USA

America’s second-largest oil company is preparing to deepen its presence in a country most of its rivals abandoned two decades ago.

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An unnamed US official briefed reporters and said Chevron executives would appear alongside US Energy Secretary Chris Wright in Venezuela to unveil fresh investment, which would be the first corporate move to follow the agreement that just cleared Venezuela’s National Assembly.

Wright landed in Caracas late on Tuesday after the Venezuelan vote, with the signing set for Wednesday.

Chevron is the only major American producer to have stayed in Venezuela since Hugo Chávez completed the nationalisation of the industry in 2007, a move that drove Exxon and ConocoPhillips out.

A vote and an argument about the fine print

Speaking in Spanish for an interview posted online on Tuesday, US Secretary of State Marco Rubio described the arrangement in blunt terms.

“Essentially, this is now an agreement with the US government, specifically involving the Defense Department, which holds a special account allowing it to take possession of a certain percentage of these assets,” Rubio said, adding that American backing would help the company attract the private investment needed to develop the fields.

The “vast majority” of the 17 fields had been in Chinese and Russian hands, Rubio pointed out as the White House has also cast the agreement as a reassertion of the Monroe Doctrine.

Those fields come with 100-year rights for North American Blue Energy Partners and hold 65 billion barrels. A new company will be created in which the US Department of War’s Office of Strategic Capital takes a 35% stake, with the US State Department entitled to buy 20% of output at production cost.

US citizens must form a majority of the board, and Washington holds a veto over appointments.

Venezuelan lawmakers approved the agreement by a show of hands, though some opposition members abstained, saying they had not seen the terms.

“We need and are obliged to know what is written in the fine print,” said opposition lawmaker Luis Emilio Rondón.

“Who benefits from this oil if it stays underground?” argued the National Assembly chief Jorge Rodríguez in return.

NABEP is owned by Alejandro Betancourt, who has faced investigations over alleged money laundering in Spain and Switzerland without charges being filed and has been accused of involvement in a corruption scheme at state producer PDVSA.

An unnamed US official called him a “proven operator” while conceding that geopolitics sometimes means dealing with imperfect figures.

“I’m not nominating anyone for sainthood here,” the official said. “What I am telling you is that this is a person that, in the past, has been helpful to the United States government.”

What the deal has not settled

Analysts remain sceptical that output can be revived quickly, with estimates ranging from one to ten years before new barrels reach the market. Washington is not investing money in the venture, officials say, arguing its backing alone will attract the capital needed.

US President Donald Trump suggested on Monday that others would follow Chevron.

“We have Exxon going in, we have Chevron going in. We have our big oil companies going in,” Trump stated.

However, Exxon’s position appears unchanged as a spokesman said on Tuesday that “nothing has changed” after CEO Darren Woods also called Venezuela “uninvestable” earlier this year.

For the US administration, the urgency is domestic.

US President Donald Trump just met oil executives at the White House on Tuesday as petrol prices climbed because of new US strikes on Iranian targets near the Strait of Hormuz, posting afterwards that “we are unleashing American Energy Dominance!”

Cheaper fuel is a priority before November’s midterm elections, in which Republicans could lose control of both the House and the Senate.

Additional sources • AP

The United States takes its turn chairing the G20 finance track this week under distinctly awkward conditions.

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US Treasury Secretary Scott Bessent and Federal Reserve Chair Kevin Warsh are hosting counterparts in the North Carolina mountains, following a deputies meeting held over the weekend, with the formal agenda covering economic growth, global imbalances, sovereign debt restructuring, banking regulation and energy security.

Asheville was chosen deliberately.

The city was devastated by Hurricane Helene in September 2024, a storm that killed more than 250 people and caused close to $80 billion (€69bn) in damage from Florida to the Carolinas, and Bessent has cited its rebuilding as a fitting backdrop for talks about economic growth.

“We want the rest of the world to come along with our growth agenda, whether it’s deregulation, the energy independence […]” he said, adding that “the world has this mountain of debt, and we do have to grow our way out of it,” confirming public debt will feature prominently in the discussions.

The setting may prove easier than the substance.

Trade friction between the US and Canada escalated after negotiations broke down, hostilities with Iran have resumed through economic rather than military means, and Warsh arrives days after a hawkish first Jackson Hole address that sharply raised the odds of a US rate rise this month.

Both meetings serve as groundwork for the leaders’ summit at Trump National Doral in Miami on 14 and 15 December, and come weeks before Xi Jinping is expected in Washington on 24 September.

Bessent’s push on Iran

The US Treasury Secretary intends to use bilateral meetings to build support for squeezing Tehran, and stated that Washington will sanction another bank this week, though he declined to name it.

“This is going to be financial violence if we have to,” Bessent told AP.

“We are showing people that we know who you are, you know who you are, and this has got to stop,” he added.

The campaign’s opening move came on Friday, when the US Treasury proposed a rule that would cut the Emirati branches of Banque Misr, Egypt’s second-largest lender, off from the American financial system.

By stopping short of full sanctions, the US administration appeared to signal reluctance to punish major trading partners that still deal with Iran, notably China and India.

On Beijing specifically, Bessent said “all options are on the table” over its continued oil purchases, while dismissing suggestions of hesitancy as “a completely false narrative that the media picked up on.”

The meetings are also being held under unusual media restrictions, after the US Treasury barred certain reporters from the New York Times, Wall Street Journal and Bloomberg from covering them.

The New York Times called the move “not just another disturbing effort by the administration to undermine independent journalism, but a blatant attempt to evade public scrutiny.”

The department has not explained its decision, though Bessent told the AP that “it has nothing to do with point of view.”

Who speaks for Europe at the G20

The EU is represented by Ireland’s Tánaiste and Finance Minister Simon Harris, who holds the role by virtue of Ireland’s EU presidency since 1 July, alongside ECB President Christine Lagarde and Economy Commissioner Valdis Dombrovskis.

Harris said he was looking forward to “the first Ministerial meeting of the G20 Finance Ministers and Central Bank Governors since Ireland assumed the Presidency of the EU,” describing the forum as a place where the largest economies “can exchange views and work towards international economic and financial stability.”

The Irish minister’s stated priority reflects the conflict shaping much of the agenda at this G20 meeting.

Among the EU’s concerns, Harris listed “energy security and ensuring we have secure and resilient energy supplies at a time of severe volatility caused by the conflict in the Middle East.”

He will also hold bilateral meetings with counterparts from G20 member states as Ireland has also been invited as a guest for the December leaders’ summit in Miami.

Additional sources • AP

Marking his 100th day in the job, Federal Reserve Chair Kevin Warsh told the Kansas City Fed’s symposium in Wyoming that the US economy has strengthened rather than weakened under recent shocks, that the labour market is consistent with full employment, and that inflation remains the central bank’s dominant concern.

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Warsh declined to say what he would do next month, but he removed most of the arguments against acting and bolstered the ones in favour of a rate hike.

“For my part, today I am impressed by the overall performance of the economy, which appears to have strengthened,” Warsh stated.

“One indicator of strength is how well an economy holds up to shocks. On that score, both Main Street and Wall Street have been remarkably resilient,” he added.

On inflation, Warsh noted that the PCE index stood at 3.7% over twelve months and 4.1% over six, and 54% of the basket’s components rose by more than 3% over the past year, against 32% in the two decades before the pandemic.

Summer readings that beat expectations “do not tell me that underlying trends have meaningfully improved,” Warsh stated.

The Federal Reserve Chair’s conclusion was blunt: “the Fed’s predominant focus right now should be on prices.”

The standard set was equally direct. “We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do,” Warsh declared.

That assessment matters because it eliminates the case for supporting growth with further stimulus and potentially opens the door for restrictive measures as markets moved in response.

At the time of writing, the 10-year Treasury yield has fallen 0.5% from its Friday high to 4.67% and the 30-year dropped around 0.9% to 5.16%, while the dollar index rose 0.4% from the intraday low to roughly 99.4 points.

Traders raised the implied probability of a 0.25% hike at the 15 and 16 September Fed meeting to 55%, from around 35% before Warsh’s speech.

Performance of the US economy

Warsh opened his speech with what he called a hinge point in history, arguing that artificial intelligence has advanced faster than even its advocates predicted.

Annualised AI token sales at the two leading labs alone exceed $100 billion, he said, up more than 500% in a year.

AI is “a new variable, potentially a new factor of production,” raising questions the Fed cannot answer yet such as whether it will lift productivity and when, whether it complements or replaces labour, and where the returns will ultimately land.

A new Federal Reserve task force on productivity and jobs is examining it, though he stressed its recommendations will have no bearing on current policy decisions.

Warsh then listed extensive evidence for his positive outlook on the US economy.

Business investment in equipment and intangibles growing at around 9%, its fastest since 2021, with more than half of this year’s capital expenditure growth attributable to the AI buildout.

S&P 500 profits went up more than 20% over the year, credit spreads are near historic lows and banks are easing lending standards. Housing and agriculture are strained, Warsh acknowledged, but on balance he “would be hard pressed to describe broad financial conditions as restrictive.”

Unemployment at 4.1% is low by historical standards, with jobless claims near their lowest in decades, leaving inflation as the outlier.

No forward guidance

The Federal Reserve Chair devoted a substantial section to defending his refusal to signal future moves, a stance that has drawn criticism since he took office in May.

Forward guidance was adopted during the 2008 crisis by colleagues including himself, he said, and was essential then, but “the practice has overstayed its welcome” and now “risks creating ambiguity in the name of clarity.”

Warsh warned of a hall-of-mirrors problem in which markets read the Fed while the Fed reads markets, leaving both blind to new developments.

“We should not indulge a regime in which market participants are looking primarily to the Fed for their next trade,” he said, adding that the costs of such errors fall not on “financial high-fliers” but on households facing high inflation or insecure jobs.

Warsh also rejected calls to publish an explicit reaction function, arguing economic knowledge does not permit a mechanical rule.

Instead he set out six principles: interrogate incoming data rather than trust stale figures, accept that judging supply against demand is imprecise; treat the 2% PCE target as firm and fixed; pursue both mandates without treating them as a trade-off; rely on short-term rates rather than unconventional tools; and remember that money itself matters.

“I stand here today committed to a discipline, not to a decision,” Warsh said in closing.

The decision comes on 16 September at the next Fed meeting.

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

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

Why the gap isn’t about money

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

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

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

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

Three ways this goes

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

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

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

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

The takeaway

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

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

Chinese media and intelligence are closely following the exodus of the American Central Intelligence Agency CIA personnel, particularly the months-long wait for new retirees to receive their financial entitlements. The agency is facing what it describes as an unprecedented number of retirements as the Trump administration seeks to reduce its workforce. Chinese media and intelligence perspectives on this unprecedented exodus of CIA officers align with their own. The delayed payments are a key focus, with both China and the US focusing on exploiting these developments to highlight institutional weaknesses within the American administration and the declining effectiveness of espionage against Beijing. Beijing is using the CIA exodus and delayed retirement payments to cast doubt on the efficiency of American institutions, targeting disaffected and dismissed intelligence operatives to gather information. This is achieved by promoting the idea of ​​the US administration’s collapse and attracting these affected security professionals to bolster Chinese counterintelligence capabilities.  Here, Beijing is exploiting the widespread layoffs and dismissals within the CIA and other US federal agencies, turning the affected employees into valuable assets to bolster Chinese counterintelligence capabilities. The Chinese strategy focuses on transforming these dismissed experts from defenders of US national security into offensive tools that expose Washington’s vulnerabilities.

The most prominent trends in official and semi-official Chinese commentary and analysis regarding the dismissal of CIA personnel can be summarized as follows: (Chinese mockery of the China-defeat strategy and the backfiring on the strategist). This is the same point made by Chinese media reports, such as the official Xinhua News Agency, which indicated that the Trump administration had previously announced that its restructuring and hiring freeze aimed to focus on China-defeating and the trade war. However, the actual result was the dismissal of skilled and experienced personnel within the CIA. This exposes the structural failures of the US, and Chinese media highlighted the crisis as evidence of administrative chaos within the United States. The pressure to downsize the federal government has paralyzed the Office of Personnel Management (OPM). This has left Washington unable to even pay the pensions of its retired spies on time.  Here, Chinese intelligence, military, political, strategic, and media circles seized upon this crisis to promote the idea of ​​eroding American national security and the golden opportunity it presented for counterintelligence. Chinese think tanks and intelligence agencies seized upon internal American warnings that leaving thousands of former intelligence officers without income for months made them easy targets for infiltration. Beijing interpreted this as a tacit admission of the fragility of institutional loyalty within the American system in the face of financial pressures. Beijing viewed it as evidence of American administrative disarray and a prime example of the brain drain of accumulated expertise. Chinese analyses, assessments, and evaluations focused on the fact that the deferred resignation and contract buyouts programs have prompted senior analysts and field officers within the CIA (those with extensive networks and deep knowledge of Asian affairs) to abruptly leave the service, creating an intelligence gap that will be difficult to fill in the near future.  From the Chinese perspective, this exposes the American narrative of transparency and efficiency and reinforces the idea of ​​the political manipulation of intelligence. Therefore, China is exploiting this unprecedented crisis within the CIA to bolster its ongoing narrative that US intelligence agencies have become tools in partisan political conflicts within Washington. Beijing views the mass exodus as a reflection of the professional officers’ lack of confidence in the administration’s political direction. Beijing is using this as part of a counter-propaganda strategy, with Chinese media outlets employing these facts to send messages to the international community, developing countries, and the Global South, suggesting that the United States, which seeks to impose its global security hegemony, is suffering from severe internal divisions that prevent it from managing its fundamental sovereign affairs efficiently and professionally.

Regarding the Chinese political and media exploitation of the CIA staff exodus crisis, the Chinese media machine promotes these crises as evidence of the collapse and disarray of the US federal administration model. It exploits the inability of US institutions to meet their financial obligations (to portray Washington as incapable of protecting even its most sensitive agencies). Therefore, Chinese intelligence, analytical, and strategic circles employ propaganda to highlight the fragility of job security and social stability within US decision-making circles. Furthermore, China strategically and intelligence-wise exploits this internal US crisis. Chinese intelligence agencies monitor these vulnerabilities to target former employees or those facing termination. Beijing offers inducements or clandestine channels of communication through consulting and research fronts to ensnare individuals who are psychologically and financially distressed. China also exploits the frustration resulting from delayed pensions or forced layoffs to facilitate infiltration, counter-recruitment, and the acquisition of sensitive secrets.

Chinese intelligence, such as the Ministry of State Security (MSS), operates through specific and deliberate mechanisms. The MSS, which oversees Chinese intelligence operations, exploits vulnerabilities such as fractured loyalty, financial weakness, and psychological and material incentives. Beijing focuses on federal officers and probationary personnel who have been laid off from the CIA and harbor resentment, bitterness, and a desire for revenge against their former superiors. Chinese intelligence, analytical, and strategic circles then work to support these individuals to fill the financial gap. The sudden loss of a job for a security officer with high financial obligations creates fertile ground for recruitment, as China offers substantial and enticing financial incentives to secure their loyalty. Chinese intelligence circles are also actively employing digital recruitment through front companies. These are sham consulting firms. Beijing is establishing networks of consulting companies, think tanks, and fake recruitment agencies that appear Western and 100% legitimate to target talent on LinkedIn. Through these platforms, Chinese intelligence officers target former CIA employees who are seeking employment on well-known job search platforms like LinkedIn. They use disguised accounts, sometimes employing artificial intelligence, to apply for jobs. Then begins the process of gradually extracting information. The relationship starts with requests for ordinary, non-classified (publicly available) research in exchange for lucrative financial rewards to build trust. The employee is then gradually drawn into providing sensitive information and moving to encrypted communication platforms.

Here, Chinese intelligence agencies work to feed their counterintelligence efforts with tactical information. When China succeeds in recruiting a compromised American security operative, it doesn’t just seek international secrets but focuses on acquiring high-quality information that serves its counterintelligence apparatus. The most prominent of these is uncovering the methods of operation of the US Central Intelligence Agency (CIA). Understanding American recruitment mechanisms, how spies are planted, and methods of vetting and infiltration. Identifying profiles and characteristics (profiles) to understand the psychological and behavioral traits the CIA seeks in informants, which helps China detect potential spies within its own territory or within the People’s Liberation Army early on. This also involves uncovering technical and cyber vulnerabilities by identifying the encryption tools and systems used by US agencies, thus giving Chinese counterintelligence the ability to fortify its networks and penetrate counterespionage operations.  Exploiting the absence of exit briefings, Western and American intelligence reports have revealed that some federal employees who were hastily discharged did not undergo standard exit briefings. This procedural gap left employees without direct warnings or clear reporting mechanisms should they be approached by hostile entities. Beijing exploited this as a golden opportunity to operate with minimal oversight. In response to this risk, US security agencies, such as the FBI and the National Counterintelligence and Security Center NCSC), issued heightened security alerts and shut down and blocked dozens of fake websites belonging to Chinese recruitment networks targeting discharged CIA employees.

China opposes the US and Western escalation against Iran and insists on condemning the US and Israeli attacks on Iranian nuclear targets. China considers the US and Israeli military attacks on Iranian nuclear facilities a blatant violation of international law and the UN Charter. While Beijing officially adheres to nuclear non-proliferation, it will hold the US directly responsible and will oppose the imposition of new international sanctions against Iran in the UN Security Council. China will work to hold Washington accountable. Beijing believes that the US withdrawal from the nuclear agreement is the root cause of the current impasse in the Nuclear Non-Proliferation Treaty (NPT) negotiations. The Chinese Foreign Ministry asserts that the policy of maximum pressure and economic sanctions against Tehran will not resolve the crisis but will only exacerbate tensions. China views Tehran’s threat to withdraw from the NPT as an understandable reaction to the maximum pressure exerted upon it, but it consistently prefers diplomatic solutions and supports maintaining the international legal framework to prevent escalation.  The Chinese stance came after Iranian parliamentarians, including Ebrahim Rezaei, asserted that withdrawing from the Nuclear Non-Proliferation Treaty (NPT) is the best response to the Trump administration’s escalation of economic warfare.

The main dimensions of the Chinese position regarding the Iranian threat to withdraw from the NPT are embodied in China’s rejection of pressure and sanctions against Iran. China maintains that the escalating US sanctions and policies against Tehran will not resolve the nuclear crisis but rather exacerbate it. Chinese intelligence, military, political, and strategic circles have adopted a strategy of legal consideration versus feasibility. Experts and observers close to Chinese circles argue that Iran’s withdrawal from the NPT is a legitimate legal right for independent states, but Beijing implicitly suggests that such a move could trigger harsher international sanctions against Tehran. Therefore, Beijing is working to (obstruct UN sanctions against Iran). China, along with Russia, has expressed its readiness to block the activation of the snapback mechanism or any harsh international sanctions against Iran in the UN Security Council to protect its interests and regional stability, while adhering to a political settlement. Beijing is calling on all parties to return to the negotiating table and maintain regional and international stability, instead of taking radical and escalatory steps that violate international treaties.

In my analysis, China will insist on referring the Iranian issue to international forums, such as the Security Council, using its veto power to condemn and block any resolutions issued against Iran. Here, China is expected to cooperate with Russia to obstruct any Western or American Security Council resolutions aimed at condemning Iran or imposing new, harsh UN sanctions. China will maintain its commitment to dialogue by continuing to call for a return to the political negotiating table, while publicly acknowledging Tehran’s previous assurances that it is not seeking to produce nuclear weapons. Here, we must understand all the strategic parameters of China’s position regarding the escalation against Iran over its nuclear program through the lens of China’s opposition to nuclear armament. Despite China’s understanding of Iran’s motives and its right to peaceful energy, it categorically rejects Tehran’s move towards acquiring a nuclear military arsenal in order to preserve the stability of the international order and prevent a regional arms race. This is coupled with the desire of relevant circles in Beijing to safeguard their interests. Therefore, Beijing will strive to avoid sliding into a direct confrontation with the West and the United States while continuing to provide Iran with as much economic and diplomatic support as possible in order to alleviate Iran’s isolation.

China supports Tehran diplomatically, emphasizing dialogue and rejecting the unilateral sanctions imposed by Washington. Despite the ongoing pressure, the likelihood of direct war remains low, as a major war of attrition is avoided. China’s position is characterized by its call for diplomatic solutions and dialogue based on mutual respect, its rejection of unilateral US economic sanctions against Iran, and its insistence that all parties address the root causes of the tension and resume the nuclear agreement. This is especially relevant given the Iranian threat to withdraw from the agreement, voiced by several members of the Iranian parliament who believe that remaining in the nuclear non-proliferation treaty is pointless under continued US pressure.  Intelligence, military, political, and strategic circles in Beijing considered the Iranian parliamentary proposal a political response to the tightened US economic sanctions against Tehran. Chinese intelligence circles are well aware that an actual Iranian withdrawal from the Nuclear Non-Proliferation Treaty requires the approval of Iran’s Supreme National Security Council. Should this occur—a slim possibility according to Chinese strategic assessments—it would mean the potential outbreak of a full-scale war. Therefore, strategic assessments in Beijing suggest that the potential confrontation between Washington and Tehran will likely escalate into a protracted war of attrition rather than a full-scale military clash. According to Chinese analyses, both Washington and Tehran prefer economic pressure and the prospect of open negotiations to the option of open warfare. Hence, China seeks to curb any military escalation that could threaten energy security and regional stability.

Accordingly, China supports the continuation of the diplomatic and political track to resolve the Iranian nuclear crisis. It rejects pressures, escalatory policies, and economic sanctions against Tehran, while simultaneously calling for dialogue based on mutual respect and the preservation of regional stability, without supporting any sudden steps that could fuel the conflict. China’s general position stems from its rejection of sanctions. Beijing believes that the policy of maximum pressure and economic sanctions does not resolve the nuclear issue. Therefore, China consistently calls for adherence to dialogue to resolve differences through peaceful political and diplomatic means and to resume negotiations. China also provides strategic support to Iran. In this regard, China stands with Iran in the face of Western and American pressure. China is working alongside Russia to submit draft resolutions to the UN Security Council to support de-escalation, extend the agreement’s framework, address threats of withdrawal, and avoid mutual escalation. China urges all parties to avoid any unilateral steps or escalatory measures, such as triggering the snapback mechanism or mutual withdrawals from international agreements and treaties, which could lead to a loss of control.  Therefore, Beijing prefers to contain this crisis and the Iranian threats to withdraw from the Nuclear Non-Proliferation Treaty through negotiating frameworks that preserve the basic structure of the non-proliferation regime, while holding the United States and European countries partly responsible due to Washington’s previous withdrawal from the same nuclear agreement that Tehran is now threatening to withdraw from.

On July 23, Volodymyr Zelensky told Ukrainians that Raytheon wanted to help produce Patriot interceptors on Ukrainian-linked lines. Five days later, Lockheed Martin signed a second license, this one for the PAC-3 MSE — the hit-to-kill missile that has spent three years picking Russian ballistic warheads out of the sky over Kyiv. For a moment it looked like a watershed: the United States handing a country still absorbing nightly missile and drone barrages the blueprint to build its own air defense. Then, within days, the story came apart in public. US Ambassador Matthew Whitaker said Washington would not allow Ukraine to build PAC-3s at all. Donald Trump called the technology transfer “a hard thing to give away.” NATO’s own envoy said no agreement would close before winter. Something had clearly been decided. Nobody could agree on what.

The Patriot system is the closest thing the West has to a proven shield against ballistic missiles, and it is scarce almost everywhere it is needed. Roughly twenty countries now compete for a production line that turns out about 650 PAC-3 MSE interceptors a year worldwide — Lockheed Martin’s entire global output, shared among Ukraine, Israel, Taiwan, Gulf states and the US Army’s own depleted stocks. Russia, meanwhile, has been firing 55 to 60 Iskander ballistic missiles a month at Ukraine alone, before counting the nightly Shahed drone waves that push crews to expend scarce interceptors on cheaper threats out of necessity. The Pentagon has spent much of the past two years quietly rationing Patriot allocations across allies, reportedly diverting orders meant for Taiwan and Ukraine to replenish American stockpiles. Against that backdrop, “Ukraine will build its own Patriots” is not primarily a sovereignty story. It is a story about whether the system that makes Patriots for everyone else can keep up at all.

What the deal actually requires

Start with what was actually signed, because the headlines overstate it. Raytheon’s license covers the PAC-2 GEM-T, an older blast-fragmentation interceptor effective against aircraft and cruise missiles. Lockheed Martin’s covers the PAC-3 MSE, the missile that actually stops Iskanders and Kinzhals. Neither license includes the radar, the fire-control system or the launchers; those still come from existing Patriot batteries. And neither company has committed to building these missiles on Ukrainian soil in the near term. Reporting from Reuters and Ukrainian officials both point to Germany, which already runs its own PAC-2 line, as the likely first production site, with capacity shifting to Ukraine only “after the war ends.” What was announced in July, in other words, is not a factory. It is paperwork that keeps a door open.

Even so, the paperwork matters, because of what it concedes. Every PAC-3 MSE round carries a 24-month production lead time for the missile itself and 30 months for its solid rocket motor. Boeing manufactures every active radar seeker that guides it from a single facility in Alabama, capped at 650 to 700 units a year — a bottleneck no amount of Ukrainian factory floor changes. Aerojet Rocketdyne is the sole source for the motor. These are not obstacles a co-production agreement dissolves; they are structural limits on how fast the United States can arm anyone, Ukraine included. A government does not open its most tightly export-controlled missile program to a country still under nightly bombardment unless it has concluded that the existing pipeline, working alone, cannot meet demand. That is the admission buried in the announcement: not that Ukraine’s industrial base is ready, but that Lockheed’s and Raytheon’s are strained, and Washington needs help from a country it would ordinarily be supplying, not licensing.

The contradictions among American officials sharpen the point rather than undermine it. Whitaker’s flat denial that Ukraine would ever build PAC-3s, arriving days after Zelensky announced the license, is not really about Ukraine’s trustworthiness. A Republican congressional official close to the process gave the more candid version: the manufacturers are less worried about Ukraine leaking American technology to Moscow than about Ukraine improving on it and producing it “at scale, faster and for much less money.” That fear has a track record behind it. Fire Point’s Flamingo cruise missile, built in Ukraine during the war, reportedly costs around $600,000 — roughly a sixth of a Tomahawk and a fraction of a $2 million PAC-3 ACE round — while Ukraine’s home-grown Freyja interceptor is priced at roughly a fifth of the Patriot missile it is meant to substitute for. A country that has spent three years learning to manufacture air defense under fire, at a fraction of Western unit costs, is not the industrial partner a legacy prime wants loose inside its own supply chain. The reluctance is commercial before it is strategic.

The strongest objection to this reading is that Kyiv already produces a large share of its own weapons, so extending that into Patriots is a natural next step rather than a crisis signal. Zelensky puts the domestically produced share of Ukraine’s frontline weapons at close to 60 percent, up from roughly 40 percent a year earlier — drones, the Bohdana howitzer, the Neptune and Flamingo missiles. That is true, and it matters. But those are systems Ukraine designed and built from scratch under wartime pressure, with no legacy export-control regime standing in the way. Patriot is different: it is Washington’s most sensitive interceptor program, run by companies that have spent decades keeping production onshore for precisely the security reasons Whitaker cited. Handing over any piece of it, even nominally, to a country under active bombardment breaks with everything the export-control system was built to prevent. That the United States is doing it anyway — however slowly, however contested internally — says less about confidence in Ukraine than about how thin the interceptor pipeline has become.

Three ways this goes

What happens next depends on which of the deal’s obstacles proves harder to move: engineering or politics.

Base case (our estimate: roughly 55 percent probability). The license survives, but production stays offshore. Germany’s existing PAC-2 line absorbs the first Ukrainian-linked output sometime in 2027; Lockheed and Raytheon leave the seeker and motor bottlenecks unresolved; and Zelensky’s own target of “production capability by the end of 2026” slips the way most Patriot-related deadlines have slipped since 2022. The deal functions mainly as a signal — to Moscow, to Congress, to the manufacturers themselves — that the West is willing to widen its supplier base, without actually widening it before the war’s most dangerous phase has passed.

Downside case. Export-control friction, not battlefield risk, kills momentum outright. Boeing declines to license seeker technology, Congress balks at formally notifying an ITAR transfer into an active conflict zone, and the agreement quietly becomes what several earlier Patriot-adjacent announcements already have: a signed memorandum with no factory behind it. Unable to close its ballistic-missile gap through licensed production, Ukraine leans harder into Flamingo and Freyja — cheap and available, but not full substitutes for hit-to-kill interception. Iskander and Kinzhal strikes on Ukrainian cities continue at close to current tempo through 2027.

Upside case. Ukraine’s wartime manufacturing culture forces the restructuring the primes have been resisting. Facing a credible cheaper competitor, Lockheed and Raytheon accelerate second-sourcing of seekers and motors — the actual chokepoints — to defend market share rather than out of goodwill toward Kyiv. Patriot output rises for every operator, not only Ukraine, and Kyiv becomes the proving ground for a lower-cost interceptor variant that outlives the war. This is the scenario in which an admission of scarcity turns into a fix for it — plausible, but it requires the manufacturers to treat competition, not politics, as the threat that finally moves them.

The takeaway

So: is licensing Patriot production to a country under bombardment an admission? Yes — but not the one the announcements were built to convey. It does not say Ukraine’s industrial base has arrived. It says the American one has not kept pace with a war of attrition it did not plan for, and that Washington is now willing to test its most sensitive export controls against the same scarcity that has Israel, Taiwan and its own Army competing for the same missiles.

Watch for: whether groundbreaking on a German or Polish production line actually begins before the end of 2026 — Zelensky’s own deadline for “technical capability.” If it hasn’t started by then, treat every subsequent announcement as the political theatre this one increasingly resembles: a scarcity confession dressed up as an industrial handshake.

Japan has issued an unusually direct criticism of its U.S. ally after Washington imposed sanctions on International Criminal Court President Tomoko Akane and senior trial lawyer Abdoulaye Seye.

Japan’s foreign ministry described the sanctions as “very unfortunate” and reaffirmed Tokyo’s support for the ICC and its role in prosecuting serious international crimes. The statement marks a rare public disagreement between Tokyo and Washington over an issue of international law.

The dispute comes as the administration of U.S. President Donald Trump intensifies its campaign against the Hague based court. Washington has increasingly challenged the ICC over its investigations and arrest warrants involving Israeli Prime Minister Benjamin Netanyahu and former Israeli Defence Minister Yoav Gallant, as well as its earlier investigation into U.S. personnel in Afghanistan.

For Japan, however, the issue is particularly sensitive. Tokyo depends heavily on the United States for its national defence, yet it has consistently supported the ICC and the broader international legal framework surrounding it.

Why Did the U.S. Sanction ICC Officials?

U.S. Secretary of State Marco Rubio said the sanctions targeted individuals involved in ICC efforts to investigate, arrest, detain or prosecute officials from governments that have not consented to the court’s jurisdiction.

Among those sanctioned was Tomoko Akane, a Japanese judge who serves as ICC president. Abdoulaye Seye, a Senegalese senior trial lawyer, was also targeted. Seye was part of the prosecution team that sought an arrest warrant for Netanyahu and has been nominated for election as an ICC judge.

Washington argues that the ICC has exceeded its authority by pursuing officials from countries that have not accepted its jurisdiction.

The United States is not a member of the ICC and has repeatedly objected to the court’s actions involving American personnel and Israeli officials.

The latest sanctions therefore represent another escalation in Washington’s confrontation with the institution.

Why Is Japan Supporting the ICC?

Japan joined the ICC in 2007 and has consistently supported its role in prosecuting war crimes, genocide and crimes against humanity.

Tokyo’s foreign ministry said Japan remains committed to strengthening the rule of law internationally while maintaining communication with countries involved in the dispute.

Japan’s position reflects its broader commitment to international institutions and rules based governance.

For Tokyo, the ICC is not simply a legal institution. It is part of a wider international order in which disputes and allegations of serious crimes are addressed through established legal mechanisms.

That creates an obvious tension with Washington’s increasingly confrontational approach.

Why Is This Significant for U.S. Japan Relations?

Japan rarely criticises the United States publicly, particularly on issues involving national security.

The two countries maintain a close military alliance, with U.S. forces playing a central role in Japan’s defence and regional deterrence.

Japan’s decision to openly describe the sanctions as “very unfortunate” therefore carries diplomatic significance.

It does not indicate that Tokyo is abandoning Washington or challenging the broader alliance. Instead, it demonstrates that the two countries can maintain close security cooperation while disagreeing sharply over international law.

That distinction is becoming increasingly important as U.S. foreign policy under Trump diverges from the positions of several traditional allies.

The ICC Dispute Is Also Creating Friction in Europe

Japan is not the only U.S. ally to object to the latest sanctions.

The Netherlands, which hosts the ICC, has also criticised Washington’s action. Dutch Foreign Minister Tom Berendsen said the Netherlands opposed the sanctions and invited Akane to discuss continued support for the court.

The development places Washington increasingly at odds with European partners as well as Japan.

The disagreement therefore extends beyond the U.S. relationship with a single international institution. It raises broader questions about how far America’s allies are willing to follow Washington when its policies conflict with international institutions they continue to support.

What Do the Sanctions Actually Do?

The sanctions have significant practical consequences.

They freeze any U.S. assets held by the targeted individuals and largely cut them off from the American financial system. Because most internationally active banks maintain close connections with the U.S. financial system, the effects can extend beyond American jurisdiction.

The U.S. Treasury Department has also authorized a temporary wind down of transactions involving Akane and Seye through September 17.

The measures therefore do more than express political disagreement. They can directly affect the ability of sanctioned individuals to conduct international financial activities.

Washington’s Wider Campaign Against the ICC

The sanctions against Akane and Seye are part of a broader U.S. campaign against the court.

Washington previously imposed sanctions on several ICC prosecutors and judges after the court issued arrest warrants for Netanyahu and Gallant and pursued an earlier investigation involving U.S. troops in Afghanistan.

Rubio has also indicated that the administration intends to intensify efforts against the ICC through diplomatic pressure on other countries.

According to Reuters, Washington has sought to encourage countries to leave the institution, with at least five countries already responding to the call.

The strategy therefore goes beyond individual sanctions. It represents an attempt to challenge the ICC’s legitimacy and reduce its international reach.

Why Does Japan’s Position Matter?

Japan’s response is significant because Tokyo has generally been closely aligned with Washington on major strategic questions.

Japan faces a challenging regional security environment involving China, North Korea and wider tensions in the Indo Pacific. Maintaining a strong U.S. alliance remains central to Japanese security policy.

Yet Tokyo has also invested heavily in supporting international institutions and the rule of law.

The ICC dispute highlights the possibility that these two pillars of Japanese foreign policy can sometimes pull in different directions.

Japan may need American military power for its security while simultaneously disagreeing with Washington on how international law should operate.

That is not necessarily a crisis in the alliance, but it illustrates its increasingly complicated political foundations.

Could the Dispute Deepen Divisions Among U.S. Allies?

The ICC controversy could contribute to a wider pattern of disagreement between Washington and its traditional partners.

The United States is increasingly willing to use economic and diplomatic pressure against international institutions it considers hostile to American interests. Several European governments, by contrast, continue to view those institutions as essential components of the rules based international order.

Japan’s criticism adds an important Asian voice to that disagreement.

If more U.S. allies openly defend the ICC, Washington could face growing diplomatic isolation on the issue even while maintaining strong bilateral security relationships.

That could make the dispute increasingly difficult to contain as a narrow disagreement between the United States and an international court.

How Far Can Japan Disagree With Washington?

Japan’s criticism of the ICC sanctions should not be interpreted as a fundamental rupture in the U.S. Japan alliance.

Tokyo remains heavily dependent on Washington for defence and security, and there is little indication that the ICC dispute will fundamentally alter that relationship.

Its importance lies elsewhere.

Japan is signalling that alliance solidarity does not necessarily require complete alignment on international law.

For Tokyo, supporting the ICC is consistent with a broader foreign policy objective: maintaining an international system governed by rules and institutions rather than purely by the power of individual states.

Washington’s position is increasingly different. The Trump administration views the ICC as a potential threat to American sovereignty and to officials from the United States and allied governments who could face prosecution by the court.

This creates an unusual strategic contradiction.

The United States and Japan remain closely aligned against major security challenges in the Indo Pacific, yet they are increasingly capable of finding themselves on opposite sides of debates over the international legal order.

The consequences could extend beyond the ICC itself.

If Washington continues using sanctions and diplomatic pressure against international institutions while its allies continue defending them, the United States may find that its strategic partnerships remain strong militarily but become more divided politically.

For Japan, the challenge will be maintaining its essential alliance with Washington without abandoning its support for the international legal institutions it considers important.

The ICC dispute therefore reveals a broader tension within the U.S. alliance system: strategic partners may remain united on security while increasingly disagreeing over the rules and institutions that are supposed to govern international politics.

With information from Reuters.

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

From deterrence to deal making

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

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

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

The alliance is becoming more transactional

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

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

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

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

Defence cooperation is expanding even as exercises face pressure

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

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

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

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

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

Trade has become inseparable from security

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

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

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

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

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

The deeper problem is strategic uncertainty

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

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

Trump’s approach introduces more conditionality into that bargain.

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

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

What this means for China and the Indo Pacific

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

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

That creates a structural divergence in strategic priorities.

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

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

The alliance has changed, but it has not collapsed

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

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

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

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

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

With information from Reuters.