Title: Machine Wars: Out of the Loop
Approx. Reading Time: 10 minutes
Author: Peter Kingsley
Our scenario monitoring shows tail scenarios of autonomous machine-vs-machine warfare, rogue cyber agents and drone swarms converging with reality faster than modelled. Peter Kingsley argues that trends pose a clear and present danger of triggering cascading failures, with governance too slow and fractured to act. The limitations in understanding of attribution, cause and liability in AI, cyber and hybrid conflict will undermine basic risk market principles. Risk-bearing institutions must redefine catastrophe and lead where states will not.
Read EssayPresident Donald Trump’s threats to “annihilate” Iran and President Masoud Pezeshkian’s condemnation of his “bullying mentality” leave little room for compromise. Doubts about American protection have heightened the exposure of Saudi Arabia and its Gulf neighbours. Ahead of the US midterms and Israeli elections, renewed strikes and retaliation against regional infrastructure could turn the current conflict into a broader war. The danger lies in how these attacks could reinforce one another.
Read EssayReceding polar ice is opening the Northern Sea Route to global trade, promising to halve shipping times and soon offer a tempting alternative to volatile chokepoints in the Middle East. In the short-term, a limited ice-free window, harsh weather, poor supporting infrastructure, and Russia’s control of the passage make the passage unviable as a major shipping route. But doubts may recede as quickly as the ice does.
Far-right governments in France and Germany would deepen Europe’s structural economic crisis. Restricting immigration would shrink labour supply. Economic nationalism would distort capital allocation. German efforts to weaken the European Central Bank’s ability to contain divergences in borrowing costs across countries combined with opposition to closer fiscal integration could trigger debt crises in France and Italy. Hostility to climate action would weaken energy security and competitiveness. Europe would be left poorer, less productive and less resilient to future shocks.
The real problem for the frontier AI labs is not that their models are too powerful and already “misaligned” with the goals their creators set for them. Rather, it is that the models are being trained in ways that may be leading to a type of intelligence that will become less predictable.
Read EssayTitle: The Political Trap of Extreme Heat
Approx. Reading Time: 10 minutes
Author: Laurie Laybourn
European heatwaves are outrunning the climate models, yet their consequences remain largely politically invisible, with mortality statistics and economic losses often counted months after the fact. Laurie Laybourn argues that these dynamics are assembling a trap for the political class: Impacts are growing, but there is no immediate incentive to adapt. This equilibrium will not last. A threshold is approaching that hands the politics of protection to whoever is prepared. If anti-climate forces claim adaptation first, decarbonisation efforts could be sidelined. This requires politicians to use the political room opened by the heat of 2026 to act and break this trap.
Read EssayTitle: Power Without Responsibility: China and global order
Approx. Reading Time: 10 minutes
Author: Bobo Lo
China has been the main beneficiary of Trump’s second presidency. His actions have exposed the limitations of US power, undermined the idea of the West and enabled Beijing to portray itself as the guardian of international order. Yet, as Bobo Lo argues, Chinese president Xi Jinping has shown little interest in assuming the responsibilities of global leadership and problem-solving. Despite proclaiming a “shared future for humanity”, his focus remains narrowly self-interested. Beijing will continue to prioritise core interests such as Taiwan, extract what it can from the international system, and minimise its obligations to others.
Read EssayTitle: The Future of the Rules-Based International Order
Approx. Reading Time: 8 minutes
Author: Sir Adam Thomson
Is the rules-based international order (RBIO) of the last 80 years dead? It depends which RBIO we mean, argues Sir Adam Thomson. The liberal RBIO is ailing and the American RBIO is in even worse shape. However, the international community’s RBIO—based on rules in pursuit of global common goods—is very much alive, though damaged and under threat. Over the next 20 years—absent civilisation-ending war or disease—the RBIO should survive, evolve to be less American and more law-based, and in most domains will continue to function and, in many, thrive.
Read EssayTitle: The Middle East War and the Everything Crisis
Approx. Reading Time: 9 minutes
Author: Laurie Laybourn
The US-Israel war on Iran has triggered a systemic commodity shock, overturning expectations of stability and pushing some prices beyond 2022 peaks. Disruptions to oil, gas, fertilisers and critical inputs are cascading through energy, food, finance and technology systems. Laurie Laybourn argues the result is an “everything crisis” that exposes the risks of deep fossil-fuel dependence. As impacts spread globally—from food insecurity to risks in AI infrastructure—the shock is accelerating the shift toward renewables and resilience.
Read EssayEurope faces a China Shock that is more serious and durable than the last one. This time, Beijing is unlikely to negotiate the problem away. The EU must choose between setting its own industrial and trade policy or having it set for them. The good news is that it has more leverage than it thinks.
Fears are mounting that Russia will turn its aggressive actions on a NATO member state, triggering Article 5 in the process. While a direct, easily traceable assault seems unlikely, there are other avenues for sowing discord at Moscow’s disposal.
China’s unprecedented dominance is disrupting the process through which manufacturing has historically spread from one generation of industrialisers to the next. Beijing is moving rapidly up the value chain, while simultaneously retaining most of its lower-value production, limiting the space available to poorer countries. The danger is that these other nations will become trapped in persistently weak job and productivity growth, fuelling political instability and mass migration.
Europe cannot build an independent AI stack, but it can make itself expensive to coerce and hard to ignore.
The AI landscape is evolving at such a furious pace that it is quasi-impossible to figure out where it will end, and to assess accurately how it will impact the labour market. Given that every one of us, directly or indirectly, will be affected by the outcome, the economic, political and societal stakes could not be higher. The following assertions can help frame the conversation.
During the 2026 energy shock, the global market absorbed the loss of a fifth of its oil with surprising resilience, but the buffers that sustained that calm are now nearly depleted. The next phase of the crisis will be harder and heavily dependent on decisions in Beijing.
Until recently, inflation was primarily driven by cyclical and macro-financial factors. Today, geopolitical, climate and technological risks increasingly generate shocks that propagate through interconnected economies, creating inflationary pressures that cannot easily be addressed by conventional macroeconomic policy tools. As resilience replaces efficiency as the organising principle of the global economy, inflation is likely to remain higher for longer than markets assume.
Believe the valuations and the breathless coverage, and you would think we stand on the cusp of another technological revolution—this time not in AI but in quantum computing. Strip away the hype and quantum computing’s near-term promise looks oversold—except in one domain. Its first real consequences will not be in commercial applications or even breakthrough drugs, but in the erosion of secrecy and strategic stability.
The 2015 Paris Agreement sought to limit global warming to 1.5°C but this threshold could be breached by 2028, ushering in an era of ‘overshoot’—a fundamentally new strategic context for climate action. Climate impacts are arriving faster and more severely than anticipated, challenging established worldviews and demanding new narratives and action plans. Decarbonisation alone is no longer sufficient; large-scale carbon removal is also now essential, at the same time as natural carbon sinks are weakening.
A severe El Niño, intensified by climate change, promises to further destabilise a world already beset by disrupted supply chains, volatile geopolitics and social dislocation. The implications for climate politics are particularly significant, with El Niño-driven instability creating both opportunities to reinforce action and risks of derailment. Immediate action is needed to ensure the balance of outcomes tilts in a productive direction.
The likelihood of the UK rejoining the EU could hinge on electoral reform. A move to a more proportionally representative electoral system under a new Labour leader would align the country’s politics more closely with the electorate’s views. Pro-EU parties would command a clear and stable majority in Parliament and face little political risk in advocating rejoining the EU. By consistently making the case for membership, they could further strengthen public support.
The “power of asymmetry” is reshaping modern warfare. Weaker or smaller actors can turn disadvantage into leverage, making victory harder for dominant powers. In Ukraine and Iran drones, resilience and chokepoints offset superior military strength, producing stalemate or strategic constraint. The likely outcomes are settlements resembling the Korean War in Ukraine and the Vietnam War in Iran. Across both conflicts, power is shifting from size to the ability to convert imbalance into leverage.
The dominant financial narrative is that climate threats, wars in Ukraine and the Middle East, and hybrid conflicts in cyberspace are containable and that the system is resilient—states can absorb shocks, backstop failures and come to the rescue where required. The evidence tells a more fragmented, volatile story.
The relative decline in US global power has largely reflected the rise of other countries, particularly China, but increasingly also stems from domestic factors, including political dysfunction and growing protectionism. The centrality of the dollar and military superiority make full replacement by another power unlikely, even if US dominance fades across other dimensions. However, unless internal weaknesses are reversed, US hold on these critical strengths will loosen.
The defeat of Viktor Orban—long considered a role model for other extremist politicians, and a thorn in the EU’s side when it came to confronting Russia—is the biggest victory yet in what many have noted is a slow toppling of populist figureheads across Europe. Is this just a blip, or are we seeing a final retreat of the populist wave? What can these results teach us about how to defeat illiberal forces?
The US–Israeli attack on Iran disadvantages Ukraine while offering short-term relief to Russia’s budget, but it has not yet altered battlefield or negotiation dynamics. Its significance lies in second-order effects: pressure on the supply of air defence systems, especially anti-ballistic missiles, and the economic consequences of higher oil, gas, and fertiliser prices. The longer and more disruptive the conflict—particularly for Gulf energy production and European economies, or through deeper US involvement—the more adverse the implications for Ukraine.
The US president will find it difficult to extricate himself from the crisis he has set in motion. The world now faces an inflation shock and a blow to an already fragile global economy. Crucially, major supply shocks tend to generate far-reaching consequences across the short, medium, and long term—many of them unforeseen. Risks do not remain contained but interact, reinforce, and amplify one another; shocks can cascade into systemic failure.
Climate and geopolitical shocks are exposing a persistent failure to anticipate and build resilience into modern economies. As global warming accelerates—potentially reaching 0.35°C per decade—impacts are arriving faster and more severely than expected. With further shocks looming, including a strong El Niño, risks are intensifying. Yet responses are emerging—notably distributed renewables, which offer a ‘triple win’ by strengthening energy security, reducing emissions and enhancing resilience in an uncertain world.
Governments are beginning to treat the collapse of the Atlantic Meridional Overturning Circulation (AMOC) as a security risk rather than a scientific concern. Iceland’s designation of AMOC as a security issue reflects research indicating tipping points may be closer and more dangerous than assumed. Though welcome, responses remain insufficient. Decision-relevant risk analysis, faster decarbonisation, contingency planning and coordinated international action are urgently needed to manage what is becoming one of the defining systemic risks of the climate era.
It is a truism that world leaders dominate information wars. They set agendas, frame media coverage and exert control and power through performative narratives and nostalgia. Above all, they impose their imagined futures on the world. This is nothing new. Yet when political self-interest, fantasies and myth lose contact with reality there is only one possible outcome: catastrophe. Reality bites back. History tells us that catastrophe can be the catalyst of renewal. The next year, particularly in the US, will test that theory.
