Diplomacy

BERLIN: The leader of the United Arab Emirates began a state visit to Germany on Thursday, during which deals worth billions of euros will be signed in sectors including energy and technology, Emirati diplomats said.

Berlin rolled out the red carpet for Sheikh Mohamed bin Zayed Al-Nahyan, who was received with military honors by President Frank-Walter Steinmeier and was later to meet Chancellor Friedrich Merz.

Security was tight for the visit, with Berlin cordoning off flag-lined streets and deploying large numbers of police.

“Over the course of this visit, the UAE and Germany will make a number of key announcements and multibillion-euro agreements across investment, business, technology, AI and energy,” senior UAE diplomat Lana Nusseibeh said at a briefing ahead of the visit.

The visit comes as the US war against Iran has roiled the Gulf region, with US President Donald Trump’s erratic diplomacy unsettling many midsize powers and leading them to diversify their strategic and economic partnerships.

Merz visited the Gulf region in February, shortly before the US-Israeli war started against Iran. He said then that “we need such partnerships more than ever at a time when major powers are increasingly dominating politics”.

The UAE is Germany’s largest trading partner in the Gulf, with bilateral trade topping $15 billion last year, and many big German companies have a presence there including BMW, Siemens, ThyssenKrupp and rail operator Deutsche Bahn.

The UAE meanwhile has made major investments in Germany, including in the chemical industry and offshore wind power.

During Merz’s visit in February, German energy giant RWE and Abu Dhabi’s national oil company ADNOC signed a memorandum of understanding on LNG imports over the next decade.

Gulf countries have also long bought defense equipment from Germany and have shown interest in start-ups that make drones to bolster NATO’s deterrence efforts against Russia.

Germany, the largest EU economy, supports talks towards a European Union free trade deal with the Emirates.

The group Human Rights Watch called on German leaders during the visit to “publicly call out the United Arab Emirates’ human rights record and its role in regional conflicts”.

No joint press conference was scheduled with Merz and Sheikh Mohamed.

In early August, a Pentagon official stood in front of reporters and conceded something the department almost never says out loud: the world’s best-funded military cannot out-produce a country under invasion. Travis Metz, deputy director of the Defense Innovation Unit, put a number on it. Ukraine will manufacture six to seven million small first-person-view attack drones this year — roughly 500,000 a month, built in garages, repurposed furniture factories and basements within range of Russian glide bombs. The Pentagon’s own flagship drone program, a $1.1 billion initiative branded Drone Dominance, will have ordered fewer than 200,000 drones, cumulatively, by February 2027. Metz’s response was not defensive. It was aspirational: “I see no reason why we shouldn’t… be the world champions of this as well.” The gap he was describing is not a technology gap. It is a speed gap, and speed is the one metric wartime industry cannot fake.

The instinct is to read this as a story about Ukrainian ingenuity, and it is one. But it is also the epilogue to a specific American failure. In 2023 the Pentagon launched Replicator, a program to field “multiple thousands” of autonomous systems within 24 months to counter China. By its August 2025 deadline it had delivered “hundreds,” not thousands, after burning through roughly $1 billion — undone by drones that were unfinished at selection, software that could not command large numbers of different systems at once, and a Switchblade loitering munition priced above $100,000 a unit. Washington’s answer was not to slow down and fix the model; it was to bring in the Department of Government Efficiency to override procurement rules and reclassify small drones as disposable supplies rather than regulated weapons systems. Meanwhile, Russia’s own Shahed and decoy drone output is reportedly climbing toward several hundred, and by some Ukrainian estimates up to a thousand, units a day. The war that forced Ukraine to mass-produce cheap drones is the same war exposing how slowly America still moves.

Why the gap isn’t about money

Start with unit economics, because they explain most of the gap. A Ukrainian FPV drone can be built for as little as $300 to $500 — an airframe, a camera, a battery and a warhead, assembled by hand and flown once. The Pentagon’s comparable systems have historically cost orders of magnitude more, not because the components are better but because they were designed inside an acquisition culture built for exquisite, low-volume platforms like fighter jets, where every part is sourced, tested and certified over years. Layer onto that a July 2026 rule requiring a “wholly domestic” supply chain — no Chinese-made motors, no Chinese battery packs — and the honest tension becomes visible: the policy meant to make American drone production more secure is, in the near term, also what makes it slower and more expensive to scale. Metz’s own explanation was blunt: it is “much harder to get from zero to 200,000” than to expand an existing line. Ukraine skipped that problem by never centralizing production in the first place — thousands of small, dispersed workshops that are individually replaceable and collectively enormous.

The deeper obstacle is not money but structure. Replicator had no dedicated budget line, was bounced between the Defense Innovation Unit and a newly created Defense Autonomous Warfare Group under Special Operations Command, and repeatedly selected systems that existed as concepts rather than finished products, in a rush to hit an artificial 24-month deadline. Congress, by its own research service’s account, has struggled to get basic cost and capability data out of the program. This is what forced DOGE’s intervention: not a shortage of appropriated dollars, but a procurement system engineered for careful, low-volume exquisiteness trying to behave like a wartime factory floor, and failing at both.

The strongest objection to treating this as a straightforward American failure is that the comparison is not apples to apples. Ukraine’s FPVs are disposable, short-range and built for a static front line; American planners are chasing autonomy, jamming resistance and long-range swarm coordination for a Pacific theatre defined by vast distances rather than trench lines, and that ambition costs more and takes longer to get right. That is a fair distinction — but it does not rescue the record. Years and a billion dollars into that more ambitious bet, the Pentagon still lacks software able to command mixed fleets of different drones, while Ukrainian manufacturers are already fielding AI-assisted terminal guidance on sub-$500 airframes, refined through thousands of real combat sorties a month. The ambition gap did not produce a capability lead. It produced the same failure as the cost gap: exquisite requirements colliding with a timeline the requirements were never built to meet.

Which is why the Pentagon’s actual fix looks nothing like a bigger budget. Six Ukrainian manufacturers, including F-Drones and General Cherry, are now required to form joint ventures with American companies — near Toledo, Ohio, and in New Hampshire — as a condition of future Pentagon orders. Washington is not just buying drones. It is importing the production model, and with it the tacit admission that the expertise now runs the other way.

Three ways this goes

What happens next depends on whether the joint-venture model actually transplants Ukraine’s manufacturing tempo onto US soil, or just its branding.

Base case (roughly 50 percent probability). The Ohio and New Hampshire joint ventures scale gradually. By 2027–28, US-based output climbs into the low hundreds of thousands annually — a real improvement, but still an order of magnitude below Ukraine’s current pace, held back by the domestic-sourcing rule’s cost premium. The program becomes a credible proof of concept for a future Indo-Pacific contingency rather than a fix for any current shortfall, and “Drone Dominance” quietly redefines success downward to match what it can actually deliver.

Downside case. The DOGE-driven bypass of standard testing repeats Replicator’s failure mode at greater scale: units purchased without adequate vetting turn out unreliable in the field, a GAO or inspector-general report documents it, and Congress reimposes the very procurement safeguards that were just stripped away. Combined with a Chinese-component ban that keeps unit costs well above Ukrainian levels, US output stalls again, and the gap that Metz conceded in August widens rather than closes by the time it next matters.

Upside case. The joint-venture model works as intended — not just as a purchasing arrangement but as a transplant of Ukrainian manufacturing culture, its dispersed micro-factories, rapid iteration and tolerance for combat-tested imperfection, into the American industrial base. That model, proven on drones, becomes the template for how Washington arms the next partner already fighting a war, whether Taiwan or a Baltic state: not a slow pipeline of finished stockpiles shipped from the continental United States, but manufacturing capability transplanted onto the partner’s own soil, and now, in this instance, onto America’s.

The takeaway

So: what does the mismatch reveal? Not that Ukraine builds better drones — the Pentagon never disputed that its own designs, on paper, are more capable. It reveals that capability on paper is not the same as capability in time, and that the American defense-industrial base, even backed by an executive order, a billion-dollar program and a DOGE override of its own rules, still cannot mobilize at wartime tempo on its own. The fix Washington has actually reached for is not more money. It is outsourcing the missing ingredient — speed — to the one partner that has been forced to master it under fire. That is the real admission, and it may be the more durable one: the next time the United States arms a country fighting a live war, it may look less like supplying an ally and more like apprenticing to one.

Watch for: whether the Ohio and New Hampshire joint-venture lines are shipping US-assembled drones at anything close to Ukrainian unit costs by the next Gauntlet test cycle at Fort Carson. If the “wholly domestic” sourcing rule keeps American-made units several multiples more expensive than their Ukrainian counterparts, the joint ventures will have transferred the branding of Ukraine’s drone war without transferring its speed.

Yes. The US South Korea relationship has not broken down under Donald Trump, but it has become more transactional, cost focused and strategically uncertain. The latest decision to scale back joint military exercises highlights a broader evolution in which Washington increasingly expects Seoul to shoulder more of the alliance burden while seeking greater flexibility for US forces across the region.

From deterrence to deal making

Trump’s approach to South Korea has been shaped heavily by his personal diplomacy with North Korean leader Kim Jong Un. His first term moved rapidly from threats of “fire and fury” to unprecedented summits with Kim, followed by the suspension or redesign of major US South Korean military exercises.

Although the Hanoi summit collapsed without a denuclearisation agreement, Trump has continued to emphasise his relationship with Kim. His latest instruction to reduce joint exercises therefore carries significance beyond cost savings. It signals that Washington may once again be willing to modify elements of its alliance posture in pursuit of diplomatic space with Pyongyang.

The strategic environment, however, is very different from 2018. North Korea has expanded its nuclear and missile capabilities and strengthened military cooperation with Russia. Reducing exercises therefore creates a more complicated calculation for Seoul: diplomatic engagement with Pyongyang may reduce tensions temporarily, but weaker military preparedness could also increase the risks associated with North Korea’s growing capabilities.

The alliance is becoming more transactional

The clearest transformation under Trump is arguably the growing emphasis on burden sharing.

Trump has repeatedly questioned the cost of maintaining roughly 28,500 US troops in South Korea and has pushed Seoul to contribute more to its own defence. The existing cost sharing agreement requires South Korea to contribute about 1.52 trillion won this year toward the upkeep of US forces.

For Washington, the argument is straightforward: South Korea is wealthy enough to assume a greater share of the financial and military burden. For Seoul, however, the US military presence remains central to deterring North Korea.

This creates a fundamental tension. The alliance is still strategically valuable to both sides, but Trump increasingly approaches it through a cost benefit framework rather than solely through traditional alliance commitments.

Defence cooperation is expanding even as exercises face pressure

The apparent contradiction is important. Trump is seeking to reduce certain military exercises while South Korea itself is increasing defence spending.

President Lee Jae Myung has pledged a larger security role and increased defence spending, while continuing to insist that Washington’s security commitment remains firm. Seoul has also sought greater strategic autonomy, including greater latitude over nuclear fuel technology and faster progress toward transferring wartime operational control.

This suggests that the alliance may be evolving rather than simply weakening.

South Korea appears to be preparing to assume greater responsibility for its own defence, while Washington wants the alliance to become more flexible and potentially address security challenges beyond the Korean Peninsula.

That latter objective is particularly sensitive for Seoul. The United States increasingly views its Asian alliances through the broader strategic competition with China, while South Korea remains primarily focused on the immediate threat from North Korea.

Trade has become inseparable from security

Under Trump, economic relations have also become an increasingly important component of the alliance.

Washington’s tariff pressure has pushed Seoul toward major investment commitments in the United States, including the $350 billion investment pledge associated with tariff relief. South Korean companies have already invested heavily in US semiconductors, batteries, electric vehicles and shipbuilding.

But disagreements over how the investment should be structured have exposed the limits of Trump’s transactional approach. Seoul has warned that demands for large upfront cash commitments could place pressure on its economy.

The detention of hundreds of South Korean workers during an immigration raid at a Hyundai LG battery project in Georgia further demonstrated how economic and political tensions can spill directly into the strategic relationship.

The result is an alliance in which security guarantees, trade concessions, investment and troop costs increasingly form one interconnected negotiation.

The deeper problem is strategic uncertainty

The central challenge for Seoul is not simply whether Trump wants fewer exercises. It is whether Washington’s definition of the alliance is changing.

For decades, the US South Korea alliance rested on a relatively clear bargain: Washington provided extended deterrence and military forces, while Seoul contributed financially and militarily to maintaining the security architecture.

Trump’s approach introduces more conditionality into that bargain.

If military exercises can be reduced because they are considered too expensive or diplomatically inconvenient, Seoul has to consider how predictable the US commitment remains. At the same time, Washington expects South Korea to spend more, invest more and potentially assume greater responsibility.

This could ultimately produce a stronger South Korean military, but it could also create greater uncertainty about the role of the United States.

What this means for China and the Indo Pacific

The evolution of the alliance also has implications far beyond the Korean Peninsula.

Washington wants greater flexibility for US forces stationed in South Korea to respond to regional contingencies, particularly those involving China. Seoul, however, has historically been reluctant to become directly involved in a confrontation over Taiwan.

That creates a structural divergence in strategic priorities.

For Washington, South Korea is increasingly part of a broader Indo Pacific security network. For Seoul, the primary purpose of the alliance remains deterrence against North Korea.

Trump’s transactional approach therefore forces South Korea to navigate between two competing imperatives: maintaining the American security umbrella while avoiding excessive strategic dependence on Washington’s wider confrontation with Beijing.

The alliance has changed, but it has not collapsed

Trump has not dismantled the US South Korea alliance. Instead, he is redefining its terms.

Military exercises are being reconsidered, defence burden sharing remains contentious, trade and investment have become bargaining instruments, and Washington increasingly expects Seoul to assume greater responsibility for regional security.

For South Korea, this creates both a risk and an opportunity. Greater defence spending and military autonomy could make Seoul less dependent on American forces. But if Washington simultaneously reduces visible commitments while demanding greater financial and strategic contributions, Seoul could find itself paying more for an alliance that feels less predictable.

The most important question, therefore, is not whether Trump is weakening the alliance. It is whether he is transforming it from a traditional security partnership into a transactional strategic bargain.

If that transformation continues, the US South Korea alliance could survive Trump, but it may emerge fundamentally different from the alliance Washington and Seoul built over the past seven decades.

With information from Reuters.

Vietnam’s sovereign AI relies heavily on open-weight models developed in the United States. However, as Washington and Beijing are moving to restrict access to these technologies, Hanoi’s bamboo diplomacy offers little protection to its AI ambitions.

In mid-July, Vietnam approved its National Digital Transformation Strategy for 2026-2030 under Decision 1266/QD-TTg, and the National Data Strategy under Decision 1308/QD-TTg. Both strategies aim for national digital sovereignty, domestic self-reliance and state-level data governance on the assumption that artificial intelligence (AI) models would remain a public good. Within days, the United States (U.S.) and China signalled their readiness to restrict access to those models.

Made in America

Vietnam’s current AI systems are modified versions of foreign tech. On the ground, Viettel, the state military telecom giant spearheading Vietnam’s AI goals, announced its VT-Super-120B-A12B Vietnamese language model had matched the accuracy of major global models of similar size. It was built by adapting Nemotron, Nvidia’s freely downloadable model family, to Vietnamese data. Viettel’s earlier model was also built on Meta’s Llama 3, trained with Nvidia tooling, and run on a cluster of 22 DGX B200 supercomputers at its Hoa Lac centre.

Moreover, VNG’s GreenNode subsidiary introduced GreenMind-Medium-14B-R1, the first open-source Vietnamese reasoning model built to run on Nvidia’s software and a single Nvidia H100 graphics chip. Meanwhile, FPT Corporation committed $200 million to build its AI factory powered by Nvidia hardware.

At the state level, Vietnam’s Ministry of Science and Technology met with senior executives from Qualcomm in Hanoi on July 17. Deputy Minister of Science and Technology Hoang Minh and Qualcomm’s Executive Vice President Durga Malladi discussed expanding cooperation in AI semiconductors, research and development, and workforce training.

While Vietnam has made its bets on the U.S. for its AI ambitions, other Southeast Asian countries are leaning towards China. Indonesia’s Indosat Ooredoo Hutchison partnered with AIonOS on DeepSeek-powered services, and Malaysia’s Communications Ministry launched a sovereign full-stack AI ecosystem running on Huawei hardware.

Outside Two Blocs

AI governance is dividing into two blocs. One bloc is the U.S.-led Pax Silica initiative, which coordinates trusted supply chains for semiconductors, critical minerals and AI infrastructure with 24 signatories. Singapore, the Philippines, India, Japan and South Korea are among them. The Philippines converted membership into commitments by agreeing in April 2026 to a 4,000-acre economic security zone in the Luzon economic corridor designated as the initiative’s first AI-native industrial hub.

The other is the Chinese-backed World Artificial Intelligence Cooperation Organization, signed into existence in Shanghai on July 16 by 29 governments. The membership also includes Russia, Belarus, Cuba, Venezuela and most of Central Asia, alongside Vietnam’s neighbours Laos, Cambodia and Myanmar.

Membership in either bloc could offer access to supply chains, technical assistance and software distribution during a diplomatic crisis.

However, Vietnam belongs to neither group because of its long-standing bamboo diplomacy, a policy of balancing relations between Washington and Beijing without taking sides. This leaves Hanoi in an awkward position. Vietnam depends heavily on American technology, but enjoys none of the guarantees or protections of one.

Weaponising Access

Export controls on chips work because processors are physical goods, subject to customs enforcement. On May 31, the Bureau of Industry and Security extended licensing requirements to any China-parented buyer worldwide, closing loopholes in Singapore and Malaysia.

AI models do not behave the same way. Access to a closed system can be revoked instantly by flipping an application programming interface (API) key. For example, on June 12, Anthropic suspended access to its Fable and Mythos models to comply with U.S. Commerce Department export controls, restoring access only on July 1 after those controls were lifted. Such events largely explain why governments prefer AI models they can host locally.

In contrast, an open-weight model, once downloaded, cannot be recalled by any foreign regulator. Instead, global superpowers exert control by forcing major tech companies and code-sharing platforms to block downloads from specific regions or countries. They can also pressure developers to restrict future model updates to dodge penalties from Washington or Beijing.

This fight over AI access is now an open battle. On July 16, Chinese startup Moonshot AI unveiled Kimi K3, a 2.8-trillion-parameter model that independent evaluators say matches top American models at a fraction of their operating cost. On July 21, Treasury Secretary Scott Bessent signalled that Washington could sanction Chinese tech firms, citing American-model watermarks found inside Chinese ones. Days later, China’s Ministry of Commerce called the investigations groundless, threatened countermeasures, and began consulting Alibaba, ByteDance and Z.ai on export controls covering model weights, training data and chip designs.

Why It Matters

For years, nations have built digital capacity cheaply and quickly by customising open-weight AI models. Kimi K3 seemed to promise that era would continue. Instead, the geopolitical fallout exposed the fragility of relying on superpower goodwill.

For Vietnam, the real threat is getting left behind. Washington or Beijing cannot delete the AI models already sitting on Vietnamese servers. What they can block is future releases. If both superpowers restrict open-weight models, Vietnam’s AI ecosystem gets stuck using today’s tools while the rest of the world moves forward. A national tech stack built on frozen updates decays one generation at a time. States that have not localised model weights face an even harsher reality. Their access relies on live connections and downloads that can vanish overnight with a new policy.

At its core, this is a problem of time. Vietnam’s bamboo diplomacy relies on having time to adapt. Trade deals and defence agreements move slowly, giving Hanoi room to bend without breaking. AI access, however, moves instantly as access disappears with a revoked key or a blocked download link.

Diplomatically, Vietnam tries to stay neutral at all costs. However, its technology does not try to do so. All of its major AI models are built on American weights, run on American chips, and improve when American companies release new ones. Vietnam acts as if it can delay picking a side, but with every new AI update or blocked release, the cost of delay becomes more expensive. In the past, diplomatic pressure moved slowly through international summits. Today, that pressure speeds up with every new model release.