In Geopolitical Concerns, the once-stable transatlantic alliance is fraying, as Washington’s ideological drift and Poland’s hard-right turn under Trump-backed President Nawrocki challenge EU cohesion just as Europe confronts the China-Russia axis and Ukraine escalates its deep-strike drone campaign into Russian territory.
In Geoeconomics, Trump’s proposed 50% EU tariffs, attacks on elite institutions, and politicized monetary policy are shaking global confidence in the dollar, even as bond volatility in Japan and U.S. fiscal recklessness trigger rising yields and investor flight toward gold and other currencies.
Global Junctions explores the AI agent race between the U.S. and China—where Google, Alibaba, and startups push new frontiers—as Europe falls behind, while fiber-optic drones in Ukraine and surging Chinese chip tech spotlight the military and economic edge of next-gen innovation.
Finally, in Global Trajectories, Gaza teeters on famine, Taiwan faces rising threat warnings, China’s uneven property rebound reflects deeper vulnerabilities, and scholars warn we may be entering a new revisionist era demanding Cold War-style deterrence and alliance building.
Geopolitical Concerns
For Europe, America was the future. Now what?
Mark Mozower, The Financial Times
Europe Sees China-Russia Threat as World’s ‘Greatest Challenge’
Alberto Nardelli, Philip Heijmans, and Josh Xiao, Bloomberg
What Poland’s new hard-right president means for Europe
The Economist
An astonishing raid deep inside Russia rewrites the rules of war
The Economist
The relationship between Europe and the United States, which has spanned over two centuries and historically saw America emerge from the European imagination before becoming Europe’s model for the future, is currently experiencing an unprecedented estrangement. This shift is marked by the current US administration’s “hectoring” approach towards its European partners, leading to concerns that the transatlanticism Europeans grew up with is a “thing of the past”. While historical debates over burden-sharing in NATO and tariffs are not new, the present shock stems from a perceived “ideological disdain” emanating from Washington, viewed as a distinctively American “right-wing culture war” that challenges shared values. Structurally, the European Union has emerged as a significant economic rival to Washington, with extensive powers in areas like health regulation and data privacy that challenge major American industries. Ironically, Europe is now seen as cleaving closer to Enlightenment values of secular reason and deliberation, while the US is perceived to be in the hands of social conservatives. This divergence is exemplified by Poland’s presidential election on June 1st, where Karol Nawrocki, a hard-right nationalist supported by the Trump administration, secured victory with 50.9% of the vote against liberal Rafal Trzaskowski’s 49.1%. Nawrocki’s win allows him to use a presidential veto to block Prime Minister Donald Tusk’s agenda, potentially crippling efforts to repair the rule of law and liberalize abortion laws. This outcome, which saw Poland’s stock market dip by as much as 2%, also signals a shift towards Euroscepticism, with Nawrocki stating, “We don’t want to be a European Union province,” and pledging to oppose Ukraine’s admission to NATO.
Amidst this evolving transatlantic dynamic, European leaders increasingly view the China-Russia threat as the world’s “greatest challenge”. At the Shangri-La security conference in Singapore on May 31st, Kaja Kallas, the European Union’s top diplomat, expressed deep concern over China and Russia’s stated goal of “leading together changes not seen in a hundred years” and revising the global security order. Kallas explicitly accused China of enabling Russia’s war machine, noting that 80% of dual-use goods used to fight Ukraine come from China. French President Emmanuel Macron, speaking in Singapore on May 30th, also warned about China’s relationship with Russia, particularly citing North Korea’s military support for Russia, and urged China to prevent North Korea from “engaging on European soil”. This geopolitical landscape has been further altered by Ukraine’s audacious “Spider Web” operation on June 1st, in which its SBU agency launched small quadcopter drones from lorries deep inside Russian territory, targeting strategic bomber airfields in locations such as Irkutsk province, 4,000km from Ukraine, as well as Murmansk, Ryazan, and Ivanovo provinces. This attack resulted in at least 41 Russian aircraft, including A-50 early-warning planes, Tu-22M3, and Tu-95 strategic bombers, being destroyed or damaged. The operation, which was 18 months in the making and utilized indigenous technology, signals a significant development in Ukraine’s deep-strike capabilities and demonstrates the feasibility of widespread drone attacks using commercial logistics, a stark lesson for Western military forces whose own strategic bombers are often exposed on airbases. This high-stakes raid has cast a shadow over peace talks scheduled for June 2nd in Istanbul, by dramatically raising the cost of Russia’s continued war.
Geoeconomics
Does Trump Really Want to Sacrifice Dollar Dominance?
Jim O’Neill, Project Syndicate
American finance, always unique, is now uniquely dangerous
The Economist
Dollar’s correlation with Treasury yields breaks down
Emily Herbert, The Financial Times
Japan ultralong bonds fuel volatility in global markets
Yuka Kawai and Rya Saeki, Nikkei
Donald Trump’s recent actions are intensifying risks to the U.S. dollar’s future, with trade threats and institutional attacks undermining confidence in American governance and innovation. His proposed 50% tariff on the EU, delayed until July 9th, reflects an aggressive trade posture that threatens U.S. companies, services exports, and may provoke EU retaliation. Simultaneously, moves like barring Harvard from enrolling foreign students are viewed as sabotaging leading research institutions and regional innovation, weakening long-term productivity. This erosion of institutional credibility raises doubts about the dollar’s reserve status, just as the U.S. financial system becomes more fragile. Asset managers like Apollo, Blackstone, and Citadel now dominate, amassing trillions in opaque, leveraged assets. Bank loans to nonbank financial firms have doubled since 2020, and leverage to hedge funds has ballooned to $2.4 trillion, creating underappreciated risks amid volatile policymaking and rising government debt.
A structural shift in U.S. financial markets is compounding this fragility, as the once-tight link between Treasury yields and the dollar has unraveled. Since early April, the 10-year yield has climbed from 4.16% to 4.42%, while the dollar has weakened 4.7%, reflecting investor doubts about U.S. fiscal health following Trump’s tax bill and a recent Moody’s downgrade. Attacks on Fed Chair Jay Powell, including a White House summons to demand rate cuts, have shaken confidence in central bank independence. Investors are hedging against dollar exposure, with Goldman Sachs recommending euro, yen, and gold positions. Meanwhile, surging ultralong Japanese government bond (JGB) yields—such as the 40-year JGB reaching 3.135% on May 29th—are increasingly influencing global markets. This bond volatility, coupled with fiscal uncertainty in both Japan and the U.S., is spilling into equities, as seen in recent Nikkei fluctuations following a weak bond auction.
Global Junctions
US vs China: Who’s leading the race to make AI agents a reality?
Yifan Yu, and Cissy Zhou, Nikkei Asia
The U.S. Plan to Hobble China Tech Isn’t Working
Christopher Mims, The Wall Street Journal
How Europe Is Losing the Global Tech Race, in Five Charts
David Luhnow, Tom Fairless, and Andrew Barnett; The Wall Street Journal
Fibre optic drones: The terrifying new weapon changing the war in Ukraine
Yogita Limaye, BBC
As the global tech landscape continues to evolve, the competition between the U.S. and China in artificial intelligence is entering a new phase—one driven less by raw computing power and more by practical applications. At the May 2025 Google I/O conference, Google unveiled its Gemini model, claiming a tenfold speed advantage over China’s DeepSeek, while Alibaba countered with Qwen3, which excels in performance efficiency and reasoning. Microsoft’s CTO Kevin Scott highlighted an industry-wide “capability overhang,” as firms struggle to translate advanced models like GPT-4o and DeepSeek R1 into meaningful real-world tools. To address this, major players such as Microsoft, Google, Tencent, and ByteDance are now focusing on agentic AI—digital assistants that reason, act, and make decisions autonomously. Chinese startup Manus claims to have created the first general AI agent, while U.S.-targeted startup Fellou is releasing AI software based on DeepSeek and ChatGPT. By 2028, Gartner expects a third of enterprise software to feature such agents, though experts remain cautious about overhyped benchmarks and real user value.
At the same time, U.S. efforts to contain China’s tech growth through export bans and chip restrictions appear to be faltering. Despite years of sanctions dating back to 2018, China has surged ahead in strategic sectors like EVs, solar panels, and autonomous systems. Huawei’s new Ascend 910C chips now rival Nvidia’s in power and performance, supported by China’s extensive energy infrastructure and rising domestic R&D. Meanwhile, Europe risks being left behind entirely, with only 107 tech unicorns compared to the U.S.’s 690, and a tech economy one-third smaller. Fragmented markets, underfunded venture capital, and declining productivity are stifling growth across the EU. On the ground in Ukraine, Russia’s deployment of fiber optic drones—immune to jamming and deadly in precision strikes—further highlights how technological advantage is shaping geopolitics. As AI agents rise, and innovation clusters shift, the question remains whether policy and investment in the West can keep pace with China’s rapid acceleration.
Global Trajectories
The 20th Century’s Lessons for Our New Era of War
Hal Brands, Foreign Policy
China is waking up from its property nightmare
The Economist
Walter Russell Mead, Wall Street Journal
Entire Gaza population at risk of famine, says UN
Malaika Kanaaneh Tapper and Neri Zilber, Financial Times
This week, four major global developments have highlighted growing instability across humanitarian, military, and economic fronts. In Gaza, the United Nations has warned that the entire population is at risk of famine amid worsening conditions and the collapse of traditional aid distribution. A U.S.- and Israeli-backed effort through the Gaza Humanitarian Foundation has provided over 2 million meals but has been criticized for sidelining UN coordination, contributing to violence and disarray, particularly in the north. At the same time, U.S. Defense Secretary Pete Hegseth raised alarms over the possibility of a Chinese invasion of Taiwan, citing rapid military expansion and intensified regional harassment. Walter Russell Mead described the unfolding moment as a dangerous prewar era, echoed by the popularity of Taiwan’s cyberwarfare-themed drama Zero Day, which portrays the rising influence of information warfare and state manipulation.
Meanwhile, China’s real estate sector is showing early signs of recovery, with high-value home sales and declining unsold inventory in top-tier cities like Shanghai. However, the rebound is uneven, and smaller cities continue to struggle, particularly as trade tensions with the United States escalate. President Trump accused China of breaching a tariff agreement, adding pressure to an already fragile economic climate. These challenges align with historian Hal Brands’s call for renewed deterrence and global engagement to counter the ambitions of authoritarian powers. Drawing parallels to the early Cold War, Brands argues that lasting peace requires sustained investment in alliances, defense, and economic strength. Taken together, these developments reflect an increasingly volatile international order, where humanitarian crises, military brinkmanship, and economic fragility are becoming deeply interconnected.
