In the Caribbean, Operation Southern Spear has become the largest U.S. military deployment in generations, pairing sanctions and terrorism designations against Nicolás Maduro’s network with very tentative diplomatic overtures. Saudi Arabia’s Mohammed bin Salman will arrive in Washington this week seeking nuclear and investment deals rather than any genuine movement on Israeli normalisation. Iran, meanwhile, faces one of its worst water crises in decades and has halted uranium enrichment after damage to key facilities, leaving Tehran balancing acute environmental stress with nuclear uncertainty. Washington has also approved tariffs of up to 500 percent on countries trading with Russia, signalling a shift from traditional sanctions to wider economic coercion. Across Asia, Japan is preparing a ¥17 trillion (US$110 billion) stimulus package as the yen sinks and yields rise, while tensions with China grow sharper after PM Sanae Takaichi suggested Japan could defend Taiwan. The United Kingdom has unveiled its toughest asylum restrictions in decades, ending automatic support and imposing a 20-year settlement wait. At home, President Donald Trump has cut tariffs on key imports as foreclosures rise, subprime delinquencies worsen and financial markets wobble, with stretched stock valuations amplifying fears that parts of the U.S. economy may already be in recession. |
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Center of Gravity
What you need to know
Operation Southern Spear expands in the Caribbean
The deployment of the USS Gerald R. Ford has brought the U.S. to its largest regional military buildup in generations, with nearly a dozen Navy ships and about 12,000 sailors and Marines now positioned under Operation Southern Spear.
Washington describes the mission as a counter-narcotics and counter-terrorism effort, although its scale conveys unmistakable coercive pressure on Caracas.
The State Department has designated the Cartel de los Soles, described as being led by the “illegitimate” Nicolás Maduro, as a Foreign Terrorist Organisation, a decision that broadens Washington’s legal authorities and increases the risks for Venezuelan officials tied to the network.
Opposition leader and Nobel peace prize laureate María Corina Machado has urged Maduro’s supporters to switch sides, telling them to “make today the decision to accompany the freedom of Venezuela” and warning that a decisive moment is approaching.
In parallel, President Donald Trump has indicated that the Maduro regime may seek discussions, saying its representatives “would like to talk,” a comment that opens a diplomatic path even as Washington expands sanctions and reinforces its military posture.
The combination of pressure and tentative engagement appears designed to extract concessions from Caracas or shape conditions for a political transition, although the response from the regime will determine whether the crisis moves toward negotiation or confrontation.
Washington now has committed too much to back down at this stage without extracting major concessions from the Maduro regime.
Known Unknowns: The impact of U.S. tariffs on international trade & especially the U.S. bond market. Whether the U.S. and Iran will restart nuke talks, or whether another round of conflict is likely between the US, Israel, Iran, and their respective allies. Relations of new Syrian government with Israel, international community & ability to maintain stability inside Syria. China’s triggers for military action against Taiwan. U.S. and allied responses to China’s ‘grey zone’ warfare in the South China Sea and north Asia. Ukraine’s ability to withstand Russia’s war of attrition. The potential for the jihadist insurgency in Africa’s Sahel region to consolidate and spread.
Cold War 2.0
It’s the U.S. vs China, everyone else needs to choose a side
U.S. moves toward punitive trade pressure on Russia’s partners
President Donald Trump has approved a bill that authorizes tariffs of up to 500 percent on any country that continues substantial trade with Russia, a measure that amounts to one of the most forceful deployments of U.S. economic leverage in decades.
The legislation, presented as a national-security tool, is intended to compel governments and major companies to choose between access to the U.S. market and commercial ties with Moscow. It applies not only to direct imports of Russian goods but also to countries that re-export Russian commodities, provide financial channels to sanctioned entities or enable technology flows that support Russia’s wartime economy.
The bill’s approval indicates that Washington is prepared to move beyond traditional sanctions into trade measures with a very broad economic reach. How governments respond (through compliance, resistance or discreet workarounds) will determine the extent to which the policy reshapes global commerce and the wider geopolitical landscape surrounding Russia’s war.
China and Japan tensions rise around the Senkakus
Four Chinese Coast Guard vessels have entered Japan-administered waters around the Senkaku Islands during what Beijing described as a “rights enforcement patrol”, the latest step in a steady escalation of maritime confrontations between the two countries.
Japan’s Coast Guard shadowed the vessels at close range to prevent any approach to the islands, while Tokyo’s Foreign Ministry lodged a formal protest through diplomatic channels, calling the incursion “unacceptable” and a violation of international law.
The episode is among the most serious flare-ups since the anti-Japanese riots in China in 2012, which followed Japan’s nationalization of parts of the island chain.
The timing is particularly sensitive. Tensions have risen sharply in recent weeks after Japan’s new prime minister, Sanae Takaichi, signaled that the country could intervene militarily in the event of a Chinese attack on Taiwan, a break from the strategic ambiguity long favored by Japanese leaders.
Beijing responded with anger, accusing Tokyo of “malicious provocation” and warning that any Japanese role in a Taiwan crisis would cross a red line.
Tokyo maintains that stability in the Taiwan Strait is essential to Japan’s security.
China’s latest patrol fits a broader pattern of calibrated pressure: repeated incursions, assertions of administrative authority and efforts to chip away at Japan’s effective control of the islets.
Tokyo’s sharper tone and Takaichi’s hawkish stance suggest a move toward more robust deterrence, raising the risk that routine coast-guard encounters could turn into genuine flashpoints. With both governments hardening their positions, relations between Asia’s two largest economies may now be at their most strained in more than a decade.
The Middle East
The birthplace of civilization
Saudi delegation to arrive in Washington with limited scope for breakthrough
Saudi Arabia’s crown prince, Mohammed bin Salman, arrives in Washington this week amid a surge of commentary claiming that Riyadh is edging toward normalization with Israel.
That reading is misplaced.
The barriers to any Saudi-Israeli agreement remain firmly in place. Without tangible progress on Palestinian statehood, Riyadh’s internal calculus stays decisively negative towards normalization with Israel. For the crown prince, the reputational, religious and strategic costs of embracing Israel continue to outweigh any potential gains.
Riyadh’s priorities lie elsewhere. Saudi officials are focused on acquiring F-35 fighter jets and securing U.S. cooperation on a civilian nuclear program, including domestic enrichment.
These aims are central to the crown prince’s plan to build a technologically sophisticated, middle-power state.
The desire for F-35s, collides, however, with American legal constraints. Under U.S. law, Washington must maintain Israel’s Qualitative Military Edge, meaning any sale of advanced systems such as the F-35 must be certified as not diminishing Israel’s technological advantage.
The statute does not impose an explicit prohibition, although in practice it has prevented the transfer of such platforms to Saudi Arabia, which many in Israel still view as a potential strategic threat.
The scale of the Saudi delegation, more than a thousand people including almost the entire cabinet, makes clear that Riyadh seeks substantive agreements in Washington.
But with normalization stalled by the absence of a credible path toward a Palestinian state, and with advanced arms sales effectively tied to that process, the most plausible areas for progress lie in civilian nuclear cooperation, investment deals, technology partnerships and sector-specific agreements linked to Vision 2030.
The crown prince may use the visit to deepen strategic ties with the U.S., broaden economic partnerships and reinforce Saudi Arabia’s position as a central regional actor.
What he will not do is sign a normalisation pact without movement towards Palestinian statehood.
Iran faces deepening water and nuclear pressures
Iran is grappling with an intensifying internal emergency, with official media reporting that 16 dams have fallen below 10 percent capacity and 20 of the country’s 31 provinces have recorded no rainfall for the current water year.
Large parts of the national reservoir network are close to exhaustion, the result of prolonged drought, chronic over-extraction of groundwater and inefficient irrigation across a country that is already more than 90 percent arid or semi-arid.
This year’s shortages are among the most severe in decades and have prompted discussion of emergency rationing, cloud-seeding and, in the most extreme scenario, the evacuation of areas in greater Tehran.
Amid this environmental strain, Iran’s foreign minister, Abbas Araghchi, has announced that the country is no longer enriching uranium at any of its nuclear sites. He said all facilities are under International Atomic Energy Agency monitoring and that enrichment work has been suspended after several installations were damaged.
The statement suggests a possible diplomatic opening, although the agency reports movement near nuclear sites and cannot confirm the status of enriched stocks. The convergence of water scarcity and nuclear uncertainty reflects a government under pronounced pressure, struggling to manage overlapping environmental and geopolitical challenges.
Trump Administration
Move fast and break things
Trump cuts tariffs as economic signals worsen
President Donald Trump has announced a sharp reduction in tariffs on a wide range of consumer goods, rolling back much of the punitive schedule imposed after his inauguration.
The exemptions list is extensive, covering beef in most forms (cuts, frozen and smoked varieties), roasted and ground coffee, bananas, oranges, tomatoes, cocoa, cinnamon, nutmeg, other spices, fruit juices, tea and even fertilizers.
The move is not a full tariff repeal, since base duties remain, although it removes the additional surcharges that pushed import costs sharply higher over the past year.
The White House says the policy targets “essentials we do not grow enough here” and is aligned with new trade talks, including negotiations with Latin American suppliers of coffee and bananas.
Trump has also suggested that the relief is part of a broader plan to deliver a US$2,000 “dividend” to low- and middle-income households next year, funded by wider tariff revenues and presented as “America First with a rebate”.
The reductions take effect immediately and are retroactive, with Treasury Secretary Scott Bessent predicting a 20 percent fall in coffee prices by year-end. Industry groups have welcomed the shift: beef exporters expect more predictable quotas, and major roasters such as Starbucks may trim costs by 5 to 10 percent.
The economic backdrop to the announcement is increasingly uneasy. Bessent has warned that parts of the U.S. economy are “already in recession”, a concern reinforced by Trump’s meeting with major bank chief executives at the White House on Wednesday.
Foreclosures have risen by 20 percent compared with last year as households struggle with mortgages and rising living costs, while subprime auto-loan delinquencies have reached their highest level in more than three decades.
Markets are showing signs of stress: AI-related shares have weakened as large investors retreat, with legendary investor Michael Burry selling Nvidia and most of his stock portfolio, followed by SoftBank unloading its entire Nvidia stake and Peter Thiel also divesting his Nvidia holdings.
Crypto markets have also turned sharply lower, with Bitcoin sliding as institutional investors sell into the downturn.
All this comes as U.S. stock valuations reach their highest levels in modern history, exceeding those seen before the Great Depression in the 1930s and the dot-com bubble of 2000.
The combination of tariff relief, deteriorating household finances and historically stretched equity valuations points to a precarious policy landscape and an economy whose outward strength conceals deepening vulnerabilities.
Trump reverses position on Epstein files amid internal revolt
President Donald Trump has abruptly reversed his position on the release of documents tied to the Jeffrey Epstein case, urging House Republicans to support a vote he had previously instructed them to block.
The shift follows a revolt among once-reliable MAGA allies, including Marjorie Taylor Greene, who broke ranks and signed a discharge petition to force the measure onto the House floor. Trump initially denounced Greene as a “traitor”, then conceded that Republicans should allow the release and that he has “nothing to hide.”
The reversal appears driven less by a sudden commitment to transparency than by a calculation that the vote would proceed regardless of his objections, and that continuing to resist would aggravate a rebellion already emerging inside the party.
The episode points to a wider fragmentation within Republican ranks, where procedural fights have become proxy contests over loyalty, identity and influence.
It also highlights the political sensitivity surrounding Epstein’s network, as lawmakers attempt to show independence to voters without inviting the president’s anger.
Trump’s transactional flexibility is therefore as much an effort to reclaim narrative control as it is a response to internal dissent, and it reflects growing instability inside a party long accustomed to his dominance.
New Europe
Europe's center of gravity shifts east, politics moves right, hostility to migrants from the south rises, as ties with the U.S. fray, and fear of Russia increases
UK unveils sweeping overhaul of asylum support and settlement rules
The British government has announced a major overhaul of its asylum and migration policies, declaring that it will end the long-standing legal duty to provide housing and subsistence to everyone who claims asylum.
Under the new framework, support will no longer be automatic but “discretionary”, allowing officials to withhold accommodation or cash assistance from people deemed able to work but unwilling to do so, as well as from those who commit crimes or ignore removal directions.
The government also plans to consult on tighter rules governing migrants’ access to welfare benefits, laying the groundwork for stricter eligibility tests and new conditions for maintaining entitlement.
In parallel, Home Secretary Shabana Mahmood has confirmed a substantial tightening of settlement rules: individuals who arrive in the country illegally will now face a 20-year wait before they can apply for permanent residency, quadrupling the current five-year requirement.
If enacted, the new rule would establish the longest settlement route in Europe, far exceeding Denmark’s existing threshold of eight years, and it signals a clear intent to reposition the United Kingdom as one of the continent’s least permissive destinations for irregular migration.
The combined measures represent one of the most consequential shifts in British migration policy since World War Two, reflecting a government eager to demonstrate control over its borders and reshape the incentives that influence asylum flows.
Whether these reforms reduce arrivals remains uncertain and is, moreover, likely to prompt significant legal challenges in the months ahead.
Watchlist
Japan prepares major stimulus as yen tumbles
Japan is weighing a stimulus package of roughly ¥17 trillion (US$110 billion), prompted by the yen’s slide to its weakest level in nearly 35 years and a rise in borrowing costs that has pushed the 10-year government bond yield to a 17-year high.
The package, which includes tax cuts, subsidies for households and firms and additional spending on semiconductors and artificial intelligence, is intended to bolster demand at a time when domestic consumption and global trade are softening.
The mix of a weakening currency, rising yields and expansive fiscal policy has unsettled investors, who fear that heavy borrowing could worsen long-term vulnerabilities in one of the world’s most indebted economies.
With financial markets now demanding higher returns for holding Japanese debt, and the central bank limited in how far it can intervene without harming its credibility, Tokyo faces a delicate task as it attempts to support growth without diminishing confidence in its public finances.
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What happened today:
887 - Emperor Charles the Fat deposed by Frankish magnates at Frankfurt. 1558 - Elizabeth I succeeds Mary I, beginning the Elizabethan era in England. 1777 - Articles of Confederation are submitted to the U.S. states for ratification. 1800 - United States Congress holds its first session in Washington, D.C. 1831 - Ecuador and Venezuela formally separate from Gran Colombia. 1869 - Suez Canal is inaugurated in Egypt, linking the Mediterranean and Red Seas. 1903 - Russian Social Democratic Labour Party splits into Bolsheviks and Mensheviks. 1950 - Lhamo Dondrub is officially named the 14th Dalai Lama of Tibet. 1969 - U.S. and Soviet negotiators open SALT I strategic arms limitation talks in Helsinki. 1970 - Soviet Lunokhod 1 rover lands on the Moon. 1973 - Athens Polytechnic uprising against Greece’s military junta ends in a bloody crackdown. 1983 - Zapatista Army of National Liberation is founded in Mexico. 1989 - Velvet Revolution begins in Czechoslovakia with a student march in Prague. 1993 - U.S. House of Representatives approves the North American Free Trade Agreement (NAFTA).



