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 reviews how U.S.–Iran tensions, Europe’s shifting security environment, Ukraine’s wartime transformation, and Tehran’s hardening strategic outlook collectively point toward a global landscape defined less by large, deliberate invasions and more by calibrated escalation, militarized standoffs, and long-term structural fragilities.
Geoeconomics takes a look at how the global economy is becoming increasingly dependent on AI-driven capital concentration, shifting U.S. financial regulations, growing stress in private credit markets, and weakening confidence in U.S. Treasuries.
Global Junctions dives into AI’s evolution from a hardware boom to financialized infrastructure, intersecting with shifting geopolitical and industrial dynamics—particularly China’s expanding clean‑energy dominance—suggesting that future economic power will hinge on integrated systems combining technology, finance, and state‑backed industrial strategy.
Global Trajectories examines how efforts to reduce dependence on China’s critical minerals, diverging U.S. and Chinese energy strategies, rising fiscal fragility in advanced economies, and expert forecasts of a more fragmented 2036 all indicate a world moving toward deeper structural competition and systemic geopolitical risk.
Geopolitical Concerns
What War With Iran Would Look Like
Arash Reisinezhad, Foreign Policy
Samuel Charap and Hiski Haukkala, Foreign Affairs
How a four-year onslaught has changed Ukraine
Economist
Vali Nasr, Financial Times
Washington and Tehran are operating within a bargaining framework in which military force is increasingly viewed as an instrument to reshape negotiations rather than replace them. The most plausible scenario between them is not invasion but a calibrated strike, potentially targeting leadership and strategic infrastructure designed to reconfigure leverage ahead of renewed talks. From the U.S. perspective, Iran’s regional deterrence architecture has weakened, creating what some see as an opportunity to extract broader concessions on nuclear capabilities, missiles, and proxies. Yet a full-scale war would be strategically counterproductive, diverting U.S. resources from competition with China, destabilizing energy markets, and risking prolonged regional entanglement. In Europe, a ceasefire in Ukraine may not restore stability but instead usher in a tense, militarized standoff between NATO and Russia. With institutional ties dismantled, defense spending rising, and communication channels degraded, the continent faces elevated risks of miscalculation. Rather than a deliberate Russian assault, the more realistic danger lies in escalation stemming from gray-zone provocations, military exercises, or spillover from Ukraine.
Four years of war have massively transformed Ukraine internally. Initial improvised resistance evolved into a high-tech conflict centered on drones, allowing Kyiv to survive despite material asymmetries. Yet battlefield resilience masks structural strains like manpower shortages, rising desertion rates, infrastructure damage, political fractures, and uncertainty over external guarantees. Even as peace negotiations emerge, territorial concessions and wavering U.S. commitment complicate Ukraine’s long-term security calculus, reinforcing a lesson drawn by frontline defenders: that ultimate security rests on national capacity rather than external assurances. Inside Iran, Tehran increasingly views war as inevitable and potentially preferable to what it sees as a coercive diplomatic trap. Iranian leaders distrust U.S. commitments, fear regime-change ambitions, and interpret demands for comprehensive disarmament as existential threats. Rather than expecting gains at the negotiating table, the regime appears to be preparing for a prolonged conflict that could raise costs for the United States and its regional partners, strain energy routes, and potentially generate domestic nationalist consolidation. While this strategy carries significant risks, it reflects a calculation that sustained confrontation may ultimately produce more favorable terms than concessions made under current pressure.
Geoeconomics
AI/End of the world, Orion Gemini
Five US Policy Shifts Could Reshape Financial Markets by Dambisa Moyo
Dambisa Moyo, Project Syndicate
Blue Owl Anxiety Rattles $1.8 Trillion Private Credit Market
Silas Brown, Olivia Fishlow, Leonard Kehnscherper, and Ellen DiMauro, Bloomberg
The haven asset status of US Treasuries is eroding
John Plender, Financial Times
U.S. economic growth has become increasingly concentrated in artificial intelligence–related capital expenditure, with estimates suggesting that between 20% and over 90% of GDP expansion in early 2025 was linked to hyperscaler investment in data centers and compute infrastructure. This has coincided with pronounced market narrowness, as the ten largest firms now account for roughly 40% of S&P 500 capitalization, while smaller listed companies and private middle-market firms face tighter financing conditions and weaker pricing power. Value creation is increasingly anchored in cash-rich, platform-based models tied to AI deployment, reinforcing structural divergence across corporate balance sheets. Elevated valuations, record technology-sector debt issuance, and circular investment dynamics heighten vulnerability to either an AI underperformance scenario, implying sharp corrections and slower growth, or a productivity surge that compresses labor income and consumption. In both cases, reliance on a narrow growth engine raises broader concerns about macroeconomic resilience and distributional stability.
At the same time, domestic policy shifts point to a more interventionist financial environment. Proposed changes to sovereign wealth fund taxation, temporary caps on credit-card interest rates, restrictions on institutional home purchases, limits on proxy advisory firms, and potential moves toward semi-annual corporate reporting suggest recalibration of market incentives and governance norms. These initiatives are unfolding alongside renewed Treasury bill purchases, directives for housing agencies to acquire mortgage-backed securities, and regulatory accommodation for dollar-backed stablecoins, signaling greater fluidity in capital markets. Strains are also emerging in the $1.8 trillion private credit sector, where redemption limits in technology-focused funds have drawn attention to liquidity mismatches, AI-linked concentration, and opaque valuation practices, prompting comparisons with pre-2008 vulnerabilities despite near-par loan disposals. Meanwhile, the perceived erosion of U.S. Treasuries’ safe-haven status amid rising public debt, geopolitical uncertainty, and concerns over institutional independence has encouraged diversification toward gold, the Swiss franc, and German Bunds, even as U.S. equities continue to attract capital.
Global Junctions
The financialisation of AI is just beginning
Economist
Why AI Is Unlike Previous Tech Booms
Dambisa Moyo, Project Syndicate
China is becoming a green superpower as Trump retreats from climate goal
Laura Bicker, BBC News
Artificial intelligence is entering a phase in which its expansion is no longer defined solely by hardware deployment but increasingly by financial engineering. Although hyperscalers are projected to spend roughly $700 billion this year on data centers and compute infrastructure, graphics processing units (GPUs) remain only marginally embedded in capital markets. New platforms are attempting to establish pricing benchmarks, derivatives, and GPU-collateralized securities that would allow compute to be hedged, traded, and securitized in a manner comparable to commodities or structured credit. Significant obstacles remain, including rapid technological depreciation, regional price dispersion, and valuation uncertainty, all of which complicate collateralization and risk transfer. If such barriers are mitigated, however, more sophisticated financial instruments could redistribute risk, lower borrowing costs, and unlock additional capital for AI-dependent firms, reinforcing the role of financial architecture in scaling technological revolutions. At the same time, AI’s competitive logic diverges from earlier tech cycles. Unlike asset-light platforms that benefited from near-zero marginal costs and strong network effects, AI is capital-intensive, energy-demanding, and has persistent operating expenses. With low switching costs and heightened regulatory scrutiny, durable advantage may depend less on user scale and more on balance-sheet strength, sustained investment capacity, and political positioning.
These shifts intersect with a broader geopolitical transformation in energy and industrial policy. As the United States scales back elements of its climate agenda, China has consolidated its position as a renewables superpower through coordinated state investment in solar, wind, batteries, electric vehicles, and grid infrastructure. Solar capacity now exceeds 1,000 GW, and rapid clean-power deployment has begun offsetting incremental fossil-fuel growth, even as coal remains central to electricity generation. Manufacturing scale, subsidies, and supply-chain integration have driven global price declines, while simultaneously generating domestic oversupply, financial strain among producers, and localized environmental and social tensions. The convergence of AI’s capital demands and China’s system-level approach to energy reveals a common theme, that of technological leadership increasingly resting on integrated ecosystems that combine industrial strategy, financial depth, infrastructure control, and regulatory leverage. Across both domains, the junction between finance, technology, and geopolitics is tightening, reshaping the foundations of economic power.
Global Trajectories
US faces ‘decade-long’ road to loosening China’s grip on rare earths
Pak Yiu, Nikkei Asia
Energy Dominance With Chinese Characteristics
Carolyn Kissane, Foreign Affairs
The rich world should beware Brazilification
Economist
Welcome to 2036: What the world could look like in ten years, according to nearly 450 experts
Mary Kate Aylward, Peter Engelke, Uri Friedman, and Paul Kielstra, Atlantic Council
Washington has intensified efforts to reduce reliance on China’s dominance in critical minerals through a proposed $12 billion strategic reserve, new bilateral supply agreements with more than 50 countries, preferential trade arrangements, and expanded public financing for domestic and overseas mining projects. Equity stakes in U.S. producers and investments in assets abroad aim to diversify sourcing and strengthen supply-chain security. Yet structural constraints like lengthy permitting processes, high capital costs, and China’s control over roughly 90% of global heavy rare earth refining, limit the speed and scale of reconfiguration. Analysts caution that stockpiling would cover only a limited period of demand and could raise procurement costs if suppliers gain pricing leverage, while meaningful diversification may require decades. This push unfolds alongside contrasting approaches to energy strategy. While U.S. policy emphasizes fossil fuel expansion under the banner of “energy dominance,” China has built an integrated system spanning renewables, batteries, grid infrastructure, and nuclear power, combining industrial policy, manufacturing scale, and state-backed finance. Electrification has been positioned as a pillar of national strength, extending Beijing’s influence across domestic systems and into infrastructure deployment throughout the developing world.
Fiscal and institutional pressures add another layer of structural risk. Brazil shows how high interest rates can generate a debt spiral, with policy rates at 15% required to contain inflation and pension obligations constraining fiscal flexibility. Stabilizing debt under such conditions would necessitate sustained primary surpluses, showing how institutional fragility and demographic pressures can elevate borrowing costs even when headline deficits appear manageable. Broader forward-looking assessments reinforce expectations of systemic strain. Surveyed strategists anticipate a more fragmented global order by 2036, with China surpassing the United States economically, rising risks of conflict over Taiwan, expanded nuclear proliferation, and declining influence of multilateral institutions amid democratic backsliding. Although the dollar is expected to retain reserve-currency primacy, cryptocurrencies and alternative assets may erode its relative position.
