Economy

Venezuela’s National Assembly voted to back the 65-billion-barrel oil deal, despite no details being publicly released.

United States Energy Secretary Chris Wright is set to travel to Venezuela, after the South American country has approved a deal that will see the US seize effective control of a large portion of its oil reserves.

An anonymous US official told reporters that Wright will travel to Venezuela on Tuesday, as the administration of President Donald Trump presses forward with the controversial energy deal.

“First and foremost, it furthers the national interest of the United States,” the official said, adding that it is “critically important” for the US to be able to “to buy oil at cost reliably”.

Details are still emerging about the arrangement, likened by critics to deals imposed by colonial powers.

Still, the interim government of Venezuelan President Delcy Rodriguez has defended the agreement as a boon to her country’s beleaguered economy. The National Assembly, led by her brother Jorge Rodriguez, voted to back the measure on Tuesday.

“Support for the binational energy treaty between the Bolivarian Republic of Venezuela and the United States of America … is approved,” Jorge Rodriguez said.

But even within the National Assembly, there was pushback. Some opposition lawmakers abstained from the vote and denounced the fact that the terms of the agreement have yet to be published.

“We need and are obliged to know what is written in the fine print,” lawmaker Luis Emilio Rondon said, calling for “the full and complete text of what has been agreed”.

While details about the arrangement are still emerging, the deal is slated to give the US access to 65 billion barrels of proven oil reserves in Venezuela, about one-fifth of the country’s total.

As part of the deal, the US is expected to enter into a partnership with a private company to extract fuel from 17 large Venezuelan oil fields. The lease over the oil fields will run 100 years, according to reports.

The White House confirmed on Monday that it is partnering with North American Blue Energy Partners (NABEP), helmed by Venezuelan businessman Alejandro Betancourt who is a former ally of the late Venezuelan President Hugo Chavez.

The agreement would create a new company, wherein the US Defence Department would take a 35 percent ownership stake and the State Department would have the right to buy 20 percent of the oil produced at cost.

Betancourt has faced criminal investigations for alleged money laundering in Spain and Switzerland.

But a US official who spoke anonymously defended the partnership, arguing that Betancourt is not facing any criminal charges in the US.

“I’m not nominating anyone for sainthood here,” the official said. Instead, the official framed the deal as “a geopolitical opportunity to secure fields that primarily had largely been under the influence of Chinese and Russian companies”.

Asked about the possibility of democratic elections in Venezuela, the official said they were not feasible in the immediate future.

Periods of transition, the official added, “almost invariably requires you to work with elements of the existing structure, even as you are creating a new one”.

Separately, oil giant Chevron is expected to sign an agreement to expand operations in Venezuela on Wednesday.

Venezuela’s energy sector has become dilapidated, with critics blaming heavy US sanctions and government mismanagement.

While the Trump administration has pushed for greater international participation in Venezuela’s oil sector, some companies have expressed scepticism about investing there.

The 65-billion-barrel oil deal was announced on August 27 in a post on Trump’s Truth Social platform.

His administration has exercised increasing influence over Venezuela’s government, since it launched a January 3 military operation to abduct and imprison Venezuelan President Nicolas Maduro.

Trump and Maduro had frequently clashed. In the wake of Maduro’s abduction, Trump backed the socialist leader’s vice president, Rodriguez, to take over Venezuela’s government, holding her up as a model of cooperation.

Canadian Prime Minister Mark Carney has reprimanded the United States for what he describes as a flippant approach to the ongoing trade dispute between the two countries.

On Tuesday, Carney hit back against a series of insults and disparaging remarks from US President Donald Trump and his officials, saying that talks can proceed once Washington takes a more serious approach to the issues at hand.

“When the Americans stop doing memes, stop throwing shade and stop trying to be tough, and start being serious about having those discussions, we can have those discussions,” Carney told reporters in Ottawa. “It’s not constructive, but that’s their democracy.”

The Liberal Party leader’s remarks come as tensions flare once again between the US and Canada, which have historically had tight relations.

But Trump’s second terms have caused those ties to fray. Since returning to office in 2025, Trump has imposed a series of tariffs on Canadian products, prompting retaliatory actions.

The latest round of tariffs came on August 22, when negotiations between the two countries fell through.

As a result, 50 percent tariffs were imposed on roughly $20bn worth of Canadian goods. Canada has pledged to respond with tariffs on US goods, worth roughly the same dollar amount, starting on September 8.

In the aftermath of the failed negotiations, Carney blamed the impasse on last-minute US demands.

He accused the Trump administration of seeking to limit Canada’s ability to cement trade deals with other countries and of requesting changes to laws protecting Canada’s French language and culture.

Carney also said Trump’s team attempted to push an asymmetrical deal that would damage Canada’s industries.

“Canada’s a sovereign state. We will strike free trade deals with the countries we wish to strike free trade deals with,” Carney told reporters on Tuesday. He added, “Of course, we’re not going to accept those terms.”

The trade war between the two countries has prompted a surge of nationalism in Canada.

A June poll from the research firm Abacus Data found that national pride surged 12 points in two years, reaching 77 percent this year.

Carney has faced pressure not to yield to US demands. In addition to imposing steep tariffs, the Trump administration has also pushed Canada to cede its sovereignty and become a “51st state” within the US.

Trump has also taken symbolic actions designed to assert US dominance over the two countries’ shared border region. On August 27, the US president signed an executive order directing federal entities to refer to Lake Ontario as “Lake America”.

“They are one of the worst countries in the world to deal with,” Trump said of Canada in a recent radio interview.

Other cabinet-level officials in the Trump administration have echoed Trump’s remarks disparaging Canada.

US Treasury Secretary Scott Bessent told the news outlet CNBC that Canada’s economy is ill-equipped to handle a trade war with the US, and he blamed Carney for escalating the situation.

“Well, I don’t think you can be in a tit-for-tat with someone who’s 13 times larger than you are,” Bessent said on Monday.

Of Carney, he added, “He came to power on an anti-American, anti-Trump agenda. He was 20 points behind in the polls. And then he started this. And it’s unfortunate that he’s not doing what’s best for the Canadian people.”

US Secretary of Defense Pete Hegseth, meanwhile, posted an image of two female Canadian cadets on social media, in an apparent effort to mock the country’s armed forces.

“This is real,” he wrote beneath the image of the two women, alongside an emoji of the Canadian flag.

Hegseth, a former TV host, has frequently castigated efforts to include women, LGBTQ people and racial minorities in the military as “woke” distractions from the US military’s core mission.

When reporters asked Carney to respond to such messages, he replied that such comments were “beneath” the officials’ office.

“Our plan has always been standing up for Canada, first and foremost, here at home,” Carney said.

Russian Finance Minister Anton Siluanov has made a surprise appearance at United States-hosted G20 finance talks in North Carolina, sparking frustration and dismay among European ministers and officials.

Siluanov’s appearance at the talks in Asheville on Monday marks the first time the minister, who was appointed in 2011, has attended a G20 meeting in person since Moscow launched its full-scale invasion of Ukraine in 2022.

He held a bilateral meeting with US Treasury Secretary Scott Bessent, with Russia’s Ministry of Finance saying the two men discussed financial cooperation within the G20 framework.

A US official said the meeting focused on US President Donald Trump’s peace plan for Ukraine.

Asked about the invitation to Siluanov, Trump told reporters: “We like getting along with everybody. One of the reasons I’m so successful, I get along with everybody.”

European officials, however, criticised the move.

Polish Finance Minister Andrzej Domanski said he was unhappy to see Moscow represented, although he recognised the right of G20 hosts to invite guests.

“We do not trust Russia. They lie constantly, and you need to be really, really cautious while discussing with them,” ⁠he told the Reuters news agency, stressing that Russia was the aggressor in its conflict with Ukraine.

“So for me, it would be very difficult to have any kind of conversation with Russia.”

‘Troubling’ signal

German Finance Minister Lars Klingbeil said the US’s decision to welcome Siluanov sent a “signal I find troubling”.

He said he told Siluanov during a plenary session that Moscow had to end the war and “that we clearly support Ukraine”.

He also said Europe was preparing a further package of sanctions against Russia and hoped for close cooperation with Washington on the measures.

European ministers and central bankers also opposed appearing with Siluanov in the traditional G20 “family photo”, European officials said. The photograph was ultimately taken without the Russian minister.

Klingbeil said European officials, including European Central Bank President Christine Lagarde, had discussed Russia’s involvement on Sunday and agreed that maintaining an avenue for dialogue could allow them to deliver a frank message to Moscow.

“However, the mere fact that the Russian finance minister is back – after, I believe, four G20 meetings without Russian participation – indicates an attempt at normalisation, and that makes it all the more important for us to push back,” he said.

Siluanov’s appearance marked a sharp contrast with the G20 meeting in Washington, DC, in April 2022, when his virtual participation prompted officials from Canada, the United Kingdom, the US, and the European Central Bank to walk out.

White House defends talks with Russia

Asked about Siluanov’s attendance, White House spokesman Kush Desai told the AFP news agency that the Trump administration had been working with Russia to push for a deal that “would stop the endless bloodshed that the president has really condemned”.

“The president and the administration will never shy away from talking with the folks we need to talk to, to further that,” he said. “That’s what we’re working on here at the G20.”

Separately, Reuters and AFP, citing sources familiar with the Washington-Moscow talks, said Bessent had made clear that the US would not provide Russia with economic relief until war in Ukraine was over.

Trump has pushed Moscow and Kyiv to reach a deal to halt the fighting, but an initial 28-point plan that largely adhered to Russia’s demands was criticised by Ukraine and European governments.

The US, which currently holds the rotating G20 presidency, did not invite South Africa, last year’s G20 host, to the gathering. Poland, which is not a permanent G20 member, was invited.

Certain reporters from major US newsrooms, including The New York Times and Bloomberg News, were not granted credentials to cover the gathering.

The decision was condemned by the National Press Club, which said that “no administration should be allowed to handpick the press corps that scrutinizes it”.

The two-day meeting comes as global debt levels have reached a record of nearly $353 trillion and the global economy faces an energy shock triggered by the US-Israel war on Iran. The talks also come amid rising tensions over China’s large trade surplus and uncertainty over the effects of a surge in artificial intelligence investment.

Washington has recently stepped up efforts to economically pressure Tehran amid the deadlocked truce talks.

Washington plans to impose sanctions on another bank this week as it steps up its campaign to economically isolate Tehran amid the deadlocked truce talks, the US Treasury chief has said.

In an interview with The Associated Press news agency on Sunday, Treasury Secretary Scott Bessent declined to name the bank to be targeted by sanctions.

The announcement comes just days after Washington said it would cut off the United Arab Emirates’s operations of Basque Misr from the US financial system after accusing Egypt’s second-biggest bank of doing business with the Iranian government.

“This is going to be financial violence if we have to,” Bessent told AP on Sunday. “We are showing people that we know who you are, you know who you are, and this has got to stop.”

⁠In an interview with the Reuters news agency, Bessent said the next step may be cutting off an institution entirely from the dollar-based financial system.

“You’re going ⁠to see a lot ⁠more of these every week,” he said on Sunday, ahead of a Group of 20 finance leaders ⁠meeting in Asheville, North Carolina. “We’re starting with the banks, and we’re telling ⁠the banks it’s not OK ⁠to have Iranian money and to aid the regime.”

The US has stepped up efforts to economically pressure Tehran to submit to Washington’s demands, a campaign dubbed “Operation Economic Outcast”, amid the stalled truce talks between both parties.

Last week, the Treasury Department imposed new sanctions on nearly 60 individuals and entities that Washington accused of being part of networks helping Iran generate oil revenue, procure weapons and conduct cyber-operations.

Iran, however, has rejected the latest US sanctions, with Minister of Finance and Economic Affairs Ali Madanizadeh saying they will fail.

Violence in the conflict resumed on Sunday, the first time since late July, with Iran launching missiles at two US bases in Jordan following a US attack on Larak Island in southern Iran.

Cooperation against Iran

Bessent is preparing to host the meeting of the G20’s finance leaders, where he will huddle individually with his counterparts from the world’s major and developing economies to encourage cooperation against Iran.

The US Treasury chief also told AP that he would speak to his Chinese counterparts at the meeting and “all options are on the table” in terms of sanctioning Beijing for its continued trade with Tehran. 

But he rejected the idea that the US was reluctant to confront China, calling it “a completely false narrative that the media picked up on”.

He insisted that Beijing and Washington agreed on the need to reopen the Strait of Hormuz and prevent Iran from developing a nuclear weapon.

Reporting from ORANGE CITY, Iowa — They met decades ago, when they were first married, and the three sisters-in-law still gather each week at the Dutch Bakery to catch up amid the sweet smell of flour and sugar floating through the air.

Despite the cozy setting here on the state’s western edge, they can feel the country beneath their feet slipping away, eroding under the threats of immorality and terrorism.

“I never thought we would live in so much fear,” said Joanne Niezen, as her coffee sat cooling before her in a Styrofoam cup.

There’s fear on the other side of the state as well, though for different reasons.

In the college town of Iowa City, with its hip music scene and pita restaurant advertising “fresh thinking and healthy eating,” Veronica Tessler worries about the harsh rhetoric directed at immigrants and the economic inequality that lingers years after the Great Recession.

“I really fear for our country,” said Tessler, who left her job at a foreign policy foundation to open a frozen yogurt shop near the University of Iowa campus.

A sense of dread is about the only thing that unites Orange City, a bastion of religious conservatism, and Iowa City, known for its blue-sky liberalism. Together they bookend not only the state’s geography but its political spectrum as Iowa prepares to kick off the presidential selection process Monday night with its closely watched caucuses.

The two communities, located in the most lopsidedly partisan counties in the state, reflect the vast political chasm here and across the country, a divide that President Obama was unable to heal and which may prove insurmountable for whomever takes his place.

“Republicans see an America where the government is too big at home and too feeble abroad. Democrats see an America where the economy is out of whack,” said David Nagle, a Democratic attorney who used to represent Iowa City and surrounding Johnson County in Congress. “It’s like two trains in the night, passing in opposite directions.”

But the division goes far beyond a profound disagreement on issues. While partisan tensions are nothing new, they have deepened and intensified during the presidencies of George W. Bush and Barack Obama as the parties have splintered along the lines of age, race and culture. The result is a separation of America into mutually estranged and suspicious tribes.

Today, as conversations at opposite poles of Iowa show, voters on each side often get their news from different sources, worry about different problems and view political adversaries with mistrust and even contempt. One voter’s vision for America is nothing less than another’s nightmare; it’s common to hear candidates of the opposing party described as “concerning” or “scary” or “crazy.”

In 2014, a major study released by the nonpartisan Pew Research Center found that more than one-third of Republicans and just over a quarter of Democrats — especially those most engaged in politics — go as far seeing the other party as a “threat to the nation’s well-being.”

In Johnson County, known both affectionately and derisively as the “People’s Republic,” life in Iowa City revolves around the university, with young people constantly hustling between classes or hunkered down in coffee shops with headphones and homework.

Obama is largely viewed with gratitude or, at worst, disappointment for failing to deliver an even more liberal agenda.

The city’s leanings are evident at the Hamburg Inn, where jars labeled with the names of presidential candidates are lined up in the window. Diners drop in coffee beans to show their preferences; some of the Republican jars are nearly empty, while a second container was added for Bernie Sanders, a democratic socialist, because the first overflowed.

Tessler, 30, is volunteering with the Sanders campaign, and she’s been alarmed by what she hears coming from the mouths of Republican contenders.

In response to Donald Trump’s proposal to ban Muslims from entering the U.S., she helped make T-shirts to protest his Iowa City visit last Wednesday. “I stand with my Muslim neighbors,” they read.

She doesn’t dismiss the threat of terrorism — in fact, she was visiting family near San Bernardino on the day of the attack there that killed 14 people in December. But she’s also the daughter of a Soviet Jew who escaped to Los Angeles in 1973, and she thinks Republicans are scapegoating immigrants and refugees.

“They are not American ideals,” she said.

For many in Iowa City, issues like economic inequality and student debt feel most urgent, not fears of terrorist attack.

“ISIS could do something terrible anywhere,” said Chuck Michaelson, 61, a piano instructor who lives in nearby Coralville, using an acronym for the militant group Islamic State. He paused while flipping through a biography of writer Joan Didion at a bookstore near campus. “But the likelihood of it being personally affecting is slim. It’s like being struck by lightning.”

About 300 miles away in Orange City, across a vast expanse of fertile farmland, the fears of terrorism seem more immediate despite the area’s isolation and outward serenity.

“The whole thing of ISIS scares me,” said Bob Hulstein, 64, who publishes the Orange City newspaper and owns a printing business with his brother-in-law, Dave Pluim, 51.

After attacks in Paris and San Bernardino, Hulstein said, “I’m afraid we’re going to see that closer and closer. I guess I want that stopped before it comes to my front door.”

Pluim agreed. “In fact, it would be real easy to do something horrible in Orange City,” he said. “Come to a high school basketball game.”

Settled largely by Dutch immigrants, this region proudly promotes its heritage; Orange City, the seat of Sioux County, was named after a Dutch prince, and decorative windmills, wooden shoes and tulip-themed businesses abound.

The area was hardly touched by the Great Recession — strong commodity prices and a boom in farm values helped see to that — and now there is something close to full employment. “Help wanted” signs are everywhere: at the florist, the bakery, restaurants, the post office.

So it is not economics that drives the anxiety here so much as concerns about the country’s place in the world.

“Are we willing to back our allies?” said Tony Vande Brake, 25, a financial advisor and newly elected member of the Orange City Council. “Are we willing to stand behind our military prowess, show strength if we had to?”

Back at the Dutch Bakery, Niezen and her sisters-in-law describe the election as a chance to reclaim the moral authority and military strength that, in their opinion, has withered under Obama and fueled a rise in Islamic extremism.

“He’s taken our military way down,” said Niezen, who is in her 70s. “When they were cutting our people’s heads off, he should have gotten in there right then.”

Leona Noteboom, an 83-year-old retiree, agreed. “I don’t trust him for taking care of my country,” she said.

“We’re just losing all our Christian values,” piped in Carol Noteboom, 74, who lives on a nearby farm.

Amid all the anxieties, there were glimmers of optimism.

Morgan Brittain, a political science student, crosses the ideological fault line every time he travels from his family’s home in Winterset, a small town outside Des Moines, to school in Iowa City. When he last got his hair cut back home, the woman holding the shears confided she planned to support Trump.

“I was like, ‘Oh my gosh, Heidi, you’re killing me,’” Brittain said.

At the barbershop close to campus, everyone seems bewildered by Trump’s popularity.

Asked if any candidate could bridge the divide, Brittain laughed and said, “I’m going to say absolutely, anybody can unify us.”

But he’s just 22, Brittain said, and still an idealist.

Twitter: @ChrisMegerian

Twitter: @markzbarabak

Megerian reported from Iowa City and Barabak from Orange City.

Hoy: Léa esta historia en español

For more, go to latimes.com/politics.

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US president says deal secures majority US control of more than 65 billion barrels of proven oil reserves in Venezuela.

The United States has struck a deal with Caracas that would give them control of some 65 billion barrels of Venezuela’s proven oil reserves, President Donald Trump has announced, while reviving the OPEC nation’s battered energy industry.

In a post on Truth Social, Trump said the “historic transaction more than doubles American oil reserves” and “will substantially lower gas prices for all Americans”.

“At my direction, Secretary of State Marco Rubio, and Secretary of War Pete Hegseth, working closely with Highly Respected Interim President of Venezuela, Delcy Rodriguez, and, through a partnership with private business, have secured majority US control of more than 65 BILLION BARRELS of proven Oil Reserves in Venezuela, at no cost to the American Taxpayer,” Trump wrote.

Venezuela’s interim President Delcy Rodriguez welcomed the deal, which is expected to bring about $209bn to the state’s treasury.

The announcement followed weeks of negotiations over an agreement that would give American companies long-term access to a group of Venezuelan oilfields and guarantee the resulting crude supply to the US.

Venezuelan officials are preparing to sign agreements next week granting new oil exploration and production rights to a number of companies, particularly US firms.

Sources previously told Reuters news agency that a lease model was under consideration, with fields potentially auctioned to US producers, but the arrangement could face legal and constitutional challenges in Venezuela, where the state retains control over core oil industry activities.

The new deal would represent a dramatic expansion of Washington’s role in Venezuela’s oil industry as the Trump administration seeks to revive the country’s production and secure more crude for US refineries. Venezuela holds the world’s largest proven oil reserves, but produces only 1.25 million barrels per day, far below its potential after years of underinvestment, mismanagement and sanctions.

Trump did not disclose the structure of the agreement, the fields or companies involved, nor how the US would exercise majority control over the reserves.

Secretary of State Marco Rubio described the agreement as a win for both countries, saying on X that it would secure stable, low-cost oil for the US and help lower petrol prices.

For Venezuela, Rubio said the deal would bring nearly $100bn in private investment, support thousands of high-paying jobs and help rebuild the country’s economy.

Canada’s economy has rebounded sharply in the second quarter after six months of virtually no growth, aided by a strong jump in exports and solid domestic demand, though a new round of tariffs from the United States brings renewed uncertainty.

The economy grew at an annualised rate of 3.3 percent in the second quarter, the fastest rate since 2023, after a revised 0.3 percent increase in the first quarter, Statistics Canada said on Friday.

The upward revision to first-quarter growth means Canada was not in a technical recession, usually defined as two straight quarters of contraction.

Healthy domestic demand, led by consumer spending and business investment, signals the economy is slowly brushing off the impacts of more than 18 months of US import tariffs that upended North American supply chains and increased costs.

Renewed tariff dispute

A strong domestic consumption and expenditure pattern puts Canada on a firm footing to withstand a new 50 percent US import tariff that President Donald Trump imposed this week on $20bn of Canadian exports. Canada retaliated with its own countermeasures on US imports.

“It seems like households and businesses were beginning to find ways of navigating the trade-related uncertainty before the latest round of tariffs,” Royce Mendes, managing director and head of macro strategy at Desjardins, wrote in a note.

“While it helps that the economy was on stronger footing heading into August, the fresh wave of protectionism injects a significant amount of uncertainty into the outlook,” Mendes said.

Michael Davenport, senior Canada economist at Oxford Economics, said in a note to Al Jazeera that while the gross domestic product (GDP) growth was along expected lines, “the economy is set to slow in the coming quarters amid escalating US-Canada trade policy uncertainty, new bilateral tariffs, and a shrinking population”.

The Canadian dollar weakened slightly after the GDP data, with the loonie trading down 0.01 percent at 72.17 US cents.

On a quarterly basis, GDP grew 0.8 percent for the period ended June, from an upwardly revised 0.1 percent in the previous quarter.

Second-quarter annualised growth was higher than the Bank of Canada’s July forecast of 2.5 percent growth.

Higher exports were one of the main contributing factors for the second-quarter growth, with outbound shipments growing 3.6 percent, the biggest increase in over three years, Statistics Canada (StatsCan) said.

Stronger household spending

Final domestic demand, the sum of all consumption and capital spending and a crucial metric to assess domestic health, rebounded to 1 percent in the second quarter, from a minor contraction in the first quarter.

Domestic demand has been muted for several quarters as consumers and businesses remain cautious while Canada navigates its trade war with the US.

But household final consumption expenditure, the main indicator of consumer spending, rose 0.8 percent, its highest level in three quarters, highlighting stronger household spending. This was mainly driven by higher wages and government benefits, economists said.

Business investment, or business gross fixed capital formation, sprang to a solid 2.3 percent growth in the second quarter from a contraction of 1.3 percent, the first time in the last year and a half that business investment has expanded.

That growth was led by investment in both residential and non-residential structures, machinery and equipment, StatsCan said.

However, the general gross fixed capital formation, essentially government expenditure for creating assets, continued to decline with a second-quarter contraction of 2.9 percent, after shrinking 2.6 percent in the previous quarter.

On a month-to-month basis, GDP for June grew 0.3 percent against a forecast of 0.2 percent, and an advance indicator showed that the economy was largely flat in July, the statistics agency said.

US trade officials downplay French language dispute, calling claims fabricated.

Canada’s top trade negotiator with the United States, Dominic LeBlanc, says he “welcomes” a shift in the US position on “discoverability”, “labelling” and “measures to promote French language and Canadian culture” not being subject to US tariffs.

LeBlanc praised the move in a post on Thursday on X and added that Canada is looking “forward to further constructive U.S. clarifications on their other positions, which would create the possibility of a mutually beneficial trade agreement”.

Al Jazeera reached out to the White House for comment, but it pointed to an interview with US Trade Representative Jamison Greer on the Canadian broadcaster CBC in which Greer said French language discoverability on streaming services “is not something where we push hard or condition or red-line”.

Commerce Secretary Howard Lutnick echoed those comments at a news conference on Thursday outside the Kennedy Center in Washington, DC.

“Do I care about how the Quebecois speak? I mean, what could matter less to America? We don’t care. So the fact is we never brought those words up. This is manufactured, and that’s why the president put out a [post on Truth Social] saying it was a complete lie, right? It was manufactured,” Lutnick told reporters.

The comments come on the heels of tit-for-tat tariffs between Washington and Ottawa.

Canada announced retaliatory tariffs on roughly $20bn of US goods ranging from 15 to 50 percent that will go into effect on September 8. Those levies were in response to 50 percent tariffs announced by Washington on Canadian goods as negotiations collapsed over the weekend.

US President Donald Trump ramped up his rhetoric against Canada in recent days, including signing an executive order on Thursday to rename Lake Ontario, the easternmost of the five Great Lakes, which borders Ontario, to Lake America.

On Saturday, Canadian Prime Minister Mark Carney said US officials made “threats to the French language” as well as threats to the culture of Canada and Quebec specifically.

Canada’s retaliatory tariffs are to hit hundreds of consumer products, including ice skates, dishwashers and construction materials. However, on Wednesday, Ottawa scaled back some tariffs, including those on fish and other seafood products.

“Based on feedback, we have made select adjustments to protect against economic harms, including removing seafood and fish products from our list of counter-tariffs,” Canada’s Department of Finance said in a post on X.

“We are continually working with Canadian industries to assess the effectiveness of these measures, with a primary focus on industries that have been targeted by US tariffs.”

OpenAI detected its artificial intelligence models communicating with each other and gaining internet access without authorisation months before they hacked the start-up Hugging Face, the creator of ChatGPT has announced following an internal probe.

In a report released on Wednesday, OpenAI said its AI agents exploited vulnerabilities in Artifactory, a software repository tool, to post notes and access the internet without human prompting as far back as May.

OpenAI said its agents went on to exploit a separate Artifactory vulnerability on July 8 to facilitate communication among themselves, setting in motion a chain of actions that culminated in the July 11 attack on AI company Hugging Face.

OpenAI’s findings come amid growing concern about the potential for AI to inflict serious real-world harm, including self-directed cyberattacks.

OpenAI said in its report that its agents collaborated and delegated work in the lead-up to the attack, sometimes referring to themselves as a “swarm” or “collective”.

METR and Redwood Research, two security research organisations contracted by OpenAI to investigate the incident, said in a separate report released on Wednesday that about 1200 agents had communicated with each other and roughly 700 participated in the attack.

After discovering how to escape OpenAI’s controlled environment, agents shared their methods via a “inter-agent message board”, enabling additional agents to exploit the company’s infrastructure, the tech giant said.

When one AI agent found Hugging Face user credentials that had been exposed online, it shared them with the group, enabling an agent to “discover and chain together several security exploits” that provided access to Hugging Face’s severs, according to the report.

“An internal team observed an agent engaging in message board activity and instances of disallowed internet access as early as late May, and with the benefit of hindsight, some early signals identified in our report should have triggered an earlier response,” OpenAI said.

OpenAI said agents created by an unreleased AI model were the primary participants in the attack, but publicly available GPT-5.6 Sol was also involved.

The company also revealed that it took its security team 11 days to detect the malign activities leading up to the attack, which the company uncovered on July 19 and publicly disclosed on July 21.

OpenAI, which described the incident as a “warning shot” for the world, said it would take several steps to strengthen its safeguards for its models, including restricting internet access, creating more secure testing environments and placing “stricter requirements on alignment throughout a model’s lifecycle”.

“We are also investing significantly more compute resources into chain-of-thought monitoring⁠ to more quickly intervene on misaligned behavior,” the San Francisco-based firm said.

Hugging Face, which operates a platform for hosting open-source AI models, did not immediately respond to a request for comment outside of business hours.

Toby Walsh, an expert in AI and professor at UNSW Sydney, said the public should be concerned that OpenAI had missed warning signs and allowed the malicious activity to go undetected for so long.

“We cannot depend on either their goodwill or their competence. This needs regulatory oversight. Now!” Walsh told Al Jazeera.

“They ignored some troubling early evidence like this,” Walsh said.

“External auditing is the only appropriate response.”

Walsh said the incident also highlighted the “inherent conflict of interest” at the heart of AI development.

“Labs are locked in a relentless race to push the boundaries,” he said.

Tim Miller, a professor specialising in AI at the University of Queensland, said OpenAI’s report left him more concerned than before about AI’s dangers.

“More concerned because they demonstrate that these models are very good at hacking, and that everyone has access to them,” Miller told Al Jazeera.

“I’m surprised how good these are,” Miller said.

“Unfortunately, I’m not surprised that OpenAI engineers were somewhat negligent.”

Meta settles $16.68bn lawsuit over child addiction claims, agreeing to major changes in Facebook and Instagram features.

Meta Platforms has agreed to settle a lawsuit that accused the company of designing Facebook and Instagram in a way that addicted children, misled consumers about safety, and collected personal data of children on the platform.

On Wednesday, the social media giant agreed to pay a maximum of $16.68bn as part of a settlement to resolve claims brought in the United States case, championed by a coalition of 29 US states. The case, which started on August 18, was expected to last six weeks.

Meta, based in Silicon Valley in California, has also agreed to make changes to Facebook and Instagram nationwide as part of the settlement. Among these are daily usage limits of two hours for those under the age of 18, which can only be removed by a parent, and nighttime blocks.

The California State Attorney General’s Office said that the Mark Zuckerberg-led company would also identify and remove children under the age of 13 from the platform.

Meta denied any wrongdoing as part of the settlement, which still needs court approval. It had faced up to $1.4 trillion in fines in the case, but the coalition had been seeking a penalty closer to $200bn.

The settlement comes after a loss in a comparable landmark case in New Mexico, where a jury ordered Meta to pay $375m in March and another $567m in August.

Meta’s stock tumbled in early trading on Wall Street, down 0.1 percent since the market opened.

SEOUL, Aug. 26 (UPI) — North Korean leader Kim Jong Un presided over a key party meeting focused on economic development, state-run media reported Wednesday, but made no mention of renewed diplomatic outreach by U.S. President Donald Trump.

Kim led an enlarged meeting of the political bureau of the ruling Workers’ Party Central Committee on Tuesday, the official Korean Central News Agency reported. The meeting reviewed progress in the country’s “major economic sectors” and discussed implementation of policy goals for 2026, KCNA said.

Officials cited unspecified “unfavorable conditions and difficulties arising alongside ever-changing circumstances” and shortcomings in implementing economic plans laid out at February’s Ninth Party Congress.

Kim blamed the problems on the “immature operation and leadership of the economic guidance organs” and called on officials to “successfully conclude this year’s struggle without fail,” according to KCNA.

The party meeting comes as Trump has stepped up overtures to Kim, whom he said he expects to meet this year.

Trump last week abruptly ordered the United States and South Korea to curtail their annual Ulchi Freedom Shield military exercise, citing its cost and saying the drills sent an “inappropriate and hostile” signal to Pyongyang.

Kim did not mention Trump or the military exercise in his remarks reported by KCNA. His sister, Kim Yo Jong, said last week that Pyongyang had “no interest” in the reduction of the drills.

“If the U.S. calculates that it can propagate its recent measure as the one of so-called good faith, they will not get desired answer,” she said.

The apparent lack of urgency from Pyongyang coincides with an improving economic picture after years of contraction and pandemic-era isolation.

North Korea’s economy grew by an estimated 3.5% in 2025, according to South Korea’s Bank of Korea, marking its third consecutive year of growth above 3%. The central bank cited expanded economic cooperation with Russia, increased trade with China and domestic policy projects as key factors, and said the North’s real GDP has surpassed its 2017 level, when United Nations sanctions were tightened.

The economic situation contrasts with Trump’s first term, when North Korea was under mounting international sanctions pressure while Trump pursued direct diplomacy with Kim. The two leaders held summits in Singapore and Hanoi and had a brief meeting at the Demilitarized Zone, but no nuclear deal was reached.

At February’s Ninth Party Congress, Kim hailed the previous five-year economic plan as a success and said the next would focus on stabilizing and consolidating the economy while pursuing “gradual and qualitative development” of industry and agriculture. He also called improving the economy and raising living standards “heavy and urgent historic tasks.”

Analysts have questioned whether Pyongyang has much incentive to return to negotiations on Washington’s terms. North Korea is less economically isolated than during Trump’s first term, and Kim has repeatedly declared the country’s growing nuclear arsenal off-limits to negotiations.

Bruce Klingner, senior fellow at the Maureen and Mike Mansfield Foundation, said Tuesday the chance of a meeting appeared “slim to none.”

“North Korea right now feels [it is] in the strongest position it’s been for quite some time,” Klingner said at a forum hosted by the Korea Economic Institute of America in Washington, pointing to Pyongyang’s economic ties with Russia and China as well as revenue from cryptocurrency theft.

“It’s getting about a billion dollars a year from cryptocurrency crime, so it doesn’t need the U.S. and sanctions relief as it did several years ago,” Klingner said. “So I think they’re just going to sit back … [saying] ‘we don’t close the door on engagement, but you need to offer more.'”

Trump on Tuesday reposted his directive to cut back the U.S.-South Korea joint drills, again highlighting his “very good relationship” with Kim. He also posted several photos of himself with the North Korean leader from their meetings in Singapore and at the DMZ.

A top Iranian official says Iran and Oman have agreed on a new temporary route for shipping in the Strait of Hormuz, but insisted that the waterway will not reopen until the United States fulfils its commitments under an interim peace deal signed in June.

The remarks by Kazem Gharibabadi, Iran’s deputy foreign minister for legal and international affairs, came on Tuesday, after Iran and Oman’s top diplomats held talks in Tehran to finalise the details of a phased framework for managing the strait.

Iran and Oman, both coastal nations on the strait, have been in on-and-off talks for weeks about controlling traffic through the strategic waterway, which handled one-fifth of global oil and liquefied natural gas shipments before the US-Israel war on Tehran began in February.

Most ⁠shipping in the strait has been shut down since then.

Gharibabadi, speaking on state television, said Iran and Oman had agreed the new route’s entry “would be through our territorial waters, and part of the exit route would also be through our territorial waters”.

The transit corridor would be seven miles (11.3km) wide, he said.

“The agreed-upon transit route with Oman is a temporary route,” he added.

Earlier on Tuesday, Iran’s Foreign Minister Abbas Araghchi met with his Omani counterpart, Badr Albusaidi, in Tehran to discuss the temporary navigation corridor as well as a project to clear mines from the strait, according to a joint statement.

Albusaidi said on X he hoped the countries would “soon announce” the corridor, adding that “future management of the strait and a permanent solution will follow in due course.”

Technical talks are planned to develop a long-term arrangement, including mechanisms for information sharing and navigational and security services, according to the statement.

Mines in Hormuz

The Strait of Hormuz became a flashpoint after Tehran responded to the US-Israel war by closing the waterway. It then announced a new shipping route through its territorial waters, bypassing the internationally recognised Traffic Separation Scheme adopted by the International Maritime Organization (IMO) in 1968. Tehran said that route had been mined.

Then in June, when Iran and the US signed a Memorandum of Understanding (MoU) to end the war, Oman and the IMO announced a new transit corridor in the Strait of Hormuz – backed by the US – that hugged the Omani coast.

Iran said the so-called southern route violated the MoU and launched attacks on ships using the corridor, resulting in the collapse of the interim deal.

Diplomatic efforts towards a broader peace deal have since stalled, and passage through the strait remains dangerous. An oil tanker was disabled by an unidentified projectile on Tuesday near Oman’s Ash Shishah, close to the strait’s entrance, the United Kingdom’s maritime trade watchdog said.

Gharibabadi, in his comments on Tuesday, said Iran would not consider the strait open despite the agreement with Oman.

He also dismissed a claim by US President Donald Trump that all mines had been cleared from the strait’s international waters, saying it was “only aimed at calming the markets”. He warned that US mine-detection vessels would become “very good targets” if they entered the area.

Gharibabadi insisted the US must fulfil its commitments under the MoU – including sanctions relief and the release of frozen Iranian assets – if it wants a return to the diplomatic track.

He also urged countries to resist US pressure over sanctions on Iran.

Trump had announced last week the “most crushing economic operation ever” against Iran, and threatened sanctions against any country that does business with it.

“We are urging countries not to succumb to American pressure regarding the sanctions that Washington wants to impose on us,” Gharibabadi said, adding that Washington was “mistaken about its ability to enforce its sanctions against our neighbours”.

He said an earlier US sanctions campaign under Trump had failed to achieve its goals and predicted new measures would meet the same fate.

“The new American sanctions are doomed to failure, and we have our own methods to counter them,” he added.

The administration of United States President Donald Trump has announced new economic sanctions on Tehran, describing the measures as an “economic D-Day” as the US war on Iran approaches the six-month mark.

US Treasury Secretary Scott Bessent announced the sanctions on Monday, alongside a naval blockade of Iranian ports.

Bessent said the sanctions target key sources of Iran’s revenue, including its oil and gas industry, and called on countries around the world to cut economic ties with Tehran.

What are the sanctions?

The Treasury Department said the sanctions will target Iran’s aviation, digital assets, gold, technology and shipping sectors, as well as impose sanctions on 60 specific individuals and vessels.

“The main point is that Iran seems to have much less room than it did in previous years to simply work around sanctions,” Peiman Salehi, a Tehran-based geopolitical analyst, told Al Jazeera.

Bessent also said on Monday that the new sanctions expose Tehran’s trade partners to secondary penalties. According to a Treasury Department release on Monday, the targets include ships based in or associated with countries including Singapore, China, and Hong Kong.

“Today’s sanctions are mostly incremental, but are part of trying to intimidate remaining trading partners into cutting ties [with Iran],” said Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security think tank.

“There’s a lot of signalling and bluster aimed at getting other countries to crack down on entities involved in grey-zone trade, but new measures are mostly incremental for now,” she said. Grey-zone trade refers to both illegal, underground trade and trade that is unsanctioned but difficult.

The Treasury Department said Iran has used cryptocurrency to circumvent its longtime sanctions and facilitate transactions involving the Islamic Revolutionary Guard Corps (IRGC) and members of the Iranian regime. The department also said Iran has used gold to help prop up the value of its currency amid economic instability.

The new shipping sanctions target Iran’s state-linked shipping fleet, which the Treasury Department alleges is being used to transport oil as well as “sensitive weapons components”.

The technology sanctions are intended to restrict Iran’s acquisition of materials that could be used in its weapons programmes. The aviation sanctions target Iranian airlines that the Treasury Department alleges are being used to transport weapons and military personnel, as well as financial resources to Iran’s proxies.

Washington also indefinitely suspended several broad exceptions to its ongoing sanctions on Iran, including those covering academic exchanges, personal money transfers and certain sporting activities. Organisations currently engaged in those activities have until September 8 to wind down their operations.

Ziemba says these measures “will have more effect on Iranians, not just the regime”.

What sanctions were already in place?

Washington’s sanctions on Iran have been in place since 1979, after students took hostages at the US Embassy in Tehran, and increased over the next 45 years. Sanctions were briefly paused, however, after the administration of President Barack Obama and world powers signed a nuclear deal with Tehran in 2015. But the Trump administration withdrew from the deal during its first term, in 2018, bringing back old penalties while adding new ones.

Washington imposed new sanctions during Trump’s second term, many of them before the US and Israel first struck the country on February 28.

In February 2025, the Treasury Department sanctioned 30 individuals and vessels involved in the “brokering [of] the sale and transportation of Iranian petroleum-related products”, according to a department release. The targets were based in several countries, including India and China.

In December 2025, Washington sanctioned 29 vessels it accused of being part of a so-called shadow fleet used to transport Iranian petroleum. It also sanctioned Egyptian businessman Hatem Elsaid Farid Ibrahim Sakr over his businesses’ alleged ties to seven of those 29 vessels. The measures continued the 1979 sanctions campaign against Iran’s oil industry.

The Treasury Department stepped up the sanctions again in April 2026, targeting another two dozen individuals, companies and vessels operating within the network of Iranian oil shipping magnate Mohammad Hossein Shamkhani, the son of now-deceased senior Iranian security official Ali Shamkhani.

Later that same month, the Treasury also targeted what it described as “regime-linked cryptocurrency” and said it had seized nearly half a billion dollars from so-called “shadow banking networks”.

How have sanctions affected US consumers?

Pressure on the Iranian oil market, both through existing sanctions as well as the current war, has tightened the rest of the globe’s oil supply and affected countries that buy Iranian oil.

China, for example, is the primary destination for Iranian oil, buying roughly 90 percent of Iran’s crude oil exports. Beijing bought 1.4 million barrels per day in 2025.

At the same time, Asian markets, China included, also heavily rely on oil travelling through the strategically vital Strait of Hormuz, where roughly one-fifth of the globe’s oil transited before Iran choked off the route.

This has put pressure on the global oil supply, meaning the benchmark for crude oil has ticked up, translating to higher prices on fuel and food.

For US consumers, that has been most apparent at the petrol pump. The average price for a gallon of petrol (3.78 litres) is $4.09, up from $2.98 on February 28 when the US and Israel first struck Iran, according to the American Automobile Association (AAA), which tracks daily petrol prices.

Experts warn that if Iran retaliation accelerates, it could hit Americans hard.

“If sanctions provoke Iranian retaliation against Gulf shipping, materially reduce oil exports, or cause insurers and shipping companies to avoid the region, then Americans could feel it very quickly through gasoline, diesel, airfares, freight costs and ultimately inflation,” John Deal, managing director of capital markets at Post Oak Group investment bank, told Al Jazeera.

The economy and Iran are emerging as key issues heading into the US midterm elections, with voters expressing dissatisfaction on both fronts. That could put pressure on Republicans in competitive races, including in traditionally red states such as Texas.

A late-July Reuters/Ipsos poll suggested that only about a third of Americans supported the war, while just 28 percent of respondents in a CNN poll approved of Trump’s handling of Iran.

On the economy, an AP/NORC poll suggested that 32 percent of Americans approved of Trump’s performance. A recent Reuters/Ipsos poll, meanwhile, suggested that Democrats were narrowly ahead of Republicans on which party voters trust more to handle the economy—the first Democratic advantage in roughly a decade.

How are the sanctions affecting markets?

The latest sanctions announcement is weighing on Wall Street as well as the oil and gold markets.

On the heels of the announcement, the price of gold, largely considered a safe investment during times of economic uncertainty, jumped by 0.8 percent to $4,639.49 per ounce (28 grams) in midday trading, ticking up to its highest level since mid-May.

As for oil, prices pulled back on Monday after two weeks of gains. The price of the global benchmark Brent crude tumbled by more than 2 percent on Monday to $85.22 a barrel.

On Wall Street, the major indices are mixed amid the latest sanctions news as well as Trump’s announcement of new tariffs on Canada. The Nasdaq is down 0.5 percent, and the S&P 500 is down 0.2 percent. The Dow Jones Industrial Average, however, is trending in positive territory, 0.2 percent higher than the market open on Monday.

The oil sector is taking a hit. Chevron is down 0.8 percent, ExxonMobil tumbled 0.9 percent, BP fell more than 2 percent, and Shell is down 0.2 percent.

WASHINGTON — The United States unveiled plans Monday for new sanctions against Iran that Trump administration officials said are designed to sever Tehran from the global financial system as the nearly six-month conflict between the two countries drags on.

Treasury Secretary Scott Bessent, who previewed the announcement last week as “economic D-Day,” described the measures as the opening of an all-out financial assault on the Iranian government and its trade partners — a group that includes China, India, Turkey and the United Arab Emirates.

“To those who enable Tehran, do not discount the cost of testing Washington’s resolve,” Bessent said at a news conference. “No nation should expect to enjoy the rewards of our system while helping those who seek to destroy it.”

Bessent said it was time for world leaders to “make a decision” between “America and Iran,” adding that President Trump has already been calling foreign leaders to make specific requests ahead of the new sanctions.

But when asked whom the president had been talking to, Bessent said he would not “name names.” He also said the secondary measure would not take effect immediately, arguing that the administration is trying to give “everyone the opportunity to remedy bad behavior.”

“Why would I want to blow up the global financial system?” Bessent said when a reporter pressed him on why the sanctions weren’t immediate. “We believe that it is important to level set and give people a cure period, but they should know that that will move very quickly and that we are serious.”

The pressure campaign will build on a naval blockade and other sanctions the Trump administration has already imposed in its effort to force Tehran into a deal that ends the war on U.S. terms.

Trump’s latest economic push against Iran revives a familiar strategy from presidents of both parties, using financial leverage to pressure Tehran toward more serious negotiations over its nuclear program. Sanctions helped bring Iran to the table before a 2015 nuclear deal brokered by President Obama, but the agreement was widely criticized as weak by Republicans. After Trump withdrew from the agreement in his first term, a new “maximum pressure” campaign failed to secure a new deal.

Trump’s decision to return to a strategy of economic coercion has signaled to Iran that the fighting phase of the war is probably over, for now, with the U.S. administration choosing a path “neither of war nor of peace,” Masoud Pezeshkian, Iran’s president, said this week.

Iranian officials, who had been anticipating the move, pushed back on Washington’s strategy even before Bessent began speaking Monday.

Foreign Minister Abbas Araghchi told Iranian state media over the weekend that the sanctions amounted to a repackaged version of decades-old American pressure tactics that Tehran has already learned to withstand. Esmail Baghaei, Iran’s foreign ministry spokesman, warned of “grave consequences” for any countries cooperating with what he said was “illegal behavior” by the United States. And Mohsen Rezaei, the secretary of Iran’s Supreme Security Council, suggested that the economic pressure could shut down oil exports through the Strait of Hormuz, a threat that would ripple through global energy markets.

That defiance underscores the central gamble of Washington’s strategy. Rather than aiming sanctions at Iran alone, Bessent’s plan to potentially squeeze major economies like China and India over their ties to Tehran could pose a diplomatic risk to the U.S.

The fallout could also reach beyond foreign diplomacy as a hit to global markets also risks compounding Trump’s troubles at home ahead of the midterm elections, as Americans grow unhappy with the economy and their support for the conflict in the Middle East plummets. The Iran sanctions also land as the administration wages a separate trade fight with Canada, adding uncertainty to global and domestic markets.

Whether Washington will be able to apply pressure on Iran’s trade partners remains an open question.

China alone shares nearly $10 billion in bilateral trade with Iran, and paid roughly $31.2 billion for unreported Iranian crude oil imports in 2025, according to the U.S.-China Economic and Security Review Commission. That makes China the largest buyer of Iranian crude oil by a wide margin, accounting for more than 90% of Iran’s oil exports, according to the commission.

It is unclear whether Trump has spoken to China’s leader, Xi Jinping, about the sanctions. But the two leaders are set to meet in Washington next month, adding to the diplomatic dynamics of the moment.

Other trading partners have already made some moves.

The UAE said last week that it was suspending trade with Iran, a decision that followed accusations that Tehran had fired two ballistic missiles at the Emirates.

Afra Al Hameli, a spokesperson for the Emirati Ministry of Foreign Affairs, said in a post on Aug. 18 on X that all trade, commercial exchanges and financial transactions with Iran have been halted until further notice. She added that the Emirates was “firmly committed to safeguarding the integrity of the international financial system.”

Bessent said Monday that he expects other countries will “take similar actions as we continue our engagement.”

In an opinion article written for the Financial Times last week, Bessent has cast the new measures as the “single greatest financial offensive ever marshalled against an adversary.”

Bessent wrote that countries that “sever Iran’s remaining financial and commercial connectivity” will see their economies reinvigorated, and those who don’t will experience the end of their “lasting prosperity.”

“Any nation that serves as a financial artery of a withering regime should expect to share in its isolation,” he wrote. “To become a sanctuary for terror is to become, in the eyes of the United States, a global pariah.”

Ahead of the announcement Monday, Trump posted on Truth Social that Iran was “completely collapsing.”

Meanwhile, Iran’s central bank governor, Abdolnaser Hemmati, said the U.S. had already done all that it can against Iran and that the central bank had been shoring up its foreign currency reserves for months. Last week, he said Iran’s crude exports had “virtually stopped.”

“[The Americans] have done everything, so what else can they do?” he said in an interview with Tasnim News.

Despite his assurances that the central bank was working on preventing a devaluation of the Iranian rial, the currency has struggled to remain above a black market exchange rate of 2 million per dollar — a record low. The Central Bank rate stands at roughly 1.5 million rial to the dollar.

Though experts question the effectiveness of additional economic pressure on Tehran, Bessent’s threat to target Iran’s trading partners — especially the UAE, China and Turkey, who together comprise almost three-quarters of Iran’s foreign imports — will undoubtedly be painful for Iranians.

For example, Iran uses the UAE as a reexport hub and buffer, and receives vehicle spare parts from China, according to the Observatory for Economic Complexity. Iranian economic experts say both the agricultural and pharmaceutical sectors also rely on imports from countries such as Brazil and Turkey.

Ceballos reported from Washington and Bulos from Beirut.

Saudi Arabia’s Crown Prince, Mohammed bin Salman, (MBS), is on the second day of his two-day state visit to France, where he’s meeting President Emmanuel Macron.

In this explainer, we outline what they are expected to discuss and examine how their latest meetings build on an already evolving relationship.

What is on the agenda?

MBS’s visit to Paris began on Sunday evening alongside President Macron at the closing ceremony of the Esports World Cup. It was the first time the Esports tournament, which includes competitions ranging from video games to chess, had been held outside Saudi Arabia.

On Monday, Macron and Bin Salman are expected to sign several agreements on health, transport and energy.

French media reported that a deal to build a Dragon Ball-themed amusement park, backed by a Saudi investment fund and inspired by the iconic Japanese manga series, could be signed.

Valerie Pecresse, President of the Regional Council of Île-de-France in Greater Paris, told French broadcaster TF1 that the regional government had been working on the project for 18 months.

“There is a very important meeting at the Elysee today that may result in the signing of this agreement. We are waiting for the signature,” she said, describing the project as “on the scale of Disneyland”.

Bin Salman and Macron are also holding bilateral discussions on regional security and their economic ties.

That is expected to include discussions about energy routes that bypass the Strait of Hormuz, such as new pipelines, capacity upgrades and alternative port networks.

France is a major buyer of Saudi oil and mineral products.

Since the start of the US-Israeli war on Iran on February 28, shipping has been severely disrupted in the Strait of Hormuz – the vital waterway on which oil exporters in the Gulf are heavily reliant and where 20 percent of the world’s oil and natural gas supplies are shipped from during peacetime. The disruption sent oil prices soaring.

Before the war, a barrel of Brent crude – the global benchmark – cost about $66. Over the course of the conflict, prices have climbed above $100 – hitting a high of $119 early on in the war.

On Monday, Brent was trading around $93 a barrel.

Bin Salman and Macron are also expected to discuss the war in Iran, the bloodshed in Palestine, as well as developments in Syria and Lebanon, where Israel occupies around one-fifth of its territory.

Other expected topics on Monday’s agenda include global events that Saudi Arabia is set to host in the coming years, including Expo 2030, focusing on sustainability and urban innovation, and the 2034 football World Cup.

How much trade does Saudi Arabia do with France?

The two countries have a fairly equal trading balance.

In 2024, France exported $4.5bn worth of goods to Saudi Arabia and imported $4.6bn worth, according to data from the Observatory of Economic Complexity (OEC), an online platform that compiles and visualises international trade statistics.

Refined petroleum accounted for 72 percent of Saudi Arabia’s exports to France in 2024. Besides refined petroleum, Saudi Arabia exported crude petroleum and other mineral products to France. It also exported small amounts of machinery, chemicals and cars.

France’s exports to Saudi Arabia in 2024 were more diverse, including airliners, helicopters, gas turbines, pharmaceutical products and perfume, among other products.

What have relations between Saudi Arabia and France been like?

Sunday’s visit marked the third time MBS has visited France after trips in 2022 and 2023.

In December 2024, Macron visited Riyadh, where the two countries founded the Saudi-French Strategic Partnership Council, which formalised and upgraded political and economic ties between Saudi Arabia and France.

The current visit is also MBS’s first international trip since the August 7 signing of the Mecca Joint Defence Agreement, known as the Mecca pact – the mutual defence agreement between Saudi Arabia, Turkiye and Pakistan.

Signed by the prince, Turkiye’s President, Recep Tayyip Erdogan, and Pakistan’s Prime Minister, Shehbaz Sharif, the agreement commits all three states to treat an armed attack on any one of them as an attack on all three.

Analysts say the pact shows that Saudi Arabia is taking steps to diversify its security partnerships beyond Washington.

US President Donald Trump’s administration has said it aims to sever “every” economic lifeline sustaining Iran in what officials have warned will be the toughest sanctions campaign ever seen.

The threat, if followed through, would mean putting China, Iran’s biggest trade partner, squarely in the crosshairs of US sanctions.

That would be a risky proposition for Washington due to the likelihood of severe blowback from Beijing – so much so that some analysts doubt that the Trump administration’s measures, set to be announced on Monday, will match its rhetoric in scope or severity.

While the Trump administration has yet to provide details about what it has dubbed “economic D-Day”, US officials have made it clear that Iran’s trade partners are in their sights.

In an op-ed in the Financial Times on Sunday, US Treasury Secretary Scott Bessent warned that countries fearful of breaking ties with Iran should not “discount the cost of testing Washington”.

“The president has created the conditions to leverage every agency, every authority and action many assumed we would never summon,” said Bessent, who is scheduled to unveil the sanctions in a news conference at 17:00 GMT.

Brett Erickson, a sanctions expert and managing principal of Obsidian Risk Advisors, said the Trump administration’s willingness to target China will be an indication of its resolve to mount a sustained economic offensive against Tehran.

“That is not a relationship you degrade lightly. If the United States decides to really bring China into the ring, it will be a serious indication that the United States plans to wage this economic war for a prolonged period of time,” Erickson told Al Jazeera.

“If they do not, it will be a tacit admission from the Trump administration that they do not believe economic hardship can seriously bring about a change in the Iranian position,” Erickson said.

Any US pressure campaign that excludes China would be necessarily limited in scope given the outsized importance of Beijing and Tehran’s economic ties.

China reported $9.96bn in two-way trade with Iran in 2025, a figure that does not include some $31.2bn in Iranian oil shipments, according to the US-China Economic and Security Review Commission.

China’s purchases of Iranian oil have been a particularly crucial lifeline for Tehran, accounting for about 90 percent of its oil sales, according to the US Treasury Department.

Until now, the Trump administration’s Iran sanctions regime has targeted only a handful of relatively minor China-based entities.

In April, the Trump administration sanctioned Hengli Petrochemical (Dalian) Refinery, one of China’s largest independent refineries, commonly known as “teapots”, over its alleged purchases of Iranian oil.

The Trump administration also imposed sanctions on four firms in Hong Kong in May, followed by measures in August targeting six China and Hong Kong-based shipping lines.

Washington has so far left Chinese financial institutions, widely viewed as a key node in Iran’s oil trade, untouched.

“Cutting off Chinese economic ties will be key to the success of any attempt to increase pressure on Iran. However, the United States won’t do it,” Jennifer Kavanagh, a senior fellow at Defense Priorities, a Washington-based foreign policy think tank, told Al Jazeera.

“If it does, China will retaliate and has the leverage to impose costs on the US,” Kavanagh said.

China has vigorously opposed US sanctions against Iran, arguing that economic pressure will not resolve the nearly six-month-long war.

In a statement on Sunday, China’s Ministry of Foreign Affairs said that Beijing remained “committed to promoting peace talks” and willing to “continue making efforts for the early restoration of peace and tranquility in the region”.

Iran, for its part, has threatened to retaliate against countries that support the US measures.

Mohsen Rezaei, the secretary of Iran’s Supreme National Security Council, warned on Saturday that any country that participated in sanctions would be considered an “enemy” and that “not a drop” of oil would leave the Gulf if Iran’s neighbours joined the US campaign.

Wang Wen, dean of the Chongyang Institute for Financial Studies at Renmin University of China, said Beijing would inevitably take countermeasures in response to any US sanctions and their intensity would depend on the “severity of US actions”.

“China maintains its desire to avoid conflict, but its bottom line cannot be crossed,” Wang told Al Jazeera.

For Trump, invoking Beijing’s ire would risk not only economic retaliation, but also unravelling efforts to stabilise US-China relations only weeks before the US president is due to host Chinese leader Xi Jinping at the White House.

Trump’s scheduled summit with Xi on September 24 would be their second face-to-face meeting aimed at lowering the temperature in US-China relations since Washington launched its war on Iran in late February, following Trump’s visit to Beijing in May.

Zichen Wang, deputy secretary-general of the Center for China and Globalization (CCG) think tank in Beijing, said neither Beijing nor Washington were likely to want Iran to define the upcoming summit.

“Unless the US measures become very broad or directly target major Chinese interests, both sides are likely to try to keep this dispute from overwhelming the wider agenda,” Wang told Al Jazeera.

“That said, Chinese restraint should not be read as an absence of response,” Wang said.

“Beijing has often avoided immediate rhetorical escalation, but when unilateral US actions have materially affected Chinese companies or other Chinese interests, it has shown a growing willingness to answer with practical countermeasures.”

While the Trump administration could potentially make it more challenging and expensive for China to continue its economic support of Iran, it is unlikely to be able to stop Beijing outright if it is determined to maintain ties, said Erickson of Obsidian Risk Advisors.

“US sanctions can absolutely force companies to de-risk in order to avoid exposure, but there will always be an entity willing to fill this role,” Erickson said, adding that Xi is unlikely to “merely stand by while Trump flexes the powers of American economic statecraft without flexing Beijing’s own in return”.

Though US officials have stated their intention to “collapse” Iran’s government with ramped-up sanctions, Erickson expressed doubt that the Trump administration will be able to achieve its war goals through economic pressure alone.

“Unless the Trump administration is willing to burn serious bridges and employ all remaining levers of economic warfare simultaneously, there is no reasonable assertion that can be made that it will be able to produce the victory that kinetic warfare could not,” he said.

EXPLAINER

At least 145 countries have reported increases in petrol prices since the attacks on Iran by the US and Israel began on February 28.

Since the United States and Israel launched their war on Iran six months ago, petrol prices have risen in at least 145 countries, adding to the burden on consumers worldwide.

The figures are based on data from GlobalPetrolPrices, which tracks fuel prices in 170 countries and territories. Petrol prices in Myanmar rose the most, increasing by 56 percent from $0.77 per litre of 95-octane fuel on February 23 to $1.20 on August 17. Bhutan recorded the next-largest increase at 55 percent, followed by Cuba at 51 percent, the UAE at 50 percent and 48 percent in Nigeria.

In 25 other countries, most of them oil producers with heavily subsidised fuel, prices have either remained unchanged or fallen by single digits.

The table below lists the 145 countries where petrol prices at the pump increased over the past six months.

How higher fuel costs shrink your driving range

Before the war, the US national average for a gallon [3.78 litres] of regular petrol was $2.94. It now costs $4.09, an increase of 39 percent, according to AAA Fuel Prices, which tracks retail fuel prices for the American Automobile Association (AAA).

The extra cost directly affects how far people can travel. Before the war, $50 worth of fuel in the US could take a family sedan roughly 718 km (446 miles). Today, the same amount takes you about 536 km (333 miles) – 183 km less, a 25 percent reduction in driving distance.

That gap varies depending on where you live.

Set your country, car and budget below to see how far your money takes you. If you’re filling up in the US, you can also select a state and fuel grade.

How high oil costs drive up the price of food

Oil prices and food prices move in lockstep, with energy prices affecting every stage of the food supply chain, from the fertilisers used in the fields to the trucks that carry food from field to supermarket shelf.

Rising oil prices also directly impact shipping and the cost of transport.

“The lifeblood of the global economy is transport,” economist David McWilliams told Al Jazeera. “It’s getting stuff from A to B – it’s a logistics problem, a supply chain problem and ultimately transportation is the energy of the global economy.”

In lower-income countries, where populations spend a far greater share of their earnings on food and import large quantities of grain and fertiliser, rising oil prices could rapidly translate into food shortages.

What products are made from oil and gas?

Oil and gas are used for far more than just fuel. They are raw materials for thousands of everyday products.

Plastics, including water bottles, food packaging, phone casings and medical syringes, are all derived from crude oil.

Crude oil is also the hidden ingredient in synthetic fabrics, such as polyester, nylon and acrylic, which are used to make everything from sportswear to carpets. It also underpins the cosmetics industry, as it is used to make products such as petroleum jelly (Vaseline), lipsticks and concealers.

Household items also rely on oil-based ingredients, with laundry detergents, dishwashing liquids and paints all derived from petroleum products.

The global food supply is essentially built on natural gas in the form of fertilisers, used to enhance crop yields and ensure that food production can meet demand.

Naivasha, Kenya – For communities living around Naivasha, water is not an abstract resource. It sustains families, livestock, farms and schools.

That reality has taken on new significance after plans for a major Microsoft-G42 data centre in Olkaria, near Lake Naivasha, stalled in May 2026 over concerns about available power capacity.

Microsoft and United Arab Emirates-based artificial intelligence company G42 announced the project in 2024 as part of a $1bn digital investment package for Kenya. The proposed facility was to run on geothermal energy and eventually scale to as much as 1 gigawatt of capacity.

The uncertainty has also prompted questions about what another major industrial user could mean for water in a region where residents already report shortages.

Microsoft and G42 said the proposed data centre campus would run entirely on renewable geothermal energy and incorporate water conservation technology. The companies did not disclose a project-specific water consumption figure in their 2024 announcement.

Kenya Electricity Generating Company (KenGen) communications director Frank David Ochieng told Al Jazeera that the data centre remains at the design stage and that he could not comment further until the project is ready to proceed.

For residents like Musa Olorkedienye, who spoke to Al Jazeera, water scarcity is already a daily concern. He says communities around Olkaria have seen changes in access to water, including the loss of reliable piped supplies that residents previously received from KenGen.

“Currently, we are relying on water vendors to get water, our animals are walking for kilometres, and we fear things could get worse as demand for water rises,” Olorkedienye says.

Pastoralist Isaac Leshishi, who also spoke to Al Jazeera, says increasingly harsh weather is adding to the pressure.

Why Olkaria?

The choice of Olkaria was closely tied to energy. The area is home to Kenya’s major geothermal operations, making it an attractive location for a power-intensive facility.

KenGen operates the Olkaria geothermal complex, while Microsoft and G42 planned to power the proposed data centre entirely with geothermal energy.

A lake under pressure

Naivasha is a freshwater lake in Kenya’s Rift Valley whose catchment supports agriculture, tourism, livestock and domestic water use. Its basin also hosts geothermal development and other economic activity.

Grace Kimani, a patrol leader with Lake Naivasha and Oloiden, told Al Jazeera that the reservoir is under growing pressure from population growth, agriculture, water abstraction, climate variability, pollution and ecosystem degradation.

“The planned Microsoft-G42 data centre in Olkaria could bring jobs and investment, but its water demand raises concerns about adding pressure to already competing needs, particularly during dry periods,” she said.

Kimani said there is limited public information about the project’s expected water demand, source and cooling technology. She said transparency and an assessment of its cumulative impact on water resources would be important.

She also called for water-efficient or water-free cooling, water recycling and the use of treated wastewater, as well as sustainable abstraction limits and community involvement in monitoring.

Silas Wanjala of the Lake Naivasha Riparian Association, who spoke to Al Jazeera, said the region is heavily dependent on groundwater and that declining water flows are adding to the pressure.

“These industries, especially EcoCloud, which deal with data, will consume a lot of water at a time when rivers are drying, and demand for water is on the rise,” Wanjala said.

Olkaria EcoCloud Data Centre is a local partner in the G42-led development. In 2024, the Kenya News Agency reported that G42, Microsoft and EcoCloud signed a letter of intent for the wider data-centre initiative, with EcoCloud described as a local partner that had previously signed a memorandum of understanding with G42.

Wanjala points to past fluctuations in Lake Naivasha as a warning.

“This lake in 2010 nearly dried up due to over-abstraction, and this could be repeated due to high demand for water by these investors in Olkaria,” he says.

His concern comes against a wider backdrop of water scarcity in Kenya. The Food and Agriculture Organization (FAO) of the United Nations says Kenya has about 527 cubic metres (527,000 litres) of freshwater available per person, below the 1,000-cubic-metre threshold for water scarcity, and estimates availability could fall to about 475 cubic metres per person by 2030.

The figures do not show what effect the proposed data centre would have on Lake Naivasha. They provide context, however, for why the prospect of another major water user is drawing scrutiny in a region where demand is already high.

How much water would it use?

The amount of water the proposed Microsoft-G42 facility itself would require remains unclear.

The project announcement provides no projected consumption figure.

Existing industrial use offers some context.

A KenGen environmental and social impact assessment records that 195,165 cubic metres of water were abstracted from Lake Naivasha in July 2023 for domestic and commercial uses at Olkaria and for operations and domestic use at Eburru.

Of that total, 153,918 cubic metres were used for commercial operations at Olkaria. The assessment records the abstraction as within Water Resources Authority (WRA) permitted levels.

Those figures relate to existing KenGen operations, not the proposed data centre.

For farmer Eskimos Kobia, who spoke to Al Jazeera, the potential competition extends beyond households and livestock. He says farmers, pastoralists, schools and investors will all face greater pressure as demand increases.

Kimani said climate variability has also led to fluctuations in lake levels, with periods of flooding followed by prolonged dry conditions.

“Water quality is affected by agricultural run-off, untreated wastewater in some areas and invasive species,” she says.

Investment versus local concerns

Not everyone in Naivasha opposes the investment.

Absolom Mukhuusi of the Naivasha Professional Association, who spoke to Al Jazeera, says the technology sector could bring jobs, infrastructure and new businesses to the area. But he says economic benefits should not come at the expense of local communities.

“Even as we welcome the investors, our biggest fear is what happens to our water bodies and communities as water is diverted to Olkaria for the heavy users,” he says.

Could technology help?

Geologist Kenyatta Otieno, who spoke to Al Jazeera, sees another potential benefit.

He recalls the pressure large flower farms once placed on the lake’s ecosystem, saying many have since left or scaled back their operations.

Otieno says the proposed centre would have included a resource centre to monitor lake levels and weather patterns. Such monitoring, he says, could help identify the highest water level over time and guide riparian land zoning.

“The centre being built with water conservation in mind would be futuristic as Naivasha is generally a water-scarce area. It would be a model for future development,” Otieno said.

Kenya already has regulators responsible for managing competing demands. The WRA regulates water abstraction and issues water-use permits, while the National Environment Management Authority (NEMA) oversees environmental impact assessments under the country’s environmental regulatory framework.

Attempts by Al Jazeera to obtain comments from WRA and NEMA officials were unsuccessful. Efforts to reach Microsoft-G42 officials and Kenyan government officials for comment on the project’s status and water requirements were also unsuccessful.

For now, the project’s eventual scale, design and water requirements remain unclear, according to KenGen.

“We are now competing with the multibillion [-dollar] companies for water, and we fear that we shall be the losers in the long run,” Leshishi said.

Canada’s Prime Minister Mark Carney has announced retaliatory tariffs on the United States after Washington imposed a 50 percent levy on $20bn worth of Canadian goods.

Carney, speaking in Ottawa on Saturday, said the new Canadian tariffs would target US steel, dairy and electronics industries among others and take effect on September 8.

“Canada will match Washington’s new tariffs dollar for dollar in order to protect Canadian workers, farmers, families, and businesses,” Carney told reporters.

The announcement came after days of intense negotiations broke down late on Friday, worsening a delicate relationship between the longtime trade partners and allies.

US President Donald Trump’s new tariffs hit sectors including wine, furniture, dairy products, cement, clothing, fishing rods and hockey equipment, and cover some $20bn worth of goods, or 5.5 percent of Canadian exports to the US.

Carney said Trump set conditions that were ultimately unacceptable even though earlier talks had been positive.

“In recent days, the United States proposed new terms that were uneconomic, unfair and undermined the net benefits for Canada, and called into question the reliability of any deal,” Carney said, adding these demands included curtailing Canada’s ability to forge new trade deals.

“We cannot accept what they’ve offered, and we will not give what they’ve asked.”

He added that US negotiators also made unacceptable “threats” to the French language and “Quebec culture”, referring to the French-speaking province in eastern Canada.

No new talks planned

Carney is one of the few global leaders to retaliate against US tariffs and has pledged to forge new trade and military alliances, despite Canada’s dependence on the ‌US for nearly 70 percent of its exports.

Canada will impose tariffs on US steel, dairy, appliances, agricultural equipment, pulp and paper, and electronics, along with some products the US previously targeted in Canada, Carney said from Ottawa’s Parliament building. The government will release details on its response in the coming days, he said.

Carney said Canada would announce support measures next week for industries hit ⁠by the new US duties, adding these measures could last years.

There was no immediate comment from the White House.

US Trade Representative Jamieson Greer told Fox News on Saturday that no new ⁠talks are planned with Canada.

“We’re moving forward with measures that respond to Canadian retaliation,” Greer said. “They’ve always had the best deal, and they still would have an even better deal, but they didn’t want that.”

The new US tariffs are expected to have a major impact on Canada’s economy.

“Costs are going to go up, prices are going to go up, unemployment is going to go up as well,” said Al Jazeera’s David Mercer, reporting from the Canadian city of Calgary. “And it’s been warned that business owners – small [and] medium-sized businesses – some of those will have to declare bankruptcy,” he said.

At the same time, Mercer said, Carney is selling the trade war as an opportunity for Canada to strengthen its trade relations with other countries.

“He’s been around the world, he’s been talking to countries in Asia, in Europe, shoring up new trade relationships, wanting to diversify Canada’s economy and Canada’s trade relationships with other countries around the world just to get away from that dependency that Canada has traditionally had on the United States,” he said.

Public opinion surveys in Canada show most Canadians back a “tougher approach” to the US in the trade talks. A poll by Leger last week said 56 percent of Canadians favoured a hard line and making no more concessions.

‘Bad deal’

Ontario Premier Doug Ford, one of the most vocal ⁠opponents of US tariffs, supported Carney’s decision to retaliate.

“I’m glad he didn’t sign that deal because it was a bad deal. It was a bad deal for Ontario. It was a bad deal for the auto sector, the steel sector, and manufacturing sector,” Ford told reporters on Saturday.

In Port Colborne, Ontario, resident Stuart Edwards said the trade war was going to “hurt everybody” and “it’s just sad”.

“We have a bully in Washington, and he’s just hitting us all with the big stick all the time,” he said. “And we’re not going to put up with it; Canada isn’t. We’ll fight back.”

But Pamela Coulis, from Fort Erie in Canada, was worried about rising prices.

“I think probably the gas will go up even more, and all products, from food to, I don’t know, wood, everything else,” she said.

Diamond Isinger, who served as a special adviser to former Canadian Prime Minister Justin Trudeau, said both countries will suffer from the trade war.

“It’s going to cause pain and challenge for Canadians and Americans alike, in terms of the actions that, unfortunately, the US has taken as well as Canada’s retaliation. But ultimately this was the way forward; this was the only realistic next step,” she said.

“Because the US administration responds best, of all the responses that they could have, to all the actions that a government like Canada could take, to strength,” Isinger added.

“So, we could not simply accept 50 percent tariffs going forward. We had to move forward with our own retaliatory package.”

In the US, the escalating trade war was met with anger by Democratic lawmakers and governors from border states including Minnesota, New York and Washington, who blamed Trump for triggering chaos that would raise costs for US businesses and families.

“Needlessly picking fights with our allies and raising prices here at home. That’s Trump’s economic policy in a nutshell,” New York Governor Kathy Hochul posted on X.

The Business Roundtable, a group of 200 chief executives of leading US corporations, also warned the new tariffs “risk raising costs for American businesses and families”, and urged both governments to resume negotiations.

BEIRUT, Lebanon, Aug. 21 (UPI) — The World Bank said Friday that the recent Israel-Hezbollah conflict has severely disrupted Lebanon’s fragile recovery, predicting a 6.4% contraction in the crisis-ridden economy this year and a rise in inflation to 17.5%.

The international financial institution said in a report that Lebanon entered 2026 “on firmer footing,” after an estimated 4.2% expansion in real gross domestic product in 2025.

It was the country’s fastest growth since the onset of the 2019 financial crisis, driven by stronger consumption, investment and tourism, as well as improved high-frequency indicators, according to the report.

It noted that the rebound was sharply interrupted by the military escalation between Hezbollah and Israel on March 2, causing further damage to housing and infrastructure, displacing some 1.2 million people, disrupting supply chains, and severely affecting tourism and domestic demand.

Dahlia Khalifa, World Bank Middle East director, said Lebanon’s recovery has been “sharply set back by the renewed conflict,” adding to an already severe social and economic crisis.

The report projects that Lebanon’s economy will contract by 6.4% in 2026, while inflation is expected to rise to 17.5%, driven by supply disruptions, higher shipping costs and rising oil prices, further eroding purchasing power.

According to the latest casualty count released by the Lebanese Health Ministry, some 4,348 people have been killed and 12,703 others injured since March 2. Israel’s intensive military campaign has caused massive destruction to property and infrastructure, with some 70 border villages in southern Lebanon reduced to rubble and rendered uninhabitable.

Lebanese Finance Minister Yassine Jaber has estimated that the combined direct and indirect losses resulting from the conflict in Lebanon since 2023, including the 2024 and 2026 escalations, could reach $20 billion.

Lebanon was still struggling to recover from a protracted financial crisis — described by the World Bank as a “deliberate depression” and the worst globally since 1850 that limited access to bank deposits, caused prices to soar, unemployment to soar and public services to deteriorate.

Moreover, the population faced eroded purchasing power after the Lebanese pound lost more than 95% of its value against the U.S. dollar,

The World Bank report said the government recorded an overall surplus of 3.9% of GDP in 2025. However, rising humanitarian and reconstruction needs after the recent war, pressure to increase public sector wages and slower revenue growth are expected to place additional strain on public finances in the second half of this year.

The report noted that continued progress on reforms remains essential to restoring confidence, reviving growth and supporting a durable economic recovery.

“Advancing reforms — particularly on banking sector restructuring and fiscal management –will be critical to restoring confidence, protecting stability and mobilizing the financing needed for reconstruction and recovery,” the World Bank’s Khalifa said.

The report noted that the banking sector remains deeply weakened despite some progress in advancing its restructuring agenda and warned that the exchange rate could come under pressure “if foreign inflows decline or conflict-related shocks persist.”