Geopolitics · page 2

France is on fire, but something more dangerous burns below

• The Economic Times says France’s debt is about €3.5tn, close to 120% of GDP, and its 10-year yield near 4.9% is the highest in over two decades, about 140 basis points above Germany’s.
• The 2027 budget seeks €43bn in cuts and tax rises, while interest payments are projected at €91.2bn, more than education or defence.
• Pension costs take 32% of the education ministry’s budget, so protests over schools collide with the need for austerity.

Other side: The piece notes France is not facing automatic default: long debt maturities and a diversified investor base give some cover, and the IMF calls the rise manageable for now.

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Summary based on The Economic Times. Read the full story ↗

North Korea claims an AI-guided torpedo; experts are sceptical

• North Korea says it tested a torpedo system named Zam-2.0 on Thursday that uses AI for target detection and guidance, according to state news agency KCNA, which did not explain what it meant by AI.
• It follows a run of weapons tests as Kim Jong Un turns to naval power, including underwater-launched missile tests and hypersonic launches. His sister also claimed AI was used in the 3 October missiles.
• South Korea’s military, which often accuses Pyongyang of exaggeration, had not commented. Experts say guidance software is probably improving but doubt truly autonomous targeting.

Other side: Pyongyang has shown real progress in naval and missile programmes, and better guidance software would matter even without full autonomy.

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Summary based on AP. Read the full story ↗

Dr Doom turns optimist: Roubini says India's moment has arrived

• Nouriel Roubini, who warned of the 2008 crash at the IMF in 2006, told ET that India is a "major success story" and that the coming decades could be as much about India as past ones were about China.
• He expects market pressure and US worries about inflation and affordability to push tariffs lower and Washington towards a more constructive stance on India. The first phase of a trade deal is in legal drafting.
• His catch: 7% growth is not enough. India must get closer to 9% to give young people good jobs as AI reshapes work, and friendshoring away from China is the opening.

Watch next: Whether the US trade deal is signed and tariffs fall. "Next China" forecasts have come before, and moving from 7% to 9% needs reforms that have often stalled.

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Summary based on The Economic Times. Read the full story ↗

Mistral's Mensch: Europe must build frontier AI or surrender

• Mistral AI cofounder and CEO Arthur Mensch rejects a growing European view that frontier models should be left to the US and China, with Europe building applications on others' models.
• Europe tried that with the internet, he says, and now pays more than €260 billion a year to American cloud and software firms. Whoever owns a model sets its price, uses and versions; last June an American lab suspended access to its top models, a call made outside Europe.
• He argues states need models they can audit, adapt and count on for cyber defence. Mistral plans to raise capital and expand its compute sixfold over the coming year.

Other side: Mensch runs a company that needs capital, so his case is also a pitch. Open models keep improving, and renting may cost far less than chasing rivals with deeper pockets.

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Summary based on X. Read the full story ↗

China’s weak economy is creating a lost generation

• WSJ reports that China’s Gen Z, raised to believe hard work guarantees a better life, now faces a shrinking job market, burnout and delayed marriage, with some living off savings or their parents.
• AI adds to the squeeze: big employers are quietly trimming staff, managers are less willing to hire inexperienced people, and officials have warned firms not to cut jobs as they adopt AI.
• Urban youth joblessness is near 19%, far above the US rate, and some economists think the true picture is worse than official data.

Other side: Past technology shifts have created new work, and China’s shrinking population may eventually need automation, so the pain may be about timing rather than permanent.

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Summary based on The Wall Street Journal. Read the full story ↗

Rising sickness and disability claims strain Britain’s budget

• WSJ says Britain has seen an unusual surge in sickness and disability claims: about seven million people now claim, many for mental-health conditions that are hard to verify.
• The yearly bill, excluding healthcare, tops £100bn and keeps rising, while Britain’s borrowing costs are the highest in the G7 and investors punish any sign of weak fiscal discipline.
• An earlier attempt to tighten eligibility was dropped after a backlash and a bond sell-off; the new Labour leadership promises reform without “crude cuts”, with a budget due later this month.

Other side: Some of the rise may reflect genuine need and better recognition of mental-health conditions, and hard cuts could push vulnerable people into hardship rather than into work.

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Summary based on The Wall Street Journal. Read the full story ↗

Hackers heat French supermarket fridges, causing fires and food losses

• Hackers pushed connected fridges in French supermarkets up to 50°C overnight, causing fires and food losses at several hundred stores. The Paris prosecutor is investigating, and the prime minister has asked cyber agency ANSSI to look into it.
• About 150 Intermarché stores and 80 Carrefour supermarkets were hit, and Coopérative U was affected too; Intermarché’s owner threw all the food away. ANSSI traced the weak point to Danfoss refrigeration software, which Danfoss says was running outdated firmware.
• Separately, Ahold Delhaize took systems offline over a “security issue”, and websites of its US chains, including Stop & Shop and Giant, went down; any link is unclear.

Watch next: Whether investigators confirm the fridges ran firmware Danfoss had long urged customers to update; if so, this is a maintenance failure more than a new kind of attack.

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Summary based on Reuters. Read the full story ↗

Craig Tindale: India is rich in dollars but short of key materials

• Tindale argues that seven inputs behind India’s factory push, from rare-earth magnets and battery cells to graphite, solar polysilicon, magnesium, antimony and gallium, all lead back to China through ore, ownership or licences.
• His evidence: after Beijing put export licences on rare-earth magnets in April 2025, Bajaj built 47% fewer Chetak e-scooters that July than a year earlier. China supplied about 83% of India’s imported permanent magnets in 2024.
• India holds $734.6bn in forex reserves but no published stockpile of these minerals, he notes, and China’s pause on wider export controls ends on 10 November.

Other side: The Bajaj episode also shows adaptation: within weeks it switched to a different type of magnet and found fresh supply, so dependence may bend before it breaks.

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Summary based on X. Read the full story ↗

Gerard Baker: voters think the US economy is worse than it is

• The WSJ’s editor at large argues that, as in 1992, perceptions rather than data are driving voters ahead of next month’s midterms, which Republicans expect to lose badly.
• A Quinnipiac poll gives Trump 31% approval on the economy, lower than Biden scored in June 2022, when inflation was at a 40-year high and output was shrinking, even though inflation and unemployment are lower today.
• He grants that prices remain far above 2020 levels and that tariffs and a war-driven rise in energy prices feed bills, but says AI investment may be starting a long boom.

Other side: After years of increases, households judge price levels, not the inflation rate, and fuel costs have climbed again, so the ‘misperception’ may be a fair reading of stretched budgets.

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Summary based on The Wall Street Journal. Read the full story ↗

AI firms are planning for the backlash after a catastrophic AI event

• Executives at Anthropic, OpenAI and other AI companies are privately planning for a public and political revolt after a catastrophic AI event, most likely a cyberattack that knocks out banking, internet, power or water, Axios reports.
• Many insiders told Axios they expect a major incident within six to 12 months. OpenAI said such scenarios are not treated as inevitable; Anthropic declined to comment.
• The planning centres on red-teaming worst cases and briefing members of Congress, so firms can shape the rules that follow; ideas in circulation range from pausing advanced AI to a mandatory kill switch.

Watch next: Whether this preparation turns into real safeguards now, or mainly positions the industry to steer the rules after a disaster.

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Summary based on Axios. Read the full story ↗

Video cameras are everywhere, and now they are being hacked for war

• Hackers on both sides of the Russia–Ukraine and Israel–Iran conflicts are breaking into internet-connected cameras to watch troops, find targets and judge strike damage; in Israel, a hacked farm webcam overlooked army movements near the Lebanon border.
• Many of the world’s estimated 1.2bn connected cameras are weakly secured, often with default passwords, and installed by facilities staff rather than IT teams; AI now makes breaking in and sifting footage far easier.
• Ukraine’s security service says it has secured, reoriented or blocked about 40,000 risky cameras since 2022; some Western countries have banned easy-to-hack Chinese brands.

Other side: Most cameras will never interest a military, and simple steps such as changing default passwords and updating devices remove much of the risk.

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Summary based on The Wall Street Journal. Read the full story ↗

When AI agents go rogue, who pays? Trump bets on liability law

• The Trump administration prefers existing liability law to new AI rules. Its new AI task force warned developers on Friday to report and fix security incidents quickly, after Anthropic disclosed a breach.
• Legal experts say current laws fit poorly: the main anti-hacking law needs proof of intent, and it is unclear whether the developer or the user deploying an agent is at fault.
• Senators Josh Hawley and Chris Murphy plan a bill to make developers liable for weak safeguards, and Representative Lori Trahan’s draft would stop firms arguing that their agents lack human intent.

Other side: Liability can push developers to build safely, but courts may take years to set precedent, and lawsuits stop working once a company is bankrupt. Some experts say only new rules can cover the biggest risks.

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Summary based on The Economic Times. Read the full story ↗

Gearoid Reidy: the world isn’t ready for a Japan with interest

• After decades of near-zero rates pushed Japanese savers to lend abroad, higher yields at home are drawing pensions, banks, insurers and households back into Japanese government bonds.
• Japanese investors sold a net ¥4.45tn ($28bn) of US long-term bonds from January to June, their first half-year of net selling since 2022, and pulled back from France and Australia.
• They still bought German, Italian and UK bonds; buying less is enough to lift others’ borrowing costs, and France may be the first casualty.

Other side: Japanese money isn’t leaving: retail investors still pour yen into foreign stock funds, and Tokyo’s reliance on US security makes a Treasury dump unlikely.

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Summary based on Bloomberg. Read the full story ↗

Trump’s Russian diesel deal: what it means for fuel prices and the war

• President Trump says Russia will supply more than 300,000 tonnes of diesel immediately, 500,000 tonnes in November and a million more after that, as the US eases sanctions on Russian fuel until 7 April.
• US diesel, vital for farms, trucking and heating, averaged $6.28 a gallon, up 70% since the Iran war began; futures fell almost 5% on the news.
• Analysts doubt lasting relief, and Ukraine’s Volodymyr Zelenskiy called it a ‘weak decision on the part of strong partners’.

Other side: Any extra barrels help households now; critics ask whether that relief is worth more revenue for Moscow’s war.

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Summary based on Mint. Read the full story ↗

What do you gift the Swiss President? PM Modi chose three Indian cheeses

• On Monday, 5 October, in New Delhi, PM Narendra Modi gave Swiss President Guy Parmelin three award-winning Indian cheeses: Gulmarg, Konark and Yeoor.
• Parmelin is in India on a three-day state visit; the gift was presented as a showcase of India’s growing cheesemaking tradition, with a nod to Switzerland’s own fame for cheese.

Other side: A gift is a gesture, not a market. Will Indian artisan cheese find buyers abroad beyond the diplomatic table?

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Summary based on India Today. Read the full story ↗

RBI chief: a failed India–US trade deal would do ‘some’ damage

• Sanjay Malhotra says the impact depends on how far tariffs go, so it is ‘premature’ to put a number on it.
• Deals with the UK and New Zealand are signed; around 10 more are under discussion, including Peru, Chile, Israel, Canada and the Eurasian Economic Union.
• USTR Jamieson Greer said on 1 Oct a deal was not imminent; on 5 Oct Nirmala Sitharaman said talks had ‘reached a plateau’.

Other side: Can a string of smaller deals really make up for the US market?

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Summary based on The Economic Times. Read the full story ↗

Japan Inc sours on China; can India gain?

• Japanese firms with a presence in China fell to 10,118 in June, the lowest since the survey began in 2010: down 22% in two years and almost 30% from the 2012 peak of 14,394.
• Reasons cited include China’s property slump, rare-earth export curbs, overcapacity, state-backed rivals, worsening relations and detentions of Japanese nationals.
• Japanese money is moving into India’s finance, not just factories: SMBC bought 20% of YES Bank (~$1.6bn), MUFG 20% of Shriram Finance (~$4.45bn), and Mizuho’s securities arm a majority of Avendus.

Other side: China is too big to abandon, and the US, Vietnam, Indonesia and Thailand compete for the same capital. Skill shortages and reliance on Chinese inputs could cap India’s gains.

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Summary based on The Economic Times. Read the full story ↗

Tata builds a non-China chip supply chain

• Tata Electronics has signed at least nine non-Chinese suppliers, including ASMPT, Nexperia, Fujifilm and Kelington, for its Assam chip assembly plant.
• The Jagiroad plant, India’s third chip assembly-and-test unit, is slated to start production in December and scale to 48 million chips a day.
• Subsidies cover 70% of the net cost of Tata’s Assam and Dholera chip projects, leaving Tata to invest ₹35,400 crore.

Other side: Executives say the aim is diversity, not shutting China out; typical chip-assembly supply chains are 55–60% China-based. Can alternatives match China on cost?

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Summary based on Mint. Read the full story ↗

China shuts a record 670+ banks in a year

• Banking entities fell 23% in four years to 3,139 by 2025; almost all closures were rural lenders.
• Fitch calls small rural and city banks the system’s weakest part: poor assets, thin capital, weak governance.
• Wuhan took over Z-Bank in July, the first such takeover since 2019.

Other side: One researcher notes the worst banks were often left out of mergers. Is this a cleanup, or just a reshuffle?

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Summary based on Financial Times. Read the full story ↗

India goes FTA shopping at the G20, with Piyush Goyal working the room

• In Milwaukee, Goyal met ministers from 10 countries and the EU on deals at every stage, from talks to pacts already in force.
• USTR Jamieson Greer says the India-US interim deal is in the “short strokes”, but an announcement isn’t imminent.
• The India-EU FTA awaits signature, the India-Canada CEPA targets year-end, and the India-New Zealand FTA takes effect on October 20.

Other side: More deals also mean more imports and tougher rivals at home. Do Indian firms gain more access than they give up?

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Summary based on The Economic Times. Read the full story ↗

China, America and the new Great Game

• Rana Foroohar likens the US-China rivalry to the 19th-century Britain-Russia Great Game: decades of moves, not one war.
• China owns 60% of Peru’s Chancay megaport, and almost half the leading container ports outside China have some Chinese ownership or operations.
• Her verdict: outside nations such as India, Japan, Canada, the Gulf states and the EU may decide the outcome.

Other side: She concedes the US still has the reserve currency, the richest tech firms and free sea lanes; there may be no single winner.

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Summary based on Financial Times. Read the full story ↗

How the French bond trade backfired on investors

• Hedge funds piled into leveraged bets on French debt over the summer, figuring French politics wouldn’t get much rockier.
• A widening poll lead for Marine Le Pen and a poorly received budget plan sparked selling; short-term yields swung up to 0.40 points over two days.
• France’s €3.5tn government bond market is Europe’s largest, and foreigners own more than half of it.

Other side: PGIM’s Robert Tipp says forced selling, not a change in France’s creditworthiness, drove the rout, and the ECB ultimately backstops eurozone bonds.

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Summary based on The Wall Street Journal. Read the full story ↗

Polymarket’s Alpha traders: the secret chat turning wars and elections into profit

• About 30 members, mostly Gen Z, pool research in an invitation-only Discord; they’ve made an estimated $40mn on Polymarket since 2024.
• A CEPR study found two-thirds of Polymarket users lost money; 0.1% of profitable traders captured half the profits.
• Polymarket and Kalshi averaged about $1.6bn a day in August, up nearly 2,000% in a year.

Other side: Members call it skill, not luck. One, a PhD student now attending gambling-addiction meetings, says the real harm is the story that this is democratised finance.

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Summary based on Financial Times. Read the full story ↗

Burnham: rejoining the EU is an option

• Andy Burnham says Brexit has done more harm than good.
• Options: status quo, customs union, single market, rejoin.

Other side: Critics fear old wounds; EU may not say yes.

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Summary based on BusinessDay. Read the full story ↗

Jamie Dimon: a plan for the Western world’s revival

• A US–Europe free-trade deal, open to allied democracies
• In return, Europe must deliver economic and military reform
• He would revive the Trans-Pacific Partnership and the US–EU trade talks.

Other side: Similar pacts died over job and wage fears, and deeper capital markets would also benefit big banks like his.

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Summary based on The Wall Street Journal. Read the full story ↗

Iran’s secret weapon against America: China

• As Beijing hailed its role in a US–Iran truce, a Chinese plane landed in Tehran.
• China is now the only major buyer of Iranian oil.
• Chinese front companies and banks help move the money.

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Summary based on Mint. Read the full story ↗

F-35 parts bound for US repair end up in Hong Kong

• Sent from Australia for US repairs, it went to Hong Kong.
• Australia is investigating how the parts went missing.

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Summary based on The Guardian. Read the full story ↗