skepticism about multilateral arrangements has forced allies and partners to question systems they’ve depended upon since World War II. Trump’s blunt focus on borders, energy dominance, and the Western Hemisphere has global partners rethinking their own concepts of geography and leverage.

Davos matters this week not in terms of whether Trump will convert his listeners to his worldview, but rather because the world has already begun to change around those gathering there. The Davos vocabulary of cooperation and convergence coexists now with the new language of fragmentation, national interest, and strategic autonomy.

When he appears at Davos this week, Trump arrives with the ambitions of a nineteenth-century president confronting leaders with a twentieth-century mindset inadequate to the uncertainties of a twenty-first-century world. At this inflection point, all three eras are colliding. There’s no settled script for what comes next.

Frederick Kempe is president and chief executive officer of the Atlantic Council. You can follow him on X @FredKempe.

This edition is part of Frederick Kempe’s Inflection Points newsletter, a column of dispatches from a world in transition. To receive this newsletter throughout the week, sign up here.

The post At Davos, Trump’s 19th-century instincts will collide with 21st-century uncertainty appeared first on Atlantic Council.

Bottom lines up front

• Relations between Washington and Brussels were upended this weekend after Trump threatened tariffs on several European nations until the United States can acquire Greenland.
• Many European leaders would still prefer to avoid an open confrontation or rupture with the Trump administration, but the Greenland dispute is testing the limits of this strategy.
• With no obvious off-ramp that would satisfy both sides, escalation is more likely than at any other time since Trump’s return to the White House. 

DAVOS and WASHINGTON—In Davos, where Josh recently landed, preparations are underway to welcome US President Donald Trump, French President Emmanuel Macron, German Chancellor Friedrich Merz, European Commission President Ursula von der Leyen, and dozens of other global leaders under this year’s theme: “A Spirit of Dialogue.”

But the truth is there is very little spirit—and even less dialogue—between Trump and his European counterparts right now.

Relations between Washington and Brussels were upended this weekend after Trump said on social media Saturday morning that he would impose a 10 percent tariff on France, the Netherlands, Denmark, Norway, Sweden, France, and the United Kingdom—presumably on top of the existing tariffs— “until such time as a Deal is reached for the Complete and Total purchase of Greenland.” In the same post, which targeted countries that recently sent troops to Greenland, Trump threatened to raise these tariffs to 25 percent if such a deal has not been agreed to by June 1. For all the Wall Street analysts who argued that the second year of Trump’s term would bring more stability on the tariff front, Saturday morning should have been a wake-up call. Trump is not abandoning his favorite economic weapon anytime soon—unless, that is, the Supreme Court forces him to, as the court is set to rule on the legality of many of the administration’s tariffs as soon as this week.

This all adds up to an incredibly volatile situation: a US president seemingly willing to seize the territory of a NATO ally or force its sale, a Supreme Court that may dramatically alter the tools the president has to levy tariffs, and a European Union (EU) asking itself whether it made a mistake by agreeing to a lopsided trade deal just six months ago in Scotland—and increasingly questioning the future of the US-European alliance.

Below, we break down each of these dimensions—and how they could escalate or deescalate in the week ahead.

Europe’s scramble for a united response

If Wall Street underestimated the president’s use of tariffs, so did Europe. Fresh off the successful signing of the EU-Mercosur trade deal on Saturday in Paraguay, the new threats brought von der Leyen and European Council President António Costa back to the harsh realities of Trump-era power politics. 

Their initial reaction in true Brussels style: coordinate a European response among the twenty-seven EU countries. 

Macron went further, declaring the tariffs “unacceptable” and calling for the EU to deploy its so-called “big bazooka” against economic blackmail: the much-touted but never-used Anti-Coercion Instrument (ACI). This stood in contrast with the response from Italian Prime Minister Giorgia Meloni, a Trump ally. She said that the US tariffs would be a mistake but characterized the dispute over Greenland as a misunderstanding and called for dialogue and de-escalation. 

To equip European leaders with greater leverage, the Commission is dusting off a €93 billion package of retaliatory tariffs that it prepared during the trade negotiations following Trump’s “Liberation Day” global tariff announcement but suspended after the bloc brokered the Turnberry trade deal with Washington last July. The threat of these tariffs, however, will hardly strike fear into the US president. This White House knows full well that it has the upper hand in pressuring a low-growth EU with a a $236 billion trade surplus with the United States and divergent member state interests.

The ACI also is likely disappearing into back pockets in Brussels, despite bluster from Paris and the European Parliament. Designed to counter economic coercion from China and give the EU more flexibility and leverage in trade talks, its potential use has generated strong reservations from member states that are more dependent on the United States for security and trade. Much depends too on what position Germany will take and whether Berlin and Paris can align on the use of the instrument.         

Another missed opportunity for Europe is the absence of a done deal on US-EU trade. While Washington and Brussels agreed the Turnberry deal last July, the EU has yet to fully ratify the framework agreement. Opposition to the deal in the European Parliament has been building for months. But it reached a boiling point on Saturday when the largest political group in the European Parliament, von der Leyen’s center-right European People’s Party, announced that it will not vote to approve the deal in the face of Trump’s threats. 

Without the Turnberry deal implemented, the EU will have a harder time countering Trump’s punitive Greenland tariffs and preventing him from reopening a trade dispute that many hoped had been closed.

Many leaders in Europe would still prefer to avoid an open confrontation or rupture with the Trump administration. But the US president’s more brazen approach on Greenland is testing the limits of Europe’s hugging-the-bear strategy–efforts to continue engagement with the US president amid volatility and manifest disagreements while avoiding open confrontation. Trump’s aggressive push risks robbing European leaders of what political space is left at home to maintain their carefully calibrated balancing act vis-à-vis the United States. Geopolitical sparring over Greenland alone will not push Europe into collective opposition to the United States. But with the Trump administration refusing to rule out military options and levying economic threats over the president’s personal ambitions for the Arctic island, that dynamic might just change.

The Supreme Court, tariffs, and Trump’s next move

All of the above assumes that the US Supreme Court does not tell the president—possibly as soon as Tuesday—that he can no longer use the International Emergency Economic Powers Act to impose tariffs. The threat issued against Europe would almost certainly rely on that authority if Trump were to follow through with it.

If the court ends up siding with the president, expect Trump to double down. The last meaningful check on his tariff authority would be gone, and there is little chance Congress would muster the support needed to rein him in.

The more likely scenario, however, is that the court either rejects or sharply limits his powers. In that case, Trump will need a Plan B.

That plan has been contemplated before—with Europe in mind. While Trump has been surprisingly disciplined in dealing with the European Commission rather than individual member states, he has previously threatened specific countries, including Spain, with sector-specific tariffs. If the court rules against him, expect to see a wave of French, Dutch, and Danish agricultural and industrial products being targeted under Section 232 and Section 301 authorities. Regardless of the court’s ruling, those authorities will remain firmly in the president’s power. 

Trump also would likely turn to Section 122 authority, which allows tariffs of up to 15 percent for 150 days. But that would merely replace existing EU tariff levels—not add to them—which appears insufficient for the kind of leverage he wants to exert.

The deeper problem: no deal space

The larger issue—to use the favorite buzzword in Davos—is the lack of deal space between Trump and Europe.

On trade, the path to a deal for the two sides has been much clearer. As both the United Kingdom and the EU have shown, an agreement can be reached with Trump if the other side is willing to cut tariffs on US goods and pledge hundreds of billions of dollars in investment in the United States. It’s a model that has been followed around the world. 

But Greenland is different. It is unclear what compromises Europe could offer—military, security, economic, or otherwise—that would satisfy Trump. It is even less clear whether he will be satisfied by anything short of Greenland coming into US possession. This is the most troubling dimension of the threat. Among the people Josh has spoken with on the ground in Davos so far, few see an obvious off-ramp. And that is what makes escalation more likely than at any other time since Trump’s return to the White House. 

In Davos, the “spirit of dialogue” may quickly give way to a moment of decision. European leaders will try to “engage, not escalate” one more time—an approach that helped stabilize US support for NATO and Ukraine and got them a truce on trade. But political space on their hugging-the-bear strategy is running out fast. Leaders may face difficult strategic and tactical decisions about whether to pursue a deal based on the practical realities of what Trump wants out of Greenland or opt for economic confrontation with the United States and draw a hard line on sovereignty, international law, and, ultimately, Europe’s credibility. The approach they take will, in turn, inform Trump’s response—and the future direction of transatlantic relations.

The post Greenland, Davos, and a week that could redefine the transatlantic alliance appeared first on Atlantic Council.

On January 18, Atlantic Council vice president and Scowcroft Center senior director Matthew Kroenig was interviewed on BBC’s Newshour on how Trump’s threats towards Greenland are impacting the NATO alliance.

Staff

Matthew Kroenig

Vice President and Senior Director, Scowcroft Center for Strategy and Security

Scowcroft Center for Strategy and Security

China Defense Policy

The post Kroenig on BBC on Greenland appeared first on Atlantic Council.

Bottom lines up front

• The Trump administration’s rhetoric regarding Greenland is escalating, with the president now threatening tariffs on several European countries. 
• But congressional action and European moves to head off a military confrontation could create space for diplomacy. 
• There’s a deal in reach that would avoid blowing up the transatlantic alliance and even increase security in the Arctic.

WASHINGTON—The transatlantic divide over Greenland just deepened, with US President Donald Trump announcing on Saturday that he will impose escalating tariffs on Denmark and other European nations until they agree to a deal for the United States to purchase Greenland. At this precarious moment, three lines of effort are underway to avoid a catastrophic clash over the world’s largest island. 

One is diplomatic: through the high-level working group agreed to at a January 14 meeting in Washington between US, Danish, and Greenlandic officials. The second includes congressional efforts to block an outright US invasion of Greenland. The third is deterrence: an increase of Danish and NATO member states’ military presence and exercises in and around Greenland. 

This problem should not have arisen. But it is still possible to achieve an outcome that leaves NATO and the transatlantic alliance intact and Arctic security strengthened. 

What does the White House want with Greenland (and what might it settle for)?

The United States has longstanding and legitimate security interests in Greenland. Because of these interests, Washington has sought several times since the mid-nineteenth century to acquire it. After World War II, the United States addressed its security interests through the 1951 Defense of Greenland Agreement, which gives the United States extensive military basing rights on the island and does not question Denmark’s sovereignty or Greenland’s status. That agreement served US interests well throughout the Cold War and is still in force. 

Those interests do not seem to be driving policy, however. Currently, notwithstanding White House claims of Chinese and Russian threats to Greenland, neither Trump nor his administration has cited specific, unmet US security requests related to Greenland. Nor has the Trump administration taken steps to increase US military presence in Greenland. The Trump administration also has not cited unmet requests with respect to Greenland’s mineral deposits.

As it often does, the Trump administration is starting with an extreme position that is not simply tactical. Trump seems to really want to plant the American flag in a nineteenth-century expansionist style. The US president recently told The New York Times that annexation of Greenland “was psychologically needed for success.” Asked by CNN about Greenland, White House Deputy Chief of Staff Stephen Miller claimed that the “iron laws” of the world include strength, force, and power, and little else, and that therefore the United States can take Greenland if it so decides. While seeking to purchase Greenland seems the administration’s preferred route, it has not ruled out the use of force to acquire the island. 

Nevertheless, the Trump administration has sometimes backed off extreme initial positions when faced with counterpressure, as it has with tariff policy. Can counterpressure against the administration’s most extravagant ambitions in Greenland open up the possibility for a diplomatic deal?

The January 14 US-Danish/Greenlander meeting achieved about as much as it could have. The sides agreed to keep talking, and they announced the creation of an important working group. The intention of this group is to discern whether US interests in Greenland could be reconciled with Denmark’s red lines, including the integrity of the Kingdom of Denmark. The White House’s characterization of the working group as merely a mechanism to discuss US acquisition of Greenland didn’t help, but diplomacy still has a chance.

If the White House is interested in a deal, then there is space to make one through this working group. The group could affirm the generous terms of the Defense of Greenland Agreement or even renegotiate it. Though it is hard to see what more the United States could want in a renegotiated agreement, the ceremony of signing a new deal similarly generous in its terms could be claimed as a feather in the cap of the Trump administration. 

The working group could also address one contingency in a useful way. Some Greenlanders have been pushing for independence. An independent Greenland would be unable to provide for its own security, and the working group could address that challenge. The Trump administration might insist that an independent Greenland join with the United States in, for example, a Compact of Free Association similar to US agreements with some of the smaller Pacific Island states. But a less fraught alternative might be to agree to apply the Defense of Greenland Agreement to an independent Greenland, if that were to happen, and to bring an independent Greenland into NATO. As a member of NATO, an independent Greenland would be in a position similar to Iceland, which has no military of its own but whose security has been assured by the Alliance. Iceland is home to an air base that is an important asset for US force projection. 

Enter Congress and Europe

Given the Trump administration’s continued pressure, the US-Danish working group by itself is unlikely to lead to a solution. But the administration’s talk of annexation also has generated counter moves from the US Congress and from Europe that, if sustained, could create conditions for  a more productive outcome. 

In Congress, bipartisan bills have been introduced in both the House and Senate that would prohibit the use of appropriated funds for any military action against a NATO ally—including against Danish and other European forces defending Greenland. Whether those bills could capture a veto-proof majority is not clear, but public support among Americans for annexing Greenland is low (17 percent support annexation and only 4 percent support doing so through use of force). Senator Thom Tillis (R-NC) has said that if US military action against Greenland appeared imminent, legislation to block it could pass with veto-proof majorities.

Europe is responding as well. In the days since the Trump administration’s rhetoric about Greenland has intensified, Denmark has announced plans to increase military exercises and its military presence in Greenland. European NATO members—Germany, Sweden, France, Norway, the Netherlands, Finland, and the United Kingdom—have announced plans to send small military contingents to Greenland, with some already arriving. The contingents are likely to grow, and they could be supplemented by Danish special forces, some of which are working with the United States in the Middle East against the Islamic State of Iraq and al-Sham and other common adversaries. Trump’s response has been to accuse these countries of playing a “very dangerous game” and threaten them all with tariff increases of 10 percent as of February 1 and 25 percent by June.

The Danish military presence in Greenland, supplemented by modest European contingents, is unlikely to withstand a determined US assault. But it could succeed in complicating US planning, effectively removing from consideration a risk-free and low-cost military occupation of Greenland’s capital Nuuk. Wisely, Danish and other Europeans have spoken in general terms about bolstering Arctic security and not about the threat from the United States. But they have used the word “deterrence.” For Europeans to speak in such terms about the United States, even implicitly, is a low point, but it is needed. 

There’s a deal to be done

With counterpressure from Congress and European allies, the Trump administration may see the real opportunity to make a good deal without continuing down the risk-filled road to forced annexation. 

Trump and his administration are capable of redefining their objectives quickly, and in so doing achieving real, positive results. Faced with inadequate defense spending by NATO allies, the Trump administration squeezed hard, even seeming to threaten to leave NATO. This effort achieved what US presidents had sought for decades: allied commitments at NATO’s 2025 Summit in The Hague to increase defense spending to 5 percent of gross domestic product for defense and defense-related infrastructure. Trump could claim, with a basis in fact, that his unorthodox and sometimes confrontational style achieved something that had eluded his predecessors back to President Dwight Eisenhower. 

So it could prove with Greenland. US security in the Arctic is better achieved by working with Denmark and NATO allies, not against them, from Greenland to Norway’s Svalbard and Sweden’s Gotland. If NATO’s European members and Canada agreed to contribute more forces to Arctic security, the Trump administration could assert that its pressure tactics worked; Trump could claim a win and retroactively claim vindication for his initial threats. 

The alternative—the United States acquiring Greenland through threats or war—poses far too many risks and costs. The United States and the free world alliances it built would likely not be able to recover from the United States launching an aggressive war for the sake of seizing Greenland. But a deal on Greenland and Arctic security is possible. The costs in transatlantic resentment and stress on US-European confidence will be real but can be recovered from. If greater Arctic security, with Europeans doing heavy lifting, lies at the other side of whatever it is the West is going through, NATO and the transatlantic alliance could emerge in still solid shape.

The post The US and NATO can avoid catastrophe over Greenland and emerge stronger. Here’s how. appeared first on Atlantic Council.

In this special #BalkansDebrief interview, Congressman Mike Turner, co-chair of the Congressional Bosnia Caucus and head of the U.S. delegation to the NATO Parliamentary Assembly, discusses whether the United States is truly re-engaging in the Western Balkans under its new national security strategy released in late 2025.

The Republican Representative of Ohio’s 10th District – and former mayor of the city of Dayton, Ohio – Mike Turner speaks candidly with Ilva Tare, Resident Senior Fellow at the Europe Center, about U.S. sanctions, the Western Balkans Democracy and Prosperity Act included at the National Defense Authorization Act (NDAA), and Washington’s long-term commitment to peace, stability, and democratic institutions in the region. He reflects on 30 years since the Dayton Peace Accords, arguing that while Dayton ended the war, it was never meant to be a permanent governing framework.

The conversation also addresses Bosnia and Herzegovina’s fragile political balance, including concerns over Milorad Dodik’s secessionist rhetoric. Rep. Turner notes that sanctions remain a tool on the table if destabilizing behavior continues, while emphasizing the need for renewed international engagement to support reform and reconciliation.

The Debrief also discusses Serbia–Kosovo normalization and U.S. diplomatic leverage, Russian influence in the Balkans, NATO and EU enlargement, Montenegro as an EU frontrunner, U.S. cooperation with Albania and North Macedonia, and a message to young people who feel the region’s democratic transition is taking too long.

#BalkansDebrief is an online interview series presented by the Atlantic Council’s Europe Center and hosted by journalist Ilva Tare. The program offers a fresh look at the Western Balkans and examines the region’s people, culture, challenges, and opportunities.

Watch #BalkansDebrief on YouTube and listen to it as a Podcast.

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Throughout the year, technological breakthroughs from both the United States and China ratcheted up the competition for AI dominance between the superpowers. Countries and companies raced to build vast data centers and energy infrastructure to support AI development and use. The scramble for cutting-edge chips pushed Nvidia’s valuation past five trillion dollars—the first company to reach that milestone—even as concerns mounted over circular financing and the question of how much the AI boom is founded on hype versus reality. Meanwhile, policymakers grappled with the balance between safety, security, and innovation and how to manage possible labor disruptions on the horizon.

As 2026 begins, rapid AI integration threatens to inject even more unpredictability into an already fragmented global order. Below, experts from the Atlantic Council Technology Programs share their perspectives on what to expect from AI around the globe in the year ahead.

Click to jump to an expert prediction: 

Emerson Brooking: AI poisoning goes mainstream

Tess deBlanc-Knowles: The US pushes AI tech exports to counter China

Konstantinos Komaitis: AI governance turns global

Ryan Pan: The US-China AI race intensifies in a multipolar world

Esteban Ponce de León: AI challenges human judgment

Trisha Ray: Countries go all in on ‘sovereign AI’

Mark Scott: The battle of the AI stacks escalates

Kenton Thibaut: China doubles down on AI-powered influence operations

AI poisoning goes mainstream

Russia’s Pravda network of websites has published millions of articles targeting more than eighty countries. These sites launder and amplify content from Russian state media, seeking to legitimize Russian military aggression while casting doubt on Western support for Ukraine. Most of these articles will never be viewed by a human. Instead, they seem intended to target the web crawlers that scour the internet for training data to feed to insatiable AI models.

And the strategy is working. Last year, the Atlantic Council’s Digital Forensic Research Lab (DFRLab) and CheckFirst demonstrated how mass-produced Pravda articles were cited in Wikipedia, X Community Notes, and responses from major chatbots. Parallel research by Anthropic and the United Kingdom’s AI Safety Institute has shown how trace amounts of faulty data can effectively “poison” even very large models. People increasingly turn to AI systems to understand current events. If an AI model’s knowledge has been altered by sources intended to deceive, then the users’ will be, too.

In 2026, the issue of AI poisoning will break into the mainstream. Because of a roughly two-year lag in AI training data (many AI models are still waiting for the results of the 2024 US presidential election, for instance), these AI-targeted propaganda campaigns are about to start manifesting more often. And because one cannot reliably audit what’s inside a deployed AI model, the result will be a staggering research and policy challenge.

Digital policy experts, including the DFRLab, have spent a decade learning to identify, explain, and expose online disinformation where people can see it. This is online disinformation where they can’t.

—Emerson Brooking is the director of strategy and a resident senior fellow with the Atlantic Council’s Digital Forensic Research Lab.

The US pushes AI tech exports to counter China

In 2026, the United States will double down on exporting the US tech stack as the cornerstone of its international AI strategy. In December 2025, US President Donald Trump set the tone with his decision to allow Nvidia to export its advanced H200 chips to China, a clear endorsement of the view that the United States wins when the world builds and deploys AI using US technology.

Published days before the Nvidia decision, the Trump administration’s National Security Strategy makes this explicit: “We want to ensure that US technology and US standards—particularly in AI, biotech, and quantum computing—drive the world forward.” This framing echoes the AI Action Plan the administration released in July 2025, which stated that the “United States must meet global demand for AI by exporting its full AI technology stack,” warning that a failure to do so would be an “unforced error.”

In 2026, expect to see the United States sign more AI-focused partnerships like those forged with Saudi Arabia and the United Arab Emirates in 2025, alongside efforts to counter China’s growing influence in emerging markets. But as the United States makes this push, China holds some key advantages. Its lead in open-source AI models and focus on applied AI could prove to be the winning formula for capturing global market share with free models and deployment-ready technologies.

—Tess deBlanc-Knowles is the senior director of Atlantic Council Technology Programs.

AI governance turns global

In 2026, AI governance enters its first truly global phase with the United Nations–backed Global Dialogue on AI Governance and Independent International Scientific Panel on AI. For the first time, nearly all states have a forum to debate AI’s risks, norms, and coordination mechanisms, signaling that AI has crossed into the realm of shared global concern.

Yet this ambition unfolds amid acute geopolitical tension: The European Union pushes a rights- and risk-based regulatory model, while the United States favors voluntary standards to preserve innovation and security flexibility. For its part, China promotes inclusive cooperation while defending state control over data and AI deployment. Smaller and developing states gain a voice but remain structurally dependent on the major powers that control the bulk of AI talent, capital, and computing power.

The result is a fragile, uneven global framework. States converge on scientific assessments, transparency norms, and voluntary principles, but they avoid binding limits on high-risk AI uses such as autonomous weapons, mass surveillance, or information manipulation. Coordination emerges, but the core strategic competition remains unresolved, producing a governance architecture that manages risks at the margins while leaving rival models largely intact.

By the end of 2026, the Global Dialogue will likely have made AI governance global in form but geopolitical in substance—a first test of whether international cooperation can meaningfully shape the future of AI or merely coexist alongside competing national strategies. This juncture offers states an opportunity to demonstrate leadership by strengthening institutional capabilities and collaborative mechanisms, fostering a global AI governance framework that is more coherent, equitable, and universally engaged.

—Konstantinos Komaitis is a resident senior fellow with the Atlantic Council’s Democracy + Tech Initiative.

The US-China AI race intensifies in a multipolar world

The year ahead will see an even fiercer competition over AI dominance between the world’s two largest powers—the United States and China—while middle powers gradually close the gap in the race. China’s DeepSeek started off this year with a research paper on a new AI training method to efficiently scale foundational models and reduce costs. This publication comes almost exactly a year after the headline-making paper it released in January 2025, which was followed by the launch of DeekSeek-R1. The timing of this year’s new publication signals that the company will launch new models and continue shaping the world’s AI industry this year.

In 2026, expect China to double down on its open-source AI strategy to influence the world’s AI infrastructure. (Several major US tech companies are already using Chinese large language models in their applications.) The United States and China may also engage in further trade retaliation in the AI supply chains in light of recent developments in Venezuela, from which Chinese companies had gained access to rare earth minerals crucial to developing the AI stack. The Trump administration’s recent claims regarding Colombia, from which China also sources rare earth elements, could make Latin America the next technology battleground between the two powers.

But what about powers beyond the United States and China? In 2026, look for Europe to increase its AI defense investments even more than it did in 2025. Middle powers, notably India, will see their AI capability greatly improved this year, as US tech giants have recently pledged billions in investments in India’s AI capabilities. 

The AI race in 2026 will still be defined by a multipolar order. Nevertheless, the United States and China will continue to yield the greatest influence.

—Ryan Pan is a program assistant with the Atlantic Council’s GeoTech Center.

AI challenges human judgment

In 2026, human–AI interaction will likely challenge human judgment and identity more deeply than in any year to date. This is not only because AI models are demonstrating increasingly complex capabilities, but also because AI-generated content can be so emotionally charged in today’s polarized information environment.

Online sources and social media have shown how polarization can be deliberately targeted, and the use of AI to generate fabricated or distorted content adds a new layer to how social and political events are interpreted. AI content is reshaping the dynamics of both manipulation and what could be described as a “misinformation game,” in which techniques such as the deployment of AI slop and the memeification of events are used to mock adversaries and amplify key propaganda narratives. For example, in June 2025, amid the Israel-Iran escalation, AI became the new face of propaganda. This included graphic and sensational AI-generated fake content, such as fabricated missile strikes, military hardware, religious and national symbols, and memes. But it also included more sophisticated fabrications of CCTV footage that became increasingly difficult to debunk.

In the first days of 2026, as the Trump administration captured Venezuelan strongman Nicolás Maduro, the use of AI to generate media content increased drastically. While much of this content was humorous or satirical in nature, it nonetheless illustrates emerging usage patterns, as playful AI-generated media can still shape perceptions of power and blur the line between satire, manipulation, and propaganda. Whether fabricated content aims to provoke humor or confusion, human judgment will face new challenges in the year ahead.

This challenge to human judgment and identity extends beyond misinformation. In 2026, the AI landscape may begin to show early signs of benchmark saturation, in which models converge at near-maximum scores on established capability tests, collapsing the measurable differences between them. This matters for the information environment because the same logic applies: If distinguishing real from fabricated content becomes difficult, then so too does distinguishing what humans uniquely contribute from what AI can replicate. The implications extend to professional identity and how to understand individual value and competence.

—Esteban Ponce de León is a resident fellow with the Digital Forensic Research Lab.

Countries go all in on ‘sovereign AI’

There are unprecedented amounts of capital flowing in to meet the anticipated demand for AI. Last year, for instance, kicked off with Trump’s announcement of Stargate, with the aim of investing $500 billion in AI infrastructure over five years. The principle driving this trend is straightforward: Countries think they must control AI before it controls them. Consequently, there was a wave of sovereign AI announcements in 2024 and 2025.

That momentum will only grow in 2026, starting with the launch of India’s sovereign large language model at the AI Impact Summit in February. Nations are seeking sovereign AI to strengthen their domestic economies, protect national security, mitigate geopolitical shocks, and reflect national values. However, there’s a catch: Not every country can, or should, try to build every part of the AI stack on its own. Trying to recreate from scratch everything from data centers to models is expensive, redundant, and impractical. Nations will need to choose what to build, what to buy, and where partnerships make more sense than going solo.

—Trisha Ray is an associate director and resident fellow with the GeoTech Center.

The battle of the AI stacks escalates

As AI becomes more central to countries’ economic prospects, national policymakers will likely seek to impose greater control over critical digital infrastructure. This infrastructure includes compute power, cloud storage, microchips, and regulation, and it is central to how emerging AI technology will develop in 2026. For the world’s largest digital powers—the United States, the European Union, and China—the push to control this infrastructure will likely evolve into a battle of the “AI stacks”—increasingly opposing approaches to how such core digital AI-enabling infrastructure functions at home and abroad.

The White House’s AI Action Plan, published in July 2025, made it the stated policy of the federal government to export the US stack to third-party countries, including via potential funding support from the US Department of Commerce for other governments to purchase offerings from the likes of Microsoft, OpenAI, and Nvidia. The European Commission has earmarked billions of euros for so-called AI gigafactories, or high-performance computing infrastructure, from Estonia to Spain, while national leaders also vocally called for a “Euro stack.” The Chinese Communist Party is urging local firms to forgo Western AI know-how and rely instead on domestic alternatives from companies such as Alibaba or Huawei.

The rest of the world will have to navigate these increasingly rivalrous approaches to AI infrastructure at a time when all countries seek greater control of so-called digital public infrastructure—that is, the underlying hardware and, increasingly, software needed to power complex AI systems. How these different AI stacks interact with each other will be critical to how the technology develops over the next twelve months.

—Mark Scott is a senior resident fellow with the Atlantic Council’s Democracy + Tech Initiative.

China doubles down on AI-powered influence operations

In 2026, the People’s Republic of China’s (PRC’s) AI-enabled disinformation efforts are likely to intensify in scale, persistence, and technical sophistication, particularly those targeting Taiwan. PRC actors are already using AI-generated audio, video, and text, distributed through networks of fake accounts and contracted private firms, to conduct “cognitive warfare” campaigns aimed at shaping political perceptions and voter behavior. These campaigns prioritize volume, localization, and algorithmic exploitation, and they are increasingly designed to be continuous rather than episodic. As AI-generated content is blended with human-curated messaging and commercial infrastructure, PRC-linked operations will become harder to detect and attribute, reflecting a shift toward more deniable, adaptive, and professionalized influence operations.

At the same time, Beijing is expected to pair these activities with defensive diplomatic messaging that rejects allegations of PRC-linked disinformation or cyber operations and reframes such claims as politically motivated attacks. This pattern reinforces a broader hybrid strategy in which AI-enabled influence operations, cyber activity, and diplomatic signaling are tightly integrated. In 2026, PRC disinformation campaigns are likely to focus less on overt propaganda and more on shaping narratives around crises and cyber incidents, contesting blame, eroding trust in attribution, and influencing strategic decision-making outcomes.

—Kenton Thibaut is a senior resident fellow with the Democracy + Tech Initiative. 

The post Eight ways AI will shape geopolitics in 2026 appeared first on Atlantic Council.

Atlantic Council vice president and Scowcroft Center senior director Matthew Kroenig was interviewed on “The President’s Inbox,” a Council on Foreign Relations podcast, where he discussed the first year of Trump’s foreign policy.

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Fourteen years after the 2011 uprising and NATO-led military intervention that toppled Muammar Gaddafi, Libya remains divided. While the internationally recognized Government of National Unity (GNU) rules the northwest, the Libyan National Army (LNA), led by military leader Khalifa Haftar, controls most of eastern Libya—with both factions backed by competing foreign militaries.

For years, the situation on the ground seemed frozen. Yet two recent developments mark a shift: Oil majors are returning to the country, and the United States is stepping up its military engagement. The visits by the top leadership from US Africa Command (AFRICOM) in October and December last year and the announcement that Libya will join Exercise Flintlock—AFRICOM’s largest annual special operations exercise historically focused on West Africa—signal that the US administration now views Libya’s trajectory as inseparable from broader regional stability.

Against this backdrop, the United States has a narrow—but real—opportunity to reset conditions in Libya by combining carefully calibrated security engagement with strategic investment. Taking this opportunity is urgent, especially as Russia and other foreign powers seek to cement their influence over the southern Mediterranean’s political future.

Libya’s geostrategic significance for energy, Europe, and the Sahel

Libya straddles Europe and Africa. While its coastline faces Italy, its southern expanse feeds directly into the Sahel, where al-Qaeda-aligned groups such as Jama’a Nusrat ul-Islam wa al-Muslimin and Islamic State (IS) affiliates operate. What happens in Libya affects US and European energy security, regional counterterrorism efforts, and global migration flows. Moreover, the country produces between 1.2 and 1.4 million barrels of oil per day and aims to reach two million by 2030. With Western sanctions tightening on Russian energy, Europe increasingly views Libyan crude oil as a pressure-valve alternative.

In November, Shell, Chevron, Eni, TotalEnergies, and Repsol* were all pre-qualified to participate in Tripoli’s first exploration auction in eighteen years. However, instability in southern Libya continues to amplify extremist mobility and arms flows from the Sahel, directly threatening these investments. That risk is further compounded by the expansion of Russia’s Africa Corps—the successor to the paramilitary Wagner Group—in the east and south. Meanwhile, the Central Mediterranean migration route remains a sensitive domestic political issue for Italy. Rome’s Mattei Plan is explicitly built around stabilizing Libya’s energy production and migration management.

Navigating fragmentation and proxy competition to unlock investment

Progress in Libya’s hydrocarbons sector remains contingent on a minimum threshold of stability and predictability in governance, which is still fractured between the Tripoli-based GNU—backed by Turkey and Qatar—and Haftar’s LNA in the east, supported by Russia (via the Africa Corps), Egypt, and the United Arab Emirates.

The signing of a 2019 maritime boundary treaty with the GNU has given Turkey de facto veto power over Libya’s western security sector and offshore zones. Meanwhile, Russia has entrenched itself in eastern Haftar-controlled areas since 2023. Instead of relying on the Wagner Group, however, Moscow has transitioned to formal involvement via the Ministry of Defense. Russia now controls airbases, logistics hubs, and key desert routes into the Sahel, with personnel positioned near critical oil fields and terminals—the same assets the Tripoli government is attempting to license to Western firms.

The result is that Libya has become the Mediterranean’s most active proxy chessboard, with foreign powers positioning themselves to capture future revenues from hydrocarbons and reconstruction. Absent a credible US counterweight, decisions on energy access, migration management, and political transition will be made in Moscow or elsewhere—but not in Washington or Brussels.

A new window for US reengagement

Two developments suggest a modest but meaningful upward trend in US reengagement. First, building on the US Navy ship visit to Libya in April (the first in fifty years), AFRICOM’s deputy commander visited GNU-controlled Tripoli and LNA-held Sirte in October. Inviting Libya to Exercise Flintlock was deliberate signaling: The US government seeks to pull Libya into a broader Western security network—rather than cede the field to other countries with stronger influence, such as Russia. This trajectory continued in early December, when Prime Minister Abdul Hamid Dbeibah met AFRICOM’s commander to expand cooperation on training, equipment, and force professionalization. The GNU’s public request for deeper US support in professionalizing Libya’s security forces marks a notable shift after years of strategic hedging between Washington, Ankara, and Doha.

Second, there has been a surge of activity around Libya’s energy sector. Since 2023, oil output has stabilized, front lines have frozen, and neither the LNA nor the GNU has achieved decisive military or political dominance. This stalemate has created political space for external influence. Energy-sector momentum has been reinforced by high-level diplomatic traffic in both directions. The US special envoy for Africa and Arab Affairs, Massad Boulos, traveled to Tripoli and Benghazi in July, followed by a GNU delegation visit to Washington in August. That trip signaled the GNU’s intent to re-anchor Libya with Western stakeholders and request US assistance in pushing Russia out of eastern military bases to restore unified territorial control.

That momentum was further reinforced by a joint statement on November 26 from the United States, major European partners, Gulf states, Turkey, Egypt, and the United Kingdom. The statement backed a renewed mandate for the United Nations Support Mission in Libya (UNSMIL), endorsed a political roadmap by UNSMIL head Hanna Tetteh, and explicitly called for deeper east-west military and economic coordination—a rare moment of alignment among Libya’s external powerbrokers. For the US administration, this sent the strategic signal that Libya’s unification is now within reach. The window of opportunity, however, is closing fast—and another conflict cycle, election breakdown, or foreign miscalculation could shut it indefinitely.

The energy-security nexus: Why investment alone will fail

The return of oil majors represents the most consequential shift in Libya in a decade. But investment without security is unlikely to endure. In March last year, Libya launched its first licensing round for oil exploration in eighteen years, signaling a bid to attract Western technology, capital, and expertise. Shell, BP*, TotalEnergies, and Eni have reopened channels with the National Oil Corporation (NOC)—and ExxonMobil* signed a memorandum of understanding in August for offshore exploration in the Sirte Basin.

Yet these developments do not change the fact that some of Libya’s most valuable reserves remain under Russian influence. Western firms cannot scale operations without predictable access, enforceable contracts, and baseline security guarantees.

An intentional presence to protect investment

To consolidate recent political and economic gains—and protect sizable Western energy investments—the United States should deliberately expand its diplomatic, military, and economic presence in Libya, in close coordination with allies.

The March 2024 announcement that the United States will reopen an embassy in Libya is a critical step toward sustained engagement across military and economic channels. It will also enable closer coordination with key partners—including Italy, Egypt, Turkey, and the UN—whose objectives overlap with US interests.

As the multi-year process to open the embassy inches forward, AFRICOM and its components should pursue near-term, high-impact initiatives. US special operations forces should help build and professionalize vetted Libyan special forces units across both western and eastern factions, units that would pursue shared security interests, no matter the progress toward an eventually possible unification. Additionally, maritime partnerships should be expanded rapidly to strengthen Libyan Navy and Coast Guard capabilities, particularly in interdiction, offshore asset protection, and port security. At the same time, the United States could leverage its convening power to establish a technical deconfliction cell in Sirte, allowing GNU and LNA representatives to coordinate security around oil infrastructure and prevent escalation. Such mechanisms could also support counterterrorism cooperation, including targeting IS remnants and blocking spillover from the Sahel.

Layered US engagement can unlock stability

However, military engagement alone will not be sustainable without economic development. Given the complex legacy of US involvement—from the economically devastating sanctions of the 1980s to the 2011 NATO intervention and the overthrow of the Muammar Gaddafi regime—the United States must work through partners to advance both economic and counterterrorism objectives. The US International Development Finance Corporation and the Export-Import Bank could prioritize export credits for pipelines, gas processing, and power generation, explicitly linking financing to transparency and anti-corruption benchmarks.

US and partner foreign assistance could also support long-overdue reforms at the NOC, including modern contracting practices, environmental standards, and shared revenue frameworks. These efforts should extend beyond governments: Western energy companies involved in Libya should participate in coordinated infrastructure planning, rather than simply launching isolated investments.

Layering diplomatic, military, and economic tools would allow the United States to establish a modest but coherent posture capable of unlocking outsized stabilization effects—and preventing any country that works against US interests from having dominance over Libya’s future. For the United States, Libya offers a proving ground for a new model of engagement—one built on security assistance that enables Western investment instead of substituting for it. AFRICOM’s renewed presence and the surge of Western energy interest create a rare opportunity to reintegrate Libya into a Western orbit. If the United States seeks stability in the Mediterranean, resilience in the Sahel, and credible alternatives to Russian energy, now is the time to make coordinated security and economic investments in Libya.

Rose Lopez Keravuori is a nonresident senior fellow at the Atlantic Council’s Africa Center, an associate director at Strategia Worldwide, and chair of the board of advisors of GCR Group. She previously served as the director of intelligence at the US Africa Command.

Maureen Farrell is a nonresident senior fellow at the Atlantic Council’s Scowcroft Center for Strategy and Security and vice president for global partnerships at Valar, a Nairobi-based strategic advisory and risk firm. She previously served as the deputy assistant secretary of defense for African affairs and director for African affairs at the US National Security Council.

Note: Several companies mentioned in this article—Shell, BP, Chevron, Eni, TotalEnergies, Repsol, and ExxonMobil—are donors to the Atlantic Council but not to this article series.

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The post The US is reengaging with Libya—and it’s the right call appeared first on Atlantic Council.

Bottom lines up front

• Beijing’s recent request to dock a navy hospital ship in Rio de Janeiro has puzzled—and unsettled—Brazilian authorities.
• Yet, Brasília granted the ship access to the port, coincidentally at the same time that a US research vessel will also be docked there.
• By welcoming the Chinese vessel with little fanfare, Brasília is proving it isn’t yet ready to tilt one way or the other in its geopolitical balancing act.

BRASÍLIA—Brazil’s decision to allow a Chinese military hospital ship to dock in Rio de Janeiro could provide a case study of how Beijing is expanding its naval presence in the Western Hemisphere. It also demonstrates how regional powers are dealing with the pressures arising from the intensifying competition between the United States and China.

This past fall, China requested authorization from the Brazilian government for the People’s Liberation Army Navy hospital ship Ark Silk Road to dock in Rio de Janeiro from January 8 to 15. The request seemed, at first glance, to be just another routine stop on a humanitarian mission. 

But in Brasília, the request triggered unusual discomfort. The Chinese diplomatic note, sent on September 15 last year, omitted any reference to Harmony Mission 2025, Beijing’s first global humanitarian naval operation. And it offered few details beyond a statement that no research activities were planned in Brazilian waters and that the vessel would not use any radio equipment. In fact, the note did not explain why the ship wanted to dock in Rio de Janeiro at all.

The lack of clarity raised concerns within Brazil’s Ministry of Foreign Affairs and among some Brazilian Navy officers who spoke with me on the condition of anonymity. These officials were especially concerned because of the geopolitical context that served as the visit’s backdrop: China’s growing presence in a region traditionally perceived by Washington as part of its security sphere, just as the Trump administration is prioritizing Latin America and asserting itself with military force to impose its interests there.

Brazilian officials’ concerns over the Ark Silk Road, which have so far been raised only behind the scenes, highlight a structural tension in the country’s foreign policy: Brazil is economically dependent on China but has maintained a solid security partnership with the United States for decades. This duality is currently on full display. The US oceanographic vessel Ronald H. Brown is scheduled to dock at the Port of Suape, in northeastern Brazil, from January 14 to 21, for a scientific mission approved by the Navy General Staff. This means the US Navy mission will overlap with that of the Ark Silk Road, which arrived in Rio de Janeiro on January 8 as scheduled.

The coincidence of these maritime visits makes Brazil a reluctant arena for US-China competition. But it also offers Brazil an opportunity to demonstrate that the country wishes to act as a partner to both powers, without allowing itself to be instrumentalized by either of them.

Instrument of power projection

The Ark Silk Road is the second-largest ocean-going hospital ship designed and built by China. Weighing ten thousand tons and equipped with fourteen clinical departments, seven diagnostic units, and the capacity to perform more than sixty types of medical procedures, the ship is among the most visible faces of Chinese “smart power”: the deliberate combination of soft power and hard power that China’s defense doctrine increasingly relies on.

The humanitarian results so far, according to statistics publicized by Chinese officials, are impressive:

• 3,330 patients treated in Fiji, with 426 surgeries in just one week;
• 3,995 local patients treated, 679 surgical procedures, and 2,718 medical tests in Tonga;
• 771 consultations and 177 surgeries in Montego Bay, Jamaica, weeks after Hurricane Melissa devastated the country;
• 2,769 local patients treated and 207 surgeries completed in only three days in Kingston, Jamaica.

The Ark Silk Road, or the “ship of hope and envoy of peace” as Chinese authorities describe it, represents smart power in its purest form: It projects benevolence and technical capability, but this humanitarian narrative coexists with clear strategic calculations.

When I spoke with Rafael Almeida, a retired Brazilian Army colonel and defense and strategy analyst who holds a master’s degree from the National Defence University of China, he suggested that the Ark Silk Road’s capabilities extend well beyond medical functions for a hospital ship. For instance, he pointed to the ship’s unusually large number of sensors, antennas, and radar systems.

The ship’s itinerary included stops in need of humanitarian assistance, but it was also carefully designed with diplomacy in mind: With the exception of Mexico and Brazil, all of the Latin American countries included in the mission are part of China’s Belt and Road Initiative. In some countries, such as Nicaragua, the ship was received with military honors. The Nicaraguan National Assembly formally approved the ship’s visit as part of an exchange with its national army, marking the first time the People’s Liberation Army Navy has docked in the country.

The implicit message is unequivocal: China is gradually expanding its naval presence in the Western Hemisphere, and it is doing so under the banner of a humanitarian ship.

The South Atlantic enters the geopolitical arena

The Ark Silk Road’s passage along the Brazilian coast is occurring in an increasingly disputed region. In recent months, Washington has reinforced its presence in the Caribbean, following the resurgence of tensions between the United States and the regime of Venezuelan leader Nicolás Maduro, which culminated in Maduro’s extraction and arrest on January 3.

But the United States’ maritime military actions have gone beyond its policy toward Venezuela. Since September 2, the United States has destroyed more than thirty vessels in dozens of attacks carried out in the Caribbean and the Pacific Ocean against ships that, according to the White House, were transporting narcotics, though the administration has not presented any conclusive evidence linking these boats to drug trafficking.

Meanwhile, the Chinese humanitarian mission in the South Atlantic highlights the region’s growing strategic importance. The Ark Silk Road normalizes the Chinese navy’s presence in areas it was seen as unlikely to operate in until recently. Additionally, China has invested in ports in these areas for years, especially the mega-port of Chancay in Peru. This investment reinforces Beijing’s logistical capacity on the Pacific coast of South America. With Beijing’s humanitarian missions now reaching the Caribbean and the Atlantic, an arc of Chinese strategic infrastructure, naval diplomacy, and political influence is emerging.

It is no coincidence that China released an official document explaining its policy toward Latin America and the Caribbean less than a week after the United States unveiled its latest National Security Strategy, which places Latin America at the center of US foreign policy concerns. 

Brazil’s discomfort

China’s request for the Ark Silk Road to visit Brazil thus comes at a sensitive moment for Brazilian foreign policy. This timing, as well as the opaque nature of the request, have caused discomfort in Brasília.

When I reached out to Mauricio Santoro, a political scientist who specializes in Sino-Brazilian relations and collaborates with the Brazilian Navy’s Center for Political-Strategic Studies, he told me that Brazil does not require the kind of humanitarian support that China is offering to other countries with its mission. The Brazilian Navy has its own disaster response capabilities, Santoro noted, including the Multipurpose Atlantic Aircraft Carrier, the largest warship in Latin America. Moreover, Brazil’s United Health System is recognized as the largest public health system in the world. Free and universal, it serves a population of more than 200 million Brazilians. 

But rejecting the Chinese request would have been politically and perhaps economically costly. China is Brazil’s largest trading partner and a significant investor in the country’s infrastructure. An explicit “no” could have been interpreted as a pro-Washington geopolitical signal.

Given these factors, Brazil opted to buy time for a few months, but in November authorized the Ark Silk Road to dock in Rio de Janeiro on the requested dates. The announcement was made with little fanfare. Unlike in other countries in which the Ark Silk Road has operated, the Brazilian government has not yet issued a public statement on the matter and has refused to answer questions about the visit. 

When I reached out to ask questions about the Ark Silk Roads’s visit, the Brazilian government passed the buck. The Ministry of Foreign Affairs recommended that questions be directed to the Brazilian Navy and the Chinese embassy in Brazil. The Navy stated that it is only responsible for the technical and logistical aspects of the request. The Chinese embassy did not respond. I also contacted the Brazilian Ministry of Defense, which pointed me back to the Foreign Ministry. Documents obtained through the Access to Information Act confirm that official messages were exchanged only between the Ministry of Foreign Affairs and the Navy.

Even after the Ark Silk Road docked in Rio de Janeiro on January 8, the Brazilian government has not commented on the matter, in contrast to the Chinese Embassy in Brazil and the Chinese Consulate in Rio de Janeiro.

Meanwhile, the Regional Medical Council of Rio de Janeiro (CREMERJ) formally notified the state health department, requesting clarification as to whether the ship would be providing medical services to the local population. Citing Brazilian law and Federal Medical Council regulations, the CREMERJ emphasized that any medical act performed within Brazilian territory—even during humanitarian or diplomatic missions—must be subject to oversight. However, there is no official authorization for the Ark Silk Road to provide medical care to Brazilians.

An ‘embarrassing’ situation

On January 10, a Brazilian Navy delegation, led by Captain Gustavo Sant’anna Coutinho, chief of staff of the 1st Naval District Command, met with People’s Liberation Army Navy officers aboard the Ark Silk Road. Brazilian Navy musicians also performed on the ship’s deck. According to a senior Brazilian military officer I spoke with, the visit was accompanied by a series of confidence-building activities, including courtesy calls, invitations to tour the vessel, and a friendly football match at the Navy’s Physical Education Center. Beyond these engagements, the same officer told me, there was little substantive interaction, and the agenda remained largely routine—consistent with standard naval diplomacy.

However, this routine contrasted sharply with the level of control surrounding access to the vessel. Spontaneous visitors were not permitted. According to multiple sources I spoke with, entry required prior authorization from the Chinese consulate, and visitor lists closed in December. The Chinese Consulate General in Rio de Janeiro did not respond when I contacted it.

Despite these restrictions, the ship’s arrival was met with a visible public reception. Chinese citizens gathered at Pier Mauá to welcome the vessel, waving Brazilian and Chinese flags—scenes reminiscent of organized demonstrations during the 2025 BRICS summit in Rio de Janeiro. Brazilian media outlets have reported that similar groups at previous events were coordinated by intermediaries and accompanied by private security.

The tightly controlled access and carefully managed optics have fueled unease among some Brazilian military analysts and officers. Speaking on condition of anonymity, several of them described the visit to me as “embarrassing.” A Brazilian Navy officer told me that there had been pressure from Brazilian diplomats to ensure the Chinese were well received. However, the military did not know how to proceed since the visit had not been properly publicized.

Port visits routinely allow foreign navies to update their knowledge of port infrastructure, logistics, and coastal conditions. Such practices are common among long-established naval powers operating under bilateral frameworks. But according to Almeida, the retired Brazilian Army colonel, this marked the first time a Chinese military vessel conducted such an exercise in Brazil without a formal defense agreement in place.

Against this backdrop, Brasília’s refusal to provide more detail or otherwise draw attention to the Ark Silk Road’s docking, unlike several other countries on the itinerary, demonstrates that it is seeking maximum discretion to prevent any unwelcome geopolitical interpretations.

At the same time, this posture reflects an awareness that the convergence of Chinese and US naval presence creates a limited but significant opportunity for Brazil to reaffirm its longstanding preference for strategic autonomy. This means engaging both powers as partners, while making clear that such engagement does not amount to alignment and that Brazil does not intend to be instrumentalized in a dispute it did not choose.

The post China’s latest naval moves in the Western Hemisphere put Brazil in the diplomatic spotlight appeared first on Atlantic Council.

As of January 13, the Human Rights News Agency, a US-based human rights group, estimated that the death toll has climbed above two thousand since the start of the protests on December 28 last year. This is while the Iranian government, as it has done previously, enacted a complete internet blackout, where the entire nation continues to remain under the world’s largest digital prison.

“I saw snipers in our neighborhood—in all these years I’ve never seen such scenes,” said Sahar, a doctoral student in the Saadat Abad neighborhood in Tehran, in a brief phone conversation via Starlink satellite connection.

Her voice was more distraught than in our previous conversations earlier in the week. She also explained how, since Saturday, fewer people have been going on the streets. “At first, there were families, old, young, but now everyone’s terrified, given the bloodbath.”

So far, Tehran’s crackdown on the demonstrations appears to have turned into a bloodbath, in which the only victims appear to be ordinary Iranian people—those who for long have been paying the price of the brutality of the Islamic regime, topped with the global isolation resulting from decades of sanctions and pressure imposed by the United States and its allies.

Against this backdrop, US President Donald Trump may have a real opportunity to be an effective dealmaker with Iran. However, if he is serious about a durable, win-win outcome for both the United States and Iranians, there is only one asset worth betting on: the Iranian people.

Today, Iranian society is more unified against the Islamic Republic than at any point since 1979. Nearly three weeks into the latest nationwide protests, this time ignited not by a single spark but by the country’s wider economic freefall, Iranians have taken to the streets in extraordinary numbers.

Speaking shortly before the regime’s blackout began, Sepideh, an Iranian journalist who has been arrested multiple times and isn’t using her last name for security concerns, explained how she believes Iran is at one of the “most dangerous junctures” in its modern history.

“There is zero possibility of reform within this regime,” she told me. “But history also shows that the [United States], the UK, and Israel don’t prioritize the Iranian people either—only their own interests. This is what makes me afraid of what’s coming.”

Asked about Reza Pahlavi, the exiled son of Iran’s last monarch, she says with a deep sigh that “he has some supporters because there is no strong domestic opposition, as those voices have been crushed domestically over the years. But I struggle to believe in someone backed by foreign powers, tied to monarchy, and unable to form a coalition.”

Some others express a more fatalistic openness, including Sahar, who—prior to the internet blackout—told me how many Iranians “believe anything after this regime will be better. We want a complete separation of religion and state. This deck of cards needs to be reshuffled.”

These voices capture the nuances within the Iranian society today—united in its rejection of the Islamic Republic, deeply wary of foreign agendas, and desperate to reclaim agency over their own future.

For the United States, meaningful support for the Iranian people requires resisting the impulse to frame their uprising through the language of takeover or intervention, and instead prioritizing concrete protections for civilians in light of the brutal repression inside Iran. This means keeping Iran connected to the world, shielding protesters and journalists from digital isolation, and ensuring that accountability efforts target perpetrators of violence rather than a population already trapped between domestic repression and coercion from abroad.

Furthermore, it means treating internet access as humanitarian aid—funding circumvention support, satellite connectivity where feasible, and protection for independent journalists. This can help to ensure that the regime cannot repeatedly convert blackouts into a weapon of mass impunity.

An open, empowered Iranian civil society would not be a liability to US interests; it would be one of Washington’s greatest assets.

If the goal is to empower Iranians rather than freeze them into permanent victimhood, economic engagement must run alongside pressure on the state. This does not mean enriching the regime or reopening a flood-gate of funds to Islamic Revolutionary Guard Corps (IRGC)-backed entities. Rather, it means expanding lawful, carefully assessed, people-to-people commerce that bypasses state hijacking and manipulation.

This includes enabling small and medium-sized Iranian businesses, freelancers, and entrepreneurs to access global markets; lifting travel bans for Iranian students, artists, medics, scientists and civil society members while banning entry to government-affiliated individuals; widening licenses that allow US and European firms to provide cloud services, payment rails, logistics support, and professional tools directly to Iranian users; and supporting diaspora-led investment vehicles that fund Iranian startups, cooperatives, and cultural industries without routing capital through regime-controlled entities. Such engagement gives Iranians income, skills, and stake—converting isolation into leverage and dignity rather than dependency.

Despite decades of sanctions, Iran has cultivated one of the most educated populations in the region and a resilient tech ecosystem that mirrors Silicon Valley’s platforms under far harsher conditions. Iranian youth have built local equivalents of Amazon, Uber, YouTube, and DoorDash with little capital and almost no global access. With the right engagement, Iran could generate trillions in long-term value—benefiting not only Iranians but also US businesses and consumers. A reintegrated Iran, charged by its people, would open a new frontier in trade, education, technology, and culture.

Meanwhile, none of this negates Iran’s military capacity. After more than four decades of isolation, Iran recently went head-to-head with the world’s most powerful militaries. Even Israeli defense analysts were surprised by some of its capabilities—proof that such sophistication does not emerge from a broken society. Beneath the Islamic regime’s aggression lies decades of scientific and technological investment made by the Iranian people themselves, who—if empowered and allowed self-determination—could become Washington’s strongest allies in the region.

Trump’s rhetoric amplifies the contradictions Iranians already live with. His warnings to Tehran and expressions of solidarity have landed with equal parts validation and fear. For some protesters, his words signal that their struggle is finally seen as entwined with an uncertainty of what’s to come. For others, Washington’s bombast risks giving the regime a pretext to paint the Iranian people’s unified dissent as foreign-engineered. Supreme Leader Ayatollah Ali Khamenei’s accusations that protesters act “to please Trump” reveal just how threatening even rhetorical pressure can be to a regime terrified of losing control—one that’s now at its weakest point than ever before.

Iranians understand the stakes. They have watched Russia and China extract economic leverage from their isolation, and they fear becoming yet another bargaining chip. As Behzad, an Iranian journalist who is going by his first name for security purposes, told me, “everyone wants a piece of Iran. Sometimes I wish we lived in a poorer, smaller country; so at least we could live freely—far from domestic corruption and foreign interference.”

Still, across class, gender, and belief, Iranians remain united in one demand: the dismantling of the current regime. They do not ask the United States for bombs or saviors. They ask for surgical, effective, and thought-through support that enables them to reclaim their own agency in the absence of the current regime.

If Trump is serious about peace, stability, and a lasting legacy, the path forward does not run through air strikes or transactional deals with a failing theocracy. It runs through the Iranian people who, if given the chance, could build one of the world’s most dynamic democracies and one of Washington’s most valuable partners.

Tara Kangarlou is an award-winning global affairs journalist, author, and humanitarian who has worked with news outlets such as NBC, CNN, CNN International, and Al Jazeera America. She is also the author of the bestselling book The Heartbeat of Iran, the founder of nonprofit Art of Hope, and an adjunct professor at Georgetown’s School of Foreign Service, teaching on humanized storytelling and journalism.

The post Voices from Iran: As rejection of government reaches all-time high, Iranians also wary of foreign intervention appeared first on Atlantic Council.

Bottom lines up front

• Venezuela needs to attract foreign investment to revive its economy and oil production. To do that, it needs to reduce its debt service costs.
• The IMF can help Venezuela address its debt overhang; a recently passed reform could allow the institution to provide support even if China were to block or delay a debt restructuring.
• The Trump administration can help support the IMF’s efforts to stabilize Venezuela, which should include a speedy restructuring that provides for a comparable treatment of different creditor classes.

WASHINGTON—Without US support, Venezuela’s post-Maduro government stands little chance of stabilizing its shattered economy. The United States is the main customer for Venezuela’s oil, US creditors hold the bulk of Venezuela’s debt, most bonds were issued under New York state law, and the White House has strong political influence over the new government. But even with US support, an economic recovery will be difficult. It’s too early, for example, to tell whether the United States has sufficient levers to initiate a successful recovery in Venezuela, and it’s unclear whether the government in Caracas is capable and willing to do what’s necessary to make a recovery stick. 

What’s needed first is clear, however. Economic stabilization requires a reduction of Venezuela’s massive debt obligations, which likely exceed $150 billion and are owed to a tangled web of bondholders, arbitration claimants, Russia, and—most problematically—China. Venezuela’s debt is where the Trump administration should start, and it should do so while working with the International Monetary Fund (IMF).

A debt crisis of staggering proportions

Venezuela’s external debt represents roughly 180–200 percent of its gross domestic product, making it one of the world’s largest unresolved sovereign defaults. The $60 billion in defaulted bonds once issued by the government and the state-run oil company Petróleos de Venezuela, SA have ballooned past $100 billion as a result of accumulated interest. International arbitration awards from companies expropriated by the Chávez regime add another $20 billion. And among other creditors, China holds at least $10 billion in bilateral debt, collateralized by oil shipments that give Beijing secured creditor status and operational leverage over Venezuela’s petroleum sector.

Without addressing this debt overhang, Venezuela will find it difficult to attract the massive foreign investment needed to revive its oil production. There are differing assessments of what Venezuela can realistically service while rebuilding its economy, but substantial debt reductions will be necessary. Citigroup, for example, estimates that restoring debt sustainability requires principal haircuts of at least 50 percent. Other estimates suggest even deeper reductions—down to a 30 percent recovery value—to avoid a cycle of repeated defaults that would cause permanent economic dysfunction.

Why the IMF matters

It has been encouraging to see US Treasury Secretary Scott Bessent engage with IMF and World Bank leadership to discuss Venezuela’s economic reconstruction. Given the IMF’s expertise in resolving complicated debt situations and restoring macroeconomic stability, support by the Bretton Woods institutions will be critical.

At the same time, the IMF must be careful to preserve its independence and its legitimacy. Especially in cases of sovereign arrears, the fund needs to be seen as an impartial arbiter that adheres to its legal mandate and its rules-based framework. For example, the decision to recognize a new government in Caracas as a legitimate counterpart—which is necessary for Venezuela to negotiate access to the IMF’s financial resources—is up to the IMF’s executive board and to it alone.

What follows assumes that this prerequisite is met and that the IMF can embark on what is likely to be an extraordinarily complex restructuring effort. The fund has not conducted an economic assessment of Venezuela since late 2004, representing a twenty-one-year gap in formal relations. Moreover, the capacity of the government and central bank to implement necessary policies will need to be demonstrated, and statistical processes will likely have to be substantially rebuilt.

Nevertheless, an IMF program offers something no bilateral arrangement can provide: a multilateral framework that legitimizes deep debt restructuring and provides Venezuela with the financing and technical assistance to implement reforms. While designing a program that gives confidence that future claims on Venezuela will be honored, the IMF can bring credibility to debt sustainability analyses, work closely with diverse creditor groups, and impose program conditionality that prevents preferential treatment of powerful creditors, particularly China.

Who gets paid first?

In this regard, it is important to recognize that the large investment and economic needs of Venezuela should take precedence over short-term payouts to official or private creditors. Neither the IMF nor other creditors will be able to provide fresh funds without being assured that Venezuela has the capacity to repay such loans.

This means that creditors will likely need to agree to substantial deferments on interest and principal repayments. It will take time for creditor committees to form, however, and the negotiations will need to identify different options that ensure broad compatibility of treatment, including oil‑linked debt instruments and bond exchanges with different coupons and maturities.

The Trump administration will play an important role in this process. The administration’s stated goal of kickstarting Venezuela’s oil industry is dependent on a speedy debt resolution, which it can facilitate, for example, through executive orders that protect Venezuelan assets from litigating creditors. At the same time, the administration should avoid the impression that it uses its policy leverage and legal powers to help US creditors without ensuring comparable terms for foreign creditors, whether private or official.

The latter principle will be important for the position of China. Under traditional IMF rules, Beijing could until recently effectively veto a Venezuelan program by refusing to provide upfront restructuring commitments and, instead, engaging in multiyear negotiations that would leave the country in limbo while economic conditions deteriorate further. In this scenario, China would retain its secured position through oil-for-loan agreements while Venezuela remained shut out of multilateral support.

The strategic opening: Lending into Official Arrears

Fortunately, the IMF reformed its Lending into Official Arrears (LIOA) policy in April 2024 specifically to address coordination problems with large creditors in debt restructurings. The new mechanism allows the IMF to lend even as official bilateral creditors refuse to commit to restructuring—provided that the fund implements enhanced safeguards.

These safeguards are powerful: phased disbursements, program conditionality prohibiting preferential creditor payments, and quarterly reviews monitoring restructuring progress. Most importantly, once an IMF program is operational, Venezuela would be contractually bound not to provide official holdout creditors better treatment than bondholders and other creditors receive. The oil-for-loan arrangements that currently give Beijing privileged access to Venezuelan revenues would be explicitly prohibited under program terms.

As a result, China would have to choose between two options: It could participate constructively in restructuring on terms comparable to other creditors, or it could watch from the sidelines while Venezuela receives IMF support, stabilizes its economy, and implements rules preventing Chinese preferential treatment.

Should it be necessary to enact the new policy, Venezuela’s case would resonate well beyond the country itself. China is now the world’s largest bilateral creditor, but recent debt restructurings in Zambia, Sri Lanka, Ethiopia, and Ghana faced lengthy delays, with months or years passing from staff-level IMF agreement to financing assurances. The LIOA reforms were designed precisely to give the IMF leverage in such situations. Venezuela would become the highest-profile test yet of whether these reforms achieve their intended purpose.

Charting a path forward

The Trump administration’s best path forward is to pursue a sequenced strategy to achieve broad international buy-in while minimizing the potential for Chinese obstruction. To do this, the administration should:

First, clarify government recognition and lift sanctions. Acting President Delcy Rodríguez governs under a ninety-day mandate that lacks European Union recognition. Washington should work with other countries to establish a transitional framework—likely requiring elections—that provides the legitimacy necessary for IMF engagement.

Second, unlock Venezuela’s frozen special drawing rights (SDRs). The approximately five billion dollars in SDRs are Venezuela’s own reserves, not new lending. Releasing them provides immediate liquidity for stabilization and humanitarian assistance while IMF program negotiations proceed. If properly executed under international supervision, this would demonstrate US commitment to Venezuela’s economic recovery rather than merely extracting oil resources.

Third, coordinate creditor groups early. Representing major bondholders, the Venezuela Creditor Committee has already expressed willingness to negotiate a restructuring. The administration should facilitate such discussions to quickly establish realistic recovery expectations, including by discouraging holdout creditors.

Fourth, encourage Venezuela to formally request Chinese participation in restructuring on terms comparable to other creditors. When it does this, Caracas should give Beijing a four-week window to respond, as required under IMF policies. If China provides constructive commitments, then these should be incorporated into the program framework. But if China holds out, then the United States should direct its IMF executive director to support enhanced safeguards under the IMF’s LIOA policy, proceeding with program approval despite Chinese resistance.

Fifth, design robust program conditionality. Besides identifying appropriate macroeconomic policies, along with governance and other structural reforms, the IMF program should include strict caps on debt service payments to ensure comparability of treatment, prohibition of secured lending arrangements such as oil-for-loans, and transparent reporting on all creditor interactions. These safeguards would protect both IMF resources and the integrity of the restructuring process.

The strategic imperative

The Trump administration’s Venezuela intervention raised profound questions about US power projection in the post–Cold War era. Answering those questions requires more than military force—it requires strategic sophistication in wielding economic and institutional tools. An IMF program deploying the new LIOA mechanisms, if necessary, to ensure China’s active participation while delivering consensual and sustainable debt relief would offer precisely that opportunity. The question is whether Washington possesses the diplomatic patience and multilateral discipline to see it through.

The post How the IMF can help Venezuela stabilize its economy appeared first on Atlantic Council.

Executive summary

Financial-sector policymakers and financial service providers are facing both a real challenge and unique opportunity to drive economic inclusion for about three billion people and spur growth toward the Sustainable Development Goals (SDGs).

The good news from the World Bank’s Global Findex Database 2025 is that 79 percent of adults globally and 75 percent in low- and middle-income economies (LMIEs) now have a financial account of some kind. Mobile phones are even more ubiquitous, with 86 percent of adults globally and 84 percent in LMIEs having one, which in most contexts can be used to access financial services. This means about four out of every five people have the potential to save safely and borrow prudently to meet their financial needs and the potential to pay and be paid digitally. This is good news for the individuals, their families, and for these economies because, as the IMF has found,
financial inclusion serves as a catalyst for both economic participation and inclusive growth.

However, the majority of adults in LMIEs that have a financial account do not yet fully engage with the formal financial sector. Only 40 percent of adults in LMIEs (on average) saved formally and only 24 percent of adults in LMIEs (on average) borrowed from a formal financial service provider in the last year and even they do not necessarily have the type of credit they need.¹ There are, therefore, about three billion people who could actively engage in the formal financial sector, and they present both a challenge for financial sector leaders and an opportunity for accelerating inclusive growth.

The main reasons adults in LMIEs do not use formal digital financial services are affordability, lack of trust in service providers, and lack of products to meet their needs. Rapid advances in digital public infrastructure (DPI) and artificial intelligence (AI) have the potential to directly tackle these challenges. Together they can reduce costs, increase trust, and tailor products for individuals, thereby improving lives and driving growth:

• DPI has been endorsed by the Group of Twenty since India’s presidency in 2023.² Ninety-seven countries now have DPI-like digital payments; sixty-four countries have digital IDs, and 103 have data exchange—together reducing costs and increasing trust.³
• AI, by cheaply analyzing massive data sets, is turbocharging cost reduction and product tailoring, which translates into greater affordability and access for people on lower incomes.⁴

Yet, there are potentially problematic aspects to these exciting innovations. DPI has the potential for loss of data privacy (if privacy by design is not embedded), for rent extraction (if not an open-source platform), and for government surveillance (if DPI safeguards are not central).⁵ AI has the potential to turbocharge fraud, scams, and identity theft and compromise trust.⁶

Therefore, government financial-sector regulators and policymakers have urgent and important decisions to make about how to enact and enforce responsible guardrails in the financial ecosystem. These guardrails are essential so new customers have affordable, appropriate products, can trust their money and data are safe, and have effective recourse mechanisms if problems occur. National coordination at the highest level is essential, regional approaches including policy harmonization can be cost-effective, and urgency is imperative. Financial-service leaders also have key decisions to make about how to design affordable and responsible financial products that build trust, enable resilience, and foster financial well-being and economic growth. There is now a unique opportunity for financial-sector leaders to unleash economic potential for three billion people and accelerate inclusive growth.

Ruth Goodwin-Groen is a nonresident senior fellow with the Atlantic Council’s GeoEconomics Center. Goodwin-Groen brings thirty years of strategic and technical leadership in financial-sector development and financial inclusion in emerging markets to her current consulting practice, Goodwin-Groen Consulting. Her focus is on responsible digital financial inclusion and equality in financial services for women.

Goodwin-Groen is best known as the founding managing director of the United Nations-hosted Better Than Cash Alliance, which created a global movement from cash to responsible digital payments to achieve the Sustainable Development Goals. Alliance members and partners include over 113 governments, 229 companies, and most of the UN—accounting for over 90 percent of global gross domestic product.

Goodwin-Groen has a PhD in financial-sector development from the University of Bath, an MBA with distinction from Harvard Business School, and a Bachelor of Science with Honors from the University of Western Australia.

The author extends special thanks to those providing expert input on this paper: Isabelle Carboni, Expert Consultant; Eric Duflos, CGAP; Nicole Goldin, United Nations University-Centre for Policy Research & Atlantic Council; Leora Klapper, World Bank; David Porteous, Integral: Governance solutions; and Camilo Tellez-Merchan, Gates Foundation. She also deeply appreciates the input of Atlantic Council colleagues Josh Lipsky, Sophia Busch, and Juliet Lancey as well as those who contributed to the findings and recommendations of this report through their participation in two roundtable discussions at the Atlantic Council in April and October of 2025. See the Appendix for a list of the participants. This report was made possible in part by a grant from Tala.

New Atlanticist Oct 15, 2024

Advancing a twenty-first century approach to remittances

By Alisha Chhangani, Ananya Kumar

Valued at nearly $900 billion each year, global remittances have become a large portion of many nations’ gross domestic product. But transaction costs remain too high—a problem that policymakers should tackle at upcoming meetings in Washington and Rio de Janeiro.

Africa Americas

Issue Brief Sep 20, 2024

Toward a financial inclusion agenda for the global majority

By Nicole Goldin

Policymakers, investors, and innovators must advance a new financial inclusion agenda designed for the global majority.

Economy & Business Fiscal and Structural Reform

Issue Brief Nov 2, 2023

Asking the right questions: Can digital currency enable financial inclusion?

By Ananya Kumar

Cryptocurrencies and CBDCs have the potential to enhance financial inclusion. However, the lack of quantitative data makes it challenging to evaluate their impact. To assess their financial inclusion capacity, this paper builds a rubric for policymakers which includes layers of consideration.

Digital Currencies Economy & Business

At the intersection of economics, finance, and foreign policy, the GeoEconomics Center is a translation hub with the goal of helping shape a better global economic future.

Learn more

The post A three-billion-person challenge: The rising global market for financial leaders appeared first on Atlantic Council.

• Defining the terms of the debate
• Europe’s missing Silicon Valley
• Geopolitics and the rise of tech sovereignty
• Trump actions spur renewed calls for greater independence
• Key issues:
  • Snowden’s revelations and the ‘kill switch’
  • US law enforcement access to data on European servers
  • The US u-turn on data flows
  • A single European data market
  • EU content moderation and free speech
  • Cybersecurity and cloud services
• Looking ahead: Transatlantic tensions will persist
• Seven recommendations for Brussels and Washington

Introduction

Over the past several years, the concept of digital sovereignty has become ever more central to European notions of competitiveness and economic resilience. Formerly a niche idea within the digital policy community, it has now gone mainstream with major European leaders, from European Commission President Ursula von der Leyen to former head of the European Central Bank Mario Draghi, calling for the European Union to achieve digital sovereignty.¹ It has also become integral to European debates about technological sovereignty and strategic autonomy, and even to trade policy. And as digital sovereignty has become more prominent in European discussions, it has shifted from being a vague aspiration to a concept that EU policymakers increasingly seek to put into operation—raising the possibility of future EU restrictions on procurement from companies outside Europe, as well as other regulatory measures.

Yet, despite its growing centrality in European digital debates, digital sovereignty still does not have a clear definition.² At times, it seems to have been encompassed by the broader term of tech sovereignty, which reflects the EU’s desire to boost its industrial capabilities—not only in the digital space, but also in renewables and other green and future technologies. European policymakers also regularly refer to data sovereignty and cloud sovereignty, which can be seen as focused on particular aspects of digital sovereignty.

What all these definitions share, however, is the notion that Europe and its economy should be less dependent on others and more capable of protecting its own interests, including its interests in the digital sphere. That leads to the key unresolved questions at the heart of digital sovereignty. Does sovereignty require an economic approach that is exclusively European or, at minimum, favors European companies? Is ownership or effective control over key companies important, or is a risk-based system more appropriate? Is it desirable to limit sovereign requirements to certain sectors of the economy? Can Europe achieve a measure of sovereignty as part of a common enterprise among international partners? And if the partnership model is acceptable, who are the partners?

The transatlantic relationship is, in turn, entangled with Europe’s internal debate about digital sovereignty. Until recently, this has been an evenly divided contest, with some European experts calling for Europe to strategically decouple from the dominance of US companies, while others—including most member-state governments—have noted the lack of local alternatives and hesitated to discriminate against US and other non-EU companies.

But the Trump administration’s initial open hostility to the EU and continuing general unpredictability have caused even the most transatlantic of EU leaders to question the reliability of the United States. The July 2025 US-EU trade deal provided some temporary clarity and predictability in transatlantic commercial relations, although digital issues were addressed in only limited ways. President Donald Trump’s Truth Social post a few weeks later, threatening additional tariffs on countries with “Digital Taxes, Digital Services Legislation, and Digital Markets regulations [that] are all designed to harm, or discriminate against American Technology,” was immediately criticized by the European Commission, France, Germany, and others as a violation of Europe’s sovereignty.³ Nevertheless, during a November 2025 visit to Brussels, Commerce Secretary Howard Lutnick directly linked the removal of EU digital regulation with a potential US-EU agreement on steel and aluminum tariffs.⁴

Given Trump’s close connections with leading tech executives, the US administration’s combative posture toward European tech regulation is likely to continue being a point of transatlantic friction. Whether a continued focus by the Trump administration on Europe’s digital rules will create an even stronger push in Europe for an exclusive form of digital sovereignty is not yet evident. What is clear is that without some guidelines, such as those offered in the conclusions to this report, the European Union and United States might find that their differences regarding digital sovereignty and digital rules make creating and maintaining an open transatlantic digital marketplace much more challenging.

Defining the terms of the debate

One reason why digital sovereignty has become an increasingly inflammatory label across the Atlantic is that the lack of a clear definition allows everyone to define it in ways that support their own arguments. Its rise has also coincided with the European embrace of strategic autonomy in foreign and security policy—a notion that has predictably ruffled some US feathers, especially in the defense community. Further confusion has developed as similar terms (i.e., tech sovereignty, cloud sovereignty) have emerged in related areas. To introduce some clarity into this discussion, it can be useful to categorize these different notions.

• Strategic autonomy: First arising in the context of foreign and security policy, strategic autonomy refers primarily to Europe developing defense and foreign policy capabilities that would allow the EU to play a more independent geopolitical role. Aside from a few defense funding efforts, the idea has not yet inspired major legislative initiatives. To indicate that partnership and autonomy were not contradictory, the EU later adopted the related idea of open strategic autonomy in trade policy. More recently, the EU has begun to embrace the concept of regulatory autonomy—the idea that “the Union’s values, interests, and regulatory autonomy underpin EU action, including in the digital sphere.”⁵ In these notions, autonomy is a more ambiguous and flexible concept than sovereignty, which implies a legal order backed by legislative initiatives.
• Technological sovereignty: While the first European Commission headed by von der Leyen focused largely on legislation related to the online world, the importance of technologies—and Europe’s reliance on Chinese and US technologies—had come to the fore by the end of that mandate. This was not only about the digital world, but crucially about the European Green Deal. While the commission argued that carbon reduction would be key to the future EU economy, it became woefully clear that Europe remained dependent on others for many essential technologies: solar panels, wind turbines, semiconductors, electric vehicle batteries, etc.
  
  Thus, in the second von der Leyen commission, the position of executive vice president for tech sovereignty, security, and democracy was created to oversee the development of EU capabilities to support the digital agenda. Others in the commission, including Executive Vice Presidents Teresa Ribera and Stéphane Séjourné, were tasked with strengthening EU technological capabilities across the Green Deal and industrial strategy generally. In June 2025, a key European Parliament committee defined tech sovereignty as “the ability to build capacity, resilience and security by reducing strategic dependencies, preventing reliance on foreign actors and single service providers, and safeguarding critical technologies and infrastructure.”⁶ Unlike strategic autonomy, however, tech sovereignty underlies significant legislative initiatives, from the Net Zero Industry Act and the Critical Raw Materials Act to the Public Procurement Directives. It also entails a strong focus on industrial policy, including state aid, competition policy, and other means of boosting key tech-related industries.
• Digital sovereignty: While often used interchangeably with tech sovereignty, digital sovereignty focuses primarily on the online world. Legislation such as the General Data Protection Regulation (GDPR), Digital Services Act (DSA), Digital Markets Act (DMA), and Artificial Intelligence Act (AIA) have sought to establish a comprehensive system of governance for the online world, especially by regulating corporate behavior vis-à-vis individual or business users. With the exception of semiconductors and the EU Chips Act, much less attention has been paid to the technologies that enable the online world. However, recent proposals for a Eurostack—a European capacity to provide all elements of digital infrastructure, from cables to cloud—are indications of growing European concern about both governance and technologies.⁷

• Data sovereignty: This subset of digital sovereignty—one of the earliest variants—initially focused primarily on protection of personal data under the GDPR. However, with the Data Act and other initiatives, increased attention is now paid to the re-use of industrial data that are either sensitive or commercially valuable, and to safeguarding the capacity of EU businesses and governments to exploit data generated in Europe.
• Cloud sovereignty: The proliferation of data requires enhanced storage capabilities and increased focus on cloud storage and the security of data stored in the cloud. An increasingly sharp debate has centered on whether Europeans’ data should be stored exclusively within the EU, or whether they can be stored outside the EU by non-EU providers considered trustworthy and secure. This discussion has accelerated with the growth of artificial intelligence (AI) and its enormous requirements for cloud services and data centers. Cloud sovereignty also poses questions about how Europeans’ data can be accessed by foreign law enforcement and intelligence agencies.
• Sovereignty over speech: Users of online services today confront a wide array of illegal or undesirable content, from child sexual abuse material to advertisements for illegal products to political disinformation. EU efforts to regulate platforms’ responsibility for illegal content and systemic risks have recently sparked criticism from the Trump administration, which regards aspects of these efforts as violations of free speech.⁸ Who has the right to determine allowable speech available online in a jurisdiction other than where it was produced?
• Cybersecurity: Given the ever-growing number of cyberattacks, both in Europe and globally, the protection of the online world has become a growing element in digital sovereignty. In the past, cybersecurity had not been central to the debate about digital sovereignty, but since the Russian full-scale invasion of Ukraine in 2022 there has been a rapidly growing understanding that resilience against such attacks is an essential part of sovereignty. Europe in particular has faced numerous attacks from Russia and related online actors. The EU effort to establish standards for cybersecurity has already led to US-EU tensions, but there will likely be even more attention paid to cyber-proofing as the EU operationalizes its concept of sovereignty.

As part of the growing effort to operationalize digital sovereignty, both EU institutions and member states have initiated efforts to elaborate the meaning of this elusive concept. The European Council, in formal conclusions to its October 23 meeting, declared, “It is crucial to advance Europe’s digital transformation, reinforce its sovereignty, and strengthen its own open digital ecosystem,” adding that “this requires reinforced international partnerships and close collaboration with trusted partner countries.”⁹

On November 18, 2025, the French and German governments convened a Summit on European Digital Sovereignty. The summit identified several areas for building digital sovereignty, including AI, data, and public infrastructure, and launched a joint task force on European digital sovereignty to report in 2026.¹⁰ Its final declaration underscored the EU member states’ “shared ambition to strengthen Europe’s digital sovereignty in an open manner as a cornerstone of our economic resilience, social prosperity, competitiveness and security.”¹¹

The European Commission, for its part, issued a Cloud Sovereignty Framework in September 2025 that identifies eight types of sovereignty-related objectives to be considered in the government procurement context. In a stab at precision, the framework encourages contracting authorities to assign each objective a sovereignty effective assurance level (SEAL). The results of that assessment should provide a mathematically derived sovereignty score.¹² But as EU discussions on this topic progress, there are still key differences among the member states about the choice between strict autonomy or international partnerships, and whether the model should be based on exclusive EU control or on risk management.

Europe’s missing Silicon Valley

While many non-European observers would say that the EU’s regulatory power already gives it significant influence domestically and externally, the EU’s sovereignty in the European digital arena is vulnerable at best. Despite its role as a regulatory superpower, Europe finds itself reliant on non-EU companies for many essential elements of the digital world. A European Parliament report estimates that “the EU relies on non-EU countries for over 80% of digital products, services, infrastructure, and intellectual property.”¹³ This perception of dependency is at the heart of the EU push for digital sovereignty.

The EU has failed to develop a tech sector with either the vibrancy of Silicon Valley or the growing capabilities of China’s industry. In particular, Europe has not seen the emergence of world-leading new companies based on digital technologies. Indeed, while the US industry has created six companies with a market capitalization of €1 trillion or more, the EU has created none.¹⁴ In 2021, three US cloud companies supplied 65 percent of the EU cloud market, while EU-headquartered companies had less than 16 percent.¹⁵ As a consequence, European consumers and businesses must rely on non-EU companies—mostly US and some Chinese enterprises—for basic digital services. Initially, this largely applied to software, social media, search engines, and a wide array of shopping services. More recently, the importance of cloud, encryption, and AI, along with the prospective emergence of super-fast quantum computing, has made Europeans realize that this dependence on others has significant and potentially long-lasting effects on their own industries and economies, including those far beyond the tech sector. 

Of course, a few European companies are exceptions to these trends. Nokia and Ericsson were already leaders in the cables and fiber optics that are key to connectivity. They became even stronger in the market as concerns rose about the security of Chinese components. The Dutch company ASML has been a leader in the machines required to make the semiconductors that guide and manage so much of the digital world. SAP is the world’s largest vendor of enterprise resource planning software. But these European companies are not in the same league as their US equivalents in terms of market capitalization. For example, ASML has a market capitalization of $376 billion, while Nvidia is at $4.3 trillion and Microsoft is at $3.8 trillion.¹⁶

One consequence of Europe’s struggle in the digital marketplace has been the emergence of an EU-wide debate on competitiveness, as represented most prominently by the reports by former Italian Prime Minister Enrico Letta and former head of the European Central Bank Mario Draghi.¹⁷ Draghi specifically underlined the importance of Europe’s failure to develop an innovative tech sector by noting the increasing productivity gap between the EU and the United States, with European labor productivity falling to 80 percent of US productivity. He concluded that this was mainly due to “Europe’s failure to capitalise on the first digital revolution led by the internet—both in terms of generating new tech companies and diffusing digital tech into the economy.”¹⁸

The competitiveness debate has also sought to identify the causes of Europe’s lack of digital champions. Europe has a vibrant startup community, as demonstrated by the growing role of venture capital.¹⁹ But many of these innovative enterprises end up moving to the United States or elsewhere, while others fail to commercialize entirely. The most popular rationale for this failure to scale—cited by US and European analysts, including Draghi—is overregulation.²⁰ Other suggested reasons include a chronic lack of indigenous capital, overly strict bankruptcy laws, and a culture that fears failure.²¹ Whatever the reason, Europe’s inability to provide the resources and capabilities for its innovative companies to become continental champions, let alone world leaders, means it must rely on companies from elsewhere.

This was already the case in 2018, when the GDPR—the first major piece of EU digital legislation—came into force. During the next five years of von der Leyen’s first term as commission president, the EU passed several other pieces of digital legislation, most notably the DSA, DMA, and AIA. These measures made progress in harmonizing diverse member-state laws, both existing and anticipated. But while EU leaders saw this body of legislation as protecting their citizens from the excesses of data collection and illegal social media content, many outside the EU, especially in the US tech community, viewed these laws as overly burdensome at best and discriminatory at worst. Some EU policymakers, such as Member of the European Parliament (MEP) Andreas Schwab, early on were open about their desire to counter the dominance of US firms.²² Others, however, saw Europe as offering a positive alternative to the lightly regulated environment tech companies faced elsewhere. EU rules inevitably had the most impact on US companies, which provided the overwhelming majority of digital services in the EU market. Chinese companies also came to feel the impact of EU regulations as their market share grew over time, especially in shopping and social media.

Throughout this period of intense legislative activity, there were clear voices calling for greater digital sovereignty in Europe. The body of legislation passed in the first von der Leyen commission can certainly be viewed as an effort to place limits on the US companies that dominate Europe’s digital space—and as a way for Europe to regain some control, or sovereignty, over that market. But as competitiveness emerged as a top EU priority in 2023, the discussion about digital sovereignty became part of a much broader discussion about innovation and economic security.

Geopolitics and the rise of tech sovereignty

The earliest indication of a geopolitical element to EU digital sovereignty came during the first Trump administration, when the United States protested the use of Huawei components in European digital networks. Reluctantly at first, Europeans came to understand the risk of a Chinese capability to disrupt those networks and developed the EU Toolbox for 5G Security, a list of best practices released in January 2020. The toolbox identified states and state-backed actors as the most serious threats. It also set out criteria for identifying trusted versus untrusted vendors, including closeness to a foreign government, lack of democratic accountability in that government, lack of a data protection agreement with the EU, and ability of the third country to exercise pressure on the EU.²³

The toolbox was the first real effort to identify foreign companies and governments that might threaten Europe’s digital sovereignty and those that might not. There was clearly a focus on China and Chinese companies, as demonstrated by the criteria for vendors. But it should be noted that the toolbox is primarily voluntary guidance developed by the member states for themselves, with progress tracked by regular EU Commission reporting.

In 2019, the EU identified China as both an economic competitor and a “systemic rival,” but initially with little consequence, especially in terms of economic relations.²⁴ Over the next few years, the EU would increasingly focus on China and the dangers posed by its investments in the European economy, especially in critical European infrastructure. By March 2023, when von der Leyen called for de-risking Europe from China,²⁵ commission officials had identified a number of EU dependencies on China—including in critical raw materials, solar panels, and batteries—that had the power to disrupt European industry.²⁶ In June 2023, the commission reported that it considered Huawei and ZTE “materially higher risks” than other fifth-generation (5G) suppliers.²⁷

The EU also initiated a few measures to address those vulnerabilities: heightened screening of inward foreign investment, primarily at the member-state level; enactment of the European Chips Act, providing funding for advanced semiconductor manufacturing in Europe; adoption of the Critical Raw Materials Act, which established goals for EU production of key materials; and passage of the Net Zero Industry Act, which sought to build EU manufacturing capacity in clean technologies such as solar, batteries, and hydrogen. While these measures were not aimed only at China, concerns about that country’s ambitious global plans were a main motivation. Moreover, they had the effect of broadening the initially limited discussion of digital sovereignty beyond the realm of digital governance to include both digital and green technologies, resulting in a broader focus on technological sovereignty.

This European debate regarding the geopolitical dimensions of sovereignty—both digital and tech—intensified significantly following the Russian invasion of Ukraine in February 2022. Along with a focus on territorial security, as seen in the increased defense spending of most EU member states, the EU realized that it needed to address other vulnerabilities. Most urgently, the invasion led to a swift and drastic shift in Europe’s energy supply, as Russia went from providing 45 percent of Europe’s oil and gas in 2021 to 19 percent in 2024.²⁸ But the digital arena was also vulnerable: Russian cyberattacks and apparent sabotage against undersea cables demonstrated the dangers facing Europe’s digital infrastructure, while Russian-origin disinformation flooded European social media.

Perhaps the most important consequence of the Russian invasion, however, was the realization that Europe was vulnerable and that preserving its sovereignty—digital and otherwise—would require concrete actions. Many of the green technology initiatives mentioned above were still in the legislative process when the invasion began but moved to enactment by mid-2023 as the commission’s term began to close and as Europeans became even more conscious of those vulnerabilities. Competitiveness, resilience, and sovereignty became linked together in the concept of economic security as the EU sought to reduce its external dependencies, especially on Russia and China.

By the end of 2024, the tech sovereignty impulse in Europe had become a key policy priority, as demonstrated by the appointment of Henna Virkkunen to the new position of European Commission executive vice president for tech sovereignty, security, and democracy. But before the second von der Leyen commission could get its program under way—or make progress in implementing the Draghi report—Trump’s reelection as US president pushed the impulse toward European digital sovereignty into hyperdrive.

Trump actions spur renewed calls for greater independence

European suspicions about US intentions and capabilities in the digital world have existed since 2013, when Edward Snowden revealed the extent of US National Security Agency interception of Europeans’ communications. Nevertheless, the United States and EU enjoyed relatively open trade in digital services. The advent of the second Trump administration, however, has energized the transatlantic debate over digital sovereignty. While Trump’s focus during the 2024 campaign was on the EU’s trade in goods surplus with the United States, once back in office he frequently criticized the EU’s digital regulations as a whole, despite the US surplus in services trade driven by the success of US tech companies.

Only a month after Trump’s January 2025 inauguration, the White House issued a memorandum on “Defending American Companies and Innovators from Overseas Extortion and Unfair Fines and Penalties,” calling for tariffs and other responses in cases “where a foreign government, through its tax or regulatory structure, imposes a fine, penalty, tax, or other burden that is discriminatory, disproportionate, or designed to transfer significant funds or intellectual property.”²⁹ The memo specifically highlighted “regulations imposed on United States companies by foreign governments that could inhibit the growth or intended operation of United States companies.”³⁰ It also called for the US trade representative to determine whether to renew Section 301 investigations of several digital service taxes (DSTs), including those adopted in France, Austria, Italy, and Spain. The fact sheet accompanying the memo made clear that the target was the European Union and specifically “regulations that dictate how American companies interact with consumers in the European Union, like the Digital Markets Act and the Digital Services Act, will face scrutiny from the Administration.”³¹

Such an aggressive approach brought the issue of digital sovereignty to the fore, as it seemed to disregard the EU’s right to regulate its own market. As the United States and EU pursued a trade agreement, there were conflicting reports as to whether the DSA and DMA (as well as other EU regulations) were on the negotiating table.³² In the end, the joint statement published on August 21, 2025, did not mention either regulation or the DSTs adopted by several EU member states.

But the joint statement was hardly the last word. On August 25, Trump posted on Truth Social: “As the President of the United States, I will stand up to Countries that attack our incredible American Tech Companies. Digital Taxes, Digital Services Legislation, and Digital Markets Regulations are all designed to harm, or discriminate against, American Technology.”³³ Meanwhile von der Leyen, in her September 2025 State of the Union speech, defended the trade deal but also stated: “Whether on environmental or digital regulation, we set our own standards. We set our own regulations. Europe will always decide for itself.”³⁴

The Trump administration has continued criticizing EU digital regulation. For example, on December 16, US Trade Representative Jamieson Greer posted on X (formerly Twitter) that the EU had “persisted in a continuing course of discriminatory and harassing lawsuits, taxes, fines, and directives against U.S. service providers,” and suggested that the United States would retaliate.³⁵ It would be relatively easy for the administration to renew the Section 301 investigations of DSTs. The US government might also look for a mechanism to counter the impact of the DSA and DMA, especially if US companies are fined significantly under those laws. On April 23, 2025, the European Commission fined Apple and Meta €500 million and €200 million, respectively, for noncompliance with the DMA.³⁶ In September, Google was fined €2.95 billion for “distorting competition in the advertising technology industry,” although this case was pursued under the European Commission’s long-time competition authorities rather than under the DMA.³⁷

The commission is also investigating X as well as Meta’s Facebook and Instagram for alleged violations of the DSA, along with separate probes of the Chinese firms AliExpress, Temu, and Tiktok, and several European-based online pornography platforms. On December 5, 2025, the Commission fined X €120 million under the DSA for issues related to its blue checkmarks and advertising repository.³⁸ Beyond these specific cases, the growing criticism of Europe from the US executive branch and parts of Congress, which claim it is censoring “free speech,” is an indication that an influential segment of the Republican Party in the United States will continue to push for action against European efforts to moderate digital content. The EU has been a key target, as has the United Kingdom with its Online Safety Act.

At the same time, the European Commission has embarked on a process of simplifying some regulations as part of an effort to make the EU economy more competitive. A digital omnibus—a legislative package designed to amend several regulations across a sector simultaneously—was presented on November 19, 2025.³⁹ As with other commission proposals for simplifying regulations, the digital omnibus focuses on reducing requirements for small and medium-sized enterprises (SMEs), along with streamlining reporting in cases of cybersecurity incidents. It also proposes delaying implementation of AIA requirements for high-risk systems until relevant guidance has been issued and calls for “targeted amendments” to the GDPR to boost innovation, including that related to AI training.⁴⁰ While simplification is likely to reduce the regulatory burden on tech companies in Europe—including large US companies—it has not yet addressed issues related to digital sovereignty.

Apart from potential revisions to existing legislation, the commission plans to move forward on two tracks. First, the second von der Leyen commission anticipates deploying more financial resources to support research on emerging technologies such as AI and quantum. Early in 2025, von der Leyen announced InvestAI, an initiative to raise €200 billion in investment capital.⁴¹ The EU also plans, through the 2025 EU Startup and ScaleUp Strategy, to support startups in their search for the funding that will allow them to grow.⁴² While these funds should be viewed with some caution—it is unclear whether sufficient private funds will join this public-private effort—they demonstrate the EU’s commitment to building its own capabilities.

Second, the commission has made clear that it will continue to pursue new rules governing activities and companies in the digital arena. The Financial Data Access (FiDA) regulation, now in the final stage of negotiations, is intended to allow greater sharing of financial data among financial institutions in order to develop new digital financial products for consumers. European legacy banks have launched an effort to exclude those companies designated as gatekeepers under the Digital Markets Act from participation in FiDA; this effort will primarily affect US tech companies.⁴³

The EU Cloud and AI Development Act (CADA) will attempt to address the EU’s shortcomings in cloud and AI capacity by encouraging the permitting of new data centers and other infrastructure, and by providing greater computational capacity and resources to startups, especially those focused on AI. But it is also expected to establish EU-wide eligibility requirements for cloud service providers, along with harmonized procurement processes, in ways that could restrict participation by non-EU companies. It is not clear yet whether CADA will address concerns through risk-based assurance models or ownership restrictions. It has reportedly been delayed until the first quarter of 2026 as the commission considers the concept of European effective control as a way of supporting EU digital sovereignty.⁴⁴

The Digital Fairness Act, expected to be introduced in mid-2026, will be the EU’s flagship legislation for business-to-consumer relations and will address protection of minors online, transparent online pricing, the abuses of manipulative and addictive design, and marketing by influencers—all of which are likely to be of significant interest to US platforms. Other initiatives expected to be launched in the next eighteen months include the ICT Supply Chain Toolbox, the Quantum Europe Strategy, and the Digital Networks Act. Finally, the European Data Union Strategy, released on November 19 along with the digital omnibus, establishes the ambition of “safeguarding the EU’s data sovereignty through a strategic international data policy.”⁴⁵ It aims to do this by “making fair conditions for data access and cross-border transfer . . . protecting sensitive EU non-personal data . . . and deepening cooperation with trusted partners.”⁴⁶ While a strategy is not a legislative document, we can expect that it will help guide EU policy on international data flows.

The European Parliament is also active in the digital sovereignty debate. MEP Axel Voss, one of the parliament’s leaders on these issues, wrote in an October 2025 post on LinkedIn: “We need immediate decisions to regain a digitally competitive and sovereign EU. Eurostack, deregulation, venture capital, chips, energy, access to quality data and a flourishing environment for Start Ups and creators are crucial for our sovereignty.⁴⁷ He proposes a number of measures, from digital special economic zones to using only EU programs within EU institutions to integrating “buy and deploy European tech” in public procurement.⁴⁸

These initiatives will undoubtedly continue to have an impact on the transatlantic relationship, as they will affect the major actors in the market, most of them American. Even with the best of intentions—and no ambition to exclude those companies—EU adoption and implementation of such rules will likely raise questions about the openness of its future market and the participation of non-EU firms.

The next section explores how the United States and EU have wrestled with the competing pressures of sovereignty and open markets, as presented by a set of key issues relating to government access to data.

Snowden’s relevations and the ‘kill switch‘

More than a decade has passed since the Snowden revelations, but the topic continues to shadow transatlantic digital relations. Many in Europe hailed Snowden as a hero for revealing Europe’s vulnerability to US signals intelligence, and the European Parliament invited him to appear and speak at a plenary meeting. The Obama administration, which charged Snowden under the Espionage Act, objected vehemently to the invitation and, in the end, Snowden addressed the parliament only by video link.⁴⁹ Now, however, US domestic sentiment regarding Snowden’s actions has begun to shift, at least in Republican circles, as several of Trump’s advisers have called for him to be pardoned.⁵⁰

Snowden’s disclosures started a chain of legal proceedings in Europe that generated substantial uncertainty among companies about the legality of their indispensable transfers of personal data to the United States. The Court of Justice of the European Union (CJEU) twice invalidated EU-US international transfer arrangements, judging them insufficient to protect Europeans’ fundamental rights. In 2015, the court struck down the EU-US Safe Harbor Framework, and a successor arrangement, the Privacy Shield, met the same fate in 2020.⁵¹ Meta, the object of the litigation both times, took the issue seriously enough that it publicly conceded to US securities regulators that it might need to withdraw Facebook and Instagram from Europe if it could not legally transfer data to the United States.⁵²

A third arrangement, the EU-US Data Privacy Framework (DPF), concluded in 2023, put significant additional safeguards in place for Europeans’ personal data when they are transferred to the United States. It has stabilized the situation, at least for the time being. On September 3, 2025, the EU General Court rejected a challenge to the DPF brought by Philippe Latombe, a French parliamentarian.⁵³ The case tested the sufficiency of US legal reforms made to overcome the CJEU’s 2020 judgment on the Privacy Shield. The court rejected claims that a redress mechanism created by the agreement lacked independence within the US legal system. It also validated the sufficiency of US safeguards relating to the collection of bulk data for intelligence purposes. Latombe has appealed the General Court verdict to the Court of Justice, however, so a definitive verdict on the fate of DPF has yet to be issued.⁵⁴

The European privacy advocacy organization None of Your Business (NOYB)—headed by well-known Austrian privacy activist Max Schrems, who brought the 2015 and 2020 CJEU cases—reacted with disbelief to the Latombe ruling. Schrems drew attention to Trump administration actions against the independence of the US Privacy and Civil Liberties Oversight Board (PCLOB) and the Federal Trade Commission (FTC). He also said that he is mulling bringing a second challenge to the DPF in EU courts.⁵⁵

US cloud service providers, including Amazon Web Services and Microsoft, have responded to European unease over data transfers to the United States by introducing service features that allow enterprise customers to store certain types of data exclusively on servers located on the continent.⁵⁶ Offering to localize data in this fashion can reassure European customers concerned about the long arm of US government’s potential access to their data.

However, the Trump administration exacerbated European anxiety over data flows to and from the United States by briefly cutting off Ukraine from US intelligence sharing in early 2025.⁵⁷ The specter of a US government kill switch—in the form of an order to US cloud providers to stop commercial data transfers to Europe—has spurred further efforts by US cloud providers to reassure their European customers. Brad Smith, Microsoft’s vice chair and president, went so far as to issue a public statement in April that, “In the unlikely event we are ever ordered by any government anywhere in the world to suspend or cease cloud operations in Europe, we are committing that Microsoft will promptly and vigorously contest such a measure using all legal avenues available, including by pursuing litigation in court.”⁵⁸

In response, some European companies have spied a business opportunity. For example, the German company Ecosia and its French counterpart Qwant announced their intention to build a European web index called European Search Perspective (ESP) to compete with Google’s search engine.⁵⁹ Ecosia’s chief executive officer (CEO) cited concern about the political winds blowing in the United States: “With the US election turning out as it has, I think there is an increased fear that the future US president will do things that we as Europeans don’t like very much . . . We, as a European community, just need to make sure that nobody can blackmail us.” He also emphasized Europe’s current dependence on Google’s services: “If the US turned off access to search results tomorrow, we would have to go back to phone books.”⁶⁰

The European dream of regaining data sovereignty by generating companies that can compete with the US cloud giants has a long history of failure. Our 2022 report chronicled the ambitious Franco-German effort to develop GAIA-X, a federated data and cloud ecosystem.⁶¹ In the years since, the vision of an interoperable network of trusted European cloud providers has had limited success. Its major output is a series of standards, specifications, and labels for European cloud providers, rather than a transformation of the commercial landscape.⁶²

Draghi’s 2024 report on the single market effectively conceded defeat in this area of endeavor. “It is too late for the EU to . . . develop systematic challengers to the major US cloud providers,” Draghi wrote.⁶³ Nonetheless, European anxiety over the possibility, however small, that dominant US platform services could withdraw from the continent, be blocked from serving it by the US government, or be a mechanism for channeling EU data to the US government, will continue to power a push for European sovereign alternatives.

A second continuing impetus is an awareness in Europe—thanks to Snowden—that the dominance of US digital services in Europe offers US intelligence agencies a strategic advantage. The Biden administration even boasted of this during the 2023 congressional debate to reauthorize Section 702 of the Foreign Intelligence Surveillance Act (FISA), a principal authority for collecting intelligence information on non-Americans. The pervasiveness of US digital service providers worldwide, the administration noted, allows US intelligence agencies to “leverage this national advantage to collect foreign intelligence information . . . in order to protect America from its adversaries.”⁶⁴

US law enforcement access to data on European servers

US intelligence collection in Europe is not the only challenge to data sovereignty that the EU sees emanating from the United States. Another is the Clarifying Lawful Overseas Use of Data Act (CLOUD Act), a 2018 US law. This statute confirmed that US law enforcement can unilaterally order cloud service providers with a presence in the United States to turn over personal data they host on servers in Europe and other foreign locations for criminal investigations and prosecutions. Although several EU countries, including Belgium, give their law enforcement authorities similar extraterritorial criminal evidentiary powers, this part of the CLOUD Act is seen in Europe as singularly intrusive. When EU legislators call for companies to be immune to foreign law, they are often referring to the CLOUD Act.

However, the CLOUD Act also contains a conciliatory dimension. Part II of the act authorizes the US Department of Justice to negotiate binding international agreements under which criminal investigators and prosecutors can obtain foreign-located electronic evidence directly from providers. Because CLOUD Act agreements are consensual, they do not violate a foreign state’s judicial sovereignty by commanding that a legal measure be taken on its territory. Instead, they remove legal obstacles that companies otherwise face in voluntarily assisting foreign law enforcement. This new type of international agreement can substantially reduce reliance on mutual legal assistance treaties (MLATs), which can be too slow and cumbersome for obtaining e-evidence in fast-moving investigations.

The United States has concluded CLOUD Act agreements with the United Kingdom (UK) and Australia, and negotiations are under way with Canada, all of which are members of the Five Eyes intelligence collective.⁶⁵ The UK agreement, the first to be concluded, has had a positive effect for that country’s law enforcement agencies.⁶⁶ According to the US Department of Justice, UK agencies have already made more than twenty thousand direct requests to companies holding electronic evidence in the United States, including many for real-time interception of communications.⁶⁷ The results “provided UK Law Enforcement and Intelligence Agencies with critical data to tackle the most serious crimes facing UK citizens including terrorism; child sexual exploitation; drug trafficking; and organised crime,” a UK government minister said in late 2023.⁶⁸

Prosecutors from EU member states have looked across the channel jealously as their UK counterparts have made use of this powerful new investigative tool. In 2019, the EU authorized negotiation of an e-evidence agreement with the United States.⁶⁹ Talks began in earnest after the EU finalized its controversial counterpart to the CLOUD Act, the 2023 E-Evidence Regulation.⁷⁰ Progress has been slow and painstaking. In June 2024, senior EU and US home affairs and justice officials issued an optimistic joint statement welcoming “further progress” in the negotiations and looking “forward to advancing and completing” them.⁷¹

The Trump administration has paused EU-US negotiations without explanation. It might have concluded that CLOUD Act agreements operate overwhelmingly to the advantage of foreign partners—the inevitable consequence of most relevant data being housed on servers located in the United States. As the Trump administration has demonstrated in trade negotiations with foreign countries, it is singularly focused on agreements that it can present as bringing more benefits for the United States. However, such a narrow focus overlooks other benefits of CLOUD Act agreements—sparing cloud providers conflicts of law, deterring data localization measures, and reducing the burden on the mutual legal assistance process.

In mid-2025, the UK government added an element of controversy to the use of CLOUD agreements by allegedly serving a request to Apple that it globally disable security features on its products.⁷² If the UK successfully required Apple to remove security from a product (for example, by building in a backdoor to data that would otherwise be end-to-end encrypted), it could then use the CLOUD Act agreement to request the now-vulnerable data directly from the company. Apple challenged the request in a UK administrative court proceeding and issued a public statement warning customers about the measure’s impact.⁷³ In addition, the White House and Congress sharply criticized the reported UK measure.⁷⁴ In August, the UK government withdrew its demand for access to Apple US customers’ encrypted data, effectively conceding to the US objection.⁷⁵ It recently confirmed that the order had been reissued to apply only to UK users.⁷⁶ The US government could well demand that any EU e-evidence agreement include a similar commitment safeguarding US persons’ data from surveillance by member states’ authorities.

A US-EU e-evidence agreement would be an important advance in calming Europe’s sovereign sensitivities about how US law enforcement authorities collect foreign-located evidence, just as the Data Privacy Framework has at least temporarily allayed Europe’s concerns about US national security agencies’ collection practices. Taken together, the two agreements would neutralize much of the political tension that has prevailed in these realms for more than a decade.

The US u-turn on data flows

After decades of the United States propounding unrestricted international commercial data flows—and bemoaning Europe’s privacy impediments to them—the Biden administration made a dramatic course correction in late 2023.⁷⁷ Through parallel legislation (the Protecting Americans from Foreign Adversary Controlled Applications Act) and executive action, it imposed controls on certain categories of data exports to China, Russia, and other “foreign adversaries” citing national security reasons.⁷⁸ Subsequently, the Department of Justice issued a final rule and guidance to companies on compliance and enforcement.⁷⁹ Both the legislation and regulatory actions were spurred by reports that data brokers were collecting publicly available bulk data on US persons and selling them to foreign governments, which could enable them to—among other things—track the location of US military personnel.⁸⁰

In addition to enacting domestic measures to limit certain international commercial data flows, the United States reversed course internationally. In the fall of 2023, the Office of the US Trade Representative withdrew its proposal to include in the Joint Statement Initiative on Electronic Commerce (JSI)—a World Trade Organization negotiation—a guarantee of the free flow of data across borders.⁸¹ The final text of the JSI, announced in July 2024, not only lacks such an obligation but allows parties essentially unlimited scope to restrict data flows for data protection reasons, precisely as the EU had sought.⁸² Even with these changes, the United States declined to join the JSI because it regarded the agreement’s national security exception as insufficiently flexible, a move that some European Commission officials found puzzling.⁸³

In contrast to the United States—and despite its long history of controlling data exports through the GDPR—the EU has moved slowly to evaluate the risks of data transfers to authoritarian states such as China and Russia. In 2021, the European Data Protection Board commissioned an outside report from academics that confirmed both countries’ governments have access to individuals’ personal information without commensurate rule-of-law protections, but it took no further action.⁸⁴ Even Russia’s full-scale invasion of Ukraine has not served to entirely staunch the flow of European data to Russia. The Finnish and Dutch data protection authorities investigated data transfers by Yango, a subsidiary of the Russian search engine Yandex, but have not yet imposed restrictions.⁸⁵

The past year, however, has seen a gradual shift in European regulators’ thinking regarding data transfers to China. In May 2025, the Irish Data Protection Commission (DPC) fined TikTok €530 million after discovering it was transferring data to China without requisite data protection safeguards.⁸⁶ In July, the DPC broadened its TikTok inquiry into whether the Chinese government could access such data when they are stored in China.⁸⁷ The Finnish data protection authority began a separate investigation into possible Chinese government access to health data that a Finnish university had shared with a Chinese genetic analysis company.⁸⁸

Even Schrems, who has long challenged European data transfers to the United States, has turned his attention to China. Early in 2025, he filed complaints with European data protection authorities against six major Chinese consumer companies, including Shein, Temu, and WeChat, alleging government access to Europeans’ personal data by an “authoritarian surveillance state.⁸⁹

Recent moves by European data protection authorities to question whether China’s government has impermissible access to Europeans’ personal information mirror the rise in geopolitical tensions between Brussels and Beijing. Ireland’s inquiry into TikTok data transfers, for example, can be read as asserting European data sovereignty against a geopolitical rival. The data dynamics are, in effect, a microcosm of Europe’s larger dilemma with China—deep commercial dependency, but also a recognition that a degree of sovereign control is needed.

A single European data market

Brussels has recently expanded its laws promoting the secondary use of data for commercial, research, and government purposes, in hopes that these innovative legal measures will give homegrown companies a much-needed advantage in competing with data-rich foreign tech giants. However, the transfer of such data to non-EU companies has raised concerns about potentially protectionist restrictions. The Data Governance Act, the Data Act, and the European Health Data Space regulation—all enacted during the first von der Leyen commission—seek to stimulate a market for the secondary use of European data for commercial purposes.⁹⁰ These measures are based on the recognition that data collected by—and locked within—governmental or commercial organizations can have societal and economic benefits if made available for reuse by other entities.

The 2022 Data Governance Act grew out of a post-pandemic recognition of the potential for reuse of government-held data. It facilitates reuse by the private sector, for both commercial and non-commercial purposes, of government-held data (G2B), including data originally collected by public health, environmental, and transport authorities. Then Commissioner Thierry Breton hailed it as a step toward “an open yet sovereign European Single Market for data.”⁹¹

The Data Governance Act was followed a year later by the even more ambitious Data Act, which concentrated on expanding business-to-business sharing of non-personal data, such as the industrial data generated by connected devices. The Data Act sought to ease legal issues that arise with reuse by third parties, such as intellectual property protection and trade secret rules. Both laws insisted upon additional safeguards for transferring data to companies in third countries, such as the United States, where that data could become subject to governmental access. The European Commission further envisaged a series of sector-specific European data spaces, each requiring separate legislation.⁹² They would cover sectors—from agriculture to energy to transportation—that generate large amounts of industrial data ripe for reuse. The European Health Data Space regulation is the first of this series to be enacted.

At the start of the current commission mandate, von der Leyen’s mission letter to Virkkunen instructed her to deepen focus on the reuse of data. She was asked to “present a European Data Union Strategy drawing on existing data rules to ensure a simplified, clear and coherent legal framework for businesses and administrations to share data seamlessly and at scale, while respecting high privacy and security standards.”⁹³ The commission duly launched a public consultation process, articulating as its aim “expanding the availability and use of data to support AI development.”⁹⁴ Published on November 19, 2025, the Data Union Strategy seeks to safeguard the EU’s data sovereignty by ensuring fair conditions for cross border flows of non-personal data; “linking EU data ecosystems with those of like-minded partners;” and “boosting the EU voice in global data governance.”⁹⁵ This is intended to build a comprehensive legal regime for secondary data access that will enable European industry to catch up with the US tech giants that already enjoy access to vast pools of proprietary data.

EU content moderation and free speech

One of the EU’s proudest recent legislative accomplishments is the 2023 Digital Services Act, a sprawling and complex framework regulating online platforms’ accountability for illegal content, including illegal hate speech.⁹⁶ It imposes the most onerous requirements on very large online platforms, half of which are US companies. The Trump administration and the Republican-led Congress have sharply criticized the DSA, viewing it as a tool for the suppression of right-wing populist political speech.⁹⁷ On the contrary, the EU views certain DSA provisions, such as transparency tools and safeguards against arbitrary content moderation, as intended to protect free speech.

Trump singled out the DSA for criticism in the February 2025 official memorandum on preventing the “Unfair Exploitation of American Innovation,” while the Republican chair of the Federal Communications Commission called it “incompatible with both our free speech tradition in America and the commitments that these technology companies have made to a diversity of opinions.”⁹⁸ The US State Department began a diplomatic campaign, alleging, “In Europe, thousands are being convicted for the crime of criticizing their own governments.”⁹⁹ A leaked August 2025 cable to European posts directed US diplomats to advocate for a narrowing of the DSA’s definition of illegal content, among other ambitions. The European Commission firmly pushed back, describing the censorship allegations as “completely unfounded” and insisting that its digital legislation “will not be changed.”¹⁰⁰

The Republican majority on the House of Representatives Judiciary Committee also weighed in with a strongly worded staff report describing the DSA as an “anti-speech, Big Brother law.”¹⁰¹

The report identified a handful of examples of how the act could function to restrict speech extraterritorially. For example, in an August 2024 letter, then Commissioner Breton warned Elon Musk’s X platform that the effects of a campaign interview it hosted with Trump could spill over into the EU and spur commission retaliatory measures under the DSA.¹⁰² The committee also cited a request to X by the French national police that the platform remove a post originating from a US-based account suggesting France’s immigration and citizenship policies were to blame for a 2023 terrorist attack a Syrian refugee committed in that country.¹⁰³

The chairman of the US FTC launched a further salvo in August, warning US companies that their very compliance with the EU’s DSA, or with the UK’s similar Online Services Act or its surveillance authorities, could constitute a violation of the FTC Act, which prohibits unfair or deceptive commercial acts or practices. FTC Chairman Andrew N. Ferguson suggested, “It might be an unfair practice to subject American consumers to censorship by a foreign power by applying foreign legal requirements, demands, or expected demands to consumers outside of that foreign jurisdiction.”¹⁰⁴

This transatlantic dispute over the DSA and similar content moderation laws reflects differing US and European historical traditions on speech regulation.¹⁰⁵ The US Supreme Court has identified only speech creating a “clear and present danger” of inciting violence or other illegal conduct as suitable for restriction. Many European judiciaries, informed by their countries’ twentieth century histories of hate speech, take a more cautious view. For example, Germany bans speech glorifying or denying the Holocaust, while Denmark makes it illegal to burn the Quran. The DSA is the EU’s attempt to ensure that platforms remove content deemed illegal, both offline and online, but the act’s lack of definitions leaves a door open to abuse.

On December 23, 2025, the Trump administration raised the stakes in its free speech campaign against European content moderation laws. Secretary of State Marco Rubio issued determinations under the Immigration and Nationality Act barring from entry into the United States five Europeans associated with content moderation.¹⁰⁶ The headliner was Thierry Breton, an architect of the DSA; the others hail from European non-governmental organizations that track hate speech and disinformation on the internet. The European Commission quickly issued a statement that it “strongly condemns” the US actions, reiterating its “sovereign right to regulate economic activity in line with our democratic values.”¹⁰⁷ As the Trump administration continues its ideological campaign against the DSA, the transatlantic dispute over free speech seems bound to escalate.

Cybersecurity and cloud services

In 2022, the European Union Agency for Cybersecurity (ENISA) began an effort to harmonize member-state cybersecurity requirements for government data processing contracts. The European Commission averred that cloud services were a “strategic dependency” on a handful of large providers headquartered in the United States.¹⁰⁸ Several EU member states, led by France, argued for including sovereignty requirements in the envisaged EU Cybersecurity Scheme (EUCS).

A leaked 2023 ENISA draft proposed that the EU impose sovereignty requirements similar to those in France’s domestic security certification and labeling program, SecNumCloud, for contracts involving the most sensitive government data. SecNumCloud has an announced goal that, in order to obtain a trust certificate, cloud service providers must be “immune to any extra-EU regulation.”¹⁰⁹ ENISA proposed incorporating this requirement into EU law as well, adding restrictions on foreign ownership and insisting on localization of cloud services operations and data within the EU.

EU member states divided over whether to adopt such cybersecurity requirements, which could have the effect of disqualifying large foreign cloud service providers from sensitive government data processing contracts. In addition, some European companies, especially in the financial sector, argued that the foreign providers offered greater cybersecurity as well as a superior technical product.¹¹⁰ The Office of the US Trade Representative formally questioned whether the potential EUCS restrictions were consistent with the EU’s obligations under the World Trade Organization’s Government Procurement Agreement (GPA).¹¹¹

In 2024, the Belgian EU presidency put forward a compromise proposal that discarded the foreign ownership restrictions in favor of data labeling and localization requirements.¹¹² French authorities and technology companies expressed dismay at the prospect of EU-level cybersecurity certification rules weaker than France’s own.¹¹³ ENISA has yet to issue the final implementing measure, and this debate could well reemerge in the context of the anticipated CADA.

Looking ahead: Transatlantic tension will persist

The European debate over digital sovereignty—now firmly linked to the wider debate over technological sovereignty—is likely to be a continuing point of tension in the US-EU relationship. For many years, this has been a rhetorical exercise with few real consequences for non-EU firms, especially US companies. But the shift in geopolitics and the increasing drive to support EU industries to build a more competitive economy have led many European policymakers to conclude that now is the time to act. Moreover, the geopolitics are not just about Russia’s aggression or China’s export domination. They are also about the shifts and inconsistencies in US policy that have made many in Europe believe that it must now begin to fend for itself, in terms of both defense and the economy. 

As a result, the debate over digital sovereignty has moved from a discussion of whether there should be limits on non-EU companies to a discussion of how many restrictions there will be, and of what type and in what sectors of the economy. That discussion is likely to be pursued through several key legislative initiatives planned for late 2025 and 2026. CADA is already expected to identify requirements—including sovereign requirements—for cloud services.

Perhaps most relevant, the public procurement directives are already under internal review, with a proposal for revision expected from the commission in 2026.¹¹⁴ Because much of the debate is about who can sell which products and services to whom (including to governments), procurement policy will be a key instrument in imposing sovereign requirements. EU and member-state procurement rules currently privilege price as the key selection criteria but, in the Net Zero Industry Act and other new measures, other considerations have been introduced into the procurement calculation.

As the EU pursues these initiatives, it will face a dilemma: To what degree does sovereignty require autarky? Or does the EU require partnerships, despite the risk of dependencies, because of the current lack of key capabilities? Some in Europe have argued that the right way forward is to develop end-to-end EU capabilities in the form of a Eurostack.¹¹⁵ From fiber-optic networks and computing hardware to software development and cybersecurity capabilities, all would be provided by EU companies.¹¹⁶ Others have pointed to the difficulties with this, asking whether the lack of EU-owned capabilities in cloud, AI, search, and other key functions would doom such an effort to be inferior and thus push Europe farther behind in the race to innovate essential digital technologies for the future. They also fear that European companies will not be able to compete internationally if they are cushioned by sovereign requirements.¹¹⁷ Some see no contradiction between sovereignty and being open to non-EU firms; indeed, they see access to the most innovative global companies as essential, especially given Europe’s competitiveness challenge.¹¹⁸ For others, the key element is timing. The EU tech sector currently lags in innovation but, with proper support and time, it should be fully capable of growing world-leading firms and technologies.¹¹⁹ Indeed, the EU’s International Digital Strategy emphasizes the importance of partners in boosting EU competitiveness and innovation, and the EU’s ambitions in global governance for data can hardly be accomplished without cooperative partners.¹²⁰

But in all these versions of digital sovereignty, as well as in the larger arena of tech sovereignty, there is a central question: who owns the companies involved, and does it matter if they are not EU firms as long as they abide by EU laws and regulations? The recent negotiations over an EU-wide cloud certification system stalled on exactly this point (see the above discussion of EUCS). The Toolbox for 5G Cybersecurity put forward the concept of a “high-risk supplier” to warn against non-EU companies that were insufficiently independent of their home governments. While this was aimed at Chinese companies—especially Huawei—concerns have more recently focused on the United States and its companies.

The EU’s concerns are not only about the dominant position of US platforms in the European digital market, but also the potential actions of the US government—especially the Trump administration. The administration’s inconsistency on Ukraine, highlighted by its threats in July 2025 to cease sending weapons and other military supplies to Ukraine (reversed shortly after), alarmed many in Europe.¹²¹ Reports that the Trump administration threatened to block Ukraine’s access to the vital communications network Starlink during negotiations over critical minerals also raised European concerns.¹²² While these instances were primarily about defense, not the digital arena, they have created a heightened sense of insecurity in Europe. Coupled with the experience of the trade negotiations, they put into question the reliability of the United States as a partner in any undertaking.

In this environment, the EU will need to make choices about how best to ensure it has sufficient sovereignty over its digital market. Will the answer be found in more restrictions on non-EU companies, or with a more open arrangement that also boosts European economic growth and competitiveness?

Seven recommendations for Brussels and Washington

Given the economic stakes involved for both parties, the EU should engage the United States as it moves forward, and should keep the following guidelines in mind.

Competitiveness is key to innovation and economic success.

Throughout the coming debates over sovereign requirements, the EU must balance the need for security and for its own industrial and digital capabilities with the efficiencies and productivity required for a globally competitive economy. Settling for a more expensive and less capable product or service because it is European owned is not the way to grow the economy. There are times when it is necessary, but these instances should be rare and well considered, not routine.¹²³

Heated rhetoric on either side does not help the economy.

As the EU moves forward with legislation, both Washington and Brussels should seek to lower the temperature. While some US executive orders and statements from top officials have seemed to decry any EU regulation that impedes US companies, the reality is that Europe has the right to regulate as it sees fit in its own market, as does the United States. At the same time, European threats of broad sovereign restrictions do not encourage needed investment. It should not be forgotten that the US-EU trade and investment relationship is the largest such partnership in the world, worth around $1.5 trillion in goods and services trade in 2024, and with mutual investment worth several times that.¹²⁴ As both parties establish regulatory or investment requirements intended to boost domestic capabilities and add resilience to their economies, there will inevitably be tensions and misunderstandings. Creating barriers to trade and investment is sometimes necessary in limited circumstances, but careful consultations can ameliorate their impact.

Agreed legal frameworks in key areas can ease the need for sovereign protections.

As the discussion of data policy demonstrates, the transatlantic economy is not just about products and services, but also the data generated by them. Sharing those data—and being able to use them to generate revenues—is key to success in the digital economy. Of course, those transferring and using data must comply with local laws, including the GDPR. But the US and EU regulatory regimes collide at times, offering inconsistent or even conflicting requirements. Negotiated arrangements, such as the US-EU Data Privacy Framework, can overcome those differences and provide a stable context for business. A US–EU agreement on law enforcement access to data likewise could provide the protections and access both parties need. Similarly, an agreement that facilitates transfers of non-personal data might be useful in response to the Data Act and Data Union Strategy. Now is the time to make sure the United States and EU are developing compatible regimes.

Ringfencing can be a valuable strategy, as can trusted vendors.

Not all suppliers and customers are equal. Arrangements among allies and partners can lessen risks while preserving as much of the open, prosperous economy as possible, even in sensitive sectors. It makes no sense for Europeans to focus more on the transfer of data to the United States than to Russia or China. Using criteria such as those in the EU Toolbox for 5G Cybersecurity to identify foreign companies that can partner in key sectors will provide clarity and ease transactions. Similarly, a proposal floated in the EUCS negotiations that the trusted circle of cybersecurity providers be based on NATO membership might be appropriate. The Group of Seven (G7) could also offer a starting point for developing a set of compatible, interacting regulatory regimes in the digital economy, as it has done to some degree through its discussion of data free flow with trust and the AI principles and code of conduct.¹²⁵

Certain sectors of the economy are more sensitive than others.

Digital sovereignty requirements should not be imposed on broad swaths of the economy. There are two main reasons for such requirements: national security and creating an indigenous capability in those areas where national economic resiliency is required. Policymakers should carefully identify the areas of the economy where these two reasons apply. Cybersecurity for essential government operations and protecting critical infrastructure are good examples. Management of more prosaic, but still sensitive government data—including where they are stored and who has access—might not need such stringent requirements. Because digital elements—data, cloud, software, and increasingly AI—exist across the economy, it might be more helpful to think about specific functions and make a risk-based assessment of the consequences of failure. Sovereign requirements should be limited to those areas in which a failure or breach will have consequences across society and the economy.

The type of sovereign requirement can vary with the economic sector and even particular conditions.

Among European policymakers, the sovereign requirements currently under discussion can be divided into two types: those that require a supplier to adhere to specific rules and those that involve restrictions relating to the ownership of the company supplying a particular service or product. The first might involve data localization or restricting access to data or use of a particular technology, such as AI. The second, which has been applied in the French SecNumCloud, is far more restrictive and affects the ability of any US-based company to provide the service in question. In some cases, an ownership restriction might exclude companies with the best capabilities from providing the service, and could even expose those using the service to more risk. Thus, ownership restrictions are unlikely to be worthwhile except in rare cases. In the United States, these exist in areas of defense contracting, in which companies dealing with US classified material must set up a US company with US governance and employees. But most government digital contracts, both in the United States and in Europe, are not defense related and would not require such far-reaching ownership rules.

Instead, for those functions in which a breach or disruption would cause significant harm, creating a category of trusted vendors might be appropriate. This could apply to sensitive government functions, as well as to critical infrastructure provided by private-sector enterprises. A system based on trusted vendors could balance the desire to boost local providers while also securing access to top-quality services from non-EU companies. The EU might consider whether there are lessons to be learned from the US government’s FedRAMP system, which certifies companies (including non-US companies) to provide cloud services to different government customers. Companies need to meet criteria that become more restrictive and complex through the three levels of certification (low, moderate, and high).¹²⁶ While FedRAMP applies across most of the US government, individual agencies have the ability to impose their own requirements, allowing national security and intelligence agencies to impose further restrictions on those involved in classified functions. Despite these exceptions, FedRAMP’s graduated approach—matching certification level to sensitivity of the data—is much more tailored than some European proposals in matching certification requirements to the risk level of the cloud service required.¹²⁷

Sovereign requirements should be implemented in a consistent manner, including at the member-state level.

One of the persistent challenges of EU policy is ensuring that implementation is the same throughout the union. Both the Draghi and Letta reports cited differences in member-state requirements for businesses (or implementation of those requirements) as a key factor slowing EU competitiveness. The US trade representative has cited as trade barriers numerous instances of different requirements among EU member states, meaning that companies must follow multiple sets of rules even within the single market.¹²⁸ The European Commission recognized this problem when it decided that, under the DSA, very large online platforms (VLOPs) should be regulated at the EU level, not by member-state authorities. As the EU develops sovereign requirements in the digital sphere, it should be alert to efforts by member states to toughen criteria in ways that add unwarranted restrictions.

While the EU certainly has the right to decide on its own digital sovereignty requirements, those measures will undoubtedly affect access of non-EU companies to the market as well as the capabilities that are accessible to the EU and its member states. There will be costs for the EU, especially as it tries to build a more competitive economy. For that reason, any restrictions should be focused on those circumstances in which risks are high and security is necessary. This exercise should not be about denying access to non-EU companies, but instead about building a secure digital environment and resilient European capabilities. The EU should engage with its partners—not only the United States, but also Japan, South Korea, the UK, and others—to ensure that the fewest possible frictions arise. This will be a test for the transatlantic relationship, but one that can lead to greater cooperation rather than continued angst. 

Fellow

Frances Burwell

Distinguished Fellow

Europe Center

Central Europe Digital Policy

Fellow

Kenneth Propp

Nonresident Senior Fellow

Europe Center

European Union Digital Policy

The authors would like to thank James Batchik, Emma Nix, and Jack Muldoon for their tireless support on the report’s editing, research, and data visualization.

Issue Brief Dec 4, 2025

Improving transatlantic cooperation on digital competition

By Zach Meyers

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By Kenneth Propp

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Digital sovereignty in practice: The EU’s push to shape the new global economy

By Frances Burwell, Kenneth Propp

What does the European Union’s push for “digital sovereignty” mean in practice? Frances Burwell and Ken Propp provide an update to digital sovereignty and its transatlantic impacts.

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The Europe Center promotes leadership, strategies, and analysis to ensure a strong, ambitious, and forward-looking transatlantic relationship.

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The post Digital sovereignty: Europe’s declaration of independence? appeared first on Atlantic Council.

Executive summary

While US and European Union (EU) policies differ in their approaches to online safety and the regulation of the internet, there is agreement about the need to protect children online. That is one high-level takeaway from a recent round of US-EU dialogue hosted by the Centre on Regulation in Europe (CERRE) and the Atlantic Council.

Such dialogue helps to identify common policy approaches for the protection of minors and common approaches to enforcing rules. Ultimately, it can also help facilitate faster and more efficient rollout of technologies to protect users. Dialogue will also help global platforms develop services to comply with rules and expectations on both sides of the Atlantic.

At the recent roundtable hosted by CERRE and the Atlantic Council, the synergies and differences in regulatory approaches and philosophies on both sides of the Atlantic centred on four themes. For each theme, some common threads seemed ripe for further discussion and cooperation.

• New legislation and approaches to enforcement: In terms of the overall governance landscape, legislation has a key role to play in Europe and in the United States, where long-standing federal rules have been supported by an increasing number of state laws.The bulk of legislation in the EU—such as the Digital Services Act (DSA)—is adopted at the EU level, while some member states are adopting supplementary rules. In the United States, most legislation is now being adopted at the state level. Public enforcement by regulators plays a big role in the EU and the United Kingdom (UK). In the United States, state attorneys general are taking action to enforce rules, with powers similar to those of regulators in Europe. More alignment and cooperation on enforcement would be beneficial. Private enforcement through courts is also possible but, while this is already widespread in the United States, it is just emerging in Europe.
• The harms from which children should be protected: On both sides of the Atlantic, there is a large degree of alignment on the harms from which children need to be protected. A strong commonality is that rules in Europe and the US both require compliance by design to avoid particularly harmful conduct, such as unwanted contact by unknown adults. Other common design elements include data minimization, which is a central component of the European Commission’s guidelines on protecting minors under Article 28 of the DSA and in the UK Office of Communication’s (Ofcom) age-appropriate design code and guidance under the Online Safety Act (OSA).
• Balancing rights: To balance the protection of fundamental rights (in particular, privacy and freedom of expression) against the need to protect children, there is widespread agreement that everyone—not just children—deserves protections online. The EU, UK, and United States are all cautious about dictating which content is acceptable online and are instead converging on approaches that require platforms to use processes and systems to ensure safety by design. Ensuring the protection of fundamental rights is a common concern and, ultimately, a matter of balance, including at the enforcement level.
• Age verification: Current debates about banning access to social media and about age verification are critical in Europe and in the United States, both in general and in relation to certain types of platforms (particularly those that host pornographic content). There is no agreement on a single type of technology that should be used, but there are prototypes and guidance on the high-level principles that the technologies should reflect. There are similar discussions on both sides of the Atlantic about how to attribute responsibility for age assurance across the supply chain—i.e., where in the supply chain age verification should take place—and how the division of responsibilities between players in supply chains could work in practice.

Introduction

The EU has put in place important legal building blocks to protect children online. These include the DSA and the European Commission’s guidelines on Article 28 of the DSA, which require providers of platforms accessible to minors to “put in place appropriate and proportionate measures to ensure a high level of privacy, safety, and security of minors.”¹ They also include the Audiovisual Media Services Directive (AVMSD), which contains rules to safeguard minors’ personal data and to protect children online, and the General Data Protection Regulation (GDPR), which provides rules on collection and processing of minors’ data. Other proposals yet to be finalized include the pending Digital Fairness Act (DFA) proposal and the Regulation on Child Sexual Abuse Material (CSAM).² Member states retain certain powers to enact national laws to protect minors online.³

In the United States, the protection of minors online is an important consideration at both the federal and state levels. At the federal level, the Kids Online Safety Act (KOSA) proposal, the Children’s Online Privacy Protection Act (COPPA) and the COPPA 2.0 proposal all seek to address certain aspects of children’s safety online (in particular, privacy, advertising, and CSAM).⁴ At the state level, California’s Age-Appropriate Design Code (CAADCA) has been challenged in court on First Amendment grounds.⁵ Other states, including Nebraska and Vermont, have recently adopted similar codes that they hope will withstand First Amendment scrutiny.⁶ Utah has also recently enacted a law to protect content-creating minors from financial exploitation and privacy violations.⁷

News headlines focus on apparent differences between US and European policies, which are spiraling into growing transatlantic tension. However, there is a large degree of alignment on the need to protect children online while also safeguarding fundamental rights such as privacy and freedom of expression.

The overall governance landscape

The European and US approaches are fairly aligned on some governance aspects of regulating child protection online. Since the adoption of its rules for video sharing platforms in 2018, the EU has embraced a legislative path to protect minors online.⁸ This legislative framework was strengthened in 2022 with the adoption of the DSA. Both the video sharing platform rules and the DSA are largely principle based and rely on a form of collaboration with the industry,placing the onus on the platforms themselves to decide what constitutes an appropriate and proportionate level of protection for minors. The UK has also adopted a legislative path with the OSA and the detailed guidance produced by Ofcom.⁹ Like the DSA, the OSA adopts a risk-based approach, with the larger and riskier platforms subject to stricter measures. The UK regulator, Ofcom, has supplemented the legislation with detailed guidance.

The European Commission recently adopted guidelines to help online platforms understand and comply with their obligations under Article 28 of the DSA, including setting out a list of recommendations for platforms, but these are nonbinding. Safety by design is at the heart of the guidelines. The EU’s legislative approach focuses on ensuring platforms put in place systems and processes, while steering away from regulating the type of content that should be outlawed.

So far, the EU’s legislative framework has not led to a full harmonization of approaches to protect minors, and some member states have adopted more restrictive approaches. For example, France, Germany, Ireland, and Italy have adopted supplementary legislation to protect minors from harmful content such as online pornography.¹⁰

In the United States, the federal government has adopted legislation such as the COPPA to tackle some problematic areas such as the need to protect minors’ personal data.¹¹ Despite heightened partisanship in Congress, leaders of both the Republican and Democratic Parties have expressed interest in supporting additional bipartisan legislation to protect children online.¹² Although there is less appetite for federal legislation with binding obligations on platforms in terms of platform liability, there is appetite at the state level to embrace the legislative path, and safety by design is the cornerstone of many of these initiatives.¹³ That being said, the Kids Online Safety Act (a federal initiative) received the support of sixty co-sponsors at the federal level, which shows that this is an area with some bipartisan support. The EU and the United States are also converging on some important aspects: more obligations are placed on larger platforms; there is an emphasis on protection and safety by design; and there is no “one size fits all” solution.

There is broad consensus among experts that, irrespective of geopolitical tensions, there has never been so much space for alignment at the policy level between different jurisdictions—and between Europe and the United States in particular. This is partly because Europe (with the DSA at the EU level and the OSA in the UK) takes a systemic risk approach and does not focus on moderating individual pieces of content. That places responsibility on the platforms to have processes and systems in place to design safe spaces at the outset.

There are also similarities in public and private enforcement of norms. In the EU and the UK, regulators play an important role in making sure that industry complies with the DSA, the AVMSD, and the OSA. In the United States, even if new federal laws are adopted, the creation of a dedicated federal regulator to publicly enforce the legislation is unlikely, though existing agencies such as the US Federal Trade Commission already have a remit over some of these issues. At the state level, attorneys general are empowered to enforce COPPA via civil actions despite it being a federal law. State attorneys general have many enforcement tools at their disposal, including the power to undertake industry-wide investigations. These are broadly in line with the enforcement powers of national competent authorities and the European Commission under the DSA (and Ofcom under the OSA). On both sides of the Atlantic, private enforcement through courts is also set to play an important role, though, to date, it has been more common in the United States than in either the EU or UK.

Harms against which children should be protected

In the EU, the harms against which children should be protected are potentially very wide and are not specifically defined in the DSA, which refers only to protecting minors’ “privacy, safety and security.”¹⁴ Furthermore, member states are free to set their own rules provided they are in the line with EU legislation.

Some harms are outlawed at the EU level, such as the sharing of child sexual abuse material, dark patterns (i.e., deceptive techniques used by online platforms to manipulate users’ behavior), the processing of minors’ personal data without the consent of parents, and the sending of targeted advertising to children based on profiling.¹⁵ US policy initiatives at the state and federal levels also identify these harms as targets for regulation. The dissemination of child sexual abuse material, for example, is already a criminal offense.

A strong focus of legislation to protect minors on both sides of the Atlantic is to make sure that children cannot be contacted on platforms by unknown adults. At the state level (Vermont in particular) lawmakers frame these as safety bills to avoid framing them as content regulation, which could bring challenges on First Amendment grounds. These design architecture elements, such as default settings that prevent children being findable, are also central in the European Commission’s guidelines on Article 28 of the DSA in the UK Information Commissioner’s Office’s age-appropriate design code and in Ofcom guidance under the OSA.¹⁶

Data minimization (meaning only a minimum amount of data can be gathered and processed) is seen as critical to mitigating harms in general, because there is a strong correlation between collecting vast amounts of data about children’s behavior online and using the data to target minors with harmful content. Also, data minimization could lead to stronger protection for all users. While enforcing data minimization principles is a challenge, it can be done. In the UK, for example, Ofcom is required to work closely with the data protection authority. Operational coherence and cooperation between regulators are crucial in this area.

Balancing fundamental rights

The debate about balancing the need to protect children against the protection of certain fundamental rights (especially privacy, freedom of expression, and the rights of the child) is critical in the United States and in Europe. Initiatives in Europe and the United States tend to focus on tools and processes to protect minors, but steer away from regulating content on the platforms. Despite this, there is mounting debate regarding whether laws are creating a form of censorship or unlawfully constraining free speech, limiting users’ choices, or infringing on the rights of children. The question is wider than the need to protect children online, in the sense that some content can be inherently dangerous for some individuals whereas that same content might not be harmful for another person (minor or adult). This need to protect users from harmful (but legal) content is the most difficult to reconcile with the need to protect freedom of speech and the need for data minimization.

In the United States, the question is being argued in court. Some federal courts have ruled that laws requiring age verification are unconstitutional because they undermine the US Constitution’s First Amendment and threaten privacy rights.¹⁷ Age verification laws are being challenged by NetChoice (a coalition of tech companies) and by free speech coalitions. The Supreme Court recently ruled that the age verification law in Texas does not violate the First Amendment because it only requires proof of age to access content that is obscene to minors; it does not directly regulate adults’ speech.¹⁸ In both the EU and the United States, a considerable amount of policy work and research is being conducted on how to balance safety and privacy, especially in the context of age assurance requirements.¹⁹

At the EU level, the debate about balancing rights was not prominent while the DSA and the AVMSD were being adopted, probably because the rules were principles based and did not mention bans or age verification per se. Furthermore, the DSA contains safeguards to protect fundamental rights, such as giving users’ the right to challenge content moderation decisions (such as removals of posts, demotions of content, and account suspensions). The central article on the protection of minors in the DSA (Article 28) assumes that there cannot be safety for minors unless other rights, such as privacy, are protected as well.

Now that the DSA is being enforced, the protection of minors has become an enforcement priority for the European Commission, and some member states are calling for bans on children accessing social media platforms, some political parties are questioning the legislation and the push for age verification solutions on free speech grounds. This debate is particularly intense in the context of the regulation on the fight against CSAM, which the European Parliament and the Council of the EU are amending in an attempt to reduce the impacts of CSAM detection mechanisms on privacy, particularly in the context of end-to-end encryption.

The ultimate goal should be to protect everyone online, not just minors. This would avoid the need to put in place age assurance and age verification.

A “digital age of consent” and age verification

The debates on getting the balance right on the need to protect minors online and the need to protect some fundamental rights are crystallizing on age verification and on proposals for an outright ban on access to social media for children.

To date, there is no outright ban at the EU level on children accessing social media. Commission President Ursula von der Leyen had pledged to examine the questionwith the help of a panel of experts originally scheduled to be set up before the end of 2025.²⁰ Some member states are also discussing the option of a social media ban for children.²¹ There is a strong call in the commission’s recently adopted guidelines under the DSA for certain platforms (such as adult content platforms) to prevent children from accessing them. Also, the Danish presidency of the EU and ministers from twenty-five member states recently adopted the Jutland Declaration, which welcomed “assessments” of a digital majority age.²² This assessment could help to determine the age at which minors should be allowed access to social media and other digital services—“giving them more time to enjoy life without an invasive online presence.”²³ This question is also high on the agenda in the United States, with some states requiring social media to ban minors from accessing them (or requiring parental consent for a minor to have an account).²⁴

On age verification, there is no mandatory technology at the EU level, but the EU guidelines on the protection of minors adopted under the DSA set out principles that age verification technology used by online platforms should meet.²⁵ In particular, the systems should be based on the “double anonymity” principle. According to this principle, the platform knows the age of users without identifying them, whereas an external site—which carries out the age verification by issuing a token—does not know which site the user will visit. The EU is also about to launch an EU mini-wallet as a temporary solution, pending the adoption of national solutions.²⁶ Some member states have also set requirements on age verification that are enforced by national regulators.

In the UK, the OSA has just entered into force, and the biggest and most popular adult platforms such as Pornhub must now deploy age checks for users based in the UK. Other platforms—including Bluesky, Discord, Reddit, and X—have also announced that they will deploy age assurance in the UK as a result of the act. This has led to a surge in virtual private network (VPN) downloads, which shows the importance of global alignment where possible.

In the United States, as noted above, state legislation imposing age verification is subject to frequent court challenges.²⁷ As in Europe, there is little agreement among the states on the methods and tools to use when verifying the age of online users. Also, like in Europe, states seem to recognize that age assurance alone is not the solution.

On both sides of the Atlantic, the debates are similar in practice, including debates regarding how to attribute responsibility for age assurance across the supply chain (i.e., at what level age verification should take place, whether at the app store layer or by individual applications or websites). Questions about where verification happens raise additional questions about the extent to which other players in the chain can rely on this, or whether relying on a single point of verification could undermine safety by discouraging applications and websites from making their own assessments.

Michèle Ledger is a researcher at the Research Centre in Information, Law and Society (CRIDS) of the University of Namur where she also lectures on the regulatory aspects of online platforms at the postmaster degree course. She has been working for more than twenty years at Cullen International and leads the company’s Media regulatory intelligence service.

This issue brief benefits from the insights of discussants at an online roundtable on EU-US regulatory co-operation hosted jointly by CERRE and the Atlantic Council. However, the contents of this brief are attributable only to the author.

Providing high-quality studies and dissemination activities, the Centre on Regulation in Europe (CERRE) is a not-for-profit think tank. It promotes robust and consistent regulation in Europe’s network, digital industry, and service sectors. CERRE’s members are regulatory authorities and companies operating in these sectors, as well as universities.

CERRE’s added value is based on

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• the widely acknowledged academic credentials and policy experience of its research team and associated staff members;
• its scientific independence and impartiality; and
• the direct relevance and timeliness of its contributions to the policy and regulatory development process impacting network industry players and the markets for their goods and services.

CERRE’s activities include contributions to the development of norms, standards, and policy recommendations related to the regulation of service providers, to the specification of market rules, and to improvements in the management of infrastructure in a changing political, economic, technological, and social environment. CERRE’s work also aims to clarify the respective roles of market operators, governments, and regulatory authorities, as well as contribute to the enhancement of those organizations’ expertise in addressing regulatory issues of relevance to their activities.

The Atlantic Council promotes constructive leadership and engagement in international affairs based on the Atlantic community’s central role in meeting global challenges. The council provides an essential forum for navigating the dramatic economic and political changes defining the twenty-first century by informing and galvanizing its uniquely influential network of global leaders. The Atlantic Council—through the papers it publishes, the ideas it generates, the future leaders it develops, and the communities it builds—shapes policy choices and strategies to create a more free, secure, and prosperous world.

The Atlantic Council’s Europe Center conducts research and uses real-time analysis to inform the actions and strategies of key transatlantic decision-makers in the face of great-power competition and a geopolitical rewiring of Europe. The center convenes US and European leaders to promote dialogue and make the case for the US-EU partnership as a key asset for the United States and Europe alike. The center’s Transatlantic Digital Marketplace Initiative seeks to foster greater US-EU understanding and collaboration on digital policy matters and makes recommendations for building cooperation and ameliorating differences in this fast-growing area of the transatlantic economy.

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Bottom lines up front

• Despite several shocks in the past year, the global economy saw strong growth in 2025, raising hopes for market forecasters about what 2026 has in store.
• However, markets may be confusing resilience for immunity.
• The global economy faces major challenges in the year ahead, from the AI surge to the global response to new US tariffs.

WASHINGTON—US President Donald Trump shocked—and re-shocked—the global economy in 2025, but growth powered through. Thanks to the surge in artificial-intelligence (AI) investment and limited inflation from tariffs, it’s clear that many economists’ doomsday predictions never materialized.

By the end of 2025, forecasts across Wall Street predicted “all-time highs” for the S&P 500 in 2026. Many investors believe that the AI train won’t slow down, central banks will continue cutting rates, and US tariffs will cool down in a midterm year.

But markets may be confusing resilience for immunity.

The reality is that several daunting challenges lie ahead in 2026. Advanced economies are piling up the highest debt levels in a century, with many showing little appetite for fiscal restraint. At the same time, protectionism is surging, not just in the United States but around the world. And lurking in the background is a tenuous détente between the United States and China.

It’s a dangerous mix, one that markets feel far too comfortable overlooking.

Here are five overlooked trends that will matter for the global economy in 2026.

The real AI bubble

Throughout 2025, stocks of Chinese tech companies listed in Hong Kong skyrocketed. For example, the Chinese chipmaker Semiconductor Manufacturing International Corporation (known as SMIC) briefly hit gains of 200 percent in October, compared to 2024. The data shows that the AI boom has become global.

Everyone has been talking about the flip side of an AI surge, including the risk of an AI bubble popping in the United States. But that doesn’t seem to concern Beijing. Alibaba recently announced a $52 billion investment in AI over the next three years. Compare that with a single project led by OpenAI, which is planning to invest $500 billion over the next four years. So the Chinese commitment to AI isn’t all-encompassing for their economy.

Of course, much of the excitement around Chinese tech—and the confidence in its AI development—was driven this past year by the January 2025 release of the DeepSeek-R1 reasoning model. Still, there is a limit to how much Beijing can capitalize on rising tech stocks to draw foreign investment back into China. There’s also the fact that 2024 was such a down year that a 2025 rebound was destined to look strong.

It’s worth looking at AI beyond the United States. If an AI bubble does burst or deflate in 2026, China may be insulated. It bears some similarities to what happened during the global financial crisis, when US and European banks suffered, but China’s banks, because of their lack of reliance on Western finance, emerged relatively unscathed. 

The trade tango

In 2026, the most important signal on the future of the global trading order will come from abroad. US tariffs will continue to rise with added Section 232 tariffs on critical industries such as semiconductor equipment and critical minerals, but that’s predictable.

But it will be worth watching whether the other major economic players follow suit or stick with the open system of the past decades. As the United States imports less from China, but Chinese cheap exports continue to flow, will China’s other major export partners add tariffs? The answer is likely yes.

US imports from China decreased this past year, while imports by the Association of Southeast Asian Nations (ASEAN) and European Union (EU) increased. In ASEAN, trade agreements, rapid growth, and interconnected supply chains mean that imports from China will continue to flow uninhibited except for select critical industries.

But for the EU, 2025 is the only year when the bloc’s purchases of China’s exports do not closely resemble the United States’ purchases. In previous years, they moved in lockstep. In 2026, expect the EU to respond with higher tariffs on advanced manufacturing products and pharmaceuticals from China, since that would be the only way to protect the EU market.

The debtor’s dilemma

One of the biggest issues facing the global economy in 2026 is who owns public debt.

In the aftermaths of the global financial crisis and the COVID-19 pandemic, the global economy needed a hero. Central banks swooped in to save the day and bought up public debt. Now, central banks are “unwinding,” or selling public debt, and resetting their balance sheets. While the US Federal Reserve and the Bank of England have indicated their intention to slow down the process, other big players, such as the Bank of Japan and the European Central Bank, are going to keep pushing forward with the unwinding in 2026. This begs the question: If central banks are not buying bonds, who will?

The answer is private investors. The shift will translate into yields higher than anyone, including Trump and US Treasury Secretary Scott Bessent, want. Ultimately, it is Treasury yields, rather than the Federal Reserve’s policy rate, that dictate the interest on mortgages. So while all eyes will be on the next Federal Reserve chair’s rate-cut plans, look instead at how the new chair—as well as counterparts in Europe, the United Kingdom, and Japan—handles the balance sheet.

Wallet wars

By mid-2026, nearly three-quarters of the Group of Twenty (G20) will have tokenized cross-border payment systems, providing a new way to move money between countries using digital tokens. Currently, when you send money internationally, it can go through multiple banks, with each taking a cut and adding delays. With tokenized rails, money is converted into digital tokens (like digital certificates representing real dollars or euros) that can move across borders much faster on modern digital networks.

As the map below shows, the fastest movers are outside the North Atlantic: China and India are going live with their systems, while Brazil, Russia, Australia, and others are building or testing tokenized cross-border rails.

That timing collides with the United States taking over the G20 presidency and attempting to refresh a set of technical objectives known among wonks as the “cross-border payments roadmap.” But instead of converging on a faster, shared system, finance ministers are now staring at a patchwork of competing networks—each tied to different currencies and political blocs.

Think of it like the 5G wars, in which the United States pushed to restrict Huawei’s expansion. But this one is coming for wallets instead of phones.

For China and the BRICS group of countries in particular, these cross-border payments platforms could also lend a hand in their de-dollarization strategies: new rails for trade, energy payments, and remittances that do not have to run through dollar-based correspondent banking. This could further erode the dollar’s international dominance.

The question facing the US Treasury and its G20 partners is whether they can still set common rules for this emerging architecture—or whether they will instead be forced to respond to fragmented alternatives, where non-dollar systems are already ahead of the game.

Big spenders

From Trump’s proposal to send two-thousand-dollar checks to US citizens (thanks to tariff revenue) to Germany’s aim to ramp up defense spending, major economies across the G20 have big plans for additional stimulus in 2026. That’s the case even though debt levels are already at record highs. Many countries are putting off the tough decisions until at least 2027.

This chart shows G20 countries with stimulus plans, comparing their projected gross domestic product (GDP) growth rates for 2026 with their estimated fiscal deficits as a percentage of GDP. It’s a rough metric, but it gives a sense of how countries are thinking about spending relative to growth and debt in the year ahead. Countries below the line are planning to loosen fiscal taps.

Of course, not all stimulus plans are created equal. Ottawa, for example, is spending more on defense and investments aimed at improving the competitiveness of the Canadian economy, while keeping its estimated fiscal deficit at around 1 percentage point of projected 2026 GDP growth. US growth isn’t bad, coming in at a little over 2 percent, but the government plans to run a fiscal deficit of at least 5.5 percent. Russia is attempting to prop up a wartime economy, while China is pursuing ambitious industrial policies and pushing off its local debt problems. And on China, while the chart above shows International Monetary Fund and other official estimates for China’s GDP growth, some economists, including ones from Rhodium Group, argue that China’s real GDP growth could be as low as 2.5 percent for 2026, which would push China below the line displayed.

Within this group, emerging economies are experiencing stronger growth and may have more room to run deficits next year. For advanced economies, that spending tradeoff is much harder to justify.

When Trump captured Nicolás Maduro on the first Saturday of the year, there was speculation that when markets opened the following Monday, they might react negatively given a possible geopolitical shock or positively in anticipation that new oil would be coming online. But markets were muted, and they took the news in stride. That has been the modus operandi of markets ever since Trump took office—trying to see past the immediate news and ask what actually matters for economic growth. In 2025, that strategy paid off. But 2026 may look very different.

The post Five trends to watch in the global economy in 2026 appeared first on Atlantic Council.

This followed a series of similar recent statements from Kremlin officials reiterating Moscow’s uncompromising position and dismissing a 20-point peace plan prepared by Ukraine, Europe, and the United States. Meanwhile, Russian President Vladimir Putin declared in December that Russia’s war aims in Ukraine will be met “unconditionally” and vowed to “liberate” what he termed as Russia’s “historical lands.”

Moscow’s approach toward peace talks has remained consistently uncooperative ever since US President Donald Trump returned to the White House one year ago. While Putin has been careful not to directly rebuff Trump in order to avoid provoking fresh sanctions, there have been ample indications that the Kremlin is not ready to engage seriously in US-led diplomatic efforts. Instead, Russia seems intent on stalling for time while escalating its invasion.

There are no signs that this trend will change anytime soon. Despite mounting economic challenges on the home front amid falling energy export revenues, Russia’s defense budget for 2026 remains close to record highs. Moscow will continue to prioritize domestic drone production this year, while also allocating large sums to finance the system of generous bonus payments and salaries for army recruits who volunteer to serve in Ukraine.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

Russia’s refusal to embrace the idea of a compromise peace should come as no surprise. After all, Putin has built his entire reign around the promise of restoring Russian greatness and reversing the perceived humiliations of the Soviet collapse. After nearly four years of full-scale war, a negotiated settlement that secured Ukraine’s status as an independent country would represent a major political failure.

Since 2022, Kremlin officials and Russian state media have consistently portrayed the invasion of Ukraine as an existential struggle against Western aggression with the aim of establishing a new world order and returning Russia to its rightful place as a great power. However, a peace deal based on the current line of contact would leave approximately 80 percent of Ukraine beyond Kremlin control and firmly anchored in the West. Such an outcome would be viewed in Moscow as an historic Russian defeat.

This framing creates a political trap of Moscow’s own making. Putin knows he would face a potentially disastrous domestic backlash if he accepted anything less than a clear Russian victory in Ukraine. Peace terms that failed to force Ukraine back into the Kremlin orbit would raise difficult questions about the enormous costs of the invasion. Russians would want to know why the country had spent vast sums of money and sacrificed so many men in order to achieve so little. Putin would risk entering Russian history as the man who lost Ukraine.

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Putin has begun 2026 in a challenging position. He remains reluctant to upset Trump, but he dare not accept the compromise peace the US leader is proposing. Instead, Putin needs either total victory in Ukraine or indefinite conflict. Any attempt to end the war without establishing complete political control over Ukraine would threaten the stability of Putin’s own regime. His interests are therefore best served by seeking to prolong negotiations while working toward a military solution.

If Western leaders wish to change the current political calculus in Moscow, they must first acknowledge that there is no alternative to increasing the pressure on Putin. At present, the Kremlin dictator views escalation as necessary for regime survival and has no plans to end the war.

Two scenarios could disrupt this trajectory. A collapse in global oil prices combined with successful secondary sanctions enforcement could create an economic crisis that would force Putin to revise his priorities. Alternatively, mass casualties during a failed spring 2026 Russian offensive could trigger domestic instability, while also highlighting the fading prospects of a military breakthrough.

Both these outcomes are realistic but would require significant additional action from Ukraine’s partners. If the West is unable to muster the requisite political will, escalation remains Moscow’s most rational path in 2026. Putin has little choice but to continue his invasion. Even if Russian victory remains out of reach in the coming year, he knows he cannot accept any peace deal that secures Ukrainian statehood.

William Dixon is a senior associate fellow at the Royal United Service Institute specialising in cyber and international security issues. Maksym Beznosiuk is a strategy and security analyst whose work focuses on Russia, Ukraine, and international security. 

Further reading

UkraineAlert Jan 7, 2026

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The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

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Bottom lines up front

• Greenland has substantial reserves of rare earth elements, uranium, and other strategically important minerals.
• Yet there are substantial obstacles to mining and processing these minerals, including Greenland’s limited infrastructure, its harsh climate, and local opposition to mining.
• A unilateral approach by the United States risks limiting its ability to engage productively with Greenland’s mineral sector; a better option is for Washington to collaborate with partners to help de-risk projects for investors.

WASHINGTON—Greenland is a land of stark contrasts. Larger than Mexico and Saudi Arabia but home to only 56,000 people, this autonomous Danish territory has an economy traditionally built on fishing and substantial subsidies from Denmark. Yet beneath its ice and rocky coasts lies mineral wealth that has attracted growing international attention—including from US President Donald Trump. Greenland has firmly rejected notions of being “for sale,” and European allies have responded with alarm at US overtures about seizing the territory. Regardless of the rhetoric, the United States has compelling opportunities for commercial and diplomatic partnerships with Greenland.

As a mineral frontier, Greenland offers clear advantages: Its geological endowment is significant and comparatively unexplored, and it presents relatively low above-ground investment risk as a stable democracy aligned with Western institutions. However, these advantages come with major caveats. With fewer than one hundred miles of road on the entire island and significant local resistance to mining, Greenland lacks both the basic infrastructure and social license needed for large-scale mining operations. As a result, the path from exploration to production is likely longer, riskier, and more expensive than in more developed mining jurisdictions.

Yet, as US Secretary of State Marco Rubio prepares to meet with Danish officials in the coming days, these challenges inform how the United States can most effectively engage: through collaboration rather than confrontation.

What critical mineral reserves does Greenland have?

Greenland’s mineral wealth presents a geographical puzzle. The country’s ice-free area, which is nearly double the size of the United Kingdom, represents less than 20 percent of the island’s total surface. Vast areas of the interior remain unexplored beneath ice that can exceed a mile in thickness. 

Nonetheless, Greenland possesses an impressive array of critical minerals, from traditional commodities such as copper, lead, and zinc that have been mined on a small scale in ice-free coastal areas since 1780, to modern critical minerals essential for energy and defense technologies.

Greenland’s most geopolitically significant resources include:

• Rare earth elements (REEs): Greenland is estimated to hold approximately 36 million tonnes of rare earths, though only 1.5 million tons are currently considered proven, economically viable reserves. Greenland is generally ranked around eighth globally in reserves, placing it among the most significant undeveloped REE holders; with further exploration and feasibility studies, it may be proven to contain the world’s second-largest reserves after China. 
• Uranium: Greenland has one of the largest uranium deposits in the world, which is notably co-located with major REE deposits. However, Greenland reinstated a ban on uranium mining in 2021 following sustained local opposition. This prohibition has had direct implications for projects where uranium is present alongside other minerals.
• Other strategic minerals: Greenland holds known deposits of copper (essential for electrical infrastructure), graphite (key to battery production), gallium, tungsten, zinc, gold, silver, and iron ore. It also holds various specialty metals with high-tech and defense applications, including platinum, molybdenum, tantalum, and vanadium. While many of these resources are geologically promising, few have progressed beyond early exploration.

To date, exploration activity has focused primarily on coastal and southern Greenland, where logistics are more feasible. The latter half of the 2010s saw an explosion of exploration permits in this region; by early 2020, exploration permits had been granted across almost the majority of southern Greenland. Despite this explosion of interest, there are only two active mines on the entire island, Nalanuq (a gold mine) and White Mountain (an anorthosite mine). To date, no rare earth, uranium, or other high-profile critical mineral projects have entered commercial production.

Though further exploration and feasibility studies may foster additional interest, the sites currently receiving the most attention include:

• The Kvanefjeld project on Greenland’s southern tip, one of the world’s most significant deposits of both rare earths and uranium.
• The Tanbreez mine in the same fjord network, which contains substantial deposits of eudialyte ore rich in rare earth elements (in particular heavy rare earths) and gallium.

What are the main obstacles to developing Greenland’s mineral resources?

Greenland’s mineral deposits are globally significant, particularly for rare earth elements. However, unlike established mining regions in Australia, Canada, or even emerging sources in Africa and South America, Greenland has minimal production infrastructure and no large-scale operating critical mineral mines.

From a supply perspective, Greenland’s reserves are largely theoretical. Though it represents a substantial reserve in a politically stable, Western-aligned jurisdiction, bringing that potential online faces several notable challenges:

Infrastructure deficits: Outside of Greenland’s few small cities, roads and railroads simply do not exist. Transport depends almost entirely on ships and aircraft, greatly increasing costs and complexity. This infrastructure gap extends the typical decade-long timeline from discovery to production and dramatically increases capital requirements. While mining projects can spur infrastructure development, the initial infrastructure investment represents a significant barrier to entry—especially since it is generally too cold in Greenland to construct durable roads from concrete and asphalt. This poses a significant challenge to project economics. Transportation of minerals can sometimes be even more expensive than the mining process itself, and Greenland’s remoteness, limited economies of scale, and harsh Arctic conditions make it one of the world’s most expensive mining jurisdictions.

Social and political opposition: Though the government has periodically promoted mining as a tool for economic development, mining remains politically contentious. All land in Greenland is publicly owned and administered, making closed, privately controlled mining sites culturally unfamiliar and politically sensitive. Local opposition reflects deeper concerns about environmental impacts, changes to traditional ways of life, and the terms under which mining would proceed. Most significantly, in 2021, Greenland’s parliament passed legislation prohibiting uranium exploration and limiting uranium content in mined resources, effectively halting rare earths development at the Kvanefjeld project given the presence of uranium. 

Geopolitical complications: Recent US rhetoric about acquiring or annexing Greenland has naturally generated diplomatic friction and intensified local sensitivities around sovereignty, complicating social license for mining. At the same time, broader US-China competition has played out in Greenland’s mining sector. In one notable example, US officials reportedly successfully lobbied the Tanbreez mine CEO to sell to American bidders for less than Chinese-linked competitors. The Kvanefjeld project is owned by Australian company Energy Transition Minerals (formerly Greenland Minerals Limited)—but China’s Shenghe Resources is its second-largest shareholder, raising concerns in Washington, which sees the mining sector as a backdoor for Chinese encroachment in the Arctic. Though Shenghe only holds a 6.5 percent stake, a nonbinding 2018 MOU reflects the intent to have Shenghe “acquire all rare earth output produced at the Project,” positioning it as the primary prospective offtaker and downstream processing partner.*

What are viable paths for US engagement?

Greenland’s strategic value lies in its role as a long-term diversification partner in a concentrated global market, rather than an opportunity for immediate production. While annexation rhetoric has drawn attention to Greenland’s resources, a unilateral US approach would limit their potential value. More effective alternatives include:

Strategic partnerships with Greenland and Denmark: Rather than pursuing ownership, American companies and the US government could support mining development through direct investment, financing mechanisms, and technical assistance—tools well suited to institutions such as the US Development Finance Corporation and Export-Import Bank. Coordination with European partners could amplify these efforts, as seen in the Lobito Corridor, where European capital helped bridge infrastructure gaps. Diplomatically bundled investment could help de-risk projects that might otherwise fail to attract private capital, an approach far less viable under a confrontational strategy.

Competing effectively with Chinese investment: The Tanbreez case demonstrates that US diplomatic engagement can influence ownership and investment outcomes, but effective competition requires more than lobbying against Chinese involvement. It demands credible alternatives such as competitive financing, technical expertise, market access, and partnership structures that align with project needs—all of which are more successful in concert with a wide pool of partners. One complementary step could be the development of an investment screening mechanism in Greenland, akin to a Committee on Foreign Investment in the United States–style review, to assess national security and strategic risks associated with foreign capital. Such a framework would strengthen Greenland’s own security and governance while providing greater assurance to US and allied markets that upstream assets are not vulnerable to strategic capture. However, even with successful mining development, rare earth ores from Greenland would likely still be processed in China absent expanded allied processing capacity, underscoring the need for parallel, collaborative investment in downstream infrastructure.

Supporting responsible development: Projects that lack local legitimacy are unlikely to succeed. Emphasizing environmental safeguards, indigenous rights, and meaningful benefit-sharing is both ethically and commercially essential. Greenlanders have consistently expressed a much stronger interest in independence than in joining the United States. An overly aggressive US approach would likely further complicate social license for mining.

Greenland’s mineral wealth will take a decade or more to translate into meaningful supply. Its greatest value lies not in rapid extraction but in long-term diversification within a trusted political framework. For the United States and its allies, the challenge is clear: securing access to critical minerals and strategic space without undermining the very alliances and norms that underpin long-term stability. Patient, partnership-based engagement that respects Greenland’s autonomy and international law will not generate immediate headlines, but it offers the only credible path through a period in which intensifying competition over critical resources threaten to upend the established geopolitical order.

Note: This article was updated on January 29 to more accurately reflect Shenghe Resources’s role in mining operations in Greenland.

The post Greenland’s critical minerals require patient statecraft appeared first on Atlantic Council.

Bottom lines up front

• Unlike many of its neighbors, Argentina relies heavily on export taxes to raise revenue for its often overstretched government finances.
• Argentina’s export tariffs are so high that they have discouraged production and exports, reducing the overall tax base.
• The Milei government has taken some steps in the past year to reduce export taxes. It should accelerate these efforts, while working to replace some of the lost revenue with other sources.

The midterm victory for Argentine President Javier Milei’s ruling party in October expanded its legislative authority and provided a renewed mandate from voters to continue the country’s transformative economic reforms. Since the election, headlines have largely focused on how the Milei administration will approach much-needed fiscal and labor reforms. But Argentina should also focus on further liberalizing its foreign trade. As part of the Milei administration’s efforts to optimize efficiency and broaden the domestic tax base while lowering tax pressure on the economy, Argentina should reduce its unusually burdensome taxes on exports, known as the retenciones.

Over the past few months, the Milei administration has taken some steps on the right track. On December 9, for instance, the administration lowered the export tax on soybeans from 26 percent to 24 percent. This and other recent steps are welcome, but further reforms of the export tax are needed. Failing to reduce these taxes further could cost Argentina a sizable share of its export potential in key sectors, trapping the economy in a disequilibrium. 

The history of distortive fiscal dependence

Argentina’s current system of taxes on exports is the result of a tumultuous history of measures imposed to fill fiscal shortfalls. The problem is that these export taxes uniquely punish the country’s most efficient, globally competitive industries by forcing capital and labor away from competitive sectors—a problem economists around the world have long recognized. These taxes have been imposed, adjusted, rescinded, and reintroduced time and again, particularly targeting Argentina’s highly competitive agribusiness products in a recurrent dynamic that has discouraged production and overseas sales. The loss of overseas sales creates further problems: it limits the inflow of foreign currency, primarily US dollars, into the economy, making it more difficult for Argentina to meet its foreign currency debt obligations.

Tellingly, several Argentine administrations have altered or canceled these taxes altogether to boost languishing production and sales. Argentina has also been an outlier in charging these export tariffs, with almost none of its regional peers charging these except for very limited and targeted exemptions.

The distortive effects that these taxes have had on Argentina’s exports are clear: Comparing export volumes (rather than export values, which are subject to price fluctuations in commodities) shows that Argentina’s exports have stagnated in recent years. At the same time, its peers in the Mercosur trade agreement (Brazil, Paraguay, and Uruguay) saw their export volumes grow considerably in the same period while charging only limited duties on certain exports. This loss of potential exports costs Argentina economic growth and stifles its agricultural sector.

Although the problem is clear, solving it is not as simple as it sounds. Argentina’s duties on agricultural exports, which had been mostly eliminated in 1992, were reintroduced in 2002 as an emergency fiscal stopgap measure following the country’s historic 2001 debt crisis and subsequent default. No government since then has been able to remove all of these taxes because of how important they have become for the country’s often overstretched finances.

Famously, Argentina has run budget deficits through most of the past two decades, as well as the better part of the twentieth century. Once these duties are imposed, they then experience fiscal inertia—the fiscal cost of removing them prevents governments from doing so. Argentina relies on taxes on international trade (both imports and exports) for over 10 percent—and sometimes as much as 20 percent—of its federal government revenue. As our research shows, this makes it an outlier among its peers. The 2022 average for Latin America, for example, was slightly under 4 percent, while the upper-middle income country average stood at around 3.5 percent.

Since coming into office in December 2023, the Milei administration has made great strides to bring government spending back under control. In its first year in office, it achieved and sustained a consolidated fiscal surplus for the first time in almost two decades. The government achieved this by implementing spending cuts and freezes, as well as eliminating several subsidies, all measures that were politically costly. At the same time, the government has eliminated other distorting taxes, including the PAIS tax on foreign currency purchases.

There has been some progress on export taxes. In 2025, the administration reduced and eliminated export duties on certain agricultural products, as well as several import duties. In September, the government approved a temporary suspension of duties on grain exports as part of a drive to accrue much-needed foreign currency reserves. In October, it temporarily suspended export duties on aluminum and steel to assist the sector following the United States’ imposition of universal tariffs on these products earlier in the year.

Nevertheless, the latest available data show that Argentina still relies on taxes on taxes on international trade (6 percent of total federal government income comes from export taxes, while at least 4 percent comes from duties on imports). Any major reduction of taxes on international trade could have serious implications for the government’s goal of keeping its deficit under control. According to the latest International Monetary Fund projections, which are largely based on Argentina’s current tax system, the government is expected effectively to break even fiscally in 2026, with little, if any, surplus space left after accounting for upcoming debt repayments.

The case for accelerating the reduction of export taxes

Reducing these taxes should be a priority for Argentina because of two well-known challenges. First, Argentina’s export tariffs are so high that they have discouraged production and exports, in turn reducing the size of the taxable export base, which reduces the tax’s efficacy. That is why an export duty reduction is likely to yield a greater increase in exports. However, to do this responsibly the government would need to work in stages, steadily replacing taxes from exports with other fiscal income sources, even as it continues to rein in overall spending. Some of the replacement tax revenue could come, for example, by increasing tax collection efficiency and broadening the tax base by including larger shares of the informal economy into the mainstream.

Second, Argentina operates on a tight currency band and has debt obligations denominated in US dollars that are due early this year and next year. This means that to maintain economic stability, the country needs dollar reserves, which have become increasingly scarce. Indeed, the lack of dollar reserves necessitated the US-Argentina swap line that the Trump administration instituted in October.

Argentina generates reserves through a conversion system that requires exporters to repatriate and sell dollar earnings to the central bank at the official rate. However, this mechanism, which would otherwise mechanically generate reserves, is undermined by the high export duties’ stifling effect on overseas sales.

Additional reforms are needed

As the Milei administration goes into the second half of its term, it should double down on its reform agenda, accelerating the pace of the country’s incremental liberalization. This means committing unambiguously to a liberal program that anchors expectations for, and delivers on, gradual export and import duty reductions that give room for the economy to grow—but also to adjust—in the process. The reduction of export duties should be gradual to account for the country’s tightly kept and necessary budget surplus. Import duties, which also generate revenues, should be reduced in a gradual process that eases the purchase of goods, especially those that are needed for Argentina’s own productive sectors. However, Argentina’s import duties are governed in part by Mercosur, so this will need to be done in close coordination with the country’s partners in the bloc. 

To further boost exports as an engine of growth, Argentina needs to move toward a more orthodox economic and fiscal model that does not punish exports and does not rely on export duties for an inordinately large share of its total tax revenues. 

The moment to move in that direction is now. The next general election will take place in October 2027. Any signal that the Milei administration’s fiscal consolidation agenda is stalling, that currency reserve issues persist, or that productivity is static may reignite capital flight once again. For its economic reform agenda to succeed, the Milei government must achieve what previous administrations could not: fiscal discipline with a sustainable export-driven growth model.

The post To unlock growth, Argentina should reduce its export taxes appeared first on Atlantic Council.

On January 13, Atlantic Council vice president and Scowcroft Center senior director Matthew Kroenig was interviewed on NPR’s “Morning Edition” where he discussed the Trump administration’s threats of military action against Iran.

Staff

Matthew Kroenig

Vice President and Senior Director, Scowcroft Center for Strategy and Security

Scowcroft Center for Strategy and Security

China Defense Policy

The post Kroenig interviewed on NPR on Trump’s threats against Iran appeared first on Atlantic Council.

There’s a high level of interest in what happens next. The US Justice Department is undertaking a criminal investigation into Federal Reserve Chair Jerome Powell, following a year of sparring between Powell and US President Donald Trump over interest rates. On Sunday night, Powell went public with his response to “this unprecedented action.” He called questions about the costs of the Fed’s headquarters renovation and Powell’s testimony to Congress “pretexts” for the administration’s ongoing pressure campaign. “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,” he said. 

How will these developments affect US and global markets, and what future actions should we expect from the White House and the Fed? We turned to our chair of international economics to make sense of it all.

• Josh Lipsky (@joshualipsky): Chair of international economics at the Atlantic Council, senior director of the GeoEconomics Center, and former International Monetary Fund advisor  

The backstory

• The clash between president and Fed chair “was a shocking escalation,” Josh tells us. “Until now, Powell had done everything possible to avoid an outright confrontation. That is what made his comments last night so powerful.” 
• Trump would prefer lower interest rates to boost consumer spending, but the Powell-led Fed, Josh says, has “remained cautious [about reducing rates], wary of sticky inflation and the potential inflationary impact of tariffs.” 
• “What is particularly surprising is the timing” of the Powell probe, Josh says, since his term as chairman expires in May, and the Fed has been cutting rates gradually in recent months.  
• “Without having to fire the Fed chair, Trump was already getting the policy outcome he wanted—and would soon have the opportunity to appoint a new ally,” Josh tells us. Still, he predicts that neither the White House nor the Fed will back down. 

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The markets

• On Monday, US and global markets were basically flat. Josh thinks this is likely due to the relatively limited economic fallout from Trump’s “Liberation Day” tariffs and other major events such as the US strike on Iran’s nuclear facilities.  
• “Markets are choosing to wait and see rather than overreact, and they have data from Trump’s first year that suggests this strategy has worked,” he explains. 
• But Josh says this dynamic “creates a strange tension: Markets believe they can constrain the president through negative reactions, and therefore often don’t react [to Trump’s economic actions]—while the president, seeing little immediate financial cost, believes he can continue to push forward.” 

The fallout

• Since Sunday’s announcement, two US Senate Republicans have pledged to block Trump’s Fed nominees until the case is resolved. Josh predicts it will be hard to confirm a new chair while the case is pending, so it’s possible Powell could continue as temporary chair past his scheduled departure—not the result Trump desires. 
• While all this drama is unfolding, the US Supreme Court will hear arguments this week on the case of Trump’s attempted firing of Fed governor Lisa Cook over allegations of mortgage fraud. And as soon as Wednesday, the court will decide the fate of many of Trump’s tariffs, potentially putting the president at odds with the Fed and the high court at the same time. 
• “Even Wall Street will not be able to ignore” the impact of a Supreme Court tariff decision, Josh tells us. “While markets are hoping that year two looks like year one, Trump is signaling—from Venezuela to the Federal Reserve—that this time is different.” 
• Global central bankers and finance ministers are watching with concern, Josh reports, given the Fed’s role as a “global model of an independent central bank” that makes decisions for the sake of economic health rather than as a result of political pressure.  
• “This is not academic,” Josh says. The Fed “has repeatedly stabilized both the US and global economy in moments of crisis,” and “independent central banks are proven to deliver stronger growth, more jobs, and better economic outcomes. Trillions of dollars and millions of jobs are at stake.” 

The post How will the Trump-Powell clash shake the global economy?  appeared first on Atlantic Council.

On January 12, Atlantic Council vice president and Scowcroft Center senior director Matthew Kroenig was quoted in a Fox News article titled “Marco Rubio emerges as key Trump power player after Venezuela operation.”

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Matthew Kroenig

Vice President and Senior Director, Scowcroft Center for Strategy and Security

Scowcroft Center for Strategy and Security

China Defense Policy

The post Kroenig quoted in Fox News on Trump Venezuela policy appeared first on Atlantic Council.

He also emphasized that Venezuela can “no longer cozy up to Hezbollah and Iran in our own hemisphere.” 

There are clear implications of the Maduro arrest with respect to US-Iran policy and President Donald Trump’s calculus on strategic action against Washington’s adversaries. The US president has indicated he is weighing “very strong” options on Iran as demonstrations there escalated and the death toll rose sharply over the weekend, according to rights groups.

And as Rubio indicated, the operation could also have a more immediate impact on Tehran’s interests and operations abroad—with Venezuela serving as a foothold for Iran and its proxies in the Western Hemisphere.

Our experts break down Iran’s ties to Venezuela and the impact Maduro’s capture could have on Tehran’s interests both in and outside of Iran’s own borders.

Iran-Venezuela relations: From oil to resistance axis

Venezuela-Iran relations have strengthened in recent years: Both countries are oil producers, both have struggled under a robust Western sanctions regime, and as Tehran upgraded its relationship with Caracas, its proxies, such as Hezbollah, have established themselves inside Venezuela’s borders—creating a strategic foothold in the Western Hemisphere. 

Both countries are founding members of the Organization of the Petroleum Exporting Countries (OPEC) and had an official relationship before the 1979 revolution in Iran that saw the overthrow of the shah. As the Iranian revolution unfolded and the Islamic Republic came to power in Tehran, Venezuela was one of the first countries to recognize the new Iranian government.

This relationship intensified, however, when Maduro’s predecessor, the late Venezuelan leader Hugo Chavez, became president in 1999.

Between 2001 and Chavez’s death from cancer in 2013, Chavez and his Iranian counterparts engaged in dozens of diplomatic visits, and “the two countries signed an estimated three hundred agreements of varying importance and value, ranging from working on low-income housing developments to cement plants and car factories,” according to analysis from the Center for Strategic and International Studies (CSIS). 

Under Chavez, Tehran’s development projects in Venezuela “boosted Chavez’s image and advanced his anti-imperialist agenda throughout the region.” And through Venezuela, Tehran leveraged the partnership to bolster its posture in South America, including in Bolivia and Nicaragua. 

By the tail-end of Chavez’s rule in 2012, Iran’s investments and loans in Venezuela were valued at $15 billion, according to CSIS. 

Beyond oil and diplomatic agreements, gold smuggling has also shaped the relationship model between Tehran and Caracas. Venezuela holds the largest gold reserves in Latin America (just counting Central Bank reserves, and without including geological gold resources, which would place the country in the fifth place for gold reserves worldwide). Additionally, reports indicate that gold has been smuggled to Iran for years as a mode of payment for Iranian assistance to revive Venezuela’s oil sector. 

A base for Hezbollah and the IRGC 

Joze Pelayo, associate director for strategic initiatives and policy at the Atlantic Council’s Scowcroft Middle East Security Initiative, explains

Against this backdrop, Iranian-backed Hezbollah and its affiliates have used Venezuela as a strategic hub in the Western Hemisphere. The country has served as a sanctuary for Hezbollah to evade sanctions, a center for operations and money laundering, and a base for its transnational criminal and drug trafficking network. 

Hezbollah has flourished in key locations in Venezuela—establishing itself within business networks such as Margarita Island and the Paraguaná Peninsula, both with coastal access and a significant Lebanese diaspora community.  

Iran also used the gold market in Venezuela to finance Hezbollah’s operations.  

In 2022, a seizure order signed by former Israeli Defense Minister Gallant and published by the National Bureau for Counter Terror Financing in the Ministry of Defense exposed a smuggling ring involving gold being transported on sanctioned Iranian flights with proceeds directed to Hezbollah.

In addition to all these exchanges, Iran’s Quds Force (the external arm of Iran’s Islamic Revolutionary Guard Corps responsible for asymmetric warfare, cover operations, and intelligence) maintains a robust presence in Venezuela to support Maduro in times of crisis, according to a report from December 2025.  

The hierarchical structure in Venezuela is headed by Ahmad Asadzadeh Goljahi, who oversees operations and heads the “Department 11000,” a Quds Force subunit linked to international terrorist plots, and “Department 840,” involved in overseas assassinations. It is then no surprise that the Iranians attempting to abduct US journalist Masih Alinejad from her home in New York were supposed to make a stop in Venezuela before taking her to Iran.  

Maduro’s capture and the potential realignment of Venezuela with the United States represent a major setback for the Quds Force operations and financing. Such a shift could significantly disrupt the group’s transnational criminal and drug-trafficking networks, oil-smuggling scheme, and other illicit activities tied to Hezbollah and the Islamic Republic of Iran.  

One potential silver lining: Under US custody and influence, Maduro (and possibly Acting President Delcy Rodriguez) could provide critical intelligence as witnesses and cooperators, assisting to expose the extent of these networks, how to properly root out these toxic elements from the country, and key figures the United States could go after next.

A US signal to Tehran 

Kirsten Fontenrose, nonresident senior fellow at the Scowcroft Middle East Security Initiative, explains

The Maduro case is strategically relevant less as a template than as a signal. It suggests a US willingness to act decisively against leaders already criminalized and sanctioned, rather than allowing standoffs to persist on the assumption that the risk of escalation alone will deter action.

The Trump administration framed Maduro’s capture as a law-enforcement arrest rather than a military campaign. The United States did not invoke humanitarian intervention, collective self-defense, or congressional authorization for interstate hostilities. Instead, it relied on longstanding criminal indictments and sanctions authorities. Maduro has been under US indictment since March 26, 2020, for narcotics trafficking and narco-terrorism, and he has been subject to comprehensive Treasury sanctions well before the January 2026 operation. The legal basis for such extraterritorial law-enforcement action rests on domestic authorities rather than the law of armed conflict—a distinction that is controversial but not unprecedented in US practice. 

For Tehran, the relevance is not the legal argument itself but the political signal embedded in its use. Iranian strategic planning has long assumed that US concern about escalation—particularly actions that could be interpreted as leadership targeting—would impose practical limits on Washington’s behavior. The Maduro episode complicates that assumption. It also reinforces a second point: US leverage does not depend exclusively on military operations. In this case, years of sanctions enforcement, financial pressure, indictments, and diplomatic isolation preceded the arrest, demonstrating that decisive outcomes can be pursued through non-military instruments even in high-risk contexts. 

That sequencing intersects with current thinking about the timing of pressure on Iran. Analysis by Rapidan Energy Group Chief Executive Officer Scott Modell published in late 2025 argues that early 2026 presents unusually favorable market conditions for intensified pressure on Iranian oil exports. The analysis points to soft global demand growth, rising non-OPEC supply, spare capacity among OPEC+ producers, and subdued price expectations, suggesting that concerns about oil-price spikes—often a key political constraint on US action—would be less binding in the first quarter of 2026. If that assessment holds, market considerations would be unlikely to restrain US policymakers contemplating additional economic pressure on Iran during this period. 

Trump’s public statements following the Venezuela operation reinforce this interpretation. He framed the action in terms of accountability and deterrence, not regime change or nation-building. His emphasis on speed and decisiveness is consistent with earlier US decisions favoring limited, time-bound uses of force—particularly in counterterrorism and retaliatory contexts—over extended military campaigns. 

This posture aligns with the policy orientation of figures shaping the administration’s approach. Homeland Security Advisor Stephen Miller has emphasized coercive clarity; Special Envoy to the Middle East Steve Witkoff has advocated transactional diplomacy backed by leverage; Vice President JD Vance has expressed skepticism toward open-ended military commitments. Reporting also suggests a US Central Intelligence Agency leadership preference for intelligence-driven, more aggressive collection and disruption posture. 

Recent US actions elsewhere provide additional context. Strikes against Iran-aligned militias in Iraq following attacks on US personnel in 2024, and counter-ISIS airstrikes conducted with host-nation consent in Nigeria in December 2025, illustrate a preference for responding quickly to defined threats without prolonged warning or phased escalation. These cases do not establish a doctrine, but they reinforce the impression of a US approach that favors early, bounded action over incremental response. In this context, Operation Absolute Resolve is meaningful because it unsettles a core assumption within Tehran—that leadership insulation and escalation risk reliably constrain US action. 

The core implication for Iran, then, is strategic rather than operational. The Maduro seizure suggests that the United States is prepared to act decisively against leaders who are already criminally indicted, comprehensively sanctioned, and politically isolated, and that it may do so during periods of internal strain rather than waiting for those pressures to resolve. 

None of this implies imminent leadership targeting in Iran. But it does suggest that Washington is reassessing assumptions about timing, leverage, and leadership vulnerability. 

The post The Venezuela-Iran connection and what Maduro’s capture means for Tehran, explained  appeared first on Atlantic Council.

In addition to hosting Oreshnik missiles, Belarus has also recently been accused of aiding Russian drone attacks on Ukraine. Ukrainian President Volodymyr Zelenskyy claimed on December 26 that Russian drone units are using Belarusian territory to penetrate Ukraine’s air defense network and strike targets across the country. “We note that the Russians are trying to bypass our defensive interceptor positions through Belarus. This is risky for Belarus,” Zelenskyy commented. “It ⁠is unfortunate that Belarus is ‌surrendering its sovereignty in favor of Russia’s aggressive ambitions.”

Meanwhile, Russia is reportedly building a major ammunition plant in Belarus to help supply the ongoing invasion of Ukraine. Construction is said to be underway close to Belarusian capital Minsk, according to opposition group BELPOL, comprised of former members of the Belarusian security services. Responding to news of the plant, exiled Belarusian opposition leader Sviatlana Tsikhanouskaya accused Belarus dictator Alyaksandr Lukashenka of “dragging Belarus deeper into Russia’s war.”

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Evidence of Belarusian involvement in Russia’s war against Ukraine is not new, of course. On the eve of the invasion, Lukashenka allowed Putin to station tens of thousands of Russian troops in Belarus. The country then served as the main gateway and logistics hub for Russia’s blitzkrieg offensive to seize Kyiv in spring 2022. The Lukashenka regime is also implicated in the Kremlin campaign to abduct and indoctrinate thousands of Ukrainian children.

Reports of Lukashenka’s ongoing involvement in the Russian war effort come amid speculation of a potential thaw in diplomatic relations between Belarus and the United States. In December, 123 political prisoners were freed by the Belarusian authorities, with the US easing sanctions measures in exchange. This followed two smaller scale trade-offs earlier in 2025 as the Trump administration seeks to increase diplomatic dialogue with Minsk as part of ongoing efforts to broker a negotiated settlement to end the Russian invasion of Ukraine.

Despite these headline-grabbing humanitarian steps, there is little sign of a more comprehensive shift in Minsk away from domestic repression or any reduction in support for Russia’s aggressive foreign policy agenda. On the contrary, the available evidence indicates that while Lukashenka may seek increased engagement with the West, he has no intention of turning away from Moscow or ending human rights abuses inside Belarus.

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By continuing to provide Moscow with its full backing, Belarus enhances Russia’s ability to wage war in Ukraine. This is undermining the Trump administration’s efforts to end the Russian invasion and secure a lasting peace settlement. Belarus also remains deeply implicated in Putin’s hybrid war against Europe and stands accused of weaponizing everything from migrants to balloons against its EU neighbors.

US outreach to Minsk over the past year has secured the release of many prominent prisoners, but continued arrests mean that the overall number of political detainees in the country remains high. Naturally, Lukashenka is happy to reengage with American officials in order to secure a relaxation of sanctions pressure, but there are also concerns that the current approach risks incentivizing hostage-taking.

Yes, a less isolated and more neighborly Belarus remains a worthwhile goal, but in the current circumstances, Lukashenka has little motivation to compromise. He is looking at possible gains without actually reducing the current level of repression in Belarus.

Sanctions relief would be a significant gain for Lukashenka. In exchange for that, the US should be able to achieve some limits on Belarusian facilitation of Kremlin aggression in Ukraine or, at a minimum, a notable decrease in the number of political prisoners in Belarus.

Mercedes Sapuppo is a fellow at the Atlantic Council’s Eurasia Center.

Further reading

UkraineAlert Jan 8, 2026

Ukraine’s robot army will be crucial in 2026 but drones can’t replace infantry

By David Kirichenko

Ukraine’s growing robot army of land drones will play a vital role in the country’s defense during 2026, but they are not wonder weapons and cannot serve as a miracle cure for Kyiv’s manpower shortages, writes David Kirichenko.

Artificial Intelligence Conflict

UkraineAlert Jan 7, 2026

Ukraine security guarantees are futile without increased pressure on Putin

By Peter Dickinson

Western leaders have hailed progress toward “robust” security guarantees for Ukraine this week, but until Putin faces increased pressure to make peace, Russia will remain committed to continuing the war, writes Peter Dickinson.

Conflict France

UkraineAlert Dec 16, 2025

The only winner from Ukrainian wartime elections would be Putin

By Yuriy Boyechko

Ukrainians are fighting to defend their democracy against Kremlin authoritarianism, but they are also in no rush to hold wartime elections amid relentless Russian bombardment and with millions of Ukrainians displaced, writes Yuriy Boyechko.

Conflict Elections

The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

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The post Belarus hosts nuclear-capable Russian missiles despite talk of US thaw appeared first on Atlantic Council.

On January 10, Imran Bayoumi, associate director of the GeoStrategy Initiative, was quoted in an Associated Press article titled “How the US could take over Greenland and the potential challenges,” arguing that Trump’s threats against Greenland reflect broader US failures to prioritize Arctic strategy.

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Imran Bayoumi

Associate Director

GeoStrategy Initiative Scowcroft Center for Strategy and Security

The GeoStrategy Initiative, housed within the Scowcroft Center for Strategy and Security, leverages strategy development and long-range foresight to serve as the preeminent thought-leader and convener for policy-relevant analysis and solutions to understand a complex and unpredictable world. Through its work, the initiative strives to revitalize, adapt, and defend a rules-based international system in order to foster peace, prosperity, and freedom for decades to come.

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The post Bayoumi quoted in AP News on the US lack of Arctic strategy appeared first on Atlantic Council.

On January 9, Tressa Guenov, director of operations and programs and senior fellow at the Scowcroft Center for Strategy and Security was interviewed on Times Radio about the US-Russia relationship. She argues that though the Trump National Security Strategy does not name Russia as an adversary, oil tanker seizures demonstrate a harder line from the US against Russia in the Western hemisphere.

Staff

Tressa Guenov

Director, Programs and Operations and Senior Fellow

Scowcroft Center for Strategy and Security

The post Guenov on Times Radio about how Venezuela impacts the US-Russia relationship appeared first on Atlantic Council.

On January 9, Imran Bayoumi, associate director of the GeoStrategy Initiative, was interviewed on CBC News arguing that investments in Arctic capabilities will best position Canada for partnership with the US amidst threats to Greenland.

Staff

Imran Bayoumi

Associate Director

GeoStrategy Initiative Scowcroft Center for Strategy and Security

The GeoStrategy Initiative, housed within the Scowcroft Center for Strategy and Security, leverages strategy development and long-range foresight to serve as the preeminent thought-leader and convener for policy-relevant analysis and solutions to understand a complex and unpredictable world. Through its work, the initiative strives to revitalize, adapt, and defend a rules-based international system in order to foster peace, prosperity, and freedom for decades to come.

learn more

The post Bayoumi interviewed on CBC News on Canada’s Arctic strategy appeared first on Atlantic Council.

What impact will this deal have on European competitiveness and South American export markets? And what details remain to be ironed out as the deal moves onto the European Parliament for final approval? Our experts provide their insights into this decades-in-the-making trade pact below. 

1. Why is the EU-Mercosur deal happening now?

Those European farmers and others opposed to the EU-Mercosur deal can blame US President Donald Trump for the conclusion of this significant free trade agreement. Negotiations between the EU and Mercosur were essentially on hold after the basic agreement, finalized in 2019, was met with serious opposition by key EU member states. During 2024 and 2025, the European Commission and Mercosur negotiated an “additional instrument” with protections on labor, human rights, and environmental issues. With Trump’s tariffs in effect by summer 2025, pressure mounted for the EU to diversify its trading partners. Last year, the EU finalized a new trade agreement with Indonesia and updated an existing agreement with Mexico. The bloc also made significant progress on an EU-India trade deal.

Nevertheless, the Mercosur deal still faced near-fatal opposition until it received two final pushes: First, the European Commission proposed safeguards to protect agricultural interests from import surges. Second, the new US National Security Strategy made clear for the EU that trade relations with Latin America were a geopolitical imperative. Nevertheless, Italian Prime Minister Giorgia Meloni refused to provide her country’s needed vote until the European Commission promised additional agricultural support in the next EU budget. With Italy’s support today—and in the wake of a US operation in Venezuela that left Europe on edge about Greenland—the EU-Mercosur agreement finally made it over the finish line. 

—Frances Burwell is a distinguished fellow at the Atlantic Council’s Europe Center.

***

The EU–Mercosur trade deal comes at a moment of growing pressure to diversify export markets and trade partners amid heightened geopolitical uncertainty, particularly in light of US tensions with China and the imposition of US tariffs. For Mercosur, this urgency has been especially acute for Brazil, the bloc’s largest economy, which has faced an additional 40 percent US tariff on top of baseline duties and whose number one trading partner is China.

—Valentina Sader is a director at the Atlantic Council’s Adrienne Arsht Latin America Center, where she leads the Center’s work on Brazil, gender equality and diversity, and manages the Center’s Advisory Council.

***

The European Commission has sought to expand the EU’s network of trade relations to compensate for pressures from US tariffs, aggressive challenges from China, and the need to secure access to critical materials. Whether that diversification strategy is credible hinged in no small part on this trade deal—not just on the substance of market access and comparative advantages but also on the geopolitical feasibility of such a major agreement. The shifts in US trade policy under Trump, the challenges to the global trading system that Europe’s export-oriented economies depend on, and the demonstration of China’s stranglehold on critical resources clearly accelerated the decadeslong negotiations between the EU and Mercosur, which first opened in 1999 and were only finalized in 2024.

Last-minute additions were made by the EU in 2025 to provide more protections for European farmers. European Commission President Ursula von der Leyen hoped to sign the deal in Brasília in December 2025 after the initial safeguards were agreed upon in September, but Italy threw an unexpected wrench in those plans until further guarantees were made to protect domestic producers. Dramatic protests by farmers in Brussels in December solidified the momentum against signing the deal before Christmas.

On Wednesday, the safeguards Italy wanted were agreed upon by the EU’s agricultural minister and Rome lifted its veto. This paved the way for the European Council to vote in favor of the deal today by qualified majority—despite France voting against it, amid fresh farmer protests in Paris and increased political pressure on French President Emmanuel Macron—and for von der Leyen to officially sign the deal with Mercosur leaders in Paraguay as soon as January 12.

—Jörn Fleck is the senior director of the Atlantic Council’s Europe Center.

2. What impact will this have on Europe?

Europe worked hard to reach consensus on how to assuage doubts from European farmers about any negative impacts on their livelihoods. The additional measures added to the deal include “safeguards” for sensitive agricultural sectors, such as poultry, beef, eggs, citrus, and sugar, which would “suspend tariff preferences” in the case of “serious injury” to EU farmers. Serious injury is defined as an increase in import volume or a decrease in prices by more than 8 percent compared to the three-year average. The European Commission also introduced a slew of regular monitoring instruments, which will have to report to the European Council and European Parliament for increased accountability on enforcement. The Commission will be able to suspend imports from Mercosur in sensitive sectors if it deems this to be necessary. The final concessions agreed this week to bring Italy on board also include a revision to the 2028-2034 EU budget to allow farmers early access to roughly €45 billion in subsidies, as well as lowering import duties on fertilizers, the unaffordability of which was a major sticking point for protesters.

Economically, the agreement will remove approximately four billion euros worth of tariffs between the two trading blocs, which is significant for several key EU sectors that were previously subject to high tariffs when exporting to Mercosur. European exporters will no longer face 35 percent tariffs on car parts, 28 percent tariffs on dairy, and 27 percent tariffs on wine. The Commission estimates that the agreement could increase EU exports to Mercosur by 39 percent each year and support more than 440,000 jobs in Europe. However, not everyone shares this rosy assessment. Macron, in his announcement that France would not support the deal, stated that the economic gains would be minimal and that the agreement is “from another age.”

—Jörn Fleck

***

Despite the very visible and sometimes violent protests by European farmers, the Mercosur pact is likely to make a positive contribution to the European economy. The agreement removes most Mercosur tariffs for industrial goods (currently set at rates ranging from 15-35 percent), opening the market for European machine tools, cars, pharmaceuticals, and other products. Mercosur tariffs on most food and agriculture products (ranging from 20-35 percent) will also be removed.

While EU farmers have expressed concerns about Mercosur agricultural products, especially meat, flooding the EU market, that is very unlikely in reality. The agreement includes limited tariff-free quotas for Mercosur products, and once those quotas are reached, current tariffs are reimposed. For beef, the quota allows in only an additional 1.5 percent of total EU production, and for poultry, only 1.3 percent. Moreover, if there are sudden, sharp rises in imports, the EU can impose measures to limit them. Despite the rhetoric, agriculture remains a well-protected sector under the EU-Mercosur accord. And for European industry, this agreement opens an important new market.

—Frances Burwell

3. What impact will this have on South America?

Covering countries with a combined population of more than 700 million people, the trade deal promises to expand South American access to the European market, boosting exports and attracting greater EU investment. At the same time, it will pressure Mercosur industries to modernize, digitize, and improve efficiency to remain competitive amid increased exposure to European manufactured goods. 

Politically, the deal strengthens Mercosur’s credibility and cohesion at a moment of internal fragmentation, signaling that the bloc remains a viable platform for collective trade policy and diplomacy despite ideological differences among its members. As the bloc turns thirty-five this year, it is reasserting its strategic purpose, having finalized a deal with the European Free Trade Association, restarted negotiations with Canada, and now locked in a landmark agreement with the European Union.

—Valentina Sader

4. What should the US take away from this?

The Trump administration is unlikely to provide any public support for this agreement, but it is also unlikely to make it a significant issue in the US-EU relationship, despite its current emphasis on Latin America as its sphere of influence. This is a serious underappreciation of the importance of this accord. The EU will now have free-trade agreements with close to eighty countries, while the United States has free trade agreements with only twenty. While Trump has signed additional “deals” with many countries, they have generally raised trade barriers, rather than opening markets, and US demands for inward investment and other conditions have left many trading partners bruised and resentful. 

The EU is certainly a tough negotiator, and the Mercosur accord will make some constituencies on both sides unhappy, but it is likely to raise trade levels between two significant economic blocs. The reduction in high Mercosur tariffs for EU goods will mean more exports for European industries, luxury goods, and other products. EU companies will be able to bid on public tenders in Mercosur countries on an equal basis with local firms. The agreement also safeguards the branding of more than three hundred traditional EU food products, such as champagne and parmesan cheese, meaning that US products with those same names must be rebranded to enter the Mercosur market. This is not only an economic loss for the United States, but a geopolitical one as well. EU and Mercosur businesses will generate more partnerships, and these growing economic ties are likely to lead to more political alignment at a time when many in the Southern Hemisphere are balancing their interests between China and the United States. 

For Mercosur leaders and their citizens, the contrast could not be starker: In the same week that the United States conducted a military operation against a neighbor, the EU has finally agreed to a significant trade pact based on the rule of law.

—Frances Burwell

***

As the EU and Mercosur double down on a multilateral, rules-based free trade geopolitical reality, the United States appears to be moving in the opposite direction. Given the current geopolitical context and in the wake of a new US National Security Strategy that places the Western Hemisphere at the center of US foreign policy, this deal is an opportunity for Mercosur member countries to reduce their economic reliance on the United States.

—Valentina Sader

***

On a symbolic level, and perhaps most importantly, the deal demonstrates Europe’s willingness to adapt to an increasingly volatile global economy, the headwinds from US tariffs, and a new China challenge in critical sectors. For those in Brussels who call for the EU to stand more on its own footing economically, this is a strategic win. Moreover, if EU leaders had once again failed to reach internal consensus on the deal, it could very well have closed the door to any future deal with Mercosur and proven correct Washington’s doubts about Europe’s ability to act decisively on the world stage.

—Jörn Fleck

The post The EU and Mercosur are creating one of the world’s largest free trade areas. What’s next? appeared first on Atlantic Council.

Bottom lines up front

• Venezuela’s new acting president, Delcy Rodríguez, must satisfy Washington’s demands while maintaining sufficient support among the Venezuelan elite to avoid a regime fracture.
• Rodríguez’s most complex challenge will be managing Venezuela’s deep entanglements with Russia, China, Iran, and Cuba as the Trump administration demands that the regime cut ties to those countries.
• Venezuela’s long-repressed civil society will need to work to remain relevant amid a power transition dominated by US economic interests and the regime’s factional politics.

The United States’ extraction of Venezuelan leader Nicolás Maduro from his bunker on January 3 triggered an explosion of activity across Venezuelan social media. Across Instagram, TikTok, and WhatsApp status updates, millions of Venezuelans shared jubilant reactions to images of the former dictator in custody. Venezuelan diaspora communities from Buenos Aires to Madrid posted celebratory videos, while domestic users circumvented internet restrictions to express relief and hope.

The regime’s communication apparatus—typically one of its most formidable weapons—collapsed during the crucial first fifteen hours following the operation. Targeted strikes on antennas disrupted the radio communications of the security forces, while an electricity outage impacted the area around the Fuerte Tiuna Army Base. However, internet and phone communications continued to function normally. State TV and radio stations were broadcasting prerecorded programming rather than providing critical news coverage. Chavismo took refuge on Telegram channels and groups.

When government communications finally resumed, conflicting statements revealed chaos within the regime. Late on January 3, former Vice President Delcy Rodríguez proclaimed Maduro “the only president of Venezuela” and demanded his release while simultaneously assuming the role of acting president. In contrast, US President Donald Trump claimed that she was cooperating with his administration and was willing to fulfill all his requests regarding the US takeover of the Venezuelan oil industry. This dissonance highlighted the regime’s turmoil, torn between defiant rhetoric for domestic audiences and pliant negotiations with Washington.

The regime’s double game

Hours after Maduro’s removal, María Corina Machado, the leader of Venezuela’s democratic opposition movement, whose candidate won 67 percent of the vote according to tallies from the stolen 2024 election, declared on social media “Venezuelans, the HOUR OF FREEDOM has arrived!” However, despite her overwhelming popular legitimacy and moral authority, she operates under the constraints of surveillance and repression. The opposition’s mobilization capacity remains uncertain, as the Maduro regime’s systematic repression has crushed the country’s civil society.

For her part, Rodríguez confronts an unprecedented challenge for a Venezuelan leader: She must satisfy Washington’s demands while maintaining sufficient Chavista coalition support to prevent an internal fracture or a military coup. The Trump administration demands sufficient cooperation to enable US oil company operations, likely including transparent property contracts and regulatory stability—precisely the institutional environment that Chavismo systematically dismantled. Rodríguez making such an agreement with Trump would alienate the regime’s hardliners, who would view her accommodation as a betrayal. Thus, Rodríguez may be unable to guarantee the stability required for the business operations Trump wants to run in Venezuela.

Her public contradictions reflect this impossible position. In her first televised addresses as interim president, she demanded Maduro’s immediate release to demonstrate loyalty to domestic audiences. Less than twenty-four hours later, however, she declared it a priority to move toward a “balanced and respectful” economic cooperation between the United States and Venezuela.

This double game cannot persist indefinitely. Rodríguez must choose between accommodating Trump’s demands or preserving Chavista unity. Trump’s threat that if Rodríguez “doesn’t do what’s right, she is going to pay a very big price, probably bigger than Maduro” makes clear that there will be consequences of noncompliance. Purging the hardliners may be Rodríguez’s best option.

Navigating the geopolitical minefield

Perhaps Rodríguez’s most complex challenge is managing Venezuela’s deep entanglements with China, Russia, Iran, and Cuba while simultaneously partnering with the Trump administration. This is especially the case after the Trump administration demanded that Venezuela immediately cut ties and cease intelligence cooperation with Russia, China, Iran, and Cuba. These relationships represent more than diplomatic alignments—they constitute binding financial obligations, operational dependencies, and strategic commitments that cannot simply be abandoned without triggering massive economic and security consequences.

China presents the most significant financial exposure. Venezuela owes Beijing around twenty billion dollars in loans. These debts are secured through oil-for-loan arrangements that require repayment through crude deliveries, with China currently absorbing more than half of Venezuela’s oil exports (approximately 746,000 barrels per day in November 2025).  

Beyond petroleum, Chinese state enterprises control critical Venezuelan infrastructure. Huawei built and maintains control over Venezuela’s national fiber-optic backbone. China Electronics Import & Export Corporation built and operates the VEN911 surveillance system. ZTE Corporation designed the Homeland Card system and operationalized the Patria System database used for social control. These companies don’t simply provide services—they embed operational control within Venezuela’s digital infrastructure, creating dependencies that cannot be severed without system collapse. Expelling Chinese technology companies would require the complete reconstruction of Venezuela’s telecommunications and surveillance systems.  

Russia’s Strategic Partnership Treaty with Venezuela, signed in May 2025, commits Caracas to comprehensive cooperation with Moscow across the hydrocarbons, military technology, and strategic sectors. Russia is Venezuela’s primary supplier of naphtha and diluents—essential additives for processing Venezuela’s heavy crude. These Russian commitments create immediate conflicts with a potential US partnership, as the Trump administration’s demands make clear. The energy deal announced by the Trump administration on January 7 indicates that US diluent will be sent to Venezuela, meaning that Russia will have to withdraw from that market.

Iran provides Venezuela’s most operationally sensitive international cooperation—drone technology production at El Libertador Air Base, where Iranian personnel set up operations. On December 30, 2025, the US Treasury imposed sanctions on Empresa Aeronautica Nacional SA, the Venezuelan company operating in a joint venture with Iranian companies at drone manufacturing facilities in Venezuela. This military-technical cooperation directly threatens US interests and almost certainly constitutes a nonnegotiable red line for Washington.

Cutting ties with Cuba would resent the deepest ideological and operational challenge for the regime. Cuban intelligence advisors remain embedded throughout Venezuelan security services despite the neutralization of Maduro’s personal protection unit. These advisors provide counterintelligence expertise, interrogation training, and repression coordination—exactly the capabilities Rodríguez needs to maintain internal control against potential coup attempts. Cuba’s own survival depends on Venezuelan oil shipments, with Havana receiving subsidized petroleum. Severing Cuban intelligence cooperation would affect operational expertise within the security forces, potentially triggering a military fracture. Yet Washington has demanded the immediate severance of Venezuela’s ties to Cuban intelligence. Moreover, on January 3, US Secretary of State Marco Rubio issued a warning to the Cuban leadership: “If I lived in Havana and was part of the government, I’d be at least a little concerned.” He also emphasized that Cuba would no longer receive oil from Venezuela.

Democracy deferred

Each day of ambiguity increases pressure from all directions, making Rodríguez’s balancing act increasingly untenable. There are three competing scenarios: First, Rodríguez could successfully navigate between Washington and Chavismo. Second, hardliners could resist accommodation with the United States, triggering Trump’s threatened “second wave” operation. Third, a rebellion could replace Chavista leadership, opening the door to a transition.

Amid this uncertain picture, Venezuelan civil society, having demonstrated extraordinary resilience through the October 2023 primary elections and the July 2024 presidential campaign despite systematic repression, now confronts a different challenge. It must fight to remain relevant amid a power transition dominated by US economic interests and Chavista factional negotiations. In the days following Maduro’s capture, a clear priority has emerged for Venezuelan civil society: the total liberation of all the regime’s political prisoners, who currently number nearly one thousand. Only then will Venezuela’s transition to democracy truly begin.

The post Delcy Rodríguez’s untenable balancing act appeared first on Atlantic Council.

On January 8, Imran Bayoumi, associate director of the GeoStrategy Initiative, published an article in Foreign Policy titled “Trump’s Greenland Threats Paper Over a Lack of Arctic Strategy,” arguing that instead of threatening Greenland, the US should work to increase Arctic security burden sharing.

Staff

Imran Bayoumi

Associate Director

GeoStrategy Initiative Scowcroft Center for Strategy and Security

The GeoStrategy Initiative, housed within the Scowcroft Center for Strategy and Security, leverages strategy development and long-range foresight to serve as the preeminent thought-leader and convener for policy-relevant analysis and solutions to understand a complex and unpredictable world. Through its work, the initiative strives to revitalize, adapt, and defend a rules-based international system in order to foster peace, prosperity, and freedom for decades to come.

learn more

The post Bayoumi in Foreign Policy on Trump’s lack of Arctic strategy appeared first on Atlantic Council.

On January 8, Imran Bayoumi, associate director of the GeoStrategy Initiative, was quoted in a CBC News article titled “With Trump’s Venezuela move and Greenland threats, are Canadians vulnerable?” discussing Trump’s renewed focus on the Western hemisphere. He argues that US threats of military action against Greenland are unproductive, urging for bolstered cooperation without threats.

Staff

Imran Bayoumi

Associate Director

GeoStrategy Initiative Scowcroft Center for Strategy and Security

The GeoStrategy Initiative, housed within the Scowcroft Center for Strategy and Security, leverages strategy development and long-range foresight to serve as the preeminent thought-leader and convener for policy-relevant analysis and solutions to understand a complex and unpredictable world. Through its work, the initiative strives to revitalize, adapt, and defend a rules-based international system in order to foster peace, prosperity, and freedom for decades to come.

learn more

The post Bayoumi quoted in CBC News on Trump’s approach to Greenland appeared first on Atlantic Council.

Bottom lines up front

• A Trump-promised renaissance for Venezuelan oil and gas will be difficult to achieve.
• International oil companies are unlikely to make major new investments in the country without greater legal and regulatory certainty, but it may be possible to modestly raise production through immediate steps.
• Without real change from within, the Venezuelan industry will not be able to support the survival of the current regime or address entrenched humanitarian problems.

Within hours of the astonishing US intervention in Caracas this past weekend that captured Venezuelan strongman Nicolás Maduro, the Trump administration framed it as, among other things, a boon to its US “energy dominance” agenda. Citing Venezuela’s vast hydrocarbon resources—arguably the largest oil reserves in the world—President Donald Trump repeatedly promised that the next phase for Venezuela will involve US energy companies helping to restore the country’s failing oil and gas production, benefiting global oil markets with expanded supply. 

But the pathway from promises to meaningful production increases is likely to be a fraught one. The Trump administration seems to recognize this, as indicated by the administration seizing two oil tankers and quickly announcing an opaque arrangement wherein the United States will acquire thirty-to-fifty million barrels of already available Venezuelan crude oil. These fast wins might help justify the expenditure of US resources to continue its naval blockade and pursue further intervention, as the administration has hinted. But these moves do not fundamentally change the dynamics above or below the ground that have wrecked the Venezuelan industry. Nor do they alter the long path to a major recovery.

Indeed, a Venezuelan oil and gas production renaissance would require, among other factors, meaningful renewed interest and investment from US and international oil companies (IOCs). This will be difficult. As the Venezuelan people look ahead to a murky future and an uncertain US-led transition, leveraging their valuable energy resources to secure the country’s democratic future may prove easier said than done. 

How an industry fell apart

Decades ago, Venezuela’s oil and gas industry was a powerhouse that promised to drive the country forward. The country boasts 17 percent of global oil reserves, with an estimated 303 billion barrels of producible crude oil. In 2000, Venezuelan oil production reached a peak of 3.2 million barrels per day, enabled by joint ventures and effective partnerships between the national oil company Petróleos de Venezuela, SA, or PDVSA, and a host of IOCs.

In the early 2000s, however, the Chávez administration oversaw a nationalization of the Venezuelan oil sector that dramatically changed the terms of engagement for foreign companies. The nationalization resulted in asset seizures, international arbitration, and marked investment decline in Venezuela’s oil-producing regions by most Western companies. Following Chávez’s administration, Maduro and his officials then faced a punishing and ever-accelerating slate of US sanctions. Beginning in 2017, the first Trump administration targeted Venezuela’s oil and gas sector as the primary engine for the Maduro regime’s deepening authoritarianism.

Today, Venezuela’s oil and gas industry is in disarray. Production fluctuates below one million barrels per day, while the wider industry reels from years of underinvestment, neglect, lack of maintenance, and limited access to the engineering and technological prowess of Western IOCs. Improving this situation will require a sea change both for the Venezuelan oil and gas industry and its governing institutions; the former cannot proceed without the latter. By extension, the next steps taken by the country’s remnant Maduro-era leadership, the Trump administration, and the Venezuelan democratic opposition movement are of paramount importance to the future of the country’s energy industry. 

A stable, secure transition

The ideal first step in returning Venezuela’s industry to its former heights would be enabling a democratic transition, leading to a government that would then pass new legislation, revamp supervisory institutions, and operate in accordance with the rule of law. As of now, however, it is unclear that such a transition is the goal of either the Trump administration or Venezuela’s remaining powerbrokers. 

This concern is not a matter of idealism but rather of hard business realities. For any major corporation to engage in a foreign industry, especially in the oil and gas sector, that corporation must know who it is negotiating with. Contract designs and terms can vary considerably, but they must be developed by reliable partners who each understand the other’s roles and responsibilities. After all, a major factor that presaged the decline of Western companies’ engagement with Venezuela (and jump into arbitration proceedings) was Caracas’s reneging on contracts governing how the Venezuelan oil and gas assets were managed in terms of investment and eventual profits. Under the framework in place today, PDVSA has a majority stake in joint ventures. But in its bankrupt condition, it would be impossible for it to meet its capital commitment for nearly any project.

At this stage, it remains unclear who is actually in control of Venezuela and for how long. The Trump administration has indicated, for example, that the United States will remain in control of Venezuelan oil and gas assets for the foreseeable future, perhaps adjusting US licensing and sanctions policy to legitimize US-controlled sales of oil stored in tankers. It’s unclear how willing the Venezuelan regime will be to tolerate this. Moreover, US control is necessarily a short-term strategy. Selling off Venezuela oil stored in tankers and depositing those funds into blocked accounts controlled by the US government will avoid forcing PDVSA to shut in existing production, ensure useful supply to US Gulf Coast refiners, and provide the US government with a significant supply of funds it can manage. But volumes of floating storage are finite, and the Rodríguez government will not remain in power if it seems to be agreeing to sell off the government’s primary source of funds for the sole benefit of the United States or American creditors. 

In addition to legal considerations, the physical risk and security outlook is crucial for any industry that requires intensive on-site, day-to-day operations. These operations must be managed by crews of skilled laborers, geologists, and engineers, to say nothing of the initial construction teams and costly repairs that will be necessary throughout Venezuela’s oil and gas regions. The Trump administration has yet to detail its plan for Venezuela’s transition process apart from the acceptance of Delcy Rodríguez, Maduro’s former vice president, as the acting president. But even as Trump praised Rodríguez on Saturday, he also warned her that a failure to cooperate with a US-led transition could result in another action from US forces. 

Meanwhile, the democratic Venezuelan opposition, led by María Corina Machado, has found its role and potential future influence downplayed, with Trump saying that her movement lacks sufficient legitimacy among the Venezuelan people to be a realistic alternative. Yet another factor is the vast, complex networks of substate and illicit organizations—including violent militias and their overlords—that operate freely throughout Venezuela, have their own assets to protect, and will assuredly have opinions on who should run the country. These same stakeholders—and their foreign allies, who include geostrategic adversaries of the United States—may likewise take a dim view of the acting president’s apparent complicity in passing Venezuelan crude oil along to the United States if there are not immediate, tangible benefits for doing so outside of the remnant regime’s top brass. 

Any rational business leadership would think carefully before committing itself to new investment under these conditions. For a genuine oil sector renaissance to commence, the Venezuelan government must prove that it possesses stability, legitimacy, and resilience. US promises that a conciliatory administration in Caracas (for now) can ensure these conditions will be met with justified skepticism. 

Attracting private investment

Regulatory and financial certainty are essential factors for major international oil businesses when making significant investment decisions. This is especially true when oil and gas prices are already soft, at around sixty dollars per barrel, and most outlooks predict a global oversupply throughout the coming year. In other words, for Venezuelan oil and gas investment to make fiscal sense, IOCs will require a return on investment in a reasonable timeframe. Moreover, such businesses will need reasons to believe that long-term engagement (possibly thirty years or longer) in the country will ultimately be profitable based on global oil and gas market outlooks for the next decade or more. 

The United States removing or making major adjustments to existing sanctions on Venezuela will be crucial to expanding oil production over the short run, as well as attracting new large scale private investment to the country. At present, both the Venezuelan government and its oil and gas sector (principally PDVSA) face a punishing tranche of US sanctions that have cut them off from money, credit access, partnerships, and technology essential to running the country’s oil and gas industry. As of now, any transactions between Venezuelan entities and any foreign company are subject to US restrictions, US Treasury sanctions designations, and lost access to the US financial system. This state of affairs makes the immediate reentrance of US or other Western companies impossible.

Ideally, IOCs would like to see a scenario where most sanctions are lifted or significantly eased, along with reassurance that a reversal would not occur anytime soon. In addition, they are looking for a revamped Venezuelan regulatory framework for its energy sector, including changes to regulations governing operations, trading and exports, terms for joint ventures, asset ownership, and legal rights. Lastly, the Trump administration has hinted at measures that would enable the repayment of companies that previously exited the country in compensation for their prior losses.

A revamped licensing process that allows existing investors to expand their operations could potentially lift production by 300,000 barrels a day over the course of a year, industry experts have suggested. Allowing smaller companies to invest in production sharing, including through productive participation contracts, could likewise incentivize participation. These adjustments could enable another 200,000 to 300,000 barrels a day in new production over the course of the next twelve to eighteen months, the industry experts estimate. Funds from that production could go into a blocked account, which would realistically need to be dedicated to humanitarian benefits in Venezuela, with perhaps a share reserved for repayment of US creditors. 

For now, the Trump administration has not signaled that a major softening of the existing sanctions slate is imminent and the oil blockade remains in place. The Rodríguez leadership likewise has not signaled that a reshaping of its oil and gas regulatory framework is incoming at the behest of the United States or anyone else. Instead, the administration’s new plan for selling up to fifty million barrels of Venezuelan crude oil suggests that its focus is on growing near-term, low-hanging fruit production opportunities to prevent the industry from total collapse and shut-in of its existing production.

A positive financial and investment signal might encourage buy-in and engagement from IOCs and smaller companies. One means of doing so would be creating a new escrow account, under US control but presumably with some percentage of profits reverting back to the Venezuelan government. Such a fund could serve as the deposit site for new oil and gas profits over the near-term, ahead of a full lifting of sanctions and/or successful national elections in the future. This account could be enacted through adjustments to the existing sanctions slate, and it could provide a vehicle for early seed funds to be fed into any new Venezuelan governing institutions as a revamped regulatory design is developed. Optimistically, this fund could also serve as a test run for a new sovereign wealth fund, which could help prevent a reversion to the illegitimate use of Venezuela’s resource wealth that had been a hallmark of the Maduro regime.

For now, the Trump administration is hoping that it can deliver a strong enough signal to private oil and gas companies that there can be some compensation and long-term gains to reengagement with Venezuela, if only to enable immediate, easy repairs and infrastructure salvaging. The attractiveness of that offer, and its long-term durability and legality, are yet to be seen. 

However, much more political and regulatory change will be necessary to revive the Venezuelan energy industry. Such changes will be far more difficult to achieve than handshake deals to split revenues for a handful of oil sales; moreover, these modest steps forward are far from sufficient to address the depth of the political challenges ahead. Lifting production in the neighborhood of half-a-million barrels per day might preserve what is left of Venezuelan production capacity, but it will not be enough to keep Maduro’s remnant leadership stable or meet the population’s profound humanitarian and economic needs. As a result, the entrenched challenges of migration, drug and other illicit trafficking, intensified substate violence, and perhaps de facto Balkanization of the country by various strongmen (and their domestic or foreign backers) remain palpable risks. The Trump administration, focused on resource management in Venezuela, has so far shown little interest in resolving these issues. But they will not go away, and they could derail the administration’s vision for a more stable energy industry and country.

The post What it takes to revive Venezuela’s oil and gas industry appeared first on Atlantic Council.

On January 7, Atlantic Council vice president and Scowcroft Center senior director Matthew Kroenig was interviewed in a The New Yorker article titled “The Former Trump Skeptics Getting Behind His War in Venezuela.” He contends that President Trump demonstrated the credibility of US threats through the use of military force, while distinguishing between targeted, limited applications of force and long-term wars.

The post Kroenig interviewed in the New Yorker on military action in Venezuela appeared first on Atlantic Council.

On January 7, Imran Bayoumi, associate director of the GeoStrategy Initiative, was quoted in a BBC article titled “How could Donald Trump ‘take’ Greenland?” discussing avenues for increased US engagement with Greenland. He contends that, rather than military action, an influence operation encouraging Greenlandic independence followed by close collaboration with the United States is more likely.

Staff

Imran Bayoumi

Associate Director

GeoStrategy Initiative Scowcroft Center for Strategy and Security

The GeoStrategy Initiative, housed within the Scowcroft Center for Strategy and Security, leverages strategy development and long-range foresight to serve as the preeminent thought-leader and convener for policy-relevant analysis and solutions to understand a complex and unpredictable world. Through its work, the initiative strives to revitalize, adapt, and defend a rules-based international system in order to foster peace, prosperity, and freedom for decades to come.

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Bottom lines up front

• Following the recent US operation in Venezuela, the Trump administration has revived the idea of the United States taking Greenland, and it has not ruled out using US military force to do so.
• The Danish prime minister has responded by suggesting such a move by the United States could lead to the end of NATO, the most successful alliance in history.
• A collapse of NATO over Greenland would be contrary to US national interests as defined in the Trump administration’s own recently published National Security Strategy.

STOCKHOLM—After a bumpy start with the new Trump administration in 2025, NATO enters 2026 facing what could become the worst crisis of its existence. “We need Greenland from the standpoint of national security,” US President Donald Trump said on Sunday, ignoring the warnings of Danish Prime Minister Mette Frederiksen that the United States should stop threatening the Kingdom of Denmark or it might lead to the end of NATO.

Following the US intervention in Venezuela and the capture of Venezuelan leader Nicolás Maduro on Saturday, the wife of Trump’s close adviser Stephen Miller, Katie Miller, a Republican podcaster, posted on social media a map of Greenland covered by the American flag and accompanied by one word in capital letters: “SOON.” Sparking harsh reactions in Europe, the remarkable post was followed by Stephen Miller himself, who stated that Greenland should be part of the United States and that no one would militarily challenge a US takeover.

For NATO, this means the worst possible start to the year. The possibility that the United States, the leading member of the Alliance, would use its might to annex part of another ally’s territory is almost beyond imagination and a nightmare for NATO Secretary General Mark Rutte. As expressed in the first paragraph of the North Atlantic Treaty, the Alliance rests on the principles of the United Nations Charter that international disputes are settled by peaceful means, and that the parties refrain in their international relations from the threat or use of force inconsistent with the charter.

Denmark is a founding member of the Alliance, and it has been a loyal ally since 1949. In Afghanistan, Denmark fought alongside the United States in the tougher mission areas and suffered the most casualties in relation to its population of all NATO allies, apart from the United States.

There is nothing new about Greenland’s importance to US national security. An autonomous part of the Kingdom of Denmark, Greenland has hosted a US military base since the 1950s for exactly that reason. A 1951 treaty between the United States and the Kingdom of Denmark allows for increased US presence on Greenland if requested. But that is not what Trump is looking for, as the harsh dialogue between Copenhagen and Washington over the past year has revealed. The Trump administration argues that Greenland is part of the Western Hemisphere, and as such it should belong to the United States, which Greenland clearly opposes. This extraordinary US stance, in flagrant disrespect of international law, has caused the Danish defense intelligence service to flag the United States as a concern to Danish national security.

More broadly, the Trump administration’s stance risks dissolving the transatlantic community and putting an end to the most successful military alliance in history.

Trump has nurtured the idea of US ownership of Greenland for a long time. In his first term, he suggested a US purchase of the island on several occasions. When reelected, Trump renewed his interest, stating that “the United States of America feels that the ownership and control of Greenland is an absolute necessity.” This time, he did not rule out the use of military force to get it. A few months later, when Rutte visited the White House, Trump suggested that NATO could help him get Greenland, a request that Rutte declined.

Trump has defended his stance, saying there are “Chinese and Russian ships everywhere” near Greenland and that Denmark cannot protect it. Former National Security Advisor Mike Waltz has emphasized the need for the United States to access Greenland’s vast natural resources. But since Denmark has signaled that the United States is welcome to increase US troop numbers on Greenland should it so wish, and Greenland has announced that it is open for business if US companies are interested, neither of these arguments make sense.

Perhaps importantly, there is a parallel interest in Greenland stemming from the tech giants with close connections to the Trump administration. As reported by Reuters and The Guardian, a circle of US tech entrepreneurs and venture capital figures is promoting Greenland as a potential site for so-called “freedom cities” and large-scale extraction and infrastructure projects. These ideas are framed through libertarian concepts of minimal corporate regulation and ambitions spanning artificial intelligence, space launches, and micronuclear energy. Several of these actors are among Trump’s largest campaign donors and investors, including investors linked to mining operations in Greenland, fossil fuels, and cryptocurrency ventures. Collectively, this cohort reportedly contributed more than $240 million to his 2024 campaign and potentially stand to benefit from a US takeover of the island.

As the United States starts implementing the “Trump corollary” to the Monroe Doctrine, first by intervening in Venezuela and then quickly threatening Cuba, Colombia, Mexico, and Greenland, Europe is witnessing its strongest ally voluntarily retreat from global leadership to excel in regional dominance. “This is OUR hemisphere”, the State Department declared in an X posting on Monday to underline the launch of its new strategy, presumably sending a message to Russia and China. However, from a NATO perspective, where does this leave allies such as Canada and Denmark? Are they targets of this message as well?

Copenhagen certainly feels that way. In the past year, Denmark has substantially increased its military support in the Arctic. In January 2025, it committed 14.6 billion kroner ($2.05 billion) to Arctic defense, followed by an additional 27.4 billion kroner ($2.7 billion) later in the year. Denmark has also invested in its relationship with Greenland, including a formal apology for government abuses against Inuit women involving forced birth control in the 1960s and 1970s. On Monday, Greenland’s prime minister, Jens-Frederik Nielsen, downplayed concerns of a military takeover and repeated to the Trump administration that Greenland is not for sale. Nor, he said, are the people of Greenland interested in voluntarily becoming part of the United States.

The Trump administration’s latest escalating rhetoric about seizing Greenland has sparked intense activity in European capitals in support of Greenland and Denmark. Statements clarifying that Greenland belonged to the Greenlanders came quickly from the Nordic and Baltic capitals, and then British Prime Minister Keir Starmer followed suit, before he was joined in a statement on Tuesday by France, Germany, Italy, Spain, Poland, and Denmark. NATO ally Canada has been explicit in its support as well, and Ottawa is opening a consulate in Greenland to strengthen relations further.

For NATO, Rutte’s ambition to keep the issue off the table in the Alliance is getting increasingly difficult. Rather, he is cautiously joining the diplomatic efforts to prevent a US intervention. On Tuesday, he said that NATO “collectively . . . has to make sure that the Arctic stays safe.” He added, “We all agree that the Russians and Chinese are more and more active in that area.”

Meanwhile NATO officials continue their important work to strengthen the role of the Alliance in Arctic security through increased surveillance, patrolling, exercises, and training. This work embodies the Alliance’s collective efforts to ensure security while addressing the concerns of underinvestment expressed by the Trump administration. Allies should promptly increase these efforts even further.

So far, Denmark has rejected an offer from France to send troops to Greenland as a signal of European solidarity, likely to avoid provoking the United States. US Secretary of State Marco Rubio has also signaled a preference for negotiations to US lawmakers, indicating that the military threat is primarily being used to force Denmark to sell Greenland.

Regardless, diplomacy seems like the most reasonable, albeit challenging, option. Those European countries that have been able to establish good communication channels with the Trump administration, such as the United Kingdom, Germany, France, Italy, and Finland, should side with Denmark and lead efforts to settle the crisis, in a similar manner as Europe was able to support Ukraine in the peace process after Trump’s Alaska summit with Russian President Vladimir Putin. Rutte, another voice that has good relations with Trump, needs to engage further, as well.

The argument should be that the survival of NATO is at stake if the United States intervenes to seize Greenland, and that such a development would be contrary to US national interests. For example, the Trump administration’s own National Security Strategy (NSS) emphasizes that it is a US interest to maintain strategic stability with Russia. For that, the United States needs its European bases. Proximity matters, as the operation this past summer against Iran’s nuclear facilities clearly illustrated. Furthermore, the NSS outlines how the United States depends on Europe to succeed with its economic agenda elsewhere.

The US Congress recently went further and conditioned a range of measures in its latest defense bill to preserve NATO and US engagement in Europe. Engaging with members of Congress in Washington, DC, and with the delegations soon visiting the World Economic Forum in Davos and the Munich Security Conference is therefore crucial, as well.

Should the darkest hour come and the United States uses military force to annex Greenland, the essence of Article 5 and collective defense within NATO would lose its meaning. As Norwegian Minister of Foreign Affairs Espen Barth Eide recently put it: “The idea of NATO will be broken if the US takes Greenland.” It would be perfectly clear to Russia, China, and other adversaries that credible extended deterrence no longer exists for Europe or Canada, and that the United States has lost its closest and most powerful allies.

The post Trump’s quest for Greenland could be NATO’s darkest hour appeared first on Atlantic Council.

How US trade with Brazil is evolving

In April 2025, US President Donald Trump imposed a 10 percent tariff on Brazil as part of the administration’s “Liberation Day” tariffs on nearly every country in the world. Then in July 2025, Trump imposed an additional 40 percent tariff on Brazil specifically, which further raised tariffs on products not affected by the Trump administration’s other Section 232 duties on certain industrial goods. Our analysis of both US and Brazilian trade data shows that initially, since the implementation of these new tariffs, US imports of Brazilian products have deviated significantly from the pre-tariff trend line. At the same time, US exports to Brazil have remained consistent with the pre-tariff trend line

US purchases of products in which Brazil plays a key role as a supplier have also decreased significantly since the imposition of the new tariffs. Brazil supplied at least 20 percent of US imports for a number of goods in 2024, including coffee, orange juice, cane sugar, iron ore, aluminum oxides and hydroxides, vanadium products, various tropical woods, pig iron, fuel ethanol, meat, and a range of agricultural byproducts.

Our analysis shows that US imports of these products declined dramatically through September 2025; however, as of November 13, 2025, several categories, including coffee, orange juice, and meats, were granted exemptions from both the reciprocal and Brazil-specific tariffs, and we await the release of new trade data to assess the impact of these measures.

What these evolving trade dynamics look like in practice

This section analyzes a subset of specific products for which Brazil is a key supplier to the US market.

The bigger picture

How Brazil’s international trade partners are changing

Since the imposition of new US tariffs on Brazil, Brazil’s export markets have changed significantly, while the source of its imports, particularly from the United States, has remained relatively stable.

The US export market share declined 5.3 percent in October 2025 compared to October 2024, while China’s rose by 5.2 percent. Meanwhile, the US market share of Brazil’s imports grew 1.2 percent year over year in October 2025.

Authors: Ignacio Albe, assistant director, and Valentina Sader, Brazil lead, from the Adrienne Arsht Latin America Center.

Data: All data used in this dashboard can be found here.

The research team would like to thank Apex Brazil, the Brazilian Trade and Investment Agency, for its support for this research project.

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The post US-Brazil trade dashboard appeared first on Atlantic Council.

On January 7, Atlantic Council vice president and Scowcroft Center senior director Matthew Kroenig was interviewed on DW News about the US seizure of a Russian flagged oil tanker carrying Venezuelan oil. He contends that the move signaled US resolve in quarantining the Venezuelan regime and adopting a firmer approach toward Russia in the Western hemisphere.

Staff

Matthew Kroenig

Vice President and Senior Director, Scowcroft Center for Strategy and Security

Scowcroft Center for Strategy and Security

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The post Kroenig on DW News on US oil tanker seizures in the Caribbean appeared first on Atlantic Council.

As details of a possible security framework for postwar Ukraine continue to take shape, British Prime Minister Keir Starmer and French President Emmanuel Macron signed a joint declaration committing to deploy troops to Ukraine in the event of a peace agreement between Moscow and Kyiv. Crucially, US officials attending the talks in France also voiced American backing for security guarantees, with the United States expected to play a supporting role that will focus on ceasefire monitoring.

Ukrainian President Volodymyr Zelenskyy praised the “substantive discussions” and suggested that he was now more confident about the credibility of the security commitments being proposed by Ukraine’s partners. “Military officials from France, the United Kingdom, and Ukraine worked in detail on force deployment, numbers, specific types of weapons, and the components of the armed forces required and able to operate effectively. We already have these necessary details,” he commented.

As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.

This was the latest in a series of meetings over the past year that have sought to define workable security guarantees for Ukraine as a key element of the US-led push to end Russia’s invasion. Since early 2025, Britain and France have been at the forefront of ongoing efforts to establish a Coalition of the Willing bringing together countries prepared to contribute to postwar security measures. The objective is to prevent a resumption of Russia’s war in Ukraine.

The Paris Declaration signed on January 6 is a step in the right direction, but many key questions remain unanswered. The document does not provide the kind of NATO-style commitment to collective security that many believe is essential in order to deter Putin. Nor does it clarify the exact role of a potential European military contingent on Ukrainian territory, or define whether their mandate would include defending themselves in the event of a Russian attack. Instead, it contains vague references to “the use of military capabilities.” This language is hardly likely to convince the Kremlin, especially in light of the escalation fears that have dominated the Western response to Russia’s invasion of Ukraine.

The other obvious problem with the current peace plan is implementation. The signatories of the Paris Declaration all agree that the envisioned package of security guarantees for Ukraine can only be put in place once a ceasefire has been agreed. This will inevitably strengthen Moscow’s objections. Over the past year, Russia has repeatedly rejected ceasefire proposals while stressing its unwavering opposition to any Western military presence in Ukraine. That is exactly what the Coalition of the Willing is now proposing.

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Online Event Fri, January 30, 2026 • 9:00 am ET

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As Ukraine’s partners discuss the technical aspects of security guarantees, the elephant in the room remains Russia’s lack of interest in peace. The Kremlin was not represented at talks in the French capital this week, just as it has been absent during a similar series of recent meetings between US, Ukrainian, and European officials.

While the Trump administration has sought to maintain a parallel dialogue with Moscow, there is no indication whatsoever that Russia shares the optimistic assessments being offered by Zelenskyy and other Western leaders. On the contrary, Putin and his Kremlin colleagues continue to signal that they have no intention of compromising and remain committed to the maximalist goals set out at the start of the invasion in February 2022.

Throughout the past year, Putin has been careful to avoid openly rejecting US peace proposals due to concerns over possible retaliatory sanctions. Nevertheless, his actions speak for themselves and underline his opposition to ending the war.

Just one day after Trump and Zelenskyy met in Florida in late December and announced significant progress toward a settlement, Putin called the US leader and accused Ukraine of launching an attack on his presidential residence. The news appeared to shock Trump and placed the entire peace process in jeopardy. However, it soon transpired that the incident had been hastily invented in a bid to discredit Ukraine and derail peace talks. Trump has since acknowledged that Putin’s resident was not targeted. “I don’t believe that strike happened,” he told reporters on January 4.

The Kremlin dictator’s apparent readiness to lie directly to Trump says much about his determination to disrupt peace efforts. The faked attack on Putin’s residence was the latest in a series of Russian steps over the past year to stall or otherwise obstruct negotiations. This has led to mounting claims that Putin is playing for time without having any intention of ending his invasion.

Putin’s rejection of a negotiated settlement should come as no surprise. His army is advancing in Ukraine and retains the upper hand in a war of attrition that strongly favors Russia. With the Ukrainian military suffering from increasingly acute manpower shortages and Kyiv’s allies showing growing signs of weakening resolve, Putin remains confident that he can achieve a decisive breakthrough in 2026.

Even if he did not believe that victory was on the horizon, Putin would be highly unlikely to risk a compromise peace involving limited territorial gains. After all, he is not fighting for land in Ukraine; he fighting for Ukraine itself.

Putin views the invasion of Ukraine in the broadest of possible historical contexts as a sacred mission to reverse the injustice of the Soviet collapse and revive the Russian Empire. The terms currently on offer would leave around 80 percent of Ukraine beyond Kremlin control and free to pursue further European integration. To Putin, that would not be a partial victory; it would be a catastrophic defeat.

In the coming weeks, Russia will almost certainly reject the latest peace framework agreed in Paris. How will the Coalition of the Willing respond to this setback? Unless they are willing to impose more costs on the Kremlin and bolster Ukraine’s ability to hurt Russia militarily, all talk of postwar security guarantees and reassurance forces will continue to ring hollow. If Western leaders are serious about ending the war in Ukraine and safeguarding European security, they must acknowledge that there is no alternative to increasing the pressure on Putin.

Peter Dickinson is editor of the Atlantic Council’s UkraineAlert service.

Further reading

UkraineAlert Dec 23, 2025

Reclaiming Russia’s ‘historical lands’: How far do Putin’s imperial ambitions extend?

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Putin has again vowed to “liberate Russia’s historical lands” via negotiations or military means. The list of countries that could qualify as “historically Russian” in Putin’s revisionist worldview is long and extends far beyond Ukraine, writes Peter Dickinson.

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The only winner from Ukrainian wartime elections would be Putin

By Yuriy Boyechko

Ukrainians are fighting to defend their democracy against Kremlin authoritarianism, but they are also in no rush to hold wartime elections amid relentless Russian bombardment and with millions of Ukrainians displaced, writes Yuriy Boyechko.

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UkraineAlert Dec 9, 2025

Europe’s choice: Fund Ukraine now or pay a far higher price if Russia wins

By Elena Davlikanova, Lesia Orobets

Europe’s reluctance to pay for Ukraine’s defense is shortsighted, write Elena Davlikanova and Lesia Orobets. If Russia’s invasion succeeds, Europe will soon have to boost defense spending to levels that would completely dwarf the current cost of backing Ukraine.

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The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

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UkraineAlert is a comprehensive online publication that provides regular news and analysis on developments in Ukraine’s politics, economy, civil society, and culture.

The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values, and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia, and Central Asia in the East.

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