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 shows Europe holding to its Russia sanctions as Washington buys Russian diesel and Moscow’s long-range campaign strains Ukraine, while Gaza and France show how outside restrictions and fiscal limits constrain recovery.
Geoeconomics links rising debt in China and the developing world to a search for safer assets, with Chinese gold buying, higher Treasury term premiums, and Revolut’s push into US banking showing how capital and borrowing costs are shifting.
Global Junctions reveals how a few technology firms control the infrastructure of the AI economy and increasingly its politics, while falling prices, cheaper local models, and public ambivalence strain the commercial footing of that dominance.
Global Trajectories describes technology changing what younger generations can expect from culture and work, while newer tools rebuild market infrastructure in the United States and extend state surveillance across Africa, with lasting consequences for work, markets, and political freedom.
Geopolitical Concerns
Russia has entered a new phase of total war
The Economist
U.K. and Europe Recoil From Trump’s Diesel Deal With Putin
Michael D. Shear and Jeanna Smialek, New York Times
Wringing Hope From the Rubble of Gaza
Saher Alghorra and Aaron Boxerman, New York Times
From farms to high schools, France is a nation on edge
Christophe Ayad, Agathe Beaudouin, Benjamin Keltz, Bastien Scordia, and Florence Traullé, Le Monde
Russia has moved the pressure from the front line to Ukraine’s cities and economy, where it holds the lead in long-range weapons. Moscow has gained a net of perhaps 100 square kilometers on the ground this year, but jet-powered Shahed drones arrived at scale in late August, and Russia can reportedly launch more than 100 missiles a month. Ukraine lacks an interceptor for the new drones and holds very low stocks of Patriot missiles. The economic damage is already visible. Steel output in August was 60 percent lower than a year earlier, the deep seaports at Odesa have been effectively closed since July, and Kyiv would receive about 16 hours of electricity a day in winter if the Makariv substation holds and about four if it does not. Washington has taken a different course on Russian energy. President Trump announced a deal with Vladimir Putin to buy Russian diesel that had been under American sanctions, an arrangement that energy experts say could send about $4 billion into the Russian economy if it goes ahead. Ukrainian President Volodymyr Zelensky called it “a gift” to Putin. European governments stopped short of criticizing Trump and settled on a shared message that their own approach to Russia is unchanged. Germany said it is standing by its sanctions and working on more, and Polish Prime Minister Donald Tusk urged the United States and European nations to increase sanctions rather than step back from them. Trump replied that the European Union paid Russia $250 billion for energy. Tracking data put EU purchases of Russian oil, coal, and gas since early 2022 at €238 billion, mostly in the first year, and daily imports have since fallen to about €47 million from nearly €800 million at the 2022 peak.
Elsewhere, the Gaza ceasefire is now a year old. Israeli strikes have continued, killing more than 1,400 people since the truce, according to local health officials, and Israel says it is targeting Hamas militants. The Israeli withdrawal and Hamas disarmament that the ceasefire plan envisioned have not happened, and more than half of the territory is effectively off limits to most of its two million residents. The United Nations says about 80 percent of buildings were destroyed or damaged, and Israel restricts the entry of heavy machinery, concrete, and cement because Hamas used such materials to build tunnels. Residents are rebuilding with what remains. One brick maker digs clay from bomb craters, and a beekeeper in Jabaliya has rebuilt to six hives after nearly all of the about 400 were destroyed. In France, the strain is fiscal and social. France’s public debt has reached a record 119 percent of gross domestic product, which leaves the government of Prime Minister Sébastien Lecornu little room to maneuver in the upcoming budget and no option to raise taxes. Wildfires burned about 98,000 hectares, close to the 1976 record, and the main farmers’ union estimates drought losses at €10 billion. About 7,000 people, mostly minors, were taken into custody during high school blockades, a number unprecedented even at the height of the Yellow Vests movement. Among civil servants working for the state who report a party affiliation, closeness to the National Rally has doubled from 12 percent in 2019 to 24 percent.
Geoeconomics
Xi’s Superpower Ambitions Fuel a Dangerous Debt Spiral in China
Brian Spegele, WSJ
Why China is importing a record amount of gold — and what it means for prices
Anniek Bao, CNBC
A Global Debt Crisis Is Looming
Paolo Gentiloni, Trevor Manuel, and Mahmoud Mohieldin, Project Syndicate
Wall Street Sees an Ominous Sign in Bond Market’s Latest Selloff
Greg Ritchie, Bloomberg
Revolut’s Storonsky Says He’s Coming for JPMorgan’s US Crown
Charlie Wells and Tom Mackenzie, Bloomberg
China’s debt has grown faster than its economy can use it productively. Credit to the nonfinancial sector topped 300 percent of gross domestic product last year, 60 percentage points higher than at the end of 2019, and much of it financed factories and apartment blocks without enough demand behind them. Official figures understate the problem because the bulk of it sits with local government financing vehicles, which pushed a broader gauge of government debt to an estimated 127 percent of output last year from 98 percent in 2020. Producers sell the excess abroad, which has opened a trade surplus of about $1 trillion a year, while household consumption stood at 40 percent of output in 2024 compared with nearly 70 percent in the United States. Growth of 4.3 percent in the second quarter was the slowest in more than three years. Households have few places to put savings after the property slump, and gold has become one of them. China imported a record $158.8 billion of gold in the first eight months of 2026, more than the $96.5 billion for all of 2025. The central bank has bought for 23 straight months as part of an effort to reduce reliance on US Treasuries, whose Chinese holdings fell to an 18-year low of $618 billion in July. Analysts say that buying has put a floor under prices, which fell more than 8 percent in September to about $4,176 an ounce after a January record above $5,500.
Debt pressure is building outside China, and creditors have started to adjust. Moody’s now treats the option to pause debt servicing as credit-positive and will not count it as a default. The typical developing country now spends about 9.5 percent of government revenue on interest, the highest share in 25 years, and 32 low-income countries are in debt distress or at high risk of it. A UN expert group on debt says the problem is the cost and availability of new financing rather than the size of debts, and calls for a temporary suspension process for debt payments similar to the G20’s pandemic-era initiative. The cost of financing is rising in the largest bond market. The 10-year Treasury term premium has climbed about 40 basis points since mid-September to roughly 0.98 percent on the New York Fed’s model, the highest since 2014, and it drove the latest leg of a selloff that has taken 10-year yields to a 24-year high. Bloomberg reports no clear-cut catalyst, since inflation expectations were stable and oil held in a narrow range above $100 a barrel. Possible contributors include spillover from the disorderly selloff in French bonds, a federal deficit of about $2 trillion, and doubts about holding fixed income when inflationary shocks are becoming more frequent. In banking, one European fintech company sees an opening in the United States. Revolut won conditional approval in September to operate as a US national bank, which would give it access to Federal Reserve payment systems and the ability to offer credit cards and personal loans. Chief executive Nik Storonsky says the firm, which has more than 80 million customers and is conducting a secondary share sale at a valuation of $115 billion, wants to “dominate” the market and would hold a primary listing there if it goes public, though not before 2028.
Global Junctions
Ben Tarnoff, The New York Review of Books
Fukuyama, Thiel, and the Revenge of the Last Man
Benn Steil, Project Syndicate
People really hate AI, so why can’t they get enough?
Will Douglas Heaven, MIT Technology Review
Andy Kessler, WSJ
Five technology companies in California and Washington have a combined market capitalization of about $20 trillion, and the economist Cecilia Rikap describes them as intellectual monopolies that collect rents from data, knowledge, and other intangible assets. Amazon, Google, and Microsoft hold a particular position because the vast majority of the world’s organizations rely on their clouds, which gives them a live view of commerce across nearly every industry. Their reach extends to universities and start-ups, which function as outsourced research labs for the largest investors. Between 2012 and 2021, Microsoft co-authored 88 percent of its more than 15,000 scientific publications with outside organizations but shared ownership of only 1 percent of its patents. Nick Srnicek adds that the AI buildout now depends on governments, since data centers, energy, and customers abroad require state support, export controls, and efforts to bring other countries into the American AI stack. Peter Thiel, a co-founder of PayPal and Palantir, has financed Donald Trump, JD Vance, and other Republicans who pledge to deregulate technology. In 2009, he wrote that he no longer believed freedom and democracy are compatible. His investments in SpaceX and charter cities such as Próspera in Honduras have sought alternatives to state control, while Palantir now performs defense, intelligence, and border functions for governments. Thiel has insisted that the growing influence of technology on American politics is a force for liberty that helps disperse entrenched power centers.
Public opinion on AI is more divided than the industry’s dominance suggests. ChatGPT reached a billion monthly users in May and Gemini logged 950 million in July, though more American adults expect AI to harm them personally and society than expect a benefit, according to Pew. In a Gallup poll, 71 percent of US adults opposed a new AI data center in their area, compared with 53 percent for a new nuclear plant. All 50 US states have passed or proposed AI laws, a patchwork of more than 2,100 bills. Heaven argues that people dislike not the technology but the relentless push by the companies behind it to put it everywhere. Falling prices may matter more than sentiment for the business behind that usage. Chinese open-weight models charged 6 to 12 cents per million input tokens last week, about 90 percent less than the $1 to $2 that OpenAI and Anthropic charged for some models, according to OpenRouter. Kessler writes that American labs have gone from 70 percent market share last year to 30 percent, though all are still growing, and small models that run on laptops and phones keep improving. Qualcomm says a new phone chip could run a 30-billion-parameter model in 3 gigabytes of memory. A Stanford study found that a local model answered 88.7 percent of single-turn queries. Venture capitalist Steve Jurvetson says technology shifts often arrive when a new approach is 10 times better or cheaper. If prices fall 90 percent, demand has to grow 900 percent to keep revenue flat, and Kessler notes that Global Crossing failed when internet prices dropped too fast.
Global Trajectories
Is society growing stupider? The clues are simple and repeated.
James Marriott, Washington Post
China’s Weakening Economy Is Creating a Lost Generation
Hannah Miao, WSJ
The Biggest Change to Stock Trading in Decades Is Coming to Wall Street
Joe Light, Barron’s
The Authoritarian Future Is Already Here
Megan K. Stack, New York Times
Entertainment and the arts are simplifying as distracted audiences reward content they can follow without sustained attention. Sentences in best-selling books have shortened by almost a third since the 1930s. An analysis of more than 350,000 songs found lyrics becoming simpler and more repetitive between 1970 and 2020, and Netflix has reportedly asked for scripts that repeat the plot because viewers are on their phones. Sequels and spin-offs have risen from about 25 percent of top-grossing films before 2000 to 75 percent in the 2020s, and older songs now make up more than 70 percent of the music market. In China, young workers face a shrinking market for entry-level jobs. The urban jobless rate for 16- to 24-year-olds who are not students was roughly 19 percent in August, compared with about 9 percent in the United States, while a record 12.7 million people graduated from college this year. A study of 700 million job postings found that AI has reduced hiring demand most for workers with one to three years of experience, because language models now handle the basic tasks that newcomers once trained on. Many of those who cannot find stable work have moved into flexible gig roles, expected to reach 320 million people this year, and robotaxis and robots threaten some of those jobs too. Beijing has warned employers not to cut jobs as they adopt the technology. The warnings followed a poll of China’s biggest employers by Vice Premier He Lifeng last year, in which some estimated that AI could eliminate 30 percent or more of their existing roles, according to people familiar with the matter.
Technology is also changing how markets operate. The Depository Trust & Clearing Corp. is scheduled to launch a platform in October that lets participants tokenize many stocks and exchange-traded funds. Holders can then move tokenized shares between one another almost instantly and around the clock. Citigroup’s base case projects the tokenized asset market reaching $5.5 trillion by 2030 from $17 billion today. The Securities and Exchange Commission issued an exemption for new tokenized trading venues two days after the Clarity Act stalled in the Senate. A joint venture of Intercontinental Exchange and OKX has filed to list 63 companies, though Cerebras Systems has already objected. Nasdaq estimates that the largest institutions could earn up to $340 million a year by freeing excess collateral. Critics warn that round-the-clock trading raises the risk of overnight crashes when liquidity is low. Technology also extends state surveillance in Africa. African governments have spent at least $2 billion on Chinese surveillance systems powered by artificial intelligence. Uganda installed a $126 million camera network from Huawei in 2019, and Huawei has denied helping the government spy on opponents. Its security forces also use Russian license plate tracking and Israeli phone-extraction software. The author Kakwenza Rukirabashaija, a critic of the ruling family, says he was repeatedly detained and tortured. Stack writes that she was told repeatedly that American silence during the clampdown has emboldened the government and made it easier for other Western countries to stay quiet. Uganda owes China about $2.6 billion, and Chinese officials are working with ruling parties in several countries on leadership training schools.
