Dear Friends,
It was an emotional week for Americans as the relentless disease of political violence claimed its latest tragic victim in the young Charlie Kirk, only to be followed a day later by the anniversary of 9/11 – where we commemorated the thousands of innocents who were senselessly killed under the guise of ideology that day. Meanwhile, intense and even violent domestic upheaval is currently visible everywhere from Japan to France to Nepal, and war rages on in Ukraine and the Middle East. It’s a highly volatile world and the latest political developments at home and abroad aren’t happening in a vacuum. To analyze them collectively is to better understand where our world might be headed next and how to best prepare for it. As always, I welcome discussing these issues further as we try to make sense of them together. Drop me a line.
Emerging World (Dis)Order
Myriad nations are rife with instability this week and while the upheaval across France, Nepal, and Japan stems from distinct domestic causes, the collective turmoil is heightening uncertainty in an already highly variable world.
In Europe, the French government collapsed again on Monday after the centrist Prime Minister François Bayrou lost a confidence vote in the National Assembly.Both lawmakers and citizens were wary of Bayrou’s €44 billion package of spending cuts and tax hikes – even if these measures were aimed at curbing soaring debt. With Bayrou voted out, Macron quickly tapped Sébastien Lecornu, his longtime ally and former armed forces minister, to take over as the fifth prime minister in just 20 months.
But on Lecornu’s first day, protesters immediately attempted to block roads and infrastructure across Paris in a “block everything” campaign. Lecornu has promised a “break” with the past – and pledged to find creative ways to pass a debt-slimming budget – but critics see continuity with Macron’s unpopular austerity policies. The political impasse threatens not only Paris but the wider Eurozone, where market stress is pushing capital into U.S. Treasuries- lowering domestic yields while amplifying global currency volatility.
Further east, in Tokyo, Prime Minister Shigeru Ishiba resigned after less than a year, plunging an important global democracy into a leadership crisis and stripping the ruling Liberal Democratic Party (LDP) of its long-held majority.Corruption scandals, economic stagnation, and discontent over inflation and immigration eroded Ishiba’s authority- and his role was also challenged by an increasingly assertive China and trade tensions with Washington. The Prime Minister’s exit risks reviving Japan’s “revolving door” of short-lived leaders and fueling the rise of far-right parties, prompting calls for a new LDP leader to unify the party and connect with the public.
Of note, the leadership vacuum in Japan could delay key decisions on trade, security, and defense, just as U.S.-Japan cooperation is vital to counterbalance China. Prolonged instability may weaken the yen, disrupt supply chains, and make Japanese exports more competitive, potentially undercutting U.S. industries like autos and electronics.
And in between Japan and Europe, this week Nepal’s fragile democracy was shaken by mass protests that forced Prime Minister K.P. Sharma Oli and additional ministers to resign. The unrest, sparked by a ban on major social media platforms but rooted in anger over corruption, unemployment, and inequality, left at least 31 dead and culminated in the storming and burning of parliament. With a power gap now apparent and the next move uncertain, Nepal’s turmoil also raises strategic stakes: Beijing has poured billions into infrastructure there under its Belt and Road Initiative, while Delhi sees Nepal as a critical buffer.
As domestic upheavals are impacting global stability, these crises share themes of economic inequality, weakened institutions, and volatile leadership transitions.But for Washington, the consequences are twofold: heightened market volatility that strengthens the dollar but complicates exports, and deeper geopolitical competition with China at a moment when U.S. allies are distracted by domestic upheaval.
Middle East in Flux
It’s hard to say if the ongoing use of force in the Middle East is preventing peace negotiations from being effective, or if the negotiations have proven ineffective and so players are reverting to the use of force to enact change. Either way, what happened this week with Israel’s attack on Hamas leaders in Qatar marks a turning point of sorts, with Israel striking in the heart of a country that’s an American ally. The whole operation is mired in uncertainty- with rumors abounding about who knew what was going to happen, and when- but the attack indicates that Israel is willing to risk relations with Washington’s regional allies to obliterate Hamas and underscores that Qatar’s role as a negotiating powerhouse is only valuable as long as it’s making progress.
Like with Israel’s ongoing attacks against Houthi interests in Yemen, Israel’s latest hit on Hamas in Qatar threatens Qatar’s status more than Israel’s security. But it comes with diplomatic risks, and I’ll be watching to see how and if President Trump moves to punish Israeli Prime Minister Netanyahu for the move. Indeed, one of Trump’s most notable success stories during his first term was the signing of the Abraham Accords, when the UAE broke through a seemingly insurmountable wall to open relations with Israel. Other nations followed suit, but key players like Saudi Arabia and Qatar remained cautious.
When Hamas attacked Israel on October 7, Saudi Arabia was reportedly getting closer to signing the deal. The attacks shook the region and incited a reconfiguration of power, but somewhat miraculously the Accords held. Now, with Qatar likely feeling the embarrassment of an Israeli attack conducted upon its soil, the Accords could look even less appealing to Gulf States- although it would take an attack on UAE soil to know for sure.
Making matters even more complicated, the Accords were signed under the provision that Israel wouldn’t be expanding its territory into the Palestinian land.And as we’re seeing this week in Gaza, Israel is apparently only digging in deeper- having seemingly dismissed the idea of diplomacy as a hostage or peace negotiating tactic. But as Israel considers its next moves in the West Bank, it will need to factor-in its Gulf relations and the future of the Accords- both of which the US President has a personal interest in maintaining.
Resource Security, Tech, and Competition
Accident or not, the reality is that 19 Russian drones entered Polish airspace this week. The incursion, if intentional, would represent a concerning escalation in Russia’s war in Ukraine. Polish and NATO air assets shot down several of the drones, some of which entered Polish airspace via Russian ally Belarus. For me, the incident underscores the importance of readiness in the European theater. Drone warfare knows no frontline.
The Europeans are rightfully concerned and doubling down on building out their own defense capabilities. Just this week, the EU finalized $176bn in defense loans to many of its member states. Poland received the biggest share. The lending scheme, known as Security Action For Europe (SAFE), is a powerful investment tool with its low interest rates and 10-year grace period for repayment. The European defense sector has seen a boon ever since the new administration in Washington suggested Europe needed to shoulder more of its own security burden. SAFE will only amplify it.
I’m especially watching European defense start-ups, developing everything from AI-enabled maritime drones to seabed mapping and monitoring technologies.There is a sense of urgency in Europe to defend against possibly expanding Russian aggression. That urgency is spawning innovation.
As Poland and its NATO allies work to understand whether Russia’s drone incursions were mere accident or, from my lens, probably a test of European readiness, one thing is clear – there can be no letting up on developing defense capacity on the continent.
Weekly Wildcard
U.S. conservative political commentator Charlie Kirk was assassinated this week while hosting an open-forum debate event at Utah Valley University, in what officials have called a politically motivated attack. Kirk, a husband and father of two young children, was one of the most influential conservative voices in America. Through his leadership of Turning Point USA and advocacy on college campuses, he mobilized millions of young people and became a defining figure in the modern conservative movement.
Like all of us, I’m concerned that his murder follows a troubling pattern of escalating political violence, including the assassination attempt on President Trump himself and the killing of Minnesota House Speaker Melissa Hortman and her husband just months ago- at the hands of armed extremists targeting political figures.
