Welcome to this week’s edition of Geopolitics & the Day After. Each week, we curate and synthesize key developments from global politics, economics, and financial markets, drawing from a wide range of trusted sources. Our goal is to provide you with a clear, concise, and insightful overview of the forces transforming the world today and shaping tomorrow. Below is an overview of what we cover this week:
Geopolitical Concerns takes a look at Europe’s and Taiwan’s security strategy overhauls—Europe through whole-of-society mobilization and massive financial commitments amid rising threats from Russia and the CRINK network, and Taiwan via a $40 billion defense budget to boost deterrence against China.
Geoeconomics explores how global economic power is increasingly shaped by energy realignments, currency shifts, and geopolitical fragmentation, as U.S. LNG expansion bolsters Washington’s leverage, India recalibrates its oil strategy, and emerging blocs challenge dollar dominance.
Global Junctions reviews how the AI landscape is shifting from OpenAI-centric dominance to a multipolar race driven by strategic alliances, chip innovation, and geopolitical influence campaigns, where commercial competition and China’s rapid R&D integration are reshaping global technology and supply chains.
Global Trajectories dives into the idea that 2026 is emerging as a year of systemic strain and uneven transformation, marked by institutional fragility, resource crises, and geopolitical competition, even as breakthroughs like geothermal energy signal a parallel push toward building new systems.
In a special COP30 section this week, we examine how the summit concluded with a deal emphasizing adaptation finance and forest initiatives but omitted any commitment to phase out fossil fuels, underscoring the widening gap between climate imperatives and global diplomatic consensus amid resistance from key states and absent major powers.
Geopolitical Concerns
Germany’s Secret Plan for War With Russia
Bertrand Benoit, Wall Street Journal
Taiwan’s Lai unveils $40bn defense budget to deter China
Thompson Chau, Nikkei Asia
CRINK (China, Russia, Iran, North Korea) in 10 Charts
Brian Hart, Bonny Lin, Maria Snegovaya, and Mona Yacoubian, CSIS
Europe must show Trump the money – if it wants any say in what comes next in Ukraine
Grégoire Roos, Chatham House
How the French government is preparing the public for the possibility of war
Julie Carriat, Le Monde
Europe’s security posture is undergoing a transformation as several states prepare for the possibility of large-scale conflict, mainly due to evolving assessments of Russia’s intentions. Germany’s recently revealed 1,200-page OPLAN DEU illustrates the scale of this shift: a whole-of-society mobilization model blending civilian and military domains, designed to move up to 800,000 NATO troops through a country whose infrastructure has atrophied since the Cold War. Stress tests reveal persistent vulnerabilities in logistics, legal frameworks, procurement processes, and civil preparedness, even as Berlin accelerates dual-use upgrades and partnerships with private industry. This renewed urgency reflects a wider strategic environment shaped by Russia’s war in Ukraine and by accelerating coordination among China, Russia, Iran, and North Korea (CRINK). Russia’s invasion has been a catalyst for deepened CRINK alignment, spanning energy flows, dual-use technology transfers, reverse arms transfers into Russia, and expanded joint military exercises. Despite asymmetries in power and differing long-term incentives, the network’s growing economic and security ties represent a systemic challenge to Western deterrence frameworks, further reinforcing Europe’s perception of time pressure.
Against this backdrop, Taiwan is pursuing a parallel recalibration of its security strategy. President Lai Ching-te’s proposed $40 billion special defense budget, aimed at achieving high combat readiness by 2027, signals Taipei’s intent to bolster deterrence amid intensifying pressure from Beijing and heightened political scrutiny at home. The package’s focus on air defense, asymmetric capabilities, and U.S. procurement reflects concerns that reforms initiated under Tsai Ing-wen remain incomplete and that the window for meaningful adaptation is narrowing. While Taiwan’s domestic opposition questions the scale and pace of spending, cross-party support is emerging under U.S. encouragement, showing broad recognition of the stakes. In Europe, financial commitment is likewise becoming central to geopolitical influence. Commentators argue that under a transactional U.S. administration, Europe’s ability to shape outcomes in Ukraine increasingly hinges on matching its rhetoric with substantial financial instruments, potentially approaching €1 trillion through a mix of joint borrowing, sovereign guarantees, EIB mobilization, and use of frozen Russian assets. Meanwhile, France is preparing public opinion for a more volatile era, reintroducing voluntary national service and promoting societal resilience measures. Debates over sacrifice, national identity, and European solidarity reveal how governments are beginning to socialize populations for a geopolitical environment in which deterrence, preparedness, and political cohesion may once again become defining features of security policy.
Geoeconomics
How Natural Gas Became America’s Most Important Export
Kevin Crowley and Ruth Liao, Bloomberg
Why We Could Use a Good, Long Bear Market
Spencer Jakob, Wall Street Journal
The Geoeconomic Conundrum of India’s Oil Purchases
Shashwat Kumar, CSIS
The dollar’s dominance is being challenged more and more
Cerian Richmond Jones, The Economist
The fracturing of the world economy
Martin Wolf, Financial Times
The centrality of energy to global economic power is becoming increasingly evident as U.S. liquefied natural gas (LNG) reshapes diplomatic leverage and trade patterns. With American LNG capacity set to expand by 60% early in President Trump’s second term, natural gas, once a domestic constraint, is now a strategic asset underpinning Washington’s transactional diplomacy. Demand from Europe and key Asian partners remains strong despite geopolitical frictions, reflecting both their need for reliable supply and limited short-term alternatives. This shift is occurring alongside significant turbulence in global markets, where investors may be ill-prepared for a prolonged bear market. The absence of a major correction since 2009 has fostered complacency and speculative excess, raising concerns that a deeper downturn could be necessary to reset valuations, discipline risk-taking, and clarify capital allocation. These dynamics intersect with India’s evolving energy strategy, as New Delhi navigates the geoeconomic trade-offs of relying on discounted Russian crude while avoiding punitive U.S. sanctions. Although Russian oil has offered fiscal benefits, India’s long-term interest now lies in diversifying supply to preserve its macroeconomic stability and negotiating leverage, especially as global supply conditions in 2026 appear favorable.
Broader currency and trade dynamics are amplifying the sense of systemic transition. The dollar’s recent weakening has increased risk premiums for developing economies and incentivized exploration of alternatives to the greenback. China, the BRICS grouping, and other emerging actors are expanding swap lines, promoting yuan-denominated payments, and building digital infrastructure aimed at reducing dollar dependency. Yet, despite incremental shifts in reserve composition, the dollar’s dominance persists due to deep, liquid markets and its outsized role in global settlement. These frictions echo larger structural fractures in the world economy, where geopolitical rivalry is accelerating a division into U.S.- and China-centered blocs. While some analysts argue the U.S. and its allies retain decisive economic and technological advantages, concerns are rising that Washington’s own political volatility and the erosion of institutional reliability could weaken its position. China, despite its policy missteps and slowing growth, retains significant human capital and industrial capacity, making long-term forecasts highly uncertain. What remains clear is that economic fragmentation, whether through energy realignments, currency shifts, or competing trade blocs, will complicate global coordination and likely impose higher costs on all participants.
Global Junctions
Cracks are appearing in OpenAI’s dominant façade
The Economist
Google, the Sleeping Giant in Global AI Race, Now ‘Fully Awake’
Mark Bergen and Newley Purnell, Bloomberg
Fake Tombs and False Prophets: China’s Digital Propaganda in Indonesia
Nava Nuraniya, Julian Droogan and Jennifer Williams, Australian Institute of International Affairs
Is China winning the innovation race?
Edward White, Financial Times
Competition in the AI ecosystem is intensifying as leading firms recalibrate alliances and expand their technological ambitions. OpenAI’s dominance is increasingly strained by spending commitments, investor concerns over financial sustainability, and a high-velocity reshuffling of strategic partnerships. The latest example is Microsoft and Nvidia’s investment in Anthropic, which signals a shift from a single-center ecosystem around OpenAI to a more circular and contested landscape. At the same time, Google has re-emerged as a formidable competitor. The rollout of Gemini 3, together with growing demand for its proprietary TPUs and cloud services, has reassured investors that Google can compete across the full stack, from chips to models to applications. Massive valuation swings across the sector, along with the parallel rise of alternative chip ecosystems, point to an AI race that is no longer defined by one player but by a multipolar competition reshaping both markets and technological strategy.
Beyond commercial rivalries, AI and digital technologies are increasingly embedded in geopolitical influence campaigns and structural innovation shifts. China’s deployment of AI-generated propaganda in Indonesia, mixing pseudo-historical narratives with choreographed humanitarian imagery, shows how digital tools can be used to cultivate cultural affinity, shape political discourse, and indirectly advance economic interests. These influence operations exploit local identity tensions and partially factual historical references, enabling Chinese narratives to be adopted and localized by domestic actors. Simultaneously, China’s accelerating R&D ecosystem is altering global innovation dynamics. Rapid development cycles, deep integration of industrial policy with applied research, and expansive engineering talent pools are enabling China to close longstanding technological gaps and reshape global supply chains in sectors from EVs to advanced materials. Foreign companies increasingly view collaboration in China as essential to remain competitive, even as Western policymakers grapple with the tension between leveraging China’s innovation capacity and mitigating strategic dependencies.
Global Trajectories
Homer’s “Odyssey” offers lessons for navigating 2026
Catherine Nixey, The Economist
Satellite Imagery Shows Tehran’s Accelerating Water Crisis
David Michel, Will Todman, and Jennifer Jun, CSIS
The U.S. Can Outcompete China in Africa
Liam Karr and Yale Ford, American Enterprise Institute
Geothermal’s time has finally come
The Economist
Expect mediocre growth and, in America, too much inflation in the year ahead
Henry Curr, The Economist
The coming year is taking shape as one of disorientation rather than outright disruption, the kind of period when cultural metaphors start doubling as geopolitical commentary. Christopher Nolan’s Odyssey lands in cinemas just as the real world is navigating its own version of a post-war, post-certainty drift. The anxieties embedded in Homer’s wandering hero echo through 2026: tired institutions, fraying social contracts, and leaders trying to manage crises that were entirely foreseeable. Tehran’s water emergency is one of the clearest examples. Years of over-building, distorted incentives, and declining rainfall have pushed the Iranian capital toward rationing and even talk of relocation. The state’s inability to correct its own political economy leaves the regime with only painful options, each one likely to provoke unrest during an already fragile moment. At the same time, a toxic spill in the DRC underscores how resource competition is sharpening. China’s extractive footprint, long tolerated for lack of alternatives, is starting to generate backlash as environmental damage collides with political pressure for fairer economic partnerships. The United States, leaning into a trade-not-aid narrative, sees an opening to frame its own role in Africa as the safer, more sustainable choice.
Yet beneath these crises is a surprising countercurrent: a race to build new systems rather than simply mitigate failing ones. The geothermal boom unfolding in Utah hints at an energy landscape that could look radically different by the early 2030s, one defined not only by wind and solar but by deep-earth heat that runs continuously and aligns perfectly with the power demands of AI. Investors and governments are paying attention because the pace of technical improvement no longer resembles incremental energy policy but an early-stage industrial revolution. This technological optimism, however, is colliding with a macro environment that remains stretched thin. The global economy keeps absorbing shocks but is running out of room. Tariffs are nudging inflation upward, central banks are caught between credibility and political pressure, and deficits across advanced economies are testing market patience. If AI enthusiasm cools or if bond markets lose confidence, the world could find itself with fewer buffers than it had in past downturns. The result is a trajectory defined not by a single crisis but by a widening gap between the risks accumulating at the surface and the breakthroughs happening below it, each shaping the kind of world 2026 is preparing to inherit.
COP30
More than 80 countries at Cop30 join call for roadmap to fossil fuel phase-out
The Guardian
The Economist
COP30 seals uneasy climate deal that sidesteps fossil fuels
Nikkei Asia
Oil Producers, but Maybe Not the Planet, Get a Win as Climate Talks End
Max Bearak and Lisa Friedman, The New York Times
The drama in Belém unfolded against a backdrop of rising climate stakes and falling political ambition. More than eighty countries arrived determined to anchor COP30 around a clear roadmap to phase out fossil fuels, echoing the Dubai pledge and responding to the latest UN warnings that the world is barreling past 1.5 degrees. Their push briefly jolted the talks, with island states, European ministers, and climate envoys from across the global south urging negotiators to turn past commitments into an actionable plan. But resistance from Saudi Arabia, Russia, India, and several developing economies stripped all fossil fuel language from the final drafts, leaving supporters frustrated and the summit’s hosts scrambling. Pope Leo’s virtual address, torrential rains, a venue fire, and public protests created a sense of urgency, yet inside the negotiating rooms, the consensus system again rewarded those most determined to block progress.
The final deal reflects that tension. It boosts adaptation finance, sets up a voluntary acceleration initiative, and celebrates Brazil’s launch of the Tropical Forests Forever Facility, but it avoids naming oil, gas, or coal, the very drivers of the crisis. Latin American countries objected loudly during the closing session, the European Union voiced its disappointment, and vulnerable states warned that ignoring science would have real costs back home. With the United States absent for the first time in three decades and China opting to stay largely quiet, no major power stepped in to bridge the divide. Brazil pledged to pursue fossil fuel and forest roadmaps outside the COP process, but those efforts will have no binding authority. Delegates left Belém exhausted and uneasy, acknowledging that while the talks avoided open failure, they also confirmed the widening gap between what the climate demands and what global diplomacy could deliver.with emissions likely ticking up before cleaner capacity arrives at scale.
