In recent times, global markets have shown increasing signs of anxiety and uncertainty, as investors brace for a potential disruption in major economies, particularly the United States. The dynamics surrounding the US economy, alongside geopolitical developments and domestic policy shifts, are causing alarm among investors and analysts.
One of the most concerning aspects is the inversion of expectations regarding US and Chinese debt. Previously considered rock-solid, US government debt is now perceived as riskier than its Chinese counterpart. Meanwhile, gold prices, often viewed as a safe haven, are hitting record highs, further signaling the market’s growing fears.
This situation is particularly worrisome for investors and economists who have long raised concerns about the Chinese economy’s resilience. Despite China’s enormous size and influence, its economic stability is far from guaranteed. Factors such as a struggling real estate market, declining demand, financial brittleness and an authoritarian political system have all contributed to an uncertain future for the Chinese economy. Additionally, the controversial zero-Covid policy and the broader global trend toward protectionism have raised doubts about China’s ability to sustain or even grow its exports.
Despite these concerns, markets seem to have responded differently, with yields on Chinese debt even surpassing those of US bonds in some instances after the Ukraine war. This is particularly concerning, as it suggests that markets view Chinese debt as relatively more stable, despite the numerous vulnerabilities in China’s economic structure. The primary driver behind this shift, analysts suggest, is growing skepticism about the US economy’s future prospects.
Political paralysis and economic instability
The underlying cause of the increasing market instability can be traced to the political paralysis in the US government. Over the years, political dysfunction and gridlock in Congress have made it nearly impossible to pass meaningful fiscal reforms. The ongoing debt ceiling debates, disagreements over taxation and expenditure policies and the general dysfunction in addressing long-term issues have left the US economy vulnerable to shocks. As markets react to this uncertainty, investors have grown more wary of US debt, a once-reliable asset.
A key indicator of this growing unease is the sharp rise in gold prices. Historically, gold serves as a store of value, particularly during times of financial instability. The rising price of gold signals that investors are seeking safety in assets that are not tied to the performance of any particular government or currency. The surge in gold prices, alongside rising US bond yields, paints a troubling picture of the increasing likelihood of financial instability in the West.
The collapse of Silicon Valley Bank (SVB) in 2023 further highlighted the vulnerabilities in the financial system. The failure of the bank, triggered by rising interest rates and a subsequent loss of depositor confidence, resulted in a rapid bank run, with $42 billion withdrawn in a single day. While the federal government intervened to restore stability, the failure of SVB was a stark reminder of how quickly financial crises can unfold, especially in a fragile economic environment.
Broader implications for global markets
The impact of US instability on global markets cannot be overstated. As the US remains a key economic powerhouse, instability within its borders has far-reaching consequences for other regions, including Europe and China. The interconnectedness of global financial systems means that even small tremors in one economy can lead to cascading effects across the globe. Emerging markets, particularly in Asia and India, have already experienced significant market downturns since late 2023, underscoring the vulnerability of global markets to disruptions in the US and Western economies.
The immediate concern is the potential for a financial meltdown, a scenario that many analysts fear could occur sooner rather than later. With the US political system unable to address key economic challenges — such as the growing budget deficit and long-term debt — the risks of a recession or depression are increasing. Trade tensions, particularly between the US and China, are likely to exacerbate these challenges, potentially triggering a broader global slowdown.
A critical issue lies in the US government’s approach to economic policy. As the administration seeks to implement tariffs and reduce spending, the long-term effects could be damaging to both domestic and global markets. The US economy, which has been a driving force for growth in China and Europe, may face increasing pressure as tariffs dampen international trade and reduce employment in key industries. Further, cuts to research and development spending and other critical investments could stifle innovation, reduce economic dynamism and drive up the deficit.
Donald Trump’s return brings uncertainty
Compounding the situation is the rise of US President Donald Trump and his return to national prominence. His policies, especially his stance on tariffs and government spending, are reshaping the US economic landscape. While some may argue that his administration’s economic policies have led to short-term gains, the long-term consequences of his approach remain uncertain. The increasing protectionist measures and cuts to government spending in certain areas are likely to create more economic turmoil, particularly if the US economy fails to adapt to the changing global environment.
The combination of rising tariffs, reduced government spending and political gridlock is creating an environment in which financial stability is increasingly in question. While economists agree that the US must address its long-term debt issues, the current trajectory of economic policy is causing increasing concern. The lack of meaningful political reform and the failure to agree on solutions to address the growing deficit are exacerbating fears that the US economy could be on the brink of a major crisis.
Troubling times ahead
As global markets become increasingly nervous and volatile, the likelihood of a financial meltdown grows. While it is impossible to predict the exact timing of such a crisis, the combination of rising US bond yields, soaring gold prices and ongoing political dysfunction suggests that troubling times lie ahead. The interconnected nature of the global economy means that instability in the US will have far-reaching consequences, affecting economies in Europe, Asia and beyond.
Given the current trajectory, it is crucial for policymakers to address these concerns before the situation escalates further. However, with political gridlock preventing meaningful reform, the outlook for the global economy remains uncertain. As investors and analysts continue to monitor the evolving situation, one thing is clear: The world is entering a period of heightened volatility and unpredictability, and financial stability is no longer a given. The coming years will likely bring new challenges, and the world will need to adapt to an increasingly uncertain and complex economic environment.
[Lee Thompson-Kolar edited this piece.]
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
” post-content-short=” In recent times, global markets have shown increasing signs of anxiety and uncertainty, as investors brace for a potential disruption in major economies, particularly the United States. The dynamics surrounding the US economy, alongside geopolitical developments and domestic policy shifts, are…” post_summery=”Global markets are growing increasingly uncertain, due to concerns over US economic instability, political gridlock and rising gold prices. Despite vulnerabilities in China’s economy, its debt is seen as more stable than US debt, reflecting growing skepticism about the US’s future. These factors, combined with protectionism and geopolitical tensions, signal an imminent financial crisis.” post-date=”Mar 13, 2025″ post-title=”FO° Exclusive: Global Markets Are Now Extremely Nervous” slug-data=”fo-exclusive-global-markets-are-now-extremely-nervous”>FO° Exclusive: Global Markets Are Now Extremely Nervous
Germany’s recent election results have brought to the forefront the deepening fractures within the nation’s politics and society. The election showcased a significant shift in the political landscape, with the rise of the Alternative for Germany (AfD), a far-right party that has gained considerable support, particularly in the former East German territories. This, in conjunction with a weakening of the center-left Social Democratic Party (SPD) and a fragmented political environment, reveals the complexities Germany faces in its efforts to govern effectively.
A divided political landscape
The election results underscored the ongoing fragmentation of Germany’s political system. The SPD, led by Chancellor Olaf Scholz, saw a significant decline, securing only 16.4% of the vote. While this result was expected due to the party’s struggles in recent years, it has led to a situation where the SPD has lost much of its influence in shaping the nation’s future. On the other hand, the Christian Democrats (CDU/CSU), while victorious, achieved only 28.6% of the vote. This result demonstrates that even the center-right, long the dominant force in German politics, is no longer able to secure a decisive win without relying on coalitions.
The rise of the AfD, which secured 20.8% of the vote, is perhaps the most striking outcome of this election. Although their support is still strongest in the former East Germany, where they garnered 29.7% of the vote, the AfD is beginning to make inroads into the West, achieving 13% of the vote in regions that were once firmly supportive of the CDU/CSU. This growing influence of the AfD highlights the increasing polarization of German politics and society, driven in part by economic insecurity, immigration concerns and the cultural tensions surrounding globalization.
In addition to the rise of the AfD, the election results also revealed the diminished strength of the SPD, the Greens and the Free Democratic Party (FDP). These parties, which had formed the previous traffic light coalition government, struggled to present a unified front. The fractious nature of this coalition led to inefficiencies in governance and left the electorate dissatisfied. The lack of progress on key issues such as inflation, immigration and economic reform contributed to the overall sense of disillusionment with the current political establishment.
The roots of AfD support: economic struggles and immigration concerns
The AfD’s strong performance can be attributed to a combination of factors, with two key issues standing out: economic discontent and concerns over immigration. Germany’s economy has struggled in recent years, with no GDP growth for several consecutive years. The country has faced multiple crises, from the effects of the Russia–Ukraine war to challenges stemming from global inflation. These economic difficulties have taken a toll on the German population, particularly in the former East, where unemployment rates remain higher and economic opportunities more limited.
Moreover, immigration has become a deeply divisive issue in German society. With a growing percentage of the population born outside of Germany, many citizens feel a sense of cultural insecurity and fear that the nation’s identity is being eroded. The AfD has capitalized on these fears, advocating for tighter immigration controls and a reassertion of German values. Their message has resonated particularly in the East, where the legacy of reunification remains a source of tension.
While Germany does require immigration to address its demographic challenges and labor shortages, the rapid pace of immigration has created a perception of cultural and economic strain. This issue has been exacerbated by the ongoing debates over asylum policies and the EU’s handling of migration. The AfD’s success can thus be seen as a reaction to the perceived failure of the political establishment to address these concerns effectively.
The CDU’s shift toward the far-right
In response to the AfD’s growing influence, the CDU, under the leadership of Friedrich Merz, has begun to shift its stance toward the far-right. Merz, a former lawyer with ties to major international firms, including BlackRock, has sought to consolidate the center-right vote by adopting some of the AfD’s positions, particularly on issues like immigration. His proposals for stricter asylum laws and the tightening of border controls echo the policies championed by the AfD and reflect the growing pressure on the CDU to adopt a tougher stance on migration.
Merz’s strategy, however, raises questions about the future direction of the CDU and its relationship with the AfD. While some analysts argue that the CDU is attempting to outflank the AfD on the right, others warn that this could further erode the party’s centrist identity and deepen the political polarization in Germany. The shift to the right is already being felt in the party’s rhetoric, with Merz calling for deregulation of the economy and stronger defense policies in line with the rising nationalist sentiment in Europe.
The impact of Germany’s political instability on Europe
Germany’s political instability and economic challenges have broader implications for the future of Europe. As the heart of the European Union, Germany’s struggles to maintain political cohesion and economic stability could have far-reaching consequences for the entire continent. A fractured Germany is unlikely to provide the leadership needed to navigate the complex geopolitical challenges facing Europe, from the ongoing conflict in Ukraine to the growing threat posed by Russia.
The lack of a strong, unified German government also undermines Europe’s ability to respond effectively to global challenges. With the United States increasingly focused on domestic issues and shifting its attention away from Europe, the continent may find itself exposed to geopolitical risks. In the absence of a coherent European strategy, populist leaders like Donald Trump and Vladimir Putin could exploit Europe’s weaknesses, further undermining the region’s influence on the global stage.
Germany’s failure to address its internal divisions could result in a Europe that is fragmented, weakened and increasingly susceptible to external pressures. As the continent grapples with an aging population, economic stagnation and rising political extremism, the prospect of a more cohesive EU seems increasingly unlikely.
A long road ahead
Germany’s political future is uncertain, with deep divisions in society and a lack of consensus on key issues. The rise of the AfD and the CDU’s shift toward the far-right reflect the growing dissatisfaction with the political establishment and the challenges facing Germany in the 21st century. As the country grapples with economic stagnation, immigration concerns and a fractured political system, the path forward will require difficult compromises and painful reforms. Without a strong and unified government, Germany risks losing its leadership role in Europe, leaving the continent vulnerable to external threats and internal disarray. The coming years will be critical in determining whether Germany can overcome its political paralysis and reclaim its position as a stable and effective force in Europe and the world.
[Lee Thompson-Kolar edited this piece.]
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
” post-content-short=” Germany’s recent election results have brought to the forefront the deepening fractures within the nation’s politics and society. The election showcased a significant shift in the political landscape, with the rise of the Alternative for Germany (AfD), a far-right party that has gained…” post_summery=”Germany’s recent election results highlight deepening political fractures, with the rise of the far-right Alternate for Deutschland and the weakening of the center-left Social Democratic Party. Economic struggles and immigration concerns have fueled AfD’s support, especially in former East Germany. This instability could undermine Germany’s leadership in Europe, leaving the continent vulnerable.” post-date=”Mar 06, 2025″ post-title=”FO° Exclusive: Old Ghosts Come Roaring Back in New Germany” slug-data=”fo-exclusive-old-ghosts-come-roaring-back-in-new-germany”>
FO° Exclusive: Old Ghosts Come Roaring Back in New Germany
The geopolitical landscape has been significantly shaped by US President Donald Trump’s transactional approach to international relations. His administration’s policies regarding Panama, Canada, Mexico and the broader Gulf of Mexico region, as well as his handling of crises in places like Gaza, provide a distinct lens through which to view his mindset.
The framework under which he operates is one that embraces power politics, a belief that the strongest force holds sway and deals are transactional — each party gives something up in exchange for tangible benefits. This is the essence of his philosophy, one that redefines diplomacy as a zero-sum game. This ideology was dramatically evident in his recent AI-generated video, which paints an idyllic, fantastical version of Gaza’s future — one in which violence and despair are replaced with beachside leisure, belly dancers and the inevitable presence of billionaires like Elon Musk. This is all set to the backdrop of a new world order with Trump as its architect.
The absurdity of the video is apparent, but its most striking element is the way it is embraced by those around Trump. Instead of distancing himself from such a fantastical portrayal, he has leaned into it. The video, which was meant to showcase a utopia, reveals a mindset in which Trump sees the world as a place where countries, particularly those in the developing world, are reduced to mere settings for the grandeur of global elites. This worldview, troubling as it may be, garners support from certain quarters.
Many have reacted to this video. Commentors praise Trump’s vision for a world where these “pesky” developing nations are reduced to backdrops. Their comments focus on economic growth and the notion that such areas like Gaza should simply be incorporated into a commercial system that benefits those in power. It reflects a dangerous, imperialistic outlook that distorts how we should view global cooperation and power dynamics.
However, this vision is not one that is universally accepted, even among those who support Trump. While the video highlights his transactional style — offering deals, even at the cost of human suffering — it also reveals the continued support of those on the far-right and isolationist factions of the population. This underscores how Trump’s appeal lies in his ability to portray himself as a figure who can solve problems with direct, albeit harsh, solutions.
The real threat lies not in his policies alone, but in the fact that his worldview is growing popular. For countries like Ukraine, this presents a terrifying prospect: The reality of international law and collective defense systems is increasingly under attack.
Russia, Ukraine and the limits of military power
Trump’s approach to Russia, particularly in relation to Ukraine, further underscores his transactional nature. He has consistently hinted at providing Russian President Vladimir Putin with an exit from the Ukraine conflict, claiming that his pragmatic approach could bring about peace.
However, Trump’s focus on Russia’s military power misses the real threat: Russian intelligence. It is not the Russian military that should be feared most, but rather the country’s ongoing, sophisticated espionage efforts aimed at destabilizing democracies. These operations are often low-cost but high-reward, changing the trajectory of a nation through subversive means. Whether it’s influencing public opinion, assassinating political figures or shaping electoral outcomes, Russia’s intelligence services have been successful in destabilizing countries and shifting their allegiances.
In Ukraine, Russia’s intelligence services have capitalized on divisions, turning the situation into a proxy war of influence. Meanwhile, Trump continues to downplay the conventional military threat posed by Russia. He focuses instead on superficial geopolitical concerns, like Ukraine’s access to rare-earth minerals, which he cites as a key point of leverage in his negotiations.
Ukraine is caught in the middle. Its sovereignty is threatened by not just Russian military aggression, but the geopolitical manipulations of the United States, which seeks to extract concessions from the country. The idea of a “transactional” peace is, at its core, about securing economic resources and political influence, rather than seeking a lasting solution to the conflict.
NATO and the decline of multilateralism
Another crucial aspect of Trump’s geopolitical approach is his treatment of NATO, which he has openly criticized. He has repeatedly said that the US should not be responsible for defending Europe unless European nations increase their defense spending. While this stance has garnered support from certain segments of the American population, it has left Europe in a position to navigate the complexities of security and defense without reliable American support.
The fragility of NATO is becoming evident. Trump refused to commit to Article 5 of the NATO treaty, which states that an attack on one NATO member is an attack on all. Now countries like Germany question the alliance’s future.
This shift in US policy could have dramatic repercussions for Europe, particularly as internal divisions grow. Countries like Germany and France, historically the anchors of European unity, are struggling to maintain cohesion in the face of external threats. With Trump’s isolationist rhetoric and the growing instability within the European Union, the idea of a unified European defense system seems increasingly distant. The concept of NATO, originally designed to counter the Soviet threat, now risks irrelevance as Trump’s insistence on transactional deals further erodes its foundations.
The future of global diplomacy and economic fallout
Looking beyond Europe, Trump’s transactional approach to global diplomacy has far-reaching consequences. For instance, if China–Taiwan tensions further escalate, Taiwan could be left to navigate its fate without American intervention. Trump’s reluctance to engage in foreign conflicts or intervene in disputes unless it serves American economic interests represents a broader trend of disengagement from traditional global leadership roles. This shift is particularly concerning for smaller nations that have relied on American support for their security and sovereignty.
The Global South is similarly vulnerable in this new era of transactional diplomacy. Countries in this region, often caught between the competing interests of global powers, are left with few options other than to accept deals on the terms of stronger nations. As the world moves toward a more fragmented, bilateral approach to diplomacy, smaller countries are finding it harder to assert their interests or secure meaningful alliances. The return of de facto gunboat diplomacy, in which stronger powers impose their will on weaker nations, signals a regression to a more imperialistic world order, one in which global cooperation and multilateral institutions are sidelined.
The world in flux
The global order, as we have known it, is in a state of flux. The erosion of multilateralism, the rise of transactional politics and the growing dominance of strongman figures like Trump and Chinese President Xi Jinping signal a dramatic shift in international relations.
For nations like the US, this might seem advantageous in the short term. After all, bilateral deals can offer immediate benefits. However, the long-term consequences for global stability are profound. With Europe increasingly on its own, Ukraine stuck between competing powers and the world’s smaller nations left vulnerable, the future of international diplomacy seems uncertain at best.
For investors, this geopolitical uncertainty signals a need for caution. With protectionist policies and nationalist sentiments gaining traction, global markets may experience volatility. Domestic producers may benefit from these shifts, but the broader implications for global trade and investment are yet to be fully realized. As the global power structure continues to evolve, those who navigate this new world with foresight will be best positioned to weather the coming storm.
[Lee Thompson-Kolar edited this piece.]
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
” post-content-short=” The geopolitical landscape has been significantly shaped by US President Donald Trump’s transactional approach to international relations. His administration’s policies regarding Panama, Canada, Mexico and the broader Gulf of Mexico region, as well as his handling of crises in places like…” post_summery=”US President Donald Trump’s transactional approach to international politics focuses on power and economic interests while undermining multilateral diplomacy, as seen in his handling of Gaza and Ukraine. His dismissal of NATO weakens alliances, leaving Europe vulnerable. This shift towards bilateral deals and unilateral action erodes global stability, empowering stronger nations at the expense of weaker ones.” post-date=”Mar 04, 2025″ post-title=”FO° Exclusive: The New US–Russia–Ukraine–Europe Soap Opera” slug-data=”fo-exclusive-the-new-us-russia-ukraine-europe-soap-opera”>
FO° Exclusive: The New US–Russia–Ukraine–Europe Soap Opera
[On December 31, 2024, we predicted seven developments for 2025 and boldly went where only fools, angels and astrologers dare to go. So, what can we expect in 2025? To borrow words from the military, a more volatile, uncertain, complex and ambiguous (VUCA) world. What follows is the entire seven-part discussion. If you would like to read this piece as a clickable magazine, please click below.]
A Turbulent Donald Trump Second Presidency
US President Donald Trump won the election by promising more secure borders and higher tariffs. Now that he is in office, he will clamp down on immigration. Trump and his team believe in protectionism and isolationism. The underlying idea is to bring back manufacturing jobs to the US. So, expect higher tariffs. Lower immigration is likely to lead to economic harm. Tighter labor markets, higher costs for businesses and increased inflation are likely to follow.
As an issue, immigration has created a divide within Trump’s camp. The trigger was his selection of Sriram Krishnan as senior adviser for AI in his administration. Krishnan is a Tamil Brahmin (Tam Brahm) who was born in India. He did his undergrad at SRM Institute of Science and Technology (SRMIST) and is a general partner of American venture capital firm Andreessen Horowitz. This high-achieving Tam Brahm heads the firm’s London office and is pals with both former British Prime Minister Boris Johnson and Tesla and X CEO Elon Musk.
Krishnan’s appointment led to a backlash from the Make America Great Again (MAGA) base. Laura Loomer, a MAGA political activist and Internet personality, took issue with it. Vivek Ramaswamy and Musk, the two co-chairs of the newly proposed Department of Government Efficiency (DOGE) rode out to Krishnan’s defense. So did former PayPal executive David Sacks, whom Trump has tapped to be White House AI and cryptocurrency tsar. The war of words played out on X, the new bastion of free speech.
The MAGA crowd argues that the tech industry imports Indian workers because they are cheap. These Indians put downward pressure on American wages. Trump’s finance and tech bros, on the other hand, argue that there are not enough Americans to do tech jobs and thus the tech industry needs to bring in foreign workers. This controversy will continue to divide Trump’s camp in the months ahead.
Trump’s tariffs will accelerate the creation of two contending economic systems. Such a situation existed during the Cold War, but since the collapse of the Soviet Union, the global economy has become more integrated than ever. However, the American and Chinese economies have now grown increasingly separate from each other. This trend will accelerate.
Importantly, US global leadership will weaken. Trump will pursue unilateralist, isolationist and contentious policies. So, we will see increased fraying of international norms and weakening of US alliances in Europe, the Middle East and Asia.
The New Science and Technology Race Is Heating Up
In just the next decade — even the next five years — AI will be performing most tasks better than humans. It will also be more efficient. The shocking question our societies must answer now appears to be, “Who will be the master, AI or humans?” Even the profoundly cautious National Intelligence Council warns that AI may pose “existential threats … that could damage life on a global scale” and that “require the development of resilient strategies to survive.”
For the first time in ten thousand years of civilization, humanity faces an entity that will disrupt us, may control us and could even threaten our existence. Even if AI does not take over humanity, its impact on global employment, for both white- and blue-collar workers, could well disrupt societies and traditional ways of life.
In a poll of AI experts, 18% were excited at near-term prospects, 42% were equally excited and concerned and 37% were more concerned than excited about the changes in the “humans-plus-tech” evolution they expect to see by 2035. Numerous studies estimate that AI will eliminate the need for anywhere from seven to 48% of all jobs within 15 years. Kai-Fu Lee, one of the world’s leading experts on the subject, estimates that AI will eliminate the need for about 38% of all jobs by the early 2030s.
AI will also concentrate wealth in the few corporations and countries that have the financial and technical resources to develop and exploit this technology. Large AI firms in the US like Meta, Google and Microsoft will emerge as winners. So will Chinese companies like Tencent, Alibaba and Baidu.
Experts note, too, that wealth distribution will become even more unequal, with the top 1% of the population reaping most of the profits. Much of the rest of humanity will be in danger of losing its livelihoods. The US and China together are likely to capture 70% of the over $15 trillion that AI is estimated to add to the global economy by 2030.
In addition to an AI race, a new space race is also underway. Both the US and China are racing to go to Mars. The former expects to get there by 2027–2028, while the latter is planning for 2028. Space is becoming increasingly militarized as well. Surveillance satellites, missile defense and anti-satellite technologies are increasingly important.
Governments and private players will invest an estimated $1 trillion in the space sector. SpaceX is developing a fully reusable, two-stage super heavy-lift launch vehicle called Starship. At 122 meters (equivalent to a 35-story building), Starship can currently carry 90 metric tons and will soon double that. SpaceX has launched Starship six times and plans 100–400 launches annually within one to three years.
A third technological race is on in the renewable energy industry. The majority of solar panels and batteries currently come from China. Electric vehicles (EVs) in China cost a third less than in Europe and the US. China subsidizes EVs handsomely. Furthermore, the Chinese EV industry has technological and production advantages over its competitors.
Global EV sales are projected to grow by 30% in 2025 and reach 15.1 million. In 2024, 11.6 million EVs were sold. They comprise 13.2% of total vehicle sales. This market share is estimated to grow year-on-year despite the Trump administration’s lack of enthusiasm for EVs.
Demand for electricity is rising significantly. Increasingly, renewables are supplying this electricity. In 2025, renewables will surpass coal to become the largest source of electricity for the first time in history.
The Turbulent Middle East Will Cool Down a Bit
Israel has emerged as the big winner in the latest Middle Eastern conflict. The Israeli Defense Forces (IDF) have weakened Hamas. In Lebanon, the IDF decapitated Hezbollah and destroyed the Shia militant group’s assets. In Syria, Sunni rebels have seized Damascus, and Baathist dictator Bashar al-Assad has fled to Moscow. During the upheaval in Syria, the IDF seized all of the Golan Heights. It also destroyed the country’s entire air force, almost all of its navy and most of its other military assets.
Previously, Syria was a key Iranian ally and fought many wars against Israel. The Assad family belonged to the country’s Alawite minority, which follows a form of Shia Islam. Now that Assad is gone, Iran stands weakened and cut off by land from its allies in Lebanon. So, the threat to Israel is greatly diminished. Turkey is back in the fray, though, and its influence has risen.
The Ottoman sultan was the caliph of all Sunni Muslims until the empire ended in the aftermath of World War I. Now, the fabled Umayyad Mosque in Damascus is back in Sunni hands. In the long run, a Salafist Syria might be a bigger threat to Israel than an Alawite one. By the time Assad fell, his regime had a very narrow social base, commanding only the loyalty of the Alawite elite. The majority of the Syrian population had turned against the Assad regime, which explains its rapid fall.
Now, Ahmed Hussein al-Sharaa is in charge. He is better known by his nom de guerre Abu Mohammad al-Jolani. Backed by Turkey and some Gulf countries, Jolani has engineered an image makeover and is projecting himself as a moderate. Yet it is important to note that he was an associate of Abu Bakr al-Baghdadi and a formidable al-Qaeda operative. The US State Department long had a bounty of $10 million on his head. Already, his men are telling women to cover their heads. If Jolani manages to consolidate power and create a majoritarian state backed by other Sunni powers, that might cause Israel a greater headache than its erstwhile Shia foes.
Note that the 1916 Sykes–Picot order is dead. The nation state experiment in the Middle East has failed. Tribalism and sectarianism are ascendant. Keeping Syria or Iraq or any of the states in the region united and functional will become harder.
In the meantime, the Kurds and Palestinians remain the losers of history. No great or regional power really backs them. In the case of Palestinians, every power in the region gives them lip service, but none of these Muslim states is willing to fight for them.
In 2025, conflict in the Middle East will diminish because it has clear winners. Israel now has the upper hand against its enemies, especially Iran. For the time being, the great powers are standing by and avoiding involvement in the region.
The Russia–Ukraine War Could End
Russia and Ukraine have been at war since February 24, 2022. Casualties have mounted, and economies are under strain. Russia has been slowly but relentlessly gaining Ukrainian territory in a battle of attrition. Western support for Ukraine has been wavering. Neither France nor Germany has a budget for 2025 partly because of political disagreements over Ukraine.
US President Donald Trump’s reelection changes the equation as well. He will not support Ukraine as strongly as his predecessor Joe Biden did. So, there will be pressure on Ukraine to sue for peace.
Former CIA officer Glenn Carle and Fair Observer Editor-in-Chief Atul Singh disagree on their reading of Russia. The former sees the Russian economy as under strain. Russian foreign exchange reserves are decreasing and inflationary pressures are increasing. The country has overinvested in the military and other sectors are suffering. The ruble is tumbling. Carle estimates that Russia cannot prosecute the war forever.
Singh takes a different view. He points out that, while prices are rising, so are wages. Ironically, Western sanctions have benefited Russia by preventing capital flight. Money is no longer flowing out to buy yachts in Monaco or football clubs in London. Now, the capital stays home, creating a domestic multiplier effect. Sanctions have also forced Russia to reindustrialize. Besides, GDP figures can be deceptive. Western countries with higher GDP have a smaller manufacturing base than Russia’s. Also, sanctions have not entirely worked because developing country purchases have replaced European demand for Russian fossil fuels.
Given Russia’s size and resources, it can take greater pain than Ukraine. Ukraine’s economy has cratered, shrinking by as much as 30% according to some estimates. Ukrainian men have fled the country at higher rates than their Russian counterparts. Ukraine is simply running out of cash and men.
Unsurprisingly, Europe is losing its nerve. The German far-left and far-right both want the war to end and blame it — along with American protectionism — for deindustrializing their country. Traditionally, Germany has been a high-tech manufacturing powerhouse. Now, it is in crisis. So is France and so are many other European countries. Given these trends, Singh believes that some sort of peace or ceasefire deal should occur by the end of the year.
Will the Global Economy Muddle Along, or Is There Trouble Ahead?
Former CIA officer Glenn Carle and Fair Observer Editor-in-Chief Atul Singh disagree on the global economy. Carle thinks the global economy will muddle through, while Singh thinks there is trouble ahead.
Carle takes confidence from official growth figures. The Organization for Economic Co-operation and Development (OECD) estimates global growth will be 3.3% in 2025. The US economy is projected to grow at 2.5%, the EU about 1%, China 4.8% and India 6%. These figures are relatively healthy and the global economy should be able to weather the shock of tariffs imposed by US President Donald Trump.
Singh sees record global debt — $323 billion as of December 3, 2024 — as well as protectionism and currency wars as big risks. Sovereign debt will continue to rise, increasing default risk. Both the German and French governments fell because political leaders could not agree upon a budget. Europeans will not accept cuts to their welfare states in order to save the money for Ukraine.
In Asia, China’s real estate bubble has burst. Rising labor costs weakened its export-led strategy, which faltered under the Covid-19 pandemic. Since 1978, China has industrialized at the cost not only of the West but also emerging economies like India and Brazil. It is betting on a new wave of industrialization in critical technologies like solar panels and batteries. State support for Chinese companies is common and well known. This is tempting many countries worldwide to raise tariffs, provoking retaliation and exacerbating inflation.
Donald Trump wants to weaken the dollar, yet simultaneously retain its status as the world’s reserve currency. He is inspired by former US President Richard Nixon’s abandonment of the gold standard in 1973 after the Vietnam War. Despite this abandonment, the dollar continued to be the global reserve currency. According to our Republican sources, there is no serious threat to the dollar given current economic crises in both China and the EU. Therefore, they are confident that the US dollar will continue to be the global reserve currency even after depreciation.
Economists at top investment banks believe that the Trump administration may also use tariffs as a tool to support depreciation, pointing to the 1985 Plaza Accord. In those Cold War days, allies with a trade surplus — France, West Germany, Japan and the UK — agreed with the US to depreciate the dollar. Our sources in the incoming Trump administration indirectly indicate that some of their colleagues are determined to bring back manufacturing to the US and see depreciation as a key policy measure.
Other countries are anticipating Trump tariffs and dollar depreciation. The Swiss National Bank, the European Central Bank and the Bank of Canada have already cut interest rates, weakening their currencies. Others are planning to follow suit. However, if all major trading countries try to weaken their currencies simultaneously, none may gain from more competitive exports, but all could experience heightened exchange rate volatility.
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Singh believes that the chances of a black swan event have increased because the structural economic and political problems are not going away. So, fasten your seatbelts and expect turbulence ahead.
Unstable Africa Drives Refugees North
In 2024, militant Islamist violence in Africa reached a record high. Fatalities have nearly tripled since 2020 to approximately 11,000. This violence has displaced over 45 million people, a 14% increase over the 2023 figure. Last year marked the 13th consecutive year in which this figure has risen.
Russia has now emerged as a major player in Africa, displacing France in many countries. Moscow has conducted multiple disinformation campaigns and sent mercenaries to many conflict zones, such as Mali, Niger, Libya and Sudan.
The implosion of Sudan is the biggest crisis in Africa today. It has exacerbated the tensions in an already fragile region, worsening conflicts in neighboring states and increasing political instability. The internal conflicts in Libya, Chad, the Central African Republic, South Sudan and Ethiopia are now further complicated by Sudan’s instability.
Foreign powers, most notably the United Arab Emirates, Russia, Iran and Egypt, are inflaming Sudan’s conflict. They have deployed drones, munitions and mercenaries. They also patronize the smuggling of resources. This scramble for influence risks Sudan fragmenting into a collection of client states, sidelining civilian voices and popular sovereignty.
Over 11.5 million Sudanese have been internally displaced, and more 2.3 million have fled the country since the civil war began in April 2023. Food shortages are estimated to be killing hundreds of people daily. An estimated three million people are facing acute food insecurity.
Experts point out that droughts and floods are a key reason for increased conflict. Climate change means that places lack rain for longer periods or get too much rain in too short a time. This means the land is less productive, even as populations rise. This explosive combination has led people to fight over water, pastures and land.
In 2024, an estimated 163 million Africans suffered from acute food insecurity, over 10% of the continent’s population. This figure is nearly triple that of five years ago. Many of these Africans are crossing the Mediterranean Sea to get to Europe.
Lee Kuan Yew, the late Singaporean statesman, once warned that if Europe did not export prosperity south, Africa would export people north. That is exactly what is happening.
Europe Faces a Tough Year Ahead
France and Germany are the two beating hearts of Europe. Both of them ended 2024 without a budget. Both countries face new elections in 2025.
France went through a tumultuous year. Fair Observer Chief Strategy Officer Peter Isackson and Fair Observer Editor-in-Chief Atul Singh explain the crisis in the French Fifth Republic in the piece embedded below. Traditional parties have imploded and new blocs have emerged. Marine Le Pen’s far-right Rassemblement national (RN) is on the ascendant. Although it won only 126 seats out of 577 in the French parliament, it received the most votes.
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The left-wing Nouveau front populaire (NFP) won 193 seats while President Emmanuel Macron’s Ensemble won 159. The two parties oppose RN’s social and political far-right stance, but NFP and RN are closer on economic policy than either is to Ensemble. In 2024, the three parties could not agree upon a budget. Michel Barnier’s government fell, making him the shortest-serving prime minister of the Fifth Republic.
Germany’s traffic-light coalition — so-called because red, yellow and green are colors of the Social Democratic Party (SDP), the Free Democratic Party (FDP) and the Greens, respectively — fell because the parties could not agree upon a budget. Chancellor Olaf Scholz’s government has proven to be indecisive and ineffective. The three parties could rarely agree on anything even as the German economy contracted for two consecutive years.
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The far-right Allianz für Deutschland (AfD) is on the rise, sending shivers down the spine of a country where the specter of Adolf Hitler and the Nazi party remain strong. Yet the ineffectiveness of traditional political parties, a sinking economy and fears about immigration are fueling AfD’s rise. Repeated acts of terror by some Muslim immigrants have added to the fear.
In France, Germany and other EU countries, the clash of cultures between secular Europeans and religious immigrants is only too real. The fact that the latter are often poor and congregate around mosques makes them more Islamist than their countrymen back home. Note that President Recep Tayyip Erdoğan gets a much higher percentage of votes in France, Germany and the Netherlands than he does in Turkey.
As problems mount, the French Fifth Republic is on the verge of collapse while Germany still suffers from a postwar crisis of confidence. The operative question is simple: Who will lead Europe?
In 2006, former CIA officer Glenn Carle told a group of German officials, “If Germany does not lead Europe, Europe will not be led.” These officials were horrified at having to assume the responsibilities they had long avoided so as not to be tarred as the new Nazis. Only Germany can lead Europe, and it may eventually be AfD that leads. What happens then?
Throughout Europe, the far-right is on the rise. Slovakia, Hungary, Italy and the Netherlands are some examples. Economic strain, fears of immigration and concerns about social cohesion are at play. None of these concerns are going away in 2025.
[Anton Schauble and Lee Thompson-Kolar edited this piece.]
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
” post-content-short=” [On December 31, 2024, we predicted seven developments for 2025 and boldly went where only fools, angels and astrologers dare to go. So, what can we expect in 2025? To borrow words from the military, a more volatile, uncertain, complex and ambiguous (VUCA) world. What follows is the entire…” post_summery=”Trump’s tariffs, AI’s rapid growth and the Russia-Ukraine war are reshaping economies and global power. Conflicts in the Middle East, instability in Africa and political turmoil in Europe are driving migration and uncertainty. The world in 2025 is heading toward greater division, economic strain and a fight for technological, political and economic dominance.” post-date=”Mar 01, 2025″ post-title=”FO° Exclusive: A More Volatile, Uncertain, Complex and Ambiguous World in 2025″ slug-data=”fo-exclusive-a-more-volatile-uncertain-complex-and-ambiguous-world-in-2025″>
FO° Exclusive: A More Volatile, Uncertain, Complex and Ambiguous World in 2025
Fair Observer Communications and Outreach Officer Roberta Campani spoke with Giorgio Musso about Sudan’s ongoing crisis and what it means for the region. Musso, a researcher and lecturer at the University of Roma Tre, explains how the conflict grew out of long-standing political and military rivalries, the impact on civilians and the challenges of bringing stability to the country.
Giorgio Musso lays out Sudan’s situation in clear terms. The country, one of Africa’s largest, has endured decades of conflict, shifting power struggles and outside interference. Colonial rule shaped its early history and the fight for independence led to long, brutal wars. Oil and gold made Sudan an economic prize, drawing the attention of foreign powers. Ethnic divisions and regional disputes fueled internal conflicts, with Darfur becoming a flashpoint for violence.
The split from South Sudan in 2011 changed the country’s trajectory but left unresolved issues. South Sudan took most of the oil fields, while Sudan kept the pipelines and export infrastructure. Border tensions flared and armed groups seized opportunities to expand their control. In Khartoum, military factions maneuvered for power. Foreign governments engaged in diplomacy but often prioritized their own interests over stability.
The current war began in April 2023 as a battle between two military leaders. General Abdel Fattah al-Burhan heads the Sudanese Armed Forces (SAF). General Mohamed Hamdan Dagalo, known as Hemedti, commands the Rapid Support Forces (RSF), a powerful paramilitary group. They were once allies, but disagreements over military integration and control of resources led to open fighting. Gunfire and shelling tore through Khartoum. Violence spread across the country, hitting Darfur especially hard.
Millions of civilians were caught in the middle. Cities were reduced to battlegrounds. Hospitals ran out of supplies. Food, water and medicine became scarce. Aid workers struggled to reach those in need. More than five million people were displaced and over twelve million faced hunger. Regional governments scrambled to deal with a growing refugee crisis. Ceasefire attempts repeatedly collapsed as both factions fought for control of key territory. Tribal groups joined the conflict, deepening the chaos.
The war also drew in outside forces. Russia’s Wagner Group maintained ties to Sudan’s gold trade. Gulf states had economic interests at stake. China, the US and other powers watched closely, each calculating its next move. Meanwhile, Sudan’s civilian movements, which once pushed for democracy, were sidelined. Activists called for an end to military rule, but both generals ignored them. Some local councils tried to fill the governance vacuum, but lawlessness spread.
International organizations stepped in with mediation efforts. The African Union and IGAD held peace talks, but neither Burhan nor Hemedti showed real willingness to compromise. Humanitarian groups raised alarms over atrocities, particularly in Darfur, where ethnic violence had resurfaced. The US labeled RSF actions in the region as genocide. Despite widespread condemnation, the fighting continued.
Musso argues that Sudan’s path forward depends on real negotiations and civilian leadership. Previous peace agreements ended past wars, but only when power-sharing and resource control were addressed. Sudan needs a government that represents its people, not just military factions. Regional organizations can help facilitate talks. International actors must support stability rather than back rival factions. Most importantly, Sudan’s civilians need a voice in shaping their future. Without that, the cycle of war will continue.
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
” post-content-short=” Fair Observer Communications and Outreach Officer Roberta Campani spoke with Giorgio Musso about Sudan’s ongoing crisis and what it means for the region. Musso, a researcher and lecturer at the University of Roma Tre, explains how the conflict grew out of long-standing political and military…” post_summery=”Sudan’s military leaders, General Abdel Fattah al-Burhan and General Mohamed Hamdan Dagalo, have turned against each other in a fight for power. Their forces have devastated cities, displaced millions and deepened the country’s crisis. Sudan needs a civilian government to break the cycle of war and bring lasting stability.” post-date=”Feb 28, 2025″ post-title=”FO° Talks: Sudan, a Regional Intractable Conflict” slug-data=”fo-talks-sudan-a-regional-intractable-conflict”>
FO° Talks: Sudan, a Regional Intractable Conflict
Martin Lonergan is a man of diverse experiences, whose career has spanned trading, business, extensive travel and political candidacy. Having trekked from Florida to Washington, DC, on foot in 2021 — an unforgettable moment that led to his meeting Atul Singh — Lonergan’s life has been anything but conventional. He has run for parliament as a candidate for the Reform UK Party in the United Kingdom, written books and embraced a politically active role in an era of significant change. In this interview, he provides insight into his political journey, his views on the current state of UK politics and the future of the Reform UK Party.
A return to politics
Lonergan’s engagement in politics came after years of disillusionment. He hadn’t voted for nearly two decades, as he was disheartened by the political landscape, particularly by the actions of leaders like UK Prime Minister Tony Blair. Lonergan’s frustrations with Blair’s leadership, particularly over the Iraq War and broken promises, led him to disengage from voting entirely. However, when the Reform UK Party approached him with an opportunity to run for parliament, he felt compelled to act. His candidacy for Walthamstow — a traditionally Labour seat — was born out of a desire to make a difference rather than complain from the sidelines.
Despite the Labour incumbent’s strong victory, Lonergan’s performance was notable. He placed second, surpassing both the Tories and the Liberal Democrats, signaling a clear message that many voters were unhappy with the existing political choices. The increasing unpopularity of the Labour Party, combined with the growing disenchantment among Tory voters, signals a potential shift in UK politics — a shift that could see Reform UK gaining more traction in the future.
Disillusionment with Labour and the Tories
Lonergan’s political leanings have always been center-right, shaped largely by his experiences growing up during UK Prime Minister Margaret Thatcher’s era. He has long supported a free-market economy and individual liberty, beliefs that diverge sharply from the Labour Party’s emphasis on big government and nationalization. Reflecting on his disillusionment with Tony Blair’s tenure, he specifically criticizes Blair’s role in the Iraq War and the consequent deceit that led to widespread skepticism among voters.
Regarding Labour’s current leadership under Prime Minister Keir Starmer, Lonergan suggests that the party has now drifted closer to the center and lost its distinctive identity. With both major parties — Labour and the Tories — pursuing similar policies, especially on issues like immigration and spending, it’s become increasingly difficult for voters to differentiate between them.
By contrast, Reform UK offers a clear alternative. It stands firmly for free markets, small government and individual liberty. This makes the party a credible challenger to the traditional political establishment.
The economy and the budget
One of the key issues on the table for any potential government is the UK economy. Recent employment regulations, such as increased national insurance contributions, have made it more difficult for businesses to hire and retain employees. A more flexible labor market — one where hiring and firing are less constrained by bureaucracy — would alleviate many of the current staffing shortages plaguing various industries.
The reckless government spending under the Tory administration has left a significant hole in the public finances. Chancellor Rachel Reeves’s budget has failed to address the fundamental issues of job creation and business growth. To stimulate economic growth and job creation, the UK must establish a more favorable environment for businesses by reducing taxes and simplifying regulations.
Immigration and the UK’s social fabric
While the UK needs a balanced approach to immigration — particularly welcoming refugees in need — the current system is too lenient towards economic migrants. The country has seen an influx of young men from conflict regions who are not necessarily in immediate danger, and merely seek to exploit the benefits system.
The UK requires a more discerning approach, one that prioritizes vulnerable groups such as women and children, while also allowing skilled workers to enter the country to contribute to the economy. This would prevent the social fabric from being strained while ensuring that the UK has access to a sufficient workforce.
The NHS and bureaucracy
Lonergan is especially concerned about the state of the National Health Service (NHS). Though this system is still a cornerstone of British society, it is no longer fit for purpose in its current form. The system contains quite a few inefficiencies, particularly in middle management and non-medical staff roles that contribute little to direct patient care. Reducing this bureaucracy and focusing resources on frontline services would improve the NHS’s ability to deliver care effectively.
Furthermore, employment laws must shift to allow employers more freedom in managing staff. The country needs a system where businesses can make hiring and firing decisions based on merit, which would help address the issues of underperformance and job shortages.
Foreign policy and international relations
The UK’s foreign policy, especially its involvement in the Ukraine war, is highly disagreeable. NATO’s expansion provoked Russia to war, and the West should focus on finding a negotiated solution rather than continuing to escalate the conflict.
Furthermore, Western narratives often paint issues like the Syria and Iran situations in a one-dimensional light. Lonergan advocates for a more pragmatic approach that recognizes the complexities of these regions and focuses on diplomacy rather than military intervention.
The UK should engage with Iran, particularly regarding energy. It could provide Europe with a stable source of energy, reducing the continent’s reliance on Russia.
Reforming Britain
Looking to the future, Lonergan outlines three key priorities that he believes are crucial to “Make Britain Great Again.” First, the government needs a more controlled immigration policy that balances the needs of the economy with the social challenges of integrating large numbers of newcomers. Second, the state needs a reduction in power, with fewer regulations and lower taxes — this would foster a more dynamic and entrepreneurial society. Third, the NHS needs a reform — one that cuts waste, improves efficiency and ensures that resources are better directed towards patient care.
Lonergan believes that the UK needs a radical shift in its approach to politics, economics and foreign policy. By focusing on issues that truly matter to the British people, he is confident that the country can regain its former glory.
[Lee Thompson-Kolar edited this piece.]
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
” post-content-short=” Martin Lonergan is a man of diverse experiences, whose career has spanned trading, business, extensive travel and political candidacy. Having trekked from Florida to Washington, DC, on foot in 2021 — an unforgettable moment that led to his meeting Atul Singh — Lonergan’s life has been…” post_summery=”Martin Lonergan of the Reform UK party wants to “Make Britain Great Again.” He advocates for a center-right, free-market approach to the country’s governance. In this interview with Atul Singh, he expresses his thoughts on the UK’s current immigration policy, economy, foreign policy and more.” post-date=”Feb 19, 2025″ post-title=”FO° Talks: A Reform UK Perspective on British Politics” slug-data=”fo-talks-a-reform-uk-perspective-on-british-politics”>
FO° Talks: A Reform UK Perspective on British Politics
A recent breakthrough from DeepSeek, a new Chinese artificial intelligence startup, has sparked global interest. Not only has the company released a language learning model (LLM) that rivals OpenAI’s GPT-4o, it claims to have developed it in just two months using a minimal investment of $5.6 million.
This audacious claim has caused controversy in the tech world. Industry leaders like Elon Musk question the truth behind the Chinese company’s claim. Critics argue that DeepSeek’s expenditures and resources, including the number of chips used, are much higher than it states.
DeepSeek’s R1 model rattles US tech giants
Even discounting tall claims, DeepSeek’s rapid development and minimal investment highlight a potential shift in the AI landscape. Even if the published numbers are exaggerated, the release of an open-source cheap AI tool severely undermines the business models of Silicon Valley’s giants. Those companies rely on massive amounts of computing power and electricity consumption. The former needs a lot of high-quality chips and the latter requires a massive amount of power generation. If DeepSeek can achieve similar results with far fewer resources, i.e. lower costs, this would cause a major disruption.
This shift has already affected market confidence. On January 27, tech giant Nvidia lost $600 billion — a significant 17% — in market value. Simultaneously, the Nasdaq Composite, the index that tracks the top United States tech firms, saw a 3% drop.
Marc Andreessen, the inventor of the internet browser and a bright venture capitalist, endorsed DeepSeek’s innovation. He referred to the company’s model, R1, as AI’s “Sputnik moment.” This comment truly illuminates the importance of DeepSeek’s success, and serves as a wake-up call for the US. Just as the Soviet Union’s launch of the Sputnik 1 satellite spurred the US to action in the Space Race of the 1950s and 1960s, this new AI model signals that the US has to take on China in the new AI race.
Notably, China has made significant progress despite US efforts to restrict the country’s access to advanced chips and chip-manufacturing technology. When Joe Biden was president, he consistently used trade policies to preserve US leadership in AI and AI-related computer chips, Yet DeepSeek has overcome the odds.
The Chinese startup has garnered attention for its impressive results. According to the Artificial Intelligence Quality Index, R1 is already outperforming several established AI models, including Google’s Gemini 2.0 Flash, Anthropic’s Claude 3.5 Sonnet, Meta’s Llama 3.3-70B and OpenAI’s aforementioned GPT-4o. Based on these results, R1 could be an industry changer.
The potential boons for developers and users in the AI ecosystem are notable. As DeepSeek’s model is open-source, app developers and users stand to benefit from its accessibility and transparency. By contrast, closed-source models, like those from major US firms, limit innovation and could prove less adaptable over time. This shift could prompt Silicon Valley to reconsider its approach to AI development. In recent years, Big Tech has become more bureaucratic and less innovative. American tech giants have become monopolistic and oligopolistic, losing their hunger, nimbleness and creativity.
Silicon Valley’s death of innovation
The current AI landscape is like an inverted pyramid. At the base are LLMs like DeepSeek’s R1. Above the LLMs are app builders, and atop apps are users. The proliferation of LLMs — particularly those that are open-source — will foster innovation across the board. By contrast, Silicon Valley’s larger players are increasingly focused on maintaining their dominant positions, often stifling the spirit of innovation that once defined the San Francisco Bay Area.
A tech industry veteran once said that Silicon Valley was home to risk-takers and innovators, like the Wild West cowboys tinkering in garages. Nowadays, the adventurous cowboys who still remain have been pushed to the sidelines. Instead, founders now prepare fancy presentations to woo venture capitalists or Big Tech for investments. Once startups become big, they exit not through an initial public offering but by sale to a larger company.
When startup founders come under the thumb of Big Tech bureaucracy, this stifles their creative spirit. In turn, this stifles technological growth and dampens the innovative spirit. Big tech is now more interested in maximizing quarterly profits than advancing the frontiers of technology creatively. The dominance of big Silicon Valley’s dominance has led to bloated, inefficient business models that consume excessive resources, both in terms of computing power and energy.
Many tech veterans now believe that Big Tech should be broken up. They feel it is un-American and uncompetitive, and partly responsible for the cost-intensive and power-intensive models used in the industry today. Conversely, China’s nimble, open-source approach might offer a more sustainable and flexible model for AI development. How ironic is it that a company from a communist, authoritarian regime has threatened to upend the monopolistic status quo in a democratic, market-driven society?
Technological innovation comes from the fringes
Then again, smaller, more flexible entities tend to drive innovation. Historically, significant cultural and technological movements have emerged from fringe groups. Jazz, for example, was invented by African-Americans, a marginalized group that at that time was excluded from mainstream US culture.
Similarly, technological innovation often arises from outside the established norms. Larger organizations, while successful, can get bogged down by bureaucracy. This inhibits their ability to stay agile and forward-thinking. We can see this dynamic playing out in the tech industry right now, as small companies like DeepSeek are challenging the dominance of big players like Google and Meta.
One thing that has provided US supremacy and could potentially maintain it is the country’s unique combination of financial resources and flexibility. The massive investment capital in the US combined with its risk-taking appetite and diverse competing centers of research — both universities and other research institutions — give it a massive advantage against anyone else.
A stable, regulatory legal framework for the US economy adds to that magic potion.
China has worked to create its own AI champions. Now its small, fringe startup has found incredible success but there is no guarantee of future success. The US has many advantages and could easily win the AI race. To make sure that the US wins this race, it might be prudent to trust-bust — break up big companies into smaller entities, which Teddy Roosevelt pioneered in 1902 — the obscenely colossal Big Tech.
[Lee Thompson-Kolar edited this piece.]
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
” post-content-short=” A recent breakthrough from DeepSeek, a new Chinese artificial intelligence startup, has sparked global interest. Not only has the company released a language learning model (LLM) that rivals OpenAI’s GPT-4o, it claims to have developed it in just two months using a minimal investment of $5.6…” post_summery=”Chinese AI startup DeepSeek has commanded global attention by developing a competitive language learning model. Supposedly, it has done so only in two months and only with a small investment. Regardless of that claim’s legitimacy, DeepSeek’s success is groundbreaking for the industry. Can monopolistic Big Tech firms in the US, with tons of red tape, declining culture of innovation and capital-intensive business model, keep up?” post-date=”Feb 14, 2025″ post-title=”FO° Exclusive: Chinese AI Startup DeepSeek Sparks Global Frenzy” slug-data=”fo-exclusive-chinese-ai-startup-deepseek-sparks-global-frenzy”>
FO° Exclusive: Chinese AI Startup DeepSeek Sparks Global Frenzy
Just days after entering office, US President Donald Trump swiftly revoked 78 of his predecessor Joe Biden’s executive actions. These include executive orders, which carry the greatest weight, along with lesser memoranda and proclamations. While executive orders carry the force of law and are difficult to overturn, memoranda and proclamations are harder to track and enforce.
By January 28, Trump signed 37 executive orders, with titles like “Unleashing American Energy” and “Putting America First in International Environmental Agreements,” effectively pulling the US out of the Paris Climate Accord. These actions signal a return to policies like “drill, baby, drill,” inspired by Republican vice presidential candidate Sarah Palin. In 2008, she campaigned on a platform promoting petroleum and natural gas exploitation. They also mark a return to policies that reassert unilateral American sovereignty at the cost of international collaboration.
Over the decades, key judicial decisions have empowered conservatives. Chief Justice John Roberts has strengthened and rationalized the conservative view, which has altered American democratic institutions. One can argue that the Supreme Court’s ruling in the case of Bush v. Gore (2000) essentially handed George W. Bush an election victory, ringing in neoconservative rule.
Additionally, Trump’s current agenda echoes Republican Grover Norquist’s 1980s campaign to shrink the federal government by half. Norquist champions the unitary executive theory, in which the president must have untrammeled power, avoiding the logjam that checks and balances cause today. Unlike the 18th century, the US is now a superpower, and presidents must have the authority to act speedily and effectively in the national interest.
We can trace Norquist’s ideas to philosophers like John Hobbes, who advocated for strong executive authority to maintain order in society. This Hobbesian philosophy is manifesting again in Trump’s presidency at a time when bureaucratic inefficiencies and regulatory capture have eroded public trust in institutions.
A shift toward a unitary executive
The concept of a unitary executive goes back to before Norquist. Per this theory, the president has the power to make decisions and enforce them without interference from the legislative or judicial branches of government, and has become a driving force in US governance. This idea is credited to German legal thinker Carl Schmitt, Adolf Hitler’s personal lawyer who argued for centralizing power.
Neoconservatives have embraced the unitary executive. They believe the federal government has become intrusive and inefficient, and no longer acts as the Founding Fathers intended. They reject decentralization and champion a streamlined government. Trump’s aggressive use of executive power fits within this larger framework.
Trump is changing the very nature of American democracy. Even if his specific goals fail — many won’t — his actions have significantly altered the political and societal landscape. Trump has reshaped the discourse, expectations and structure of the US government, shifting it toward a more authoritarian model. Public support for a strong, decisive leader bolsters this move. Polls show that over 40% of the American population does not support democratic processes, and greatly favors strong leadership.
Over the last centuries, during periods of democratic paralysis, decisive leaders have often risen to combat challenges. Wartime and economic crises are two examples. The US could be experiencing one of those cyclical phases now, in which Trump steps in and shakes things up. He may face backlash for his policies, leading the country back to a more democratic way of governance. Many overdue reforms could finally come to fruition as well, like addressing gerrymandering, campaign finance and reconsidering the extremely short two-year terms in the House of Representatives.
Trump’s policies often clash with established norms, particularly on immigration and birthright citizenship. Some see this as a threat to the country’s cultural identity. These policies could change the US’s interpretation of citizenship. They will also change the essence of America.
The strong do what they can
A crucial aspect of Trump’s agenda is a conservative push for a smaller, more autocratic government that prioritizes simplicity and reduced interference in citizens’ lives. However, the policies that follow often lead to unintended contradictory consequences. For instance, tariffs increase the value of the dollar, and curbs in immigration create labor shortages. Politically, though, they work, creating a dynamic where dissatisfaction is directed at the government, which reinforces support for conservative figures as potential saviors.
Trump’s push for greater executive power is a constitutional crisis in the making. If his administration enforces policies using illegal methods, such as military action at the border, it could lead to a breakdown of legal systems. Violent clashes could break out with other branches of government over legal authority, triggering a constitutional crisis.
In terms of foreign affairs, Trump’s unilateral approach reflects a shift toward US isolationism and mercantilism. His policies suggest a return to a more imperial, 19th-century model of international relations, marked by power-driven deals and disregard for legal or ethical obligations. Out goes the rules-based order, in comes the sphere-of-influence style of international relations where power and the perception of power alone is key.
In the words of the ancient Greek historian Thucydides, “The strong do what they can and the weak suffer what they must.” Trump’s philosophy, and especially his desire to acquire Greenland, Canada and Panama, mirrors Thucydides’s thesis.
[Lee Thompson-Kolar edited this piece.]
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
” post-content-short=” Just days after entering office, US President Donald Trump swiftly revoked 78 of his predecessor Joe Biden’s executive actions. These include executive orders, which carry the greatest weight, along with lesser memoranda and proclamations. While executive orders carry the force of law and are…” post_summery=”Donald Trump revoked 78 of Joe Biden’s executive orders and issued 37 executive orders along with memoranda and proclamations, which have lesser weight, by January 28. His actions mark a shift towards a unitary executive model, where the president has the power to make decisions without interference from other governmental branches. Whether or not he succeeds in his goals, Trump has already changed how America functions.” post-date=”Feb 10, 2025″ post-title=”FO° Exclusive: Donald Trump Launches an Explosive Imperial Presidency” slug-data=”fo-exclusive-donald-trump-launches-an-explosive-imperial-presidency”>
FO° Exclusive: Donald Trump Launches an Explosive Imperial Presidency
Founder, CEO and Editor-in-Chief Atul Singh speaks with Douglas Hauer-Gilad about US immigration policy under a second term for US President Donald Trump. The discussion focuses on Trump’s policy objectives, the feasibility of them and their impact on immigrants and the legal system. Douglas’s expertise provides an informed perspective on what lies ahead.
Douglas is a lawyer who dedicates his career to immigration cases. He is also a rabbinical student in New York and a doctoral candidate in Talmud and Rabbinics. He teaches law at Boston University and is active in human rights work around the world. He currently helps Israeli families affected by the October 7 attacks. He brings a deep understanding of immigration law and its real-world effects.
Atul asks Douglas about Trump’s approach to border security and immigration enforcement. Trump emphasizes securing the border and protecting American jobs. His policies include stricter deportation measures, particularly targeting immigrants with criminal backgrounds. However, mass deportations require resources and international cooperation, which makes them difficult to implement.
US Customs and Border Protection have too much power
One key issue is the power of US Customs and Border Protection (CBP). Under a second Trump administration, CBP receives more authority to override civil rights protections. This means fewer rights for immigrants, including restrictions on their ability to appeal deportation. Trump also intends to close the US–Mexico border entirely. CBP already has minimal oversight compared to the FBI. With more freedom, the agency can act with even less accountability and become more aggressive in enforcing immigration laws.
The conversation also explores the role of tech billionaires in shaping immigration policy. Elon Musk expresses opinions on immigration but does not control government bureaucracy. It remains to be seen whether figures like Musk influence policy or if the system continues without significant changes.
Deportations are difficult
Another major topic is the idea of a large-scale deportation program. Trump previously spoke about removing millions of undocumented immigrants. Douglas discusses whether such a plan is realistic and what legal and logistical challenges it faces.
Finally, the discussion touches on the possibility of another ban on Muslim immigration. Trump previously enacted restrictions on travelers from several Muslim-majority countries. Douglas provides insights into whether such a policy returns and what its legal consequences are.
[Lee Thompson-Kolar edited this piece.]
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
” post-content-short=” Founder, CEO and Editor-in-Chief Atul Singh speaks with Douglas Hauer-Gilad about US immigration policy under a second term for US President Donald Trump. The discussion focuses on Trump’s policy objectives, the feasibility of them and their impact on immigrants and the legal system. Douglas’s…” post_summery=”US President Donald Trump’s new administration intends to crack down heavily on immigration. He is granting more power to US Customs and Border Protection and wants to institute stricter deportation policies. But these efforts require resources and international cooperation — can Trump realistically execute these goals?” post-date=”Feb 09, 2025″ post-title=”FO° Talks: US Immigration Policy Under Donald Trump 2.0″ slug-data=”fo-talks-us-immigration-policy-under-donald-trump-2-0″>
FO° Talks: US Immigration Policy Under Donald Trump 2.0
[On December 31, 2024, we predicted seven developments for 2025 and boldly went where only fools, angels and astrologers dare to go. So, what can we expect in 2025? To borrow words from the military, a more volatile, uncertain, complex and ambiguous (VUCA) world. This is Part 7 of a seven-part series. You can read Part 1, Part 2, Part 3, Part 4, Part 5 and Part 6 here.]
France and Germany are the two beating hearts of Europe. Both of them ended 2024 without a budget. Both countries face new elections in 2025.
France’s tumultuous 2024
France went through a tumultuous year. Fair Observer Chief Strategy Officer Peter Isackson and Fair Observer Editor-in-Chief Atul Singh explain the crisis in the French Fifth Republic in the piece embedded below. Traditional parties have imploded and new blocs have emerged. Marine Le Pen’s far-right Rassemblement national (RN) is on the ascendant. Although it won only 126 seats out of 577 in the French parliament, it received the most votes.
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The left-wing Nouveau front populaire (NFP) won 193 seats while President Emmanuel Macron’s Ensemble won 159. The two parties oppose RN’s social and political far-right stance, but NFP and RN are closer on economic policy than either is to Ensemble. In 2024, the three parties could not agree upon a budget. Michel Barnier’s government fell, making him the shortest-serving prime minister of the Fifth Republic.
An ineffective government and rising AfD worry Germans
Germany’s traffic-light coalition — so-called because red, yellow and green are colors of the Social Democratic Party (SDP), the Free Democratic Party (FDP) and the Greens, respectively — fell because the parties could not agree upon a budget. Chancellor Olaf Scholz’s government has proven to be indecisive and ineffective. The three parties could rarely agree on anything even as the German economy contracted for two consecutive years.
Related Reading
The far-right Allianz für Deutschland (AfD) is on the rise, sending shivers down the spine of a country where the specter of Adolf Hitler and the Nazi party remain strong. Yet the ineffectiveness of traditional political parties, a sinking economy and fears about immigration are fueling AfD’s rise. Repeated acts of terror by some Muslim immigrants have added to the fear.
Who will lead Europe?
In France, Germany and other EU countries, the clash of cultures between secular Europeans and religious immigrants is only too real. The fact that the latter are often poor and congregate around mosques makes them more Islamist than their countrymen back home. Note that President Recep Tayyip Erdoğan gets a much higher percentage of votes in France, Germany and the Netherlands than he does in Turkey.
As problems mount, the French Fifth Republic is on the verge of collapse while Germany still suffers from a postwar crisis of confidence. The operative question is simple: Who will lead Europe?
In 2006, former CIA officer Glenn Carle told a group of German officials, “If Germany does not lead Europe, Europe will not be led.” These officials were horrified at having to assume the responsibilities they had long avoided so as not to be tarred as the new Nazis. Only Germany can lead Europe, and it may eventually be AfD that leads. What happens then?
Throughout Europe, the far-right is on the rise. Slovakia, Hungary, Italy and the Netherlands are some examples. Economic strain, fears of immigration and concerns about social cohesion are at play. None of these concerns are going away in 2025.
[Anton Schauble and Lee Thompson-Kolar edited this piece.]
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
” post-content-short=” [On December 31, 2024, we predicted seven developments for 2025 and boldly went where only fools, angels and astrologers dare to go. So, what can we expect in 2025? To borrow words from the military, a more volatile, uncertain, complex and ambiguous (VUCA) world. This is Part 7 of a seven-part…” post_summery=”Both the French and German governments collapsed in 2024 after political parties were unable to agree on budgets. Europe is without leadership at a time when its economy is under strain and concerns over immigration are increasing. Far-right parties will continue to rise in 2025.” post-date=”Feb 08, 2025″ post-title=”FO° Exclusive: Europe Faces a Tough Year Ahead” slug-data=”fo-exclusive-europe-faces-a-tough-year-ahead”>
FO° Exclusive: Europe Faces a Tough Year Ahead
[On December 31, 2024, we predicted seven developments for 2025 and boldly went where only fools, angels and astrologers dare to go. So, what can we expect in 2025? To borrow words from the military, a more volatile, uncertain, complex and ambiguous (VUCA) world. This is Part 6 of a seven-part series. You can read Part 1, Part 2, Part 3, Part 4 and Part 5 here.]
In 2024, militant Islamist violence in Africa reached a record high. Fatalities have nearly tripled since 2020 to approximately 11,000. This violence has displaced over 45 million people, a 14% increase over the 2023 figure. Last year marked the 13th consecutive year in which this figure has risen.
Russia has now emerged as a major player in Africa, displacing France in many countries. Moscow has conducted multiple disinformation campaigns and sent mercenaries to many conflict zones, such as Mali, Niger, Libya and Sudan.
Sudan’s conflict is Africa’s biggest crisis
The implosion of Sudan is the biggest crisis in Africa today. It has exacerbated the tensions in an already fragile region, worsening conflicts in neighboring states and increasing political instability. The internal conflicts in Libya, Chad, the Central African Republic, South Sudan and Ethiopia are now further complicated by Sudan’s instability.
Foreign powers, most notably the United Arab Emirates, Russia, Iran and Egypt, are inflaming Sudan’s conflict. They have deployed drones, munitions and mercenaries. They also patronize the smuggling of resources. This scramble for influence risks Sudan fragmenting into a collection of client states, sidelining civilian voices and popular sovereignty.
Climate change has increased African food insecurity
Over 11.5 million Sudanese have been internally displaced, and more 2.3 million have fled the country since the civil war began in April 2023. Food shortages are estimated to be killing hundreds of people daily. An estimated three million people are facing acute food insecurity.
Experts point out that droughts and floods are a key reason for increased conflict. Climate change means that places lack rain for longer periods or get too much rain in too short a time. This means the land is less productive, even as populations rise. This explosive combination has led people to fight over water, pastures and land.
In 2024, an estimated 163 million Africans suffered from acute food insecurity, over 10% of the continent’s population. This figure is nearly triple that of five years ago. Many of these Africans are crossing the Mediterranean Sea to get to Europe.
Lee Kuan Yew, the late Singaporean statesman, once warned that if Europe did not export prosperity south, Africa would export people north. That is exactly what is happening.
[Anton Schauble and Lee Thompson-Kolar edited this piece.]
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
” post-content-short=” [On December 31, 2024, we predicted seven developments for 2025 and boldly went where only fools, angels and astrologers dare to go. So, what can we expect in 2025? To borrow words from the military, a more volatile, uncertain, complex and ambiguous (VUCA) world. This is Part 6 of a seven-part…” post_summery=”In 2024, an estimated 163 million Africans suffered from acute food insecurity, over 10% of the continent’s population. This figure is nearly triple that of five years ago. Many of these Africans are crossing the Mediterranean Sea to get to Europe.” post-date=”Feb 06, 2025″ post-title=”FO° Exclusive: Unstable Africa Drives Refugees North” slug-data=”fo-exclusive-unstable-africa-drives-refugees-north”>
FO° Exclusive: Unstable Africa Drives Refugees North
[On December 31, 2024, we predicted seven developments for 2025 and boldly went where only fools, angels and astrologers dare to go. So, what can we expect in 2025? To borrow words from the military, a more volatile, uncertain, complex and ambiguous (VUCA) world. This is Part 5 of a seven-part series. You can read Part 1, Part 2, Part 3 and Part 4 here.]
Former CIA officer Glenn Carle and Fair Observer Editor-in-Chief Atul Singh disagree on the global economy. Carle thinks the global economy will muddle through, while Singh thinks there is trouble ahead.
Global growth is promising but debt is rising
Carle takes confidence from official growth figures. The Organization for Economic Co-operation and Development (OECD) estimates global growth will be 3.3% in 2025. The US economy is projected to grow at 2.5%, the EU about 1%, China 4.8% and India 6%. These figures are relatively healthy and the global economy should be able to weather the shock of tariffs imposed by US President Donald Trump.
Singh sees record global debt — $323 billion as of December 3, 2024 — as well as protectionism and currency wars as big risks. Sovereign debt will continue to rise, increasing default risk. Both the German and French governments fell because political leaders could not agree upon a budget. Europeans will not accept cuts to their welfare states in order to save the money for Ukraine.
The dollar: a depreciating global reserve currency?
In Asia, China’s real estate bubble has burst. Rising labor costs weakened its export-led strategy, which faltered under the Covid-19 pandemic. Since 1978, China has industrialized at the cost not only of the West but also emerging economies like India and Brazil. It is betting on a new wave of industrialization in critical technologies like solar panels and batteries. State support for Chinese companies is common and well known. This is tempting many countries worldwide to raise tariffs, provoking retaliation and exacerbating inflation.
Donald Trump wants to weaken the dollar, yet simultaneously retain its status as the world’s reserve currency. He is inspired by former US President Richard Nixon’s abandonment of the gold standard in 1973 after the Vietnam War. Despite this abandonment, the dollar continued to be the global reserve currency. According to our Republican sources, there is no serious threat to the dollar given current economic crises in both China and the EU. Therefore, they are confident that the US dollar will continue to be the global reserve currency even after depreciation.
Trump’s tariffs and weakening currencies may cause turbulence
Economists at top investment banks believe that the Trump administration may also use tariffs as a tool to support depreciation, pointing to the 1985 Plaza Accord. In those Cold War days, allies with a trade surplus — France, West Germany, Japan and the UK — agreed with the US to depreciate the dollar. Our sources in the incoming Trump administration indirectly indicate that some of their colleagues are determined to bring back manufacturing to the US and see depreciation as a key policy measure.
Other countries are anticipating Trump tariffs and dollar depreciation. The Swiss National Bank, the European Central Bank and the Bank of Canada have already cut interest rates, weakening their currencies. Others are planning to follow suit. However, if all major trading countries try to weaken their currencies simultaneously, none may gain from more competitive exports, but all could experience heightened exchange rate volatility.
![""]("https://www.fairobserver.com/wp-content/uploads/2025/02/Screenshot-6.png")
Change in currency value vs US dollar, January 3, 2023 – December 16, 2024. Via FOI.
Singh believes that the chances of a black swan event have increased because the structural economic and political problems are not going away. So, fasten your seatbelts and expect turbulence ahead.
[Anton Schauble and Lee Thompson-Kolar edited this piece.]
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
” post-content-short=” [On December 31, 2024, we predicted seven developments for 2025 and boldly went where only fools, angels and astrologers dare to go. So, what can we expect in 2025? To borrow words from the military, a more volatile, uncertain, complex and ambiguous (VUCA) world. This is Part 5 of a seven-part…” post_summery=”Glenn Carle and Atul Singh disagree on the global economy. Carle believes it will muddle through with healthy growth, while Singh warns of risks from global debt, protectionism and currency wars. Tariffs, currency depreciation and China’s economic struggles could lead to volatility and potential crises in 2025.” post-date=”Feb 04, 2025″ post-title=”FO° Exclusive: Will the Global Economy Muddle Along, or Is There Trouble Ahead?” slug-data=”fo-exclusive-will-the-global-economy-muddle-along-or-is-there-trouble-ahead”>
FO° Exclusive: Will the Global Economy Muddle Along, or Is There Trouble Ahead?
[On December 31, 2024, we predicted seven developments for 2025 and boldly went where only fools, angels and astrologers dare to go. So, what can we expect in 2025? To borrow words from the military, a more volatile, uncertain, complex and ambiguous (VUCA) world. This is Part 4 of a seven-part series. You can read Part 1, Part 2 and Part 3 here.]
Russia and Ukraine have been at war since February 24, 2022. Casualties have mounted, and economies are under strain. Russia has been slowly but relentlessly gaining Ukrainian territory in a battle of attrition. Western support for Ukraine has been wavering. Neither France nor Germany has a budget for 2025 partly because of political disagreements over Ukraine.
US President Donald Trump’s reelection changes the equation as well. He will not support Ukraine as strongly as his predecessor Joe Biden did. So, there will be pressure on Ukraine to sue for peace.
Can Russia sustain the war?
Former CIA officer Glenn Carle and Fair Observer Editor-in-Chief Atul Singh disagree on their reading of Russia. The former sees the Russian economy as under strain. Russian foreign exchange reserves are decreasing and inflationary pressures are increasing. The country has overinvested in the military and other sectors are suffering. The ruble is tumbling. Carle estimates that Russia cannot prosecute the war forever.
Singh takes a different view. He points out that, while prices are rising, so are wages. Ironically, Western sanctions have benefited Russia by preventing capital flight. Money is no longer flowing out to buy yachts in Monaco or football clubs in London. Now, the capital stays home, creating a domestic multiplier effect. Sanctions have also forced Russia to reindustrialize. Besides, GDP figures can be deceptive. Western countries with higher GDP have a smaller manufacturing base than Russia’s. Also, sanctions have not entirely worked because developing country purchases have replaced European demand for Russian fossil fuels.
Ukraine and Europe’s strength are low
Given Russia’s size and resources, it can take greater pain than Ukraine. Ukraine’s economy has cratered, shrinking by as much as 30% according to some estimates. Ukrainian men have fled the country at higher rates than their Russian counterparts. Ukraine is simply running out of cash and men.
Unsurprisingly, Europe is losing its nerve. The German far-left and far-right both want the war to end and blame it — along with American protectionism — for deindustrializing their country. Traditionally, Germany has been a high-tech manufacturing powerhouse. Now, it is in crisis. So is France and so are many other European countries. Given these trends, Singh believes that some sort of peace or ceasefire deal should occur by the end of the year.
[Anton Schauble and Lee Thompson-Kolar edited this piece.]
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
” post-content-short=” [On December 31, 2024, we predicted seven developments for 2025 and boldly went where only fools, angels and astrologers dare to go. So, what can we expect in 2025? To borrow words from the military, a more volatile, uncertain, complex and ambiguous (VUCA) world. This is Part 4 of a seven-part…” post_summery=”Russia and Ukraine will probably reach a peace or ceasefire deal this year as Ukraine’s economy continues to struggle, Western support wanes and Europe loses resolve. Despite Russia’s economic challenges, sanctions have ironically strengthened domestic investment in industry, while Ukraine faces severe economic and manpower shortages.” post-date=”Feb 02, 2025″ post-title=”FO° Exclusive: The Russia–Ukraine War Could End” slug-data=”fo-exclusive-the-russia-ukraine-war-could-end”>
FO° Exclusive: The Russia–Ukraine War Could End
[On December 31, 2024, we predicted seven developments for 2025 and boldly went where only fools, angels and astrologers dare to go. So, what can we expect in 2025? To borrow words from the military, a more volatile, uncertain, complex and ambiguous (VUCA) world. This is Part 3 of a seven-part series. You can read Part 1 and Part 2 here.]
Israel has emerged as the big winner in the latest Middle Eastern conflict. The Israeli Defense Forces (IDF) have weakened Hamas. In Lebanon, the IDF decapitated Hezbollah and destroyed the Shia militant group’s assets. In Syria, Sunni rebels have seized Damascus, and Baathist dictator Bashar al-Assad has fled to Moscow. During the upheaval in Syria, the IDF seized all of the Golan Heights. It also destroyed the country’s entire air force, almost all of its navy and most of its other military assets.
Sunnis reclaimed Damascus, ending Assad’s reign
Previously, Syria was a key Iranian ally and fought many wars against Israel. The Assad family belonged to the country’s Alawite minority, which follows a form of Shia Islam. Now that Assad is gone, Iran stands weakened and cut off by land from its allies in Lebanon. So, the threat to Israel is greatly diminished. Turkey is back in the fray, though, and its influence has risen.
The Ottoman sultan was the caliph of all Sunni Muslims until the empire ended in the aftermath of World War I. Now, the fabled Umayyad Mosque in Damascus is back in Sunni hands. In the long run, a Salafist Syria might be a bigger threat to Israel than an Alawite one. By the time Assad fell, his regime had a very narrow social base, commanding only the loyalty of the Alawite elite. The majority of the Syrian population had turned against the Assad regime, which explains its rapid fall.
Jolani took charge in Syria
Now, Ahmed Hussein al-Sharaa is in charge. He is better known by his nom de guerre Abu Mohammad al-Jolani. Backed by Turkey and some Gulf countries, Jolani has engineered an image makeover and is projecting himself as a moderate. Yet it is important to note that he was an associate of Abu Bakr al-Baghdadi and a formidable al-Qaeda operative. The US State Department long had a bounty of $10 million on his head. Already, his men are telling women to cover their heads. If Jolani manages to consolidate power and create a majoritarian state backed by other Sunni powers, that might cause Israel a greater headache than its erstwhile Shia foes.
Note that the 1916 Sykes–Picot order is dead. The nation state experiment in the Middle East has failed. Tribalism and sectarianism are ascendant. Keeping Syria or Iraq or any of the states in the region united and functional will become harder.
The winners are clear
In the meantime, the Kurds and Palestinians remain the losers of history. No great or regional power really backs them. In the case of Palestinians, every power in the region gives them lip service, but none of these Muslim states is willing to fight for them.
In 2025, conflict in the Middle East will diminish because it has clear winners. Israel now has the upper hand against its enemies, especially Iran. For the time being, the great powers are standing by and avoiding involvement in the region.
[Anton Schauble and Lee Thompson-Kolar edited this piece.]
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
” post-content-short=” [On December 31, 2024, we predicted seven developments for 2025 and boldly went where only fools, angels and astrologers dare to go. So, what can we expect in 2025? To borrow words from the military, a more volatile, uncertain, complex and ambiguous (VUCA) world. This is Part 3 of a seven-part…” post_summery=”In 2025, conflict in the Middle East will diminish because it has clear winners. Israel now has the upper hand against its enemies, especially Iran. For the time being, the great powers are standing by and avoiding involvement in the region.” post-date=”Jan 30, 2025″ post-title=”FO° Exclusive: The Turbulent Middle East Will Cool Down a Bit” slug-data=”fo-exclusive-the-turbulent-middle-east-will-cool-down-a-bit”>
FO° Exclusive: The Turbulent Middle East Will Cool Down a Bit
[On December 31, 2024, we predicted seven developments for 2025 and boldly went where only fools, angels and astrologers dare to go. So, what can we expect in 2025? To borrow words from the military, a more volatile, uncertain, complex and ambiguous (VUCA) world. This is Part 2 of a seven-part series. You can read Part 1 here.]
In just the next decade — even the next five years — AI will be performing most tasks better than humans. It will also be more efficient. The shocking question our societies must answer now appears to be, “Who will be the master, AI or humans?” Even the profoundly cautious National Intelligence Council warns that AI may pose “existential threats … that could damage life on a global scale” and that “require the development of resilient strategies to survive.”
AI will eliminate jobs and concentrate wealth
For the first time in ten thousand years of civilization, humanity faces an entity that will disrupt us, may control us and could even threaten our existence. Even if AI does not take over humanity, its impact on global employment, for both white- and blue-collar workers, could well disrupt societies and traditional ways of life.
In a poll of AI experts, 18% were excited at near-term prospects, 42% were equally excited and concerned and 37% were more concerned than excited about the changes in the “humans-plus-tech” evolution they expect to see by 2035. Numerous studies estimate that AI will eliminate the need for anywhere from seven to 48% of all jobs within 15 years. Kai-Fu Lee, one of the world’s leading experts on the subject, estimates that AI will eliminate the need for about 38% of all jobs by the early 2030s.
AI will also concentrate wealth in the few corporations and countries that have the financial and technical resources to develop and exploit this technology. Large AI firms in the US like Meta, Google and Microsoft will emerge as winners. So will Chinese companies like Tencent, Alibaba and Baidu.
Experts note, too, that wealth distribution will become even more unequal, with the top 1% of the population reaping most of the profits. Much of the rest of humanity will be in danger of losing its livelihoods. The US and China together are likely to capture 70% of the over $15 trillion that AI is estimated to add to the global economy by 2030.
The US and China will race to Mars
In addition to an AI race, a new space race is also underway. Both the US and China are racing to go to Mars. The former expects to get there by 2027–2028, while the latter is planning for 2028. Space is becoming increasingly militarized as well. Surveillance satellites, missile defense and anti-satellite technologies are increasingly important.
Governments and private players will invest an estimated $1 trillion in the space sector. SpaceX is developing a fully reusable, two-stage super heavy-lift launch vehicle called Starship. At 122 meters (equivalent to a 35-story building), Starship can currently carry 90 metric tons and will soon double that. SpaceX has launched Starship six times and plans 100–400 launches annually within one to three years.
Renewable energy will rise
A third technological race is on in the renewable energy industry. The majority of solar panels and batteries currently come from China. Electric vehicles (EVs) in China cost a third less than in Europe and the US. China subsidizes EVs handsomely. Furthermore, the Chinese EV industry has technological and production advantages over its competitors.
Global EV sales are projected to grow by 30% in 2025 and reach 15.1 million. In 2024, 11.6 million EVs were sold. They comprise 13.2% of total vehicle sales. This market share is estimated to grow year-on-year despite the Trump administration’s lack of enthusiasm for EVs.
Demand for electricity is rising significantly. Increasingly, renewables are supplying this electricity. In 2025, renewables will surpass coal to become the largest source of electricity for the first time in history.
[Anton Schauble and Lee Thompson-Kolar edited this piece.]
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
” post-content-short=” [On December 31, 2024, we predicted seven developments for 2025 and boldly went where only fools, angels and astrologers dare to go. So, what can we expect in 2025? To borrow words from the military, a more volatile, uncertain, complex and ambiguous (VUCA) world. This is Part 2 of a seven-part…” post_summery=”Within a few years, AI will outperform humans, disrupt jobs and concentrate wealth, sparking existential concerns. Meanwhile, the US and China will race to Mars, and space will be increasingly militarized. Renewable energy will surpass coal, and new advancements in EVs and solar technology will reshape the globe.” post-date=”Jan 28, 2025″ post-title=”FO° Exclusive: The New Science and Technology Race Is Heating Up” slug-data=”fo-exclusive-the-new-science-and-technology-race-is-heating-up”>
FO° Exclusive: The New Science and Technology Race Is Heating Up
[On December 31, 2024, we predicted seven developments for 2025 and boldly went where only fools, angels and astrologers dare to go. So, what can we expect in 2025? To borrow words from the military, a more volatile, uncertain, complex and ambiguous (VUCA) world. This is Part 1 of a seven-part series.]
US President Donald Trump won the election by promising more secure borders and higher tariffs. Now that he is in office, he will clamp down on immigration. Trump and his team believe in protectionism and isolationism. The underlying idea is to bring back manufacturing jobs to the US. So, expect higher tariffs. Lower immigration is likely to lead to economic harm. Tighter labor markets, higher costs for businesses and increased inflation are likely to follow.
Republican divide on immigration
As an issue, immigration has created a divide within Trump’s camp. The trigger was his selection of Sriram Krishnan as senior adviser for AI in his administration. Krishnan is a Tamil Brahmin (Tam Brahm) who was born in India. He did his undergrad at SRM Institute of Science and Technology (SRMIST) and is a general partner of American venture capital firm Andreessen Horowitz. This high-achieving Tam Brahm heads the firm’s London office and is pals with both former British Prime Minister Boris Johnson and Tesla and X CEO Elon Musk.
Krishnan’s appointment led to a backlash from the Make America Great Again (MAGA) base. Laura Loomer, a MAGA political activist and Internet personality, took issue with it. Vivek Ramaswamy and Musk, the two co-chairs of the newly proposed Department of Government Efficiency (DOGE) rode out to Krishnan’s defense. So did former PayPal executive David Sacks, whom Trump has tapped to be White House AI and cryptocurrency tsar. The war of words played out on X, the new bastion of free speech.
The MAGA crowd argues that the tech industry imports Indian workers because they are cheap. These Indians put downward pressure on American wages. Trump’s finance and tech bros, on the other hand, argue that there are not enough Americans to do tech jobs and thus the tech industry needs to bring in foreign workers. This controversy will continue to divide Trump’s camp in the months ahead.
The US will isolate itself
Trump’s tariffs will accelerate the creation of two contending economic systems. Such a situation existed during the Cold War, but since the collapse of the Soviet Union, the global economy has become more integrated than ever. However, the American and Chinese economies have now grown increasingly separate from each other. This trend will accelerate.
Importantly, US global leadership will weaken. Trump will pursue unilateralist, isolationist and contentious policies. So, we will see increased fraying of international norms and weakening of US alliances in Europe, the Middle East and Asia.
[Anton Schauble and Lee Thompson-Kolar edited this piece.]
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
” post-content-short=” [On December 31, 2024, we predicted seven developments for 2025 and boldly went where only fools, angels and astrologers dare to go. So, what can we expect in 2025? To borrow words from the military, a more volatile, uncertain, complex and ambiguous (VUCA) world. This is Part 1 of a seven-part…” post_summery=”Now that US President Donald Trump has returned to office, he will implement protectionist policies, raising tariffs and limiting immigration. In the next four years, the US will increasingly isolate itself and abdicate global leadership, and the US and China will divide the world up into two increasingly separate economies.” post-date=”Jan 26, 2025″ post-title=”FO° Exclusive: A Turbulent Donald Trump Second Presidency” slug-data=”fo-exclusive-a-turbulent-donald-trump-second-presidency”>
FO° Exclusive: A Turbulent Donald Trump Second Presidency
The recent passing of former US President Jimmy Carter on December 29, 2024, has prompted widespread praise for his post-presidency humanitarian work. His efforts have rightfully earned him recognition as a peacemaker and global advocate for human rights. Carter’s efforts after leaving office earned him the Nobel Peace Prize in 2002. Democrats and Republicans alike have lauded them.
However, this acclaim should not obscure Carter’s presidency itself. Despite Carter’s declaredly moral stance, his administration was marred by contradictory foreign policy decisions.
Carter’s successes in and out of office
Carter’s presidency did have several positive achievements. His human rights policies resulted in the release of political prisoners in several countries. His administration pushed for nuclear arms control, notably through the Strategic Arms Limitation Talks II (SALT II) treaty; although it was never ratified by the Senate, it represented a significant step in reducing the threat of nuclear war. Carter also worked to improve relations with China, successfully negotiated the Panama Canal Treaty of 1977 and avoided military conflict during the Iranian hostage crisis. Considering the tensions of the period, the latter was a remarkable feat. In 1978, he helped broker the Camp David Accords between Egypt and Israel.
After leaving the White House in 1981, Carter embarked on a path of active diplomacy, engaging in peace talks and humanitarian projects around the world. He facilitated efforts to eradicate the horrific Guinea worm disease in West Africa and spoke out against human rights violations wherever they occurred. His efforts to build affordable housing through Habitat for Humanity also demonstrated his long-standing commitment to social justice. This post-presidential work remains a cornerstone of his public legacy.
Carter’s moral compromises as president
Despite his achievements, Carter’s actions abroad during his presidency present a stark contrast to the ideals he later championed. His tenure from 1977 to 1981 was defined by a series of decisions that, though well-intentioned, often contradicted the principles of peace, international law and human rights.
Despite his moral rhetoric, his administration engaged in policies that enabled authoritarian governments and military dictatorships. Carter’s decision to increase military aid to Indonesia in 1977, for instance, is a glaring contradiction. Indonesia had invaded and annexed East Timor, and the Indonesian military was responsible for numerous human rights atrocities. Under Carter, US military aid to the Indonesian regime increased by 80%, with the provision of OV-10 Bronco counterinsurgency aircraft that killed tens of thousands of East Timorese civilians.
Similarly, Carter’s support for Morocco’s illegal annexation of Western Sahara and his efforts to restore military aid to Turkey after its 1974 invasion of the Republic of Cyprus stand out as decisions that were in direct defiance of international law and United Nations resolutions.
In addition to supporting authoritarian regimes, Carter’s administration failed to act on numerous human rights abuses happening around the world. One notable example is his administration’s stance on apartheid-era South Africa. Despite public condemnation of the regime’s racial policies, Carter vetoed multiple UN resolutions that sought to impose sanctions on the apartheid government. This failure to take meaningful action against South Africa’s occupation of Namibia and its apartheid system was a significant shortcoming of Carter’s foreign policy. It was only after Ronald Reagan succeeded Carter that the US government shifted to a more robust stance against apartheid. The move gained broad bipartisan support in Congress.
Carter’s handling of the Palestine issue further exemplifies the tension between his stated principles and his actual policies. Although he publicly supported the idea of a Palestinian homeland, he failed to openly support an independent Palestinian state and refused to even meet with Palestinian leaders. He failed to pressure Israel to stop expanding illegal settlements in the occupied West Bank, even after the Israeli government violated the terms of the Camp David Accords.
Instead, Carter’s administration dramatically increased military aid to Israeli Prime Minister Menachem Begin’s right-wing government. He dismissed calls for stronger action against Israeli occupation. In a particularly controversial move, Carter fired his ambassador to the UN, former Congressman and Civil Rights leader Andrew Young, after Young met with a Palestinian representative at the UN.
Carter’s policy toward Central America also reveals a troubling disregard for human rights. In El Salvador, the military junta waged a brutal campaign against leftist insurgents and civilians. Carter continued to provide military aid to the Salvadoran government despite widespread reports of human rights violations, including the assassination of Archbishop Oscar Romero. Carter’s failure to recognize the severity of the situation and his continued support for the Salvadoran regime drew sharp criticism from human rights advocates.
Carter also authorized military aid to General Mohammad Zia-ul-Haq in Pakistan, King Fahd in Saudi Arabia and Ferdinand Marcos in the Philippines. Moreover, Carter’s covert support for the mujahideen in Afghanistan, designed to counter Soviet influence, contributed to the rise of Islamist extremism and laid the groundwork for decades of instability in the region.
As we reflect on his legacy, we should remember both the shortcomings of Carter’s presidency and the extraordinary contributions he made to global peace and justice in his later years.
[Lee Thompson-Kolar edited this piece.]
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
” post-content-short=” The recent passing of former US President Jimmy Carter on December 29, 2024, has prompted widespread praise for his post-presidency humanitarian work. His efforts have rightfully earned him recognition as a peacemaker and global advocate for human rights. Carter’s efforts after leaving office…” post_summery=”US President Jimmy Carter’s recent passing has led many to reflect on his administration and praise his post-presidential humanitarian work. Carter earned the Nobel Peace Prize for his post-presidency work, but while in office, he was no peacemaker. Carter’s foreign policy compromised his morals, supported autocratic regimes and failed to combat human rights violations.” post-date=”Jan 17, 2025″ post-title=”FO° Talks: Was the Great Jimmy Carter Really a Peacemaker?” slug-data=”fo-talks-was-the-great-jimmy-carter-really-a-peacemaker”>
FO° Talks: Was the Great Jimmy Carter Really a Peacemaker?
The EU is going through a period of serious political, economic and social crisis. Governments are falling, growth is stalling, and divisions are deepening. Like in the US, polarization has risen in Europe. The established parties have failed to meet people’s expectations, and the far right is on the rise. Over the last two and a half years, the Russia–Ukraine War has unleashed inflation and caused great economic pain. This has exacerbated social and political divides, making many countries in the EU almost ungovernable.
The German traffic light coalition government of the Social Democrats, Free Democrats and Greens (respectively red, yellow and green) has fallen. So has the French minority government led by Michel Barnier of Les Republicains. Now, neither France nor Germany has a government or a budget. Note this has not happened before.
Social divisions and political polarization
Germany and France are the two beating hearts of the EU. They created the EU and still drive it. With both in political limbo, the EU is lost.
Internally, both these countries are no longer homogenous or cohesive anymore. They have experienced unprecedented levels of immigration. This has created problems of assimilation since, unlike the US, Europe does not have a tradition of mass immigration. In Germany and France, immigrants form a greater percentage of the population in the US. Furthermore, Muslim immigrants in these countries tend to be more conservative than the local population or even their relatives back home. For example, German Turks voted for Recep Tayyip Erdoğan in much higher percentages than in Turkey. Many Muslim women also tend to wear headscarves in societies where sunbathing nude or topless is no longer a big deal.
Most people find change uncomfortable. Europeans are no exception. People do not like the way their communities are changing so rapidly. They may not be racist, but they want to retain their character. The French want to remain French and the Germans want to preserve their Germanness. Yet the political correctness that blights expression in the US also censors conversations in Europe. If someone is uncomfortable with headscarves or Turks voting for Erdoğan, she or he is denounced as a racist and an Islamophobe. People find such denunciation deeply alienating and often turn to the far right in revolt.
European economies are in big trouble
Economically, European countries are in trouble. They have huge debts, high deficits, slow productivity growth and low birth rates. There is no way Greece or Italy can pay back all their debts. Furthermore, the Russia–Ukraine War has increased energy prices, weakened industry and unleashed inflation in the economy. People are hurting. Naturally, they do not want to keep paying for a war with no end in sight.
In contrast, European elites have committed themselves to Ukraine’s defense. So, they want to keep spending on the war even as they seek budget cuts elsewhere. Naturally, legislators are unable to agree upon the cuts and governments are falling. At the moment, no resolution to the budget crisis in either Berlin and Paris is in sight.
The euro is not the world’s reserve currency. That privilege belongs to the dollar; so, unlike the US, Europe cannot print money to finance its deficits and prosecute endless war. So, Germany, France and the EU find themselves in a bind; their monetary and fiscal options are limited.
Europe has other problems too. Europe needs to increase the flexibility of its labor markets. Given an aging population, this can only happen with immigration and less rigid labor laws. The oppressive regulatory state is throttling growth and needs urgent reform. None other than German Chancellor Olaf Scholz has called for a war on red tape despite his socialist roots. European countries also have to reform and even shrink the welfare state. Only British Prime Minister Margaret Thatcher ever really achieved that in the last 50 years in Europe.
European economies have also suffered from external shocks. Chinese demand has declined and the US has taken a protectionist turn under both Republican and Democratic administrations. This protectionism will only increase once Donald Trump takes charge of the White House in January.
At a time of such upheaval, European political culture is in total flux. The traditional left and right are dead in France. They have been replaced by a constellation of pro-business centrists, the far right and a hodgepodge combination of leftist groups. German politics is also fragmenting, and the rise of the far-right Alternative für Deutschland (AfD) shows the degree of disaffection with the status quo in a country still haunted by Adolf Hitler. Something was not right in the state of Denmark and some things are certainly not hunky dory in Europe today. A full-blown crisis is now underway.
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
” post-content-short=” The EU is going through a period of serious political, economic and social crisis. Governments are falling, growth is stalling, and divisions are deepening. Like in the US, polarization has risen in Europe. The established parties have failed to meet people’s expectations, and the far right is…” post_summery=”The EU is in a crisis. Many countries have high debt and societies are polarized, causing increased political instability. Immigration has created new religious and racial divides. The Russia–Ukraine War has unleashed high inflation and deepened divides. With France and Germany without budgets and governments, the EU is in uncharted waters.” post-date=”Dec 09, 2024″ post-title=”FO° Exclusive: Why is the EU in Crisis? What Lies Ahead?” slug-data=”fo-exclusive-why-is-the-eu-in-crisis-what-lies-ahead”>
FO° Exclusive: Why is the EU in Crisis? What Lies Ahead?
In the 2024 US presidential election, Donald Trump won more decisively than he did in 2016. His victory reflects several deep issues within American society and politics, many of which have been building for years. The rise of Trump, and the success of his campaign, can be understood in the context of several major factors, including culture wars, economic pain, social media and foreign challenges. These dynamics have created deep divisions within American society that helped fuel Trump’s victory.
Identity politics and culture wars
One important factor in Trump’s success is the growing resentment among many Americans towards “woke” language policing. This refers to the effort to change language to be more inclusive, such as the use of terms like “Latinx,” a gender-neutral alternative to “Latino.” However, Latinos detest the term. Spanish is a gendered language where even tables and chairs are assigned a gender. So, “Latinx” came across as gringo imperialism to many of them and a majority (54%) of Latino men voted for Trump.
Many Americans, including progressives, find this focus on language divisive and unnecessary. For example, in Boston, one can hear complaints that the word “jimmies” (a term for chocolate sprinkles) is racist because it supposedly derives from “Jim Crow,” a discriminatory system of laws from the years of segregation. This kind of language policing is part of the culture wars and has alienated millions of Americans from the Democratic Party. Democrat social justice warriors do not realize the extent of the backlash language policing has caused, especially among socially conservative minorities.
The fixation on trans issues and the insistence that trans women are women is unacceptable to many Americans. Democrats have obsessed over trans issues as part of their social justice agenda. Allowing this tiny group to suck the oxygen in the room has alienated millions struggling to put food on their table.
Economic and social concerns, media and technology
Trump also won because discontent among working-class Americans is running extremely high. Many Americans, including recent immigrants, fear that immigration is driving down wages and increasing competition for jobs. Although inflation has decreased, food prices have continue to rise faster than real wages. This has led to greater economic frustration. High prices for childcare, healthcare, education, housing and housing insurance also weigh heavily on many Americans, creating acute financial insecurity.
This economic anxiety is compounded by a sense that the political system is out of touch with ordinary people. The Democratic Party is run by a managerial elite with few working-class leaders. Furthermore, Democrats have been trying to run with the hares and hunt with the hounds. With war in the Middle East, when Democrats please Arabs in Detroit, they upset Jews in Philadelphia.
Working-class whites, especially in states like Pennsylvania and Ohio, feel alienated. These voters have felt neglected by the Democratic Party’s shift towards identity politics and social justice. The Democrats rarely speak about the bread-and-butter issues faced by the working class. For this reason, they support Trump, who has championed issues like tariffs and border control. Both will put upward pressure on wages even if they cause a rise in prices.
Trump’s victory is also tied to changes in the media landscape. With the rise of 24-hour cable TV, social media and smartphones, Americans have been able to isolate themselves. Thanks to algorithms that create filter bubbles and echo chambers, most voters only consume information that reinforces their beliefs. They rarely engage with diverse viewpoints and have come to distrust mainstream media, which has become increasingly partisan over the years.
Furthermore, Russia’s efforts to spread disinformation, starting from the 2016 election, have succeeded. They have created an environment of distrust in the US. While Russia does not necessarily want Americans to support Trump, it certainly seeks to sow chaos and weaken confidence in American institutions.
America’s individualistic culture also plays a role. In the US, anyone’s opinion can be as valued as that of a leader or expert, making it easier for misinformation to spread unchecked. The combination of social media and distrust in the media has made it easier for Trump to connect with voters who feel left behind by the political establishment.
Globalization and social disruption
Globalization and demographic changes have also fueled divisions in American society. As immigration increases and the country becomes more diverse, new social tensions arise. A family of conservative Muslims probably does not appreciate the emphasis on LGBTQ+ issues, and they may turn away from the Democrats even if they detest Trump. So might many Latinos who are deeply Christian and oppose abortion.
The rise of global powers like China has added to these tensions. Many Americans are worried about the loss of manufacturing jobs to China and other countries. Trump’s promises to bring back jobs through tariffs have resonated with many working-class voters. While many experts argue that tariffs will increase inflation, these voters seem simply not to believe them, or else they feel that is a price worth paying.
Many Americans are also tired of increasing red tape. Under Trump’s leadership, the Republican party has focused on dismantling the so-called “administrative state” — the vast network of government agencies and regulations. Trump’s supporters believe that reducing the size of government will limit the power of elites and unleash a “sonic boom” in the economy.
Ideologues like Glover Glenn Norquist have long argued that the American state needs to shrink. The Trump team buys into this argument. It also belongs to the isolationist strand of American politics and wants a quid pro quo approach to foreign policy. The new policymakers do not believe in multilateralism, rules that act as fetters on the US, or in the need for allies or institutions such as NATO or even the World Trade Organization. America First is all about championing national interests boldly and unashamedly. This puts into question the rules-based order the US has championed since 1945.
The 2024 election reveals deep divisions in American society. Trump’s new picks reveal a drift to authoritarianism. The US faces choppy waters ahead.
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
” post-content-short=” In the 2024 US presidential election, Donald Trump won more decisively than he did in 2016. His victory reflects several deep issues within American society and politics, many of which have been building for years. The rise of Trump, and the success of his campaign, can be understood in the…” post_summery=”Donald Trump won the 2024 US presidential election because Americans are tired of political elites and feel economically insecure. His campaign tapped into dissatisfaction with cultural issues like “woke” language and concerns over jobs, inflation and immigration. These frustrations, amplified by media fragmentation and global challenges, made his message resonate even more strongly than in 2016.” post-date=”Dec 07, 2024″ post-title=”FO° Exclusive: Why Donald Trump Won Again and What Happens Now” slug-data=”fo-exclusive-why-donald-trump-won-again-and-what-happens-now”>
FO° Exclusive: Why Donald Trump Won Again and What Happens Now
Since the global financial crisis of 2007–2009, the UK economy has faced severe challenges. These issues worsened with Brexit in 2016, which sparked significant political and economic instability. The COVID-19 pandemic further strained resources, leaving the British economy weakened and in need of strong fiscal direction. In recent years, political deadlock made it difficult for any administration to address these issues effectively, leading to a decline in public investment and economic growth.
Labour’s Chancellor of the Exchequer, Rachel Reeves, is now taking action. On October 30, she introduced a post-Brexit budget aimed at tackling Britain’s structural deficits while fostering economic growth. Reeves’s goal is to put the UK back on a steady financial path by raising revenues and directing funds toward essential services and infrastructure. Her budget includes £40 billion ($52 billion) in new tax measures alongside targeted investments.
The budget reflects two competing priorities: increasing growth by stimulating investment and balancing government finances. The UK has been operating with persistent deficits, and the outgoing Conservative government left Labour with a £22 billion ($28 billion) overspend, adding pressure to address the country’s long-standing issues.
Key budget measures
Reeves’s budget introduces a series of tax increases aimed at generating revenue to meet Britain’s immediate fiscal needs. The UK Treasury collects roughly £800 billion ($1 trillion) annually, but economists estimate an additional £20-30 billion ($26-39 billion) is required to achieve a stable economy. Reeves’s budget takes steps to bridge this gap.
Significant tax changes include:
- National insurance contributions: Employers will see increased rates starting in April 2025.
- Capital gains tax: The lower rate will increase from 10% to 18%, while the higher rate moves from 20% to 24%.
- Private school fees: VAT will apply from January 2025, and these schools will lose business rates relief from April 2025.
- Stamp duty land surcharge: The rate on second homes will increase from 2% to 5%.
- Employment allowance: Relief for smaller companies will increase from £5,000 ($6,400) to £10,500 ($13,500)
- Private equity taxation: Tax on managers’ profit shares will rise from 28% to 32%.
- Corporate tax rate: The main rate will stay at 25% for businesses with profits over £250,000 ($320,000) until the next election.
On the spending side, Reeves allocated £22.6 billion ($29.1 billion) to the healthcare sector and £5 billion ($6.4 billion) to housing investment. She also secured funding to extend the High Speed 2 (HS2) railway to London Euston, enhancing transport connectivity across the country. This investment aims to promote growth by addressing years of underinvestment in essential infrastructure.
Will it work?
Britain’s budget deficit and low investment levels echo the issues faced across Europe, with the EU also struggling to maintain competitiveness. According to Mario Draghi’s recent report to the European Commission, the EU’s investment rate of 22% of GDP is insufficient for sustainable growth. The UK has an even lower investment rate, barely surpassing 20% over the past 50 years, often ranking lowest in the G7.
British Prime Minister Keir Starmer has responded to this investment gap by prioritizing wealth creation. Speaking at an international summit, Starmer emphasized the need to attract private investment to support industries where the UK has a competitive edge, such as creative services, legal and accounting sectors and luxury manufacturing. Starmer has appointed an entrepreneur as investment minister to ease business relations and streamline regulation. However, some business leaders are wary of the government’s new interventionist policies and increased payroll costs. Executives of listed companies have been selling shares at double the rate seen before Labour took office, reflecting concerns over rising wages, expanded employee rights, and growing administrative burdens.
The UK’s attempts to balance its welfare state with economic growth will serve as a test case for other European economies facing similar post-globalization challenges. While the United States benefits from cheap energy and a flexible labor market, European countries, including the UK, must find ways to compete on the global stage with limited resources. How Britain navigates this delicate balance will be closely watched across Europe. If successful, Reeves’s budget could provide a framework for European governments to address similar structural issues, particularly as the EU faces its own struggles to adapt to global economic shifts.
[Anton Schauble wrote the first draft of this piece.]
The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
” post-content-short=” Since the global financial crisis of 2007–2009, the UK economy has faced severe challenges. These issues worsened with Brexit in 2016, which sparked significant political and economic instability. The COVID-19 pandemic further strained resources, leaving the British economy weakened and in need…” post_summery=”British Chancellor of the Exchequer Rachel Reeves has introduced a £40 billion tax increase and spending plan to address the UK’s economic struggles post-Brexit. Reeves’s budget aims to stabilize public finances while promoting growth, raising taxes on businesses, capital gains and private school fees. This shift could influence similar economic policies across Europe.” post-date=”Nov 07, 2024″ post-title=”FO° Exclusive: Rachel Reeves Delivers Important Post-Brexit Budget” slug-data=”fo-exclusive-rachel-reeves-delivers-important-post-brexit-budget”>
FO° Exclusive: Rachel Reeves Delivers Important Post-Brexit Budget
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