This commentary has reported on Sudan’s civil war in prior editions, and the near encirclement of El Obeid marks an escalation rather than a new crisis. More than 600,000 civilians face acute shortages of food, water, and medicine as the Rapid Support Forces close in on the city, five months after the United Nations first documented acts of genocide in the country. The death toll, estimated by independent monitors at between 150,000 and 400,000, now rivals or exceeds the toll from Gaza and Ukraine combined, yet the war draws a fraction of the diplomatic attention directed at those conflicts. That gap reflects a wider failure spanning humanitarian aid, diplomacy, statecraft, and faith in international leadership. A road map proposed last September by the United States, Egypt, Saudi Arabia, and the United Arab Emirates collapsed within weeks, and the regional powers with the most leverage over the combatants have so far prioritized their own influence in Sudan over ending the killing. This week’s edition of Geopolitics & the Day After examines this failure alongside a broader pattern of institutions, alliances, and safeguards under strain, from Europe’s defense planning to the erosion of reading and reasoning in a postliterate culture.
Geopolitical Concerns
How Europe would fight without America
Ben Hall, Charles Clover, and Henry Foy, Financial Times
Michael Kofman, Foreign Affairs
The man who would change Russia
The Economist
Why the US and Iran are stuck in a cycle of tit-for-tat strikes
Andrew England and Alice Hancock, Financial Times
At NATO’s summit in Ankara, European governments have begun preparing for what had been, until recently, an unthinkable scenario: defending the continent with a much-reduced American role, or none at all. Twelve months of eroded trust in Washington’s commitment, compounded by threats against Denmark over Greenland and a national security strategy openly critical of European allies, have pushed military planners in Paris, London, and Berlin to rethink command structures, procurement schedules, and battlefield doctrine rather than treat higher defense budgets alone as the answer. NATO’s own defense plans assumed the United States would carry nearly 40 percent of the warfighting burden. That share is now expected to shrink, and weapons deliveries have already slowed as the war with Iran drained American and Gulf stockpiles, forcing European buyers toward domestic suppliers instead of a years-long wait for American equipment. European militaries are also applying lessons drawn directly from Ukraine’s drone-dominated battlefield. A British armored exercise at Copehill Down last spring and a separate Swedish exercise pitting national forces against a Ukrainian drone unit both showed how unprepared conventional armor and infantry remain for an environment saturated with cheap, expendable drones.
Russia’s armed forces have grown from roughly 850,000 to 1.3 million personnel despite hundreds of thousands of deaths, and current production trends suggest a force capable of threatening NATO members within five to seven years, even though its command structures and personnel quality remain far below prewar standards. The military has already rebuilt much of its armored fleet through refurbishment and new production and is on pace to field more than 200 of its most advanced tanks annually, while its adaptation cycles, in which one side copies the other’s battlefield tactics or technology, now run three to four months, faster than Western planners expected earlier in the war. Andrey Melnichenko, Russia’s leading industrialist, has broken with a long-standing practice among the country’s business elite of remaining publicly apolitical to warn that continued one-man rule risks pushing the country toward anarchy, foreign domination, or a closed, permanently besieged state modeled on North Korea. He points to fistfights at Russian filling stations and viral complaints from pro-war social media influencers as signs that the war has come home in ways the annexation of Crimea in 2014 never did. A separate test of American resolve is playing out in the Strait of Hormuz, where a June ceasefire and reopening deal between the United States and Iran has broken down repeatedly into cycles of shipping attacks and retaliatory strikes, prompting President Trump to describe the truce as over. The dispute centers on control of the strait itself: Iran insists on routing ships close to its own coastline so it can monitor traffic, while Washington has encouraged vessels to use a route near Oman that keeps American air cover in place. More than 570 vessels have transited the strait under the current arrangement even as neither side has ceded the underlying point.
Geoeconomics
Global Economy, Hit by Iran War and Inflation, Faces Sharp Slowdown
Alan Rappeport, The New York Times
The Quarter-Trillion-Dollar Onslaught of AI Bonds Is Testing Investors’ Limits
Sam Goldfarb, The Wall Street Journal
Europe’s economy is a mess. Its stock markets are a steal
The Economist
Governments Must Fix Their Debt Messes Before It’s Too Late
Michael R. Bloomberg, Bloomberg
The IMF now projects global growth of 3 percent for 2026, down from 3.5 percent last year, as the war between the United States, Israel, and Iran disrupts energy supply chains and pushes global inflation to a projected 4.7 percent. The forecast remains hostage to the Strait of Hormuz, where renewed tanker attacks and Washington’s decision to revoke a sanctions waiver on Iranian oil sales have reintroduced the uncertainty the June ceasefire was meant to remove. Oil-producing Gulf economies face sharp contractions, India’s growth is projected to fall to 6.4 percent from 7.7 percent, and China’s to 4.6 percent from 5 percent, even as the American economy holds at 2.3 percent growth on the strength of energy exports and technology investment. That same uncertainty over energy costs and interest rates is now colliding with a separate borrowing wave in corporate credit markets, where six AI hyperscalers, including Nvidia, Amazon, and SpaceX, have issued roughly $244 billion in bonds this year, more than double 2025’s total. Investors have pushed spreads wider on the expectation of continuous further issuance tied to AI infrastructure spending that some estimates put above $10 trillion over the next several years. Nvidia’s and Amazon’s bonds each slumped in secondary trading despite selling at relatively low yields, and SpaceX, issuing its first bonds in June, has seen its spread widen nearly half a percentage point as investors struggle to price an untested credit.
Europe’s stock markets remain deeply out of favor with international investors, who pulled back sharply once the war with Iran began and have been slow to return even as the Strait tentatively reopened in June. Roughly 40 percent of the earnings underlying the MSCI Europe index come from firms with substantial exposure to real assets such as energy and commodities, which tend to benefit from higher prices, and more than half of aggregate European revenue originates outside the continent’s own economy, which the IMF expects to grow just 1.1 percent this year. Analysts now forecast 17 percent earnings-per-share growth for European companies in 2026, up from a 9 percent consensus two years ago, a bullish signal that has yet to be reflected in valuations still depressed by the region’s weak headline growth and its absence of homegrown AI champions. Rising borrowing costs are compounding pressure on public finances more broadly. Advanced-economy government debt has climbed to 110 percent of GDP, roughly double its 2007 level, and yields on longer-term bonds have risen sharply since the war in Iran unsettled energy markets, pushing up the cost of servicing that debt across the developed world. Pension funds and hedge funds have increasingly relied on leveraged derivatives to hold government bonds, a practice that magnified market stress during the UK’s 2022 gilt crisis and the global dash for cash in 2020. Michael Bloomberg has urged regulators to limit that leverage and run systemwide stress tests before forced selling by over-extended investors pushes rates high enough to make the underlying debt problem self-fulfilling. That same fragility now sits beneath bond markets already absorbing record issuance from governments and AI hyperscalers alike.
Global Junctions
The price of Palantir’s politics
Joe Miller, George Hammond, and Chris Cook, Financial Times
AI Giants Are Handing Out Tons of Free Computing Power to Grab Startup Share
Kate Clark, Berber Jin, and Angel Au-Yeung,The Wall Street Journal
Why CPUs are now at the center of the AI race
Cheng Ting-Fang, Lauly Li, and Yifan Yu, Nikkei Asia
China may struggle to fund Xi Jinping’s tech dreams
The Economist
Palantir’s alignment with the Trump administration’s immigration enforcement, and the outspoken politics of its chief executive Alex Karp, are beginning to generate resistance that could affect a $330 billion business built substantially on government contracts. Government agencies in Switzerland, Germany, and France have rejected or replaced its tools, London’s mayor has blocked a contract with the Metropolitan Police, and Democratic lawmakers have signaled plans to compel testimony and revisit more than $10 billion in Pentagon contracts should Democrats retake the House this November. The company has also lost more than five dozen senior engineers to Anthropic and OpenAI over the past year, evidence that the contest for AI talent is inseparable from politics. That contest for customers is playing out just as aggressively among the model developers themselves, who are giving away free access to their AI systems to win over the startups that could become paying customers later. Anthropic and OpenAI have both moved from modest referral discounts to seven-figure incentive packages for early-stage startups: Anthropic raised its standard offer to Y Combinator companies from $30,000 to $500,000 in free credits with no strings attached, while OpenAI now offers $500,000 in credits outright plus an additional $1.5 million for companies willing to give up equity in exchange. Cursor, the AI coding startup recently acquired by SpaceX, has offered its own customers discounts of up to 75 percent. Across a single Y Combinator cohort of roughly 200 companies, the two labs alone could give away as much as $800 million in free computing over the next year, a bet that today’s giveaways will translate into tomorrow’s paying customers once those startups scale and can no longer rely on free credits.
The physical hardware underlying the AI buildout is shifting as well. The market for data-center CPUs, once considered a mature and slow-growing business, is projected to grow more than 40 percent annually and surpass $220 billion by 2030. The shift reflects AI workloads moving from training toward inference and agentic tasks that depend more heavily on CPU-driven orchestration, drawing Nvidia, Qualcomm, and Arm into direct competition with longtime leaders Intel and AMD. The ratio of CPUs to GPUs in AI data centers has already narrowed from roughly one-to-eight to one-to-four, and industry executives expect it to tighten further as agentic systems place growing demands on CPU-driven task management. China is financing its own version of this buildout through different means. Beijing has eased earlier restrictions on tech investment and steered state capital toward companies such as Unitree and DeepSeek, helping Chinese firms raise roughly $32 billion in IPOs this year, double 2025’s total. State-backed funds have moved fast to back winners: SMIC’s own venture arm now holds stakes in more than 400 semiconductor firms, and regulators approved Unitree’s IPO in just 100 days, a fraction of the year or more such approvals used to take, after the robotics firm’s valuation rocketed from 10 million to 42 billion yuan in a decade. Much of that capital comes with conditions attached, however. Bank-backed funds favor firms that already carry government recognition, and state-directed investment crowds out the kind of returns-driven private capital that has fueled America’s AI buildout. The asymmetry points to two different models for financing the same technology race, one relying on abundant private capital chasing market share, the other on a state apparatus still calibrated to serve industrial policy first and investor returns second.
Global Trajectories
There’s a New Way of War, but Is It Evolution or Revolution?
Yaroslav Trofimov, The Wall Street Journal
The EU Emissions Trading System Works But Most Decarbonisation Is Still to Come
Debora Revoltella and Fotios Kalantzis, Bruegel
Jason Ma, Fortune
Rose Horowitch, The Atlantic
The war in Ukraine has forced militaries worldwide to confront how fundamentally combat is changing. Cheap, expendable drones now account for the large majority of Russian equipment losses, autonomous systems guided by artificial intelligence are beginning to select and pursue targets with little human involvement, and the concentration of troops that once defined maneuver warfare has become a liability under pervasive aerial surveillance. Analysts caution against overcorrecting in either direction, whether dismissing Russia’s degraded battlefield performance as proof of lasting weakness or assuming Western air superiority and precision munitions guarantee an easy fight, given that neither assumption held against Iran earlier this year. Structural risk is accumulating more quietly elsewhere, in carbon markets and bank balance sheets built to look stable in the near term. Free allowances under the EU’s emissions trading system are phasing out this year, and only 15 percent of covered manufacturers say their largest emissions cuts have already happened, meaning the policy’s most binding phase still lies ahead even after it has already cut regulated industrial emissions by half since 2005. A comparable gap between appearance and underlying condition has opened in Russia’s banking sector, where a European intelligence assessment describes the financial system as sustained by state-directed lending that conceals a deteriorating loan book. Roughly 10 percent of corporate loans and 15 percent of retail loans at some major banks are now considered at risk of nonpayment, and personal bankruptcies rose nearly a third last year to more than 500,000. In both cases the strain has been managed rather than resolved, and each system’s apparent stability now rests on assumptions about carbon-price credibility and continued state backstopping that current data suggest are increasingly hard to sustain.
Another shift is underway in how people read and process written information: American reading rates have fallen sharply across every age group and education level. Fewer than half of adults reported reading a book in 2022, and the share of Americans reading for pleasure on a given day dropped from 28 percent in 2004 to 16 percent in 2023. Average attention spans on screens have fallen from two and a half minutes in 2004 to under a minute today. Reasoning-linked IQ scores have also declined for roughly two decades, reversing a rising trend that had held since the 1930s, and generative AI risks compounding the decline. Early studies show that offloading writing to AI produces cleaner prose but weaker retention and critical thinking in the people who use it, and universities are already adjusting: some professors now spend class time teaching students how to read a text closely, a skill once assumed to arrive with a high school diploma. The shift carries consequences for public life as well. Communication built around short, repeatable, emotionally charged messaging increasingly outperforms longer written argument, a dynamic that media theorists had predicted decades ago would favor leaders who prioritize being seen and heard over being read, and that some now argue has already reshaped how politics is conducted.
