Executive summary

Securing artificial intelligence (AI) infrastructure requires ensuring the security of the cloud ecosystem. The cloud infrastructure that implements and executes AI workloads presents an opening for adversaries that existing vulnerability management institutions were not designed to cover. This brief examines the mechanisms through which vulnerabilities in cloud infrastructure are discovered, disclosed, communicated, and remediated, and finds them to be inadequate to meet the security demands of an ecosystem in which AI has a growing impact.

Nation-state actors continue to target cloud environments, compressing vulnerability discovery and exploitation timelines. At the same time, public vulnerability data, anchored by the Common Vulnerabilities and Exposures (CVE) ID system and the linked National Vulnerability Database (NVD), faces severe strain. The policy institutions tasked with addressing cloud security face leadership vacuums, funding uncertainty, and competing priorities.

Community and industry driven efforts to respond to these challenges remain fragmented and voluntary, while providers operate without public accountability. Making progress on these urgent challenges requires policy mechanisms to incentivize and mandate clarity and transparency in the cloud ecosystem.

Background

In the United States, several essential cybersecurity authorities and institutions face simultaneous disruption. The Cyber Incident Reporting for Critical Infrastructure Act (CIRCIA), passed in 2022, proposed to establish the country’s first mandatory incident reporting regime for critical infrastructure sectors, has seen the publication of its final rule delayed to May 2026. The Cybersecurity Information Sharing Act of 2015 (CISA 2015), which provides liability and antitrust protections for companies sharing threat indicators with the federal government and each other, lapsed on September 30, 2025 and received only a temporary extension through September 2026, with bipartisan reauthorization efforts stalled in Congress. The Cybersecurity and Infrastructure Security Agency (CISA) continues to operate without a confirmed director, after the Senate failed to act on the administration’s nominee, and the agency has seen workforce reductions that have diminished its operational readiness. The Cyber Safety Review Board (CSRB), which conducted a landmark investigation of the 2023 Microsoft Exchange Online compromise, was dissolved in early 2025.

In Europe, a set of untested regulatory instruments are taking effect. The European Union (EU) NIS2 Directive expanded cybersecurity obligations for 18 critical sectors. The Cyber Resilience Act (CRA), adopted in 2024 with enforcement beginning in 2027, will require digital product manufacturers to build in cybersecurity capabilities and provide vulnerability disclosure mechanisms. The United Kingdom (UK) Cyber Security and Resilience Bill is progressing through Parliament with similar objectives.

The US, UK, and EU have also adopted policy approaches and established agencies specific to AI. In the US, the Trump administration’s AI Action Plan outlined goals of exporting the US AI stack abroad. The EU AI Act imposed obligations on AI developers based on the level of risk posed by specific AI models. The US and UK also established AI-specific testing and research organizations, the Center for AI Standards and Innovation (CAISI) and the AI Security Institute (AISI) respectively.

Cloud computing

Cloud computing describes a model of access to computing resources, where customers specify workloads, or defined sets of tasks, which cloud providers implement and execute. This model of access is an important part of AI development and deployment, and frontier AI companies have partnered with cloud providers to ensure access to cutting-edge compute resources.

Compute and virtualization services allocate processing power and include the orchestration platforms that oversee AI training and inference workloads. Data and storage services comprise the managed databases and object storage for training datasets, model weights, and inference outputs. Observability and logging services collect the telemetry essential to detecting anomalies and investigating incidents. Identity and access management services control who and what can interact with cloud resources.

Layered on top of these foundational services are AI-specific runtimes and serving frameworks (the managed environments in which models are loaded and scaled) as well as the web and API gateways through which users interact with AI systems. Each of these categories presents distinct vulnerabilities. A flaw in a container escape mechanism raises different remediation questions than a misconfiguration in a logging pipeline, yet both can impact the confidentiality, integrity, and availability of an AI workload.

Fraying public vulnerability infrastructure

The NVD has served for nearly two decades as an authoritative source for enriched vulnerability data, powering compliance frameworks, automated scanning tools, and risk assessments across both the public and private sectors. Budget constraints and rising submission volumes have degraded its reliability as an operational resource. The National Institute of Standards and Technology (NIST) acknowledged in early 2025 that a 32 percent increase in CVE submissions during 2024 meant the backlog was still growing.

CISA maintains the Known Exploited Vulnerabilities (KEV) catalog, which allows the agency to publicly announce vulnerabilities that have been exploited in the wild. As of March 2026, the catalog contains 1,551 vulnerabilities, making it a useful smaller-scale prioritization signal, especially in comparison to the NVD’s 339,010 vulnerabilities. CISA’s ability to update and maintain the KEV database is likely affected by the ongoing partial shutdown of CISA’s parent agency, the Department of Homeland Security, and the mass layoffs of CISA employees since January 2025.

Meanwhile, despite a clear recommendation from the CSRB’s review of the 2023 Microsoft Exchange incident, cloud providers do not comprehensively disclose security vulnerabilities or flaws within their cloud services that do not require customer action to fix. In 2024, both Microsoft and Google announced that they would issue CVEs for critical vulnerabilities, which are only a subset of the overall vulnerability landscape. Vulnerability scoring and severity evaluations are complex and involve judgement calls, so allowing providers to determine which vulnerabilities they disclose distorts publicly available data on cloud security issues.

Failing to issue a CVE identifier for a security flaw also precludes the vulnerability from being included in the KEV database, limiting the ability of US government agencies to publicly communicate evidence of exploitation. Companies can refuse to acknowledge security incidents or transparently communicate with customers in the absence of policy obligations, as Oracle’s communications around an incident in May 2025 exemplified.

Hyperscale cloud providers operate vulnerability reward programs (VRPs) that incentivize external researchers to report flaws. According to a program website, Google’s Cloud VRP has issued $3,574,399 in awards over the past year. These programs are voluntary, variable in scope and payout, depend on the communications channels offered by the cloud provider, and are not subject to public reporting obligations.

Provider programs are siloed. No mechanism exists for identifying shared flaws across cloud platforms or generating a system-wide view of collective vulnerability data. This limitation is consequential considering research demonstrating that independently developed cloud services can harbor similar security flaws due to shared open-source dependencies or common architectural patterns. The absence of cross-provider coordination means that when a researcher identifies a vulnerability pattern in one cloud platform, there is no systematic process for evaluating whether the same pattern exists in others.

AI services are not immune from these systemic challenges. A July 2025 container escape vulnerability in the NVIDIA Container Toolkit, discovered by Wiz researchers, highlighted that security issues in popular libraries impact customers regardless of their cloud provider.

Community-driven projects have attempted to address the lack of standardized tracking mechanism for cloud security issues. The Wiz-backed Open Cloud Vulnerability and Security Issue Database catalogs publicly known cloud vulnerabilities and flaws, providing researchers and practitioners with a centralized reference for flaws that might otherwise be scattered across notification methods. The ONUG Cloud Security Notification Framework addresses the lack of a common data model for security notifications across providers. While these efforts are valuable, neither possesses the institutional backing to compel provider participation or to generate the kind of systematic accounting of vulnerabilities in cloud platforms which could form the basis of further policy action.

AI changes the risk landscape

As a target, AI infrastructure concentrates extraordinarily valuable intellectual property within cloud environments: model weights, proprietary training data, novel research methods, and fine-tuning configurations, all of which are only as secure as the weakest component of their infrastructure. The scarcity of compute resources specific to AI may lead organizations to deprioritize security requirements in favor of rapid access to processing power. The emergence of AI-focused cloud providers, newer entrants that may lack the mature security operations and vulnerability management programs of established hyperscale cloud providers, creates additional points of systemic risk.

As a tool, AI is reshaping the vulnerability landscape on both the offensive and defensive sides, rapidly accelerating the pace of vulnerability discovery and exploit development. Google’s Project Zero reported 20 vulnerabilities in popular open-source packages, each of which was discovered and reproduced by an AI agent without human intervention. A similar collaboration between Mozilla and Anthropic discovered 22 vulnerabilities in Firefox and crafted partial exploits for each of them. Wiz’s first-ever cloud hacking competition surfaced over 11 vulnerabilities in open-source code comprising foundational layers of cloud infrastructure. Open-source maintainers and operators of bug bounty programs have raised alarm about the increasing volume of AI-generated bug reports, which are of varying quality and require significant effort on the part of developers and maintainers to evaluate.

Recommendations

Government agencies must respond to the changing cloud vulnerability landscape. As experts have warned, failing to keep pace with the rapid rate of developments in offensive cyber risks of AI will have security consequences. Managing the risks posed by AI for vulnerability discovery and exploitation requires recommitting to known best practices, which can serve as a foundation for future policy experimentation and adaptation.

1. Follow through on lapsed and languishing cybersecurity efforts

Congress should reauthorize the Cybersecurity Information Sharing Act of 2015, which remains the foundational legal framework enabling voluntary cyber threat intelligence sharing between the private sector and federal government. Temporary extensions do not provide sufficient assurance and protection to organizations committing to information sharing, and even brief lapses disrupt long-standing collaborations.

Consistent with the AI Action Plan, the federal government should establish a dedicated Artificial Intelligence Information Sharing and Analysis Center (AI-ISAC) to centralize threat intelligence specific to AI systems, model vulnerabilities, and adversarial exploitation techniques. This body could facilitate real-time coordination across industry, academia, and government, led by DHS in collaboration with CAISI and the Office of the National Cyber Director (ONCD).

Congress should ensure CISA and NIST, as the stewards of the KEV catalog and NVD, receive sustained, adequate resourcing to fulfill their role in the vulnerability management ecosystem.

Congress should re-establish the Cyber Safety Review Board, resolving issues with the original board’s investigation by giving the board both subpoena power and sufficient staff to support critical investigations. Congress should also clarify criteria for incidents reviewable by the board. As recent analysis in Lawfare argued, a review board specific to AI could investigate the role of AI in cyberattacks. An AI-specific body should also be scoped to include cloud security incidents, reflecting the cloud’s critical role as AI infrastructure.

2. Incentivize and disclose high-quality public vulnerability data for cloud computing

ONCD should lead on establishing a comprehensive, government-backed information and data sharing solution to drive more effective vulnerability management across the cloud ecosystem. Policy design in cloud cybersecurity suffers from a lack of high-quality public data on critical and non-critical vulnerabilities; patterns of misconfiguration; and trends in exploitation techniques by threat actors.

ONCD’s leadership on this challenge, as a component of the National Cybersecurity Strategy’s goal to shape adversary behavior, could improve collaboration with the private sector and cloud providers, while avoiding diverting CISA from its core mission of protecting government and critical infrastructure systems.

Greater data transparency and disclosure of vulnerabilities across the ecosystem could serve as the foundation of prioritization processes across the cloud ecosystem, increasing pressure on providers to tackle vulnerabilities and classes of vulnerabilities that have security consequences for government entities and companies worldwide. That prioritization should privilege shared vulnerabilities, architectural flaws, and common weaknesses present across multiple hyperscale providers, which no current mechanism systematically or publicly identifies and addresses.

3. Lead on international coordination

The US government should pursue alignment with the European Union Agency for Cybersecurity and allied governments on cloud vulnerability disclosure norms. The US government’s support of vulnerability databases and coordination efforts creates benefits for other countries. Questions about the stability of that support spur divergent efforts, such as the European Union Agency for Cybersecurity establishing its own database for cataloging cyber vulnerabilities.

Ensuring that AI safety institutions and cybersecurity agencies share information and coordinate on vulnerability management, rather than operating in parallel silos, should be an explicit element of efforts to mitigate the risks of emerging AI for cloud computing security. 

The United States and the United Kingdom should begin by harmonizing their own practices and then extend that alignment to the EU. The forthcoming CIRCIA rule and the UK’s Cyber Security and Resilience Bill offer opportunities to embed cloud-specific vulnerability and incident reporting requirements that can serve as reference points for international coordination. Encouraging international allies to adopt the same approach to disclosing vulnerabilities in compute infrastructure can contribute to changing the incentive structure of the AI compute industry, shifting it towards greater transparency from cloud providers.

Conclusion

Trust in cloud computing cannot be sustained without visibility. The physical location of a data center does not determine its vulnerability to misconfigured access controls, unpatched container runtimes, or supply chain compromises. The cloud infrastructure that underpins AI development and deployment is subject to a vulnerability management regime designed for a different era of computing. Cloud-specific security flaws fall between existing institutional mandates, and the organizations building the most consequential AI systems lack the ability to demand transparency from the infrastructure they depend on.

The building blocks for a better approach exist, but the policy architecture to connect them is missing. The United States and its allies and partners possess both the responsibility and the capacity to design an approach to cloud vulnerability management that matches the scale and complexity of the systems it is meant to protect. The question is whether they will do so before the gap between the complexity of cloud infrastructure and the maturity of the institutions overseeing it becomes the defining vulnerability of the AI era.

Sara Ann Brackett is an associate director with the Cyber Statecraft Initiative, part of the Atlantic Council Tech Programs. She focuses her work on open-source software security, cloud computing, and software supply-chain risk management within the Cyber Statecraft Initiative’s cybersecurity and policy portfolio.

The author would like to thank the Cyber Statecraft Initiative and Atlantic Council Tech Programs teams for their support and guidance throughout this project. Thank you to Trey Herr and Tess deBlanc-Knowles, who provided thoughtful feedback, and to Safa Shahwan Edwards and Jen Roberts, who were instrumental in planning and executing a workshop that informed this paper. Thank you to Nikita Shah, whose feedback shaped earlier iterations of this brief and its accompanying visualizations. The author would also like to thank the workshop participants who shared their expertise and perspectives under Chatham House Rule.

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This is the tenth chapter in the Freedom and Prosperity Center’s 2026 Atlas, which analyzes the state of freedom and prosperity in ten countries. Drawing on our thirty-year dataset covering political, economic, and legal developments, this year’s Atlas is the evidence-based guide to better policy in 2026.

Evolution of freedom

The Dominican Republic’s recent political history is defined less by rupture than by consolidation. By the mid-1990s, the country had already resolved the most consequential question of its institutional life: how political power is contested and transferred. Since the decisive elections of 1996, Dominican politics has been characterized by regular, competitive elections, peaceful alternation in power, and the absence of constitutional ruptures or electoral breakdowns. Governments have come and gone, and parties have risen and declined, but the basic rules of the game have remained intact.

In a regional context marked by institutional volatility—coups, impeachments, constitutional rewrites, and contested elections—this continuity stands out. The Dominican Republic institutionalized electoral competition early and maintained it across political cycles—including long periods of single-party dominance—without sliding into electoral authoritarianism. The result has been more than procedural stability. Over time, this durability has produced cumulative institutional returns: greater predictability for investors, incremental strengthening of legal frameworks, and an environment in which political dissatisfaction is resolved through elections rather than systemic crisis. For three decades, this steadiness has underpinned one of the strongest growth performances in Latin America. The Freedom Index captures this trajectory, showing sustained gains from 1995 onward and further consolidation after 2020.

This pattern is most visible in the political dimension, which provides the clearest entry point into the country’s broader institutional evolution. The Dominican Republic’s democratic transition was prolonged and uneven, beginning with the assassination of dictator Rafael Leonidas Trujillo in 1961 and unfolding through cycles of hope and reversal—including a coup, civil war, US intervention, and decades of semi-competitive elections under Joaquín Balaguer. The decisive consolidation came in 1996, when competitive elections finally became the uncontested mechanism for political power. This continuity is reflected in the consistently high level of the elections component of the political subindex over the entire period.

What is particularly notable is that even prolonged periods of single-party dominance did not translate into electoral authoritarianism. Between 2004 and 2020, when the Dominican Liberation Party governed for sixteen consecutive years, concerns arose about institutional sclerosis, clientelism, and attempts to alter constitutional term limits. The suspension of the February 2020 municipal elections following failures in a new electronic voting system further exposed procedural weaknesses and eroded public trust. Yet constitutional boundaries ultimately held, the electoral framework was restored, and power transferred peacefully to the opposition later that year.

The evolution of political rights over the past two decades reflects a more nuanced reality. From roughly 2010 to 2020, the political rights component shows a gradual decline. This movement does not suggest a drift toward authoritarianism, but rather the accumulated effects of prolonged incumbency. Media outlets became increasingly entangled with government advertising, patronage networks expanded, and civil society grew more skeptical of the political class. These tensions culminated in the large “Marcha Verde” protest movements that began in 2017 and persisted until the 2020 elections, demanding an end to corruption and impunity. Rather than weakening democracy, these mobilizations ultimately reinforced it by channeling discontent through institutional means and contributing to a legitimate transfer of power.

The rebound in political rights after 2020 appears to reflect shifts in political tone and enforcement patterns more than sweeping institutional reform. The arrival of the Luis Abinader administration brought a clearer rhetorical commitment to transparency and accountability, reduced pressure on critical media, and signaled greater tolerance for scrutiny, contributing to improved perceptions of political openness. Civic space widened, even if the formal legal framework governing political rights remained largely unchanged.

Civil liberties, by contrast, have remained relatively stable and high throughout the period. The country did not experience the sharp pandemic-related declines seen in many advanced democracies, particularly with respect to restrictions on movement or assembly. This stability reinforces the broader picture of an open political system that, despite its imperfections, has avoided the authoritarian and electoral backsliding observed elsewhere in the region.

The most puzzling feature of the political subindex is the persistently low score on legislative constraints on the executive, a pattern that in the Dominican case reflects institutional design rather than weak democratic competition. The country operates under a robust presidential system, and the 2010 constitutional reforms aligned legislative and presidential elections on the same electoral calendar. As a result, the party that wins the presidency almost invariably controls Congress as well, reducing incentives for legislative oversight. The limited professionalization of the legislature compounds this structural feature.

However, this does not mean that the executive operates without constraints. In practice, civil society organizations, business associations, trade unions, and protest movements play a decisive role in shaping and blocking legislation. A clear example was President Luis Abinader’s withdrawal of an ambitious fiscal reform proposal in 2021 after strong opposition from business groups and civil society. Similar dynamics have constrained reform efforts in areas such as education, transportation, and labor markets. The low legislative constraint score therefore reflects a misalignment between formal institutional checks and the informal, societal forces that operate in the Dominican political system.

The economic subindex reinforces the broader picture of institutional continuity that characterizes the Dominican Republic’s experience since the mid-1990s. Rather than reflecting abrupt policy shifts or ideological swings, the data point to a gradual and largely uneventful expansion of economic freedom, aligned with a stable political environment. One reason for this continuity lies in the country’s distinctive political economy: Across party lines, there has been broad consensus around openness to trade and foreign investment, while redistributive policies have not been the exclusive domain of the left. In practice, governments of different political orientations have combined pro-market and social welfare objectives in varying proportions, reducing the likelihood of sharp policy reversals. Over the same period, the country completed a structural transition from an agriculture-centered economy to a highly diversified one in which tourism, manufacturing, mining, construction, and services contribute in comparable proportions to GDP, strengthening resilience to external shocks. As a result, changes in economic policy have tended to be incremental, allowing the Dominican Republic to maintain a consistently business-friendly framework while adjusting gradually to social and fiscal pressures.

Trade freedom has been among the most stable components throughout the period. The country adopted an outward-looking growth model early on, anchored in tourism, free trade zones, and export-oriented manufacturing. This openness has proven resilient to changes in government and political cycles. Across party lines, successive administrations have actively pursued and ratified trade agreements with regional blocs and major economies, reinforcing a broad political consensus in favor of international economic integration. As such, trade policy has not been subject to abrupt reversals.

Investment freedom follows a similarly stable, though slightly more uneven, path. The Dominican Republic has long been perceived as relatively business-friendly within the regional context. Periodic fluctuations in this component appear to capture moments of regulatory or fiscal uncertainty rather than shifts toward state intervention or capital controls.

Property rights show gradual improvement but remain an area where institutional limitations are most visible. While large investors tend to operate within a relatively predictable legal environment, smaller firms and households continue to face slower judicial processes and administrative bottlenecks. This uneven protection of property rights contributes to the persistence of informality and limits the diffusion of economic freedom across the broader economy.

Women’s economic freedom registers a clear upward trend over the past three decades, reflecting the steady removal of formal legal barriers to women’s participation in economic life. This formal progress has coincided with increased visibility of women in both political and business leadership, including sustained cross-partisan representation at the vice-presidential level. As in many middle-income countries, improvements in formal equality coexist with persistent gaps in labor market outcomes, suggesting that social norms and institutional rigidities continue to constrain full convergence.

The sharp improvement in legal indicators subindex after 2020 aligns closely with a combination of legal reform and changes in prosecutorial practice. On the legislative side, reforms to the penal code helped modernize the criminal justice framework, clarify legal definitions, and strengthen sanctions for corruption-related offenses, contributing to greater clarity of the law and procedural coherence. At the same time, the appointment of an unusually independent attorney general marked a clear departure from past patterns in the enforcement of those laws. For the first time in decades, high-profile corruption cases were brought not only against figures associated with previous administrations, but also against politicians and officials linked to the governing coalition. Investigations involving senior legislators, mayors, and politically connected actors sent a strong signal that prosecutorial discretion was no longer being exercised along partisan lines, and this shift had an immediate effect on perceptions of judicial independence and effectiveness, as reflected in the legal subindex. However, the conversion of investigations into final convictions has been slower and more uneven, reflecting judicial inertia and inherited procedural constraints. This underscores that prosecutorial autonomy does not necessarily amount to systemic judicial transformation.

At the same time, this episode raises an important institutional question. The recent strengthening of the rule of law appears to rest heavily on the personal credibility and independence of the prosecutor, rather than on a fully consolidated system of judicial autonomy. Whether these gains can be normalized—embedded in procedures, safeguards, and professional norms that outlast individual officeholders—remains to be seen. Taken together, the evolution of freedom in the Dominican Republic shows an institutional trajectory shaped by steadiness rather than spectacle. Political competition has remained credible over time, legal institutions have strengthened without abrupt breaks, and economic rules have evolved through adjustment rather than ideological swings. This pattern stands in contrast to much of the region, where institutional change has often been driven by sharp turns, constitutional resets, and recurrent political crises. In the Dominican case, stability has carried weight. It has allowed investment decisions to be taken without persistent institutional uncertainty and has given economic activity room to expand without the disruptions associated with repeated policy reversals. Social demands, in turn, have tended to find expression through elections, courts, and public debate rather than through systemic crisis. The payoff from this understated but resilient institutional framework becomes clearer when attention shifts from rules to results. The following section examines how this steady expansion of freedom has translated into sustained improvements in income, health, education, and overall standards of living.

From freedom to prosperity

The Dominican Republic’s experience over the past three decades suggests that institutional stability, while rarely dramatic, can be economically productive. The country has recorded the fastest GDP growth in Latin America in the last half-century, averaging approximately 5 percent annually—well above the regional average of 3.2 percent. This performance has translated into the fastest income convergence with the United States of any major Latin American economy: From one of the poorest countries in the hemisphere in the 1960s, the Dominican Republic now has a standard of living roughly one-third that of the United States, compared to one-quarter for the region as a whole. This remarkable performance reflects the cumulative effect of a predictable institutional environment in which economic activity could expand over time rather than being repeatedly disrupted. The Prosperity Index captures this payoff, showing steady improvements in income and basic social indicators since the mid-1990s.

Rather than relying on a single engine of expansion, the Dominican Republic has built a diversified growth model that has evolved gradually over time. Economic activity has been rooted in a combination of tourism, free trade zones, mining, construction, and services, with each sector playing a stabilizing role at different phases of the cycle. Tourism has provided a steady source of foreign exchange, while export-oriented manufacturing in free trade zones has integrated the country into global value chains, especially in medical devices and electronics. Gold mining—anchored by Pueblo Viejo, Latin America’s largest gold mine—has emerged as the country’s leading export and proved especially valuable during the pandemic when mineral revenues helped offset the collapse in tourism. Construction and related services have supported domestic demand, partly reflecting sustained population growth and urbanization. This diversification has reduced exposure to commodity price volatility and limited the risk of abrupt downturns, distinguishing the Dominican Republic from many regional peers whose growth paths have been more narrowly concentrated.

The United States occupies a central place in the Dominican Republic’s external economic relations, but it does so within a relatively diversified trade structure. Geographic proximity, preferential trade arrangements under DR-CAFTA, and long-standing commercial ties have made the United States the country’s most important single trading partner. The relationship cuts in both directions: The Dominican Republic exports free trade zone manufactures and traditional agricultural commodities—tobacco, sugar, cocoa, coffee—while importing energy, machinery, and consumer goods from the United States. This two-way integration has provided a stable demand anchor and supported export-oriented sectors from traditional agriculture to modern manufacturing, with growing nearshoring opportunities. At the same time, the Dominican Republic has avoided excessive concentration on a single market. Trade links with Europe, the Caribbean, and Latin America have expanded over time, and tourism revenues draw on a broad set of source countries. This diversification has reduced vulnerability to shocks originating in any one economy, allowing the country to benefit from deep integration with the United States while maintaining a degree of external balance.

Education presents a more ambivalent picture. The Dominican Republic made a highly visible and politically salient commitment to education funding during the 2010s, following sustained social pressure to comply with constitutional spending mandates. Public investment expanded rapidly, leading to clear improvements in access, school infrastructure, and enrollment. These efforts marked an important shift in public priorities and are reflected in gradual gains in educational attainment indicators captured by the Prosperity Index.

However, improvements in educational quality have lagged far behind the scale of financial effort. Learning outcomes remain weak by international standards, as reflected in the Dominican Republic’s consistently low performance in the Programme for International Student Assessment, where students score well below the OECD and Latin American averages in reading, mathematics, and science. This gap points to institutional constraints rather than a lack of resources. Rigidities in the public education system—particularly regarding teacher evaluation, incentives, and accountability—have proven difficult to overcome. Opposition to reforms aimed at improving performance has often succeeded in preserving existing arrangements that disproportionately benefit a relatively protected group of workers, while limiting gains in system-wide quality and student outcomes. As a result, education has yet to play the role in productivity growth and social mobility that is required for sustained income convergence.

Health outcomes have followed a more linear trajectory. Life expectancy has increased steadily over the period, reflecting income growth, expanded access to basic healthcare, and incremental improvements in coverage. The Dominican Republic did not undertake a radical overhaul of its healthcare system, but rather expanded it gradually, with uneven quality but broad reach. These gains are consistent with the country’s level of development and contribute meaningfully to improvements in overall well-being, even as efficiency and quality challenges persist.

Inequality has improved markedly over the past decade. The Prosperity Index shows a substantial reduction in income inequality since around 2010, with the inequality component increasing by roughly twenty-five points, placing the Dominican Republic among the stronger performers in the region on this dimension. This improvement reflects a combination of sustained economic growth, rising employment, and gradual formalization, which together helped lift incomes at the lower end of the distribution. Unlike in many neighboring countries, these gains were achieved without the boom-and-bust cycles that tend to reverse distributional progress.

At the same time, the decline in measured inequality masks emerging forms of segmentation that could become more consequential over time. High levels of informality continue to limit upward mobility for a large share of workers, constraining access to stable income trajectories and social protection. While overall income dispersion has narrowed, disparities in job quality and long-term opportunity persist. The Dominican Republic’s experience illustrates that inequality can fall meaningfully even as structural dualities remain entrenched—a pattern consistent with a growth model that has been inclusive in aggregate terms but uneven in how opportunities are distributed across the labor force.

These distributional patterns also shape how migration from Haiti features in the prosperity debate. The issue is deeply polarizing, and this polarization has produced policy incoherence rather than resolution. The 2013 Constitutional Court ruling (TC 168-13) held that tens of thousands of Dominican-born individuals of Haitian descent had never been entitled to citizenship—a decision that drew accusations of creating statelessness from the Inter-American Court of Human Rights.  Subsequent regularization efforts reached only a fraction of the affected population, constrained not only by domestic political backlash but also by Haiti’s limited administrative capacity and inability to provide basic civil documentation for many affected individuals. Meanwhile, mass deportations coexist with the massive use of undocumented labor in construction, agriculture, and services, while Haitian migrants and their descendants represent a substantial share of public spending on schooling and healthcare. The result is neither exclusion nor integration but an intractable ambiguity: pervasive informality, legal precarity, and administrative inconsistency that entrenches inequality even as aggregate indicators improve.

The more consequential challenge lies in the longer-term implications of informal integration. When access to services, education, and employment relies on ad hoc arrangements rather than clear institutional pathways, the risk is not immediate marginalization but gradual stratification. Over time, this can translate into persistent differences in educational trajectories, job quality, and social mobility, even without explicit barriers or discriminatory intent. Haitian migration, therefore, does not currently undermine prosperity outcomes, but it does test the capacity of Dominican institutions to transform informal inclusion into sustainable integration and to prevent new forms of segmentation from emerging alongside otherwise improving inequality indicators.

The path forward

The Dominican Republic approaches the coming years from a comparatively favorable position within Latin America. Democratic norms are consolidated, institutional performance has improved incrementally, and prosperity gains have accumulated without major reversals. The central question ahead is therefore not one of stability, but of trajectory. The challenge is whether the country can move beyond a successful middle-income equilibrium and sustain the kind of productivity gains required to converge toward high-income status.

Externally, the Dominican Republic is unusually well positioned, particularly in its relationship with the United States. Close economic, political, and security ties have long defined the country’s development path, and recent shifts in US trade and industrial policy have, in principle, reinforced this advantage rather than undermined it. Even amid more protectionist rhetoric and policy experimentation in Washington, the Dominican Republic has remained a trusted partner, benefiting from geographic proximity, established supply chains, and a reputation for macroeconomic and political reliability. Yet this favorable positioning has not always translated into concrete gains at the scale one might expect. A telling example is the presence of a US International Development Finance Corporation office in the country, which was initially seen as an opportunity to channel investment and support strategic projects but has so far had very limited activity. This gap highlights a broader risk: Close alignment with the United States creates opportunities, but capturing them requires domestic institutional capacity, project readiness, and strategic coordination. Without these, proximity and trust alone may result in underused potential rather than accelerated convergence.

This places the question of the middle-income trap at the center of the country’s outlook. The Dominican Republic has already captured most of the gains associated with macroeconomic stability, openness, and sectoral diversification. What lies ahead is a more demanding transition toward productivity-driven growth. The risk is not a return to instability or crisis, but a gradual settling into growth rates that are sufficient to sustain middle-income status yet insufficient to achieve convergence with advanced economies. Persistently low educational quality, high informality, limited innovation capacity, and weak spillovers from export sectors continue to constrain productivity. Escaping the middle-income trap will depend on transforming these underlying drivers through improvements in learning outcomes, technical training, and innovation capacity to enable diversification toward higher-value sectors.

Institutionally, recent improvements in the rule of law and anti-corruption enforcement have strengthened public trust and international credibility. However, the durability of these gains remains an open question. Much of the progress since 2020 has relied on leadership choices and informal norms rather than on fully entrenched institutional safeguards. Whether judicial independence, prosecutorial autonomy, and legal clarity can be preserved across political cycles will be a key determinant of future performance. Moreover, prosecution is not the same as prevention, and high-profile cases have demonstrated that corrupt practices persist even under the credible threat of enforcement. A partial rollback would not necessarily trigger immediate instability, but it would weaken the institutional foundations required for higher-quality growth and more complex economic activity, while leaving underlying vulnerabilities in procurement, asset disclosure, and political finance unaddressed.

Regionally, instability represents a more immediate and less controllable risk. The situation in Haiti has deteriorated to an unprecedented degree: Since the assassination of President Jovenel Moïse in 2021, gangs—some designated as terrorist organizations—have seized control of an estimated 90 percent of Port-au-Prince, while state institutions have effectively ceased to function. The violence has displaced over one million people and caused tens of thousands of deaths since 2018. This is not cyclical instability but a qualitatively different breakdown. Persistent institutional collapse and humanitarian distress across the border generate security concerns, fiscal pressures, and diplomatic constraints that the Dominican Republic cannot fully manage on its own. While the country has so far absorbed these pressures without major disruption, prolonged instability in Haiti could increasingly test its administrative capacity, border management, and social cohesion, particularly if international engagement remains insufficient.

A related risk stems from the very factors that have underpinned the Dominican Republic’s success. Relative political stability, improving infrastructure, and deep integration into international trade networks also make the country an attractive transit and logistics hub for illicit activities, particularly drug trafficking and associated financial flows. As enforcement pressures shift across the region, there is concern that criminal networks could seek to exploit the Dominican Republic’s ports, transportation systems, and financial channels. This risk does not reflect institutional failure—in fact, the country has achieved record drug interdictions in recent years—but exposure created by openness and connectivity. If not handled carefully, these dynamics could strain security institutions, distort local economies, and erode public trust, undermining some of the institutional gains achieved in recent years.

Finally, the political economy of reform will remain decisive. The Dominican political system continues to combine a strong presidency with a relatively weak legislature and a vibrant civil society capable of constraining government action. As earlier sections have shown, this configuration has been effective at preventing democratic backsliding and forcing accountability, but it has also made structural reform difficult. This tension is particularly evident in the fiscal sphere. A narrow tax base and extensive exemptions limit the state’s capacity to finance higher-quality public services and consistent public policy execution, as well as to strengthen social protection and further reduce structural inequalities. As a result, the government has increasingly turned to debt: Interest payments alone now approach 4 percent of GDP, and debt service consumes 25 to 30 percent of the state budget, crowding out productive public investment. Meanwhile, intractable problems persist—most notably electricity subsidies required to cover distribution losses—that continue to drain fiscal resources. The result is a budget squeezed between debt obligations, unproductive subsidies, and inadequate investment in human capital and infrastructure.

Without fiscal reform, efforts to improve education, infrastructure, and social protection will remain constrained, even as parts of the economy continue to advance. The risk is that inequality, which has declined in aggregate, could begin to rise again in more structural forms, producing a segmented society marked by pockets of high prosperity and opportunity alongside regions and communities that remain disconnected from growth. Whether the political system can move from preserving stability to actively reforming itself—making choices that broaden the tax base and strengthen state capacity—will determine whether the country can convert steady momentum into sustained development. In sum, sudden crises or dramatic reversals are unlikely to define the Dominican Republic’s future. Its prospects hinge instead on whether it can leverage its favorable external position, preserve recent institutional gains, and overcome domestic constraints that limit productivity, human capital formation, and social integration. Stability has served the country well. The challenge now is to turn that stability into sustained convergence—by moving beyond a political culture of indefinite deferral that has allowed structural problems to persist even as the economy expanded. Whether leaders are prepared to make difficult and politically costly decisions—rather than merely avoiding destabilizing ones—will determine whether the next half-century is defined by incremental continuity or genuine transformation.

Marino Auffant is a nonresident senior fellow at the Atlantic Council’s Scowcroft Center for Strategy and Security. He is a historian and geopolitical strategist whose work examines global macro trends, great-power competition, and economic statecraft. Based in Washington, D.C., he advises public- and private-sector leaders on structural competitiveness, supply-chain strategy, and industrial policy, with a particular focus on strategic dynamics in the Western Hemisphere and US–Dominican Republic relations. His research and advisory work spans energy markets and semiconductor nearshoring strategy. He holds a PhD in history from Harvard University.

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Three decades ago, the West seemed unassailable. The Soviet Union had collapsed and for the third time in the twentieth century, the United States and its allies had emerged victorious in a global struggle against an authoritarian foe—and for the first time in generations, Western liberal democracy did not have an ideological or geopolitical adversary. It was a giddy moment when anything and everything seemed possible.

Today, that heady optimism feels like a distant dream. Thirty years after the Soviet empire ended, Russia launched its invasion of Ukraine, the largest land war in Europe since World War II. The liberal democratic model of governance that appeared so triumphant and invincible three decades ago is today beleaguered and on the defensive as populism, xenophobia, and authoritarian attitudes sweep Europe and North America. ​​The world today seems as dangerous, if not more so, than during the long twilight struggle of the Cold War.

So what happened? How did we fall from the heady optimism of 1992 to the peril, malaise, and danger of today? What lessons can we learn from the post-Cold War period? Shortly before the outbreak of World War II, the British historian E. H. Carr published his seminal book The Twenty Years Crisis: 1919-1939, which examined the lessons of the interwar period. Carr argued that this era was a crisis of the international system, resulting from the failure of the old liberal order to adapt to and understand new and emergent political, economic, and military realities.

​​This report argues that a similar dynamic played out in the contemporary West in our own thirty-year crisis between the end of the Cold War and Russia’s invasion of Ukraine. The liberal order failed. But how? And why? The author interviewed dozens of policymakers, analysts, and experts in Europe and North America to distill the lessons of the post-Cold War era.

Brian Whitmore is a nonresident senior fellow at the Atlantic Council’s Eurasia Center and assistant professor of practice at the University of Texas-Arlington.

He is also the founder and author of the Power Vertical Blog and host of the Power Vertical Podcast, both of which focus on Russian affairs. Whitmore was previously a senior fellow at the Center for European Policy Analysis (CEPA) from 2018 to 2020 and senior Russia analyst for Radio Free Europe/Radio Liberty (RFE/RL) from 2007 to 2017. Prior to joining RFE/RL, Whitmore worked as a foreign correspondent for the Boston Globe in Moscow and Prague.

He also worked as a graduate lecturer with the Department of Government and International Studies at the University of South Carolina as a visiting lecturer with the History Faculty at Mechnikov National University in Odesa, Ukraine, and the International Relations Faculty at St. Petersburg State University in Russia.

His work has appeared in the Washington Post, the Atlantic, the New Republic, Foreign Policy, World Politics Review, Newsweek, and elsewhere. He has appeared as a guest commentator on CNN, the BBC World Service, NPR, Bloomberg, and various other media.

A native of New Haven, Connecticut, Whitmore earned an MA in political science from Villanova University in 1987 and BA in politics from St. Joseph’s University in Philadelphia in 1986.

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• Executive summary
• Introduction
• Part one: Military AI tech trends
• Part two: The specter of algorithmic warfare
• Part three: Future scenarios
• Part four: Policy recommendations
• Conclusion

Executive summary

Military artificial intelligence (AI) is moving from the margins of experimentation into the core of how NATO will fight, make critical decisions, and deter competitors over the next decade. The 2022 NATO Strategic Concept identifies the technological edge to be critical for the Alliance to fulfil its core tasks. Both contemporary warfare and renewed strategic competition suggest that data-driven AI decision-support systems and autonomous battlefield capabilities augmented with AI will define the character of future conflicts. There is a justified focus on evaluating strategic risks associated with such systems.

This report argues that integrating AI into military systems does not generate vulnerabilities that are fundamentally new in kind compared to existing cyber risks. But the difference lies in consequences. Once AI-enabled decision-support systems and autonomous platforms become critical to Alliance operations, interference with data, models, and computing infrastructure may have implications for NATO’s ability to see, decide, and act under pressure. Similarly, the offensive use of AI-enabled capabilities does not, on its own, raise or lower the nuclear threshold. Escalation thresholds in algorithmic warfare will continue to be driven by effects on the ground rather than by whether a system is AI-enabled. Yet the characteristics of AI—the speed, system opacity, and physical infrastructure—create more room for human error, misperception, and miscalculation.

To explore such possibilities, the Atlantic Council’s Transatlantic Security Initiative, in partnership with the NATO Office of the Chief Scientist, conducted a foresight study to clarify how adversaries might counter AI-enabled capabilities and to examine what this means for NATO doctrine, strategy, and deterrence. The research combined horizon scanning and expert interviews, an off-the-record workshop held in Washington, under Chatham House rules, and scenario modeling. The project mapped AI technology trends across decision-support systems and autonomous platforms, identified likely AI vulnerabilities and vectors of attack, and explored escalation dynamics through structured discussion and scenario-based exercises.

This project brought a new perspective into the debate on the impacts of transformative military AI on future warfare for two reasons. First, it is innovative in its comprehensive scope that encompasses both physical and cyber dimensions of algorithmic warfare. Indeed, it foregrounds the AI triad of data, algorithms, and computing power and shows how each can be attacked through cyber, kinetic, and electromagnetic (EM) means. And second, it examines the intersection of AI and nuclear weapons from a different angle: Tailored nuclear weapons are treated as a potential countermeasure against military AI for their electromagnetic pulse (EMP) effects.

There are two key findings.

While military AI does not generate “shock and awe” in and of itself, AI can exacerbate existing risk conditions for accidents and inadvertent escalations.

The report finds that the employment of military AI does not make the use of tailored nuclear weapons more likely. Instead, the choice of target, physical damage, and casualties are what matter. Workshop participants ranked responses to a notional AI-enabled drone saturation attack in the Baltic region by their perceived escalatory potential. Diplomatic action and electronic warfare were the most preferred responses, followed by kinetic strikes, cyber operations, and directed-energy weapons (DEW). Tailored nuclear EMP attacks were viewed as highly escalatory and politically unacceptable for NATO to use to repel an attack over NATO territory, even when framed as a tool of “information warfare.”

At the same time, military AI is expected to make the difference in terms of increasing speed, autonomy, scale, and uncertainty. This research, however, revealed that in comparison with all three components of the AI triad, the human remains the most vulnerable element of AI. Humans are routinely exposed to phishing, social engineering, cognitive bias, and already run the risk of deskilling as more tasks are delegated to machines.

Integrating AI into military operations therefore creates dangers along two pathways. First, speed and data are working against their user. Such compressed timelines can create cognitive problems in decision-making. Without safety and quality protocols in place, flooding decision-support systems with noisy or nonpatternable data can further thicken the fog of war for commanders. Second, AI-enabled military systems become increasingly complex and can lead to normal accidents, making foreign interference detection and exposure difficult to distinguish from system failures.

Algorithmic warfare highlights the importance of electromagnetic spectrum dominance.

Digital modernization of defense—the data-centric approach and software-defined capabilities—will make electromagnetic threats more salient. Russia’s war in Ukraine already highlights how GPS jamming, communications blackouts, and electronic warfare shape combat operations. This trend will intensify as NATO begins to lean on AI-enabled and multidomain command and control.

Advances in military applications of AI further strengthen the convergence between the cyber domain of operations (digital code) and the electromagnetic environment (electrons). In a crowded and contested spectrum, where software-defined radios, commercial satellites, and cloud-linked data centers underpin military networks, the distinction between “cyber” and “conventional” attack begins to blur. Further fielding of directed-energy weapons also indicates shifting the center of gravity to energy supplies.

Attacks on AI systems can use several vectors. The adversary can target model weights through espionage and hacking; poison training datasets; blind or spoof sensors on intelligence, surveillance, and reconnaissance (ISR) platforms; disable data relays; or physically damage hardware in data centers, cables, satellites, or uncrewed systems. Cyber operators, electronic warfare units, special forces, and conventional reconnaissance-strike systems may all participate in degrading AI-enabled capabilities. In contrast, the ongoing trend of lowering the cost of warfare will make any requirements for new protection measures, such as shielding or hardening, difficult to implement due to the trade-offs in terms of cost, weight, and endurance.

The report develops three future scenarios, including a fourth baseline case, to identify likely implications of future algorithmic warfare for NATO’s doctrine and strategy: guarded opportunism, brave new world, and minority report.

• Guarded opportunism outlines a future in which military AI, despite its transformative impacts, does not require the military to dramatically alter the rules of engagement. Instead of introducing qualitatively new risks or vulnerabilities, the challenges related to military AI remain manageable with disciplined cyber hygiene and resilient power supply. On the risk side, this scenario points to heightened dangers of AI-fueled hybrid warfare below the threshold of armed conflict.
• Brave new world is a less likely but more dangerous scenario detailing the conditions for escalation spirals. Transformative effects of AI lead to conventionalizing nuclear weapons. Fielding of AI-enabled military capabilities provokes the adversary to use new nuclear-powered EM weapons. Nuclear EMP attacks are viewed as a legitimate use of nuclear weapons that belong to the specter of algorithmic warfare.
• Minority report presents a different take on the possible algorithmic future in which AI technology hype drives strategy. This scenario focuses on cognitive challenges for political and military decision-makers, who tend to overestimate near‑term benefits and discount the long-term risks and compound challenges of AI integration. Instead of improving AI operational implementation processes, countries race to achieve phantom AI advantages that destabilize the international security environment.

For NATO to leverage and maintain the advantage from transformative AI technologies, this report makes seven recommendations for NATO leaders that can contribute to NATO’s future strategy and doctrine adaptation.

1. Master AI literacy. NATO needs to develop standards for continuous AI skill development for commanders, operators, and policymakers. AI literacy is not just a strategic competency but also an instrument of restraint.
2. Engineer redundancy. Instead of creating a digital copy of all existing procedures, NATO should prioritize maintaining the ability to transmit information on rehearsed secondary systems.
3. Coordinate approach to AI tech industry. NATO should develop a code of conduct for AI tech company engagements that addresses the formation of an exclusive suppliers’ group, the knowledge gap in the private sector, and the rules for civilian software engineers in war zones.
4. Maintain information dominance. NATO should develop a functional framework for operationalizing AI in support of algorithmic warfare that prioritizes military objectives over abstract benchmarks and diversify its early warning systems.
5. Clarify escalation thresholds. NATO should develop a shared understanding of escalation thresholds for algorithmic warfare, decide on response triggers, and predelegate command authority in time-compressed scenarios to avoid escalation risks and decision paralysis.
6. Assess the electromagnetic layer with accuracy. Future algorithmic warfare will require NATO to treat electromagnetic spectrum operations as a distinct layer of multidomain operations to protect its strategic initiative and command-and-control superiority. NATO should also update its standards to reflect the changing scope of critical infrastructure as AI becomes a strategic asset to avoid underestimating the EM layer.
7. Deter by ambiguity. NATO should project resilience while cloaking its sensitive AI assets in a black box unexplainable by adversaries. However, such deterrence by ambiguity should not erode internal accountability of NATO-run AI systems.

Introduction

The 2022 NATO Strategic Concept emphasizes the importance of the Alliance maintaining its technological edge to achieve mission success.¹ But NATO’s ability to ensure military effectiveness and uphold a credible deterrence and defense posture faces challenges in the era of emerging and disruptive technologies. In the context of rapidly evolving warfare tactics and renewed strategic competition, AI-powered decision-support systems (DSS) and autonomous battlefield capabilities are expected to shape future conflicts. NATO’s 2022 Digital Transformation Vision therefore intended to accelerate the adoption of data and AI analytics to unlock new advantages for the Alliance.²

Accordingly, NATO’s AI Strategy encourages strategic foresight activities to help allies achieve a reasonable level of AI readiness.³ It also focuses on anticipating new challenges and risks related to algorithmic warfare from adversarial use of AI. While the military potential of AI is versatile and uncertain, it has nonetheless become difficult to overlook its importance to strategic competition. Countries are racing to develop and deploy AI across their civilian economies and militaries. Russia, the most significant and direct threat to NATO allies, and the People’s Republic of China, a strategic competitor seeking to control key technologies, have widely communicated their intentions to field AI for military purposes.⁴

Research objective

The Atlantic Council’s Transatlantic Security Initiative, in partnership with the NATO Office of the Chief Scientist, has conducted a foresight study addressing this crucial topic. This effort seeks to gain more clarity on AI’s transformative military effects over the next decade. This report assesses the vulnerabilities entailed in AI integration into NATO military capabilities in the context of the digital transformation of defense and the growing importance of electromagnetic spectrum operations. Importantly, it identifies ways in which adversaries might counter future AI-enabled capabilities on and off the battlefield. The objective is thus to understand how these developments may affect NATO’s doctrine and strategy moving forward.

This report’s focus on the transformative effects of military AI is highly relevant given NATO’s ambition to conduct multidomain operations.⁵ As outlined in the Digital Transformation Implementation Strategy, NATO political and military leaders intend to use advanced analytics in combination with multimodal data from sensor networks for a consolidated multidomain situational awareness in real time.⁶ While the “digital backbone” is intended to enable command and control across all domains, a broader digital interoperability framework with a secured data-sharing ecosystem will enhance political consultation and decision-making processes.  

This report therefore seeks to address the complex question of the likely implications of future military AI countermeasures on NATO’s doctrine and strategy. This means identifying the risks from integrating transformative AI into military systems, examining the vulnerabilities the adoption of AI will create, assessing the severity and probability of corresponding adversarial attacks, and formulating recommendations. Importantly, to limit the dangers of technological determinism, this project examined how political and military leaders and policy planners (at the state level of decision-making) perceive new technologies appearing on the battlefield and craft their responses to escalate or not.⁷

Methodology

In terms of methodology, this report used several data collection and analysis tools. The first phase of the project consisted of horizon scanning and road mapping. Through a structured evidence-gathering process based on desk research of relevant open-source documents and background expert interviews, this report identified the most important drivers of change, as well as the likely future developments at the intersection of AI and the defense sector that are at the margins of current thinking and planning.

In the second phase, the Atlantic Council hosted an off-the-record closed workshop held on an unclassified level in Washington. Through two prescripted discussions, conducted under Chatham House rules, policy and scholarly experts were asked to stress test the assumptions from the first phase. This informed the project on the likelihood of AI countermeasures and conditions for escalation in future algorithmic warfare, as well as to validate recommendations.

The third and last phase of the project centered on future scenario development. This is a useful policy analysis tool that visualizes a set of possible future conditions to help NATO decision-makers to anticipate challenges as they define capability requirements for NATO’s success in future algorithmic warfare.

Structure

This report proceeds as follows. Part One maps AI technology trends and their military applications over the next decade, from the battlefield to the war room. Part Two then proceeds to anticipate the vulnerabilities of AI-enabled systems and to assess the possible vectors of attack to explore escalation pathways in algorithmic warfare; it covers both digital and physical dimensions across the so-called “AI triad” of algorithms, data, and computing power—and adds a human factor.

Part Three outlines three algorithmic futures—guarded opportunism, brave new world, and minority report—based on the likely transformative effects of military AI and their impact on international security. This line of scientific inquiry is highly relevant given ongoing research concerned with the impact of roboticized autonomous systems operating with minimal human supervision on future conflicts.⁸

Part Four discusses recommendations for NATO leaders. Based on the project’s findings, this report raises seven main action points that are categorized into three areas: AI readiness and resilience; military AI doctrine; and deterrence.

Part one: Military AI tech trends

AI is becoming a general-purpose military technology that will sit inside almost every digital system that NATO uses.⁹ Its transformative effects will likely concentrate in two areas. First, decision-support systems will expand the scale of information analytics military commanders can process to make better decisions fast. Second, autonomous and semiautonomous platforms will shift how militaries sense, move, and strike on the battlefield. Together, these developments are driving an AI era of algorithmic warfare.¹⁰

AI can, in principle, be implemented in everything that uses a computer. As defense establishments digitize, AI has never been a single-purpose capability in itself. Rather, AI architecture underpins modern command, control, communications, intelligence, surveillance, reconnaissance, logistics, and weapons systems. NATO’s own definitions reflect this evolution. In 1995, NATO described AI as the capability of a functional unit to perform tasks generally associated with human intelligence, such as reasoning and learning. By 2005, it was also seen as “the branch of computer science” focused on building systems that reason, learn, and improve themselves.¹¹ These definitions now apply across a much broader digital ecosystem. Software has become a defining component of many weapon systems and AI is increasingly embedded in sensors, networks, and command-and-control tools.

The overall expectations about AI’s impact on future warfare can be captured in three concepts: speed, scale, and autonomy. Speed refers to faster sensing, processing, and engagement cycles. Scale refers to the ability to handle vast volumes of data and to coordinate large numbers of distributed assets, including swarms of UASs. Autonomy refers to the degree to which AI systems can operate with minimal human supervision. NATO’s challenge will be to harness these three dimensions without sacrificing control, accountability, or interoperability.

From general-purpose enabler to algorithmic warfare

The military applications of AI span relatively low-stakes use cases such as administrative automation and training, operational functions like logistics and cybersecurity, and high-stakes roles in targeting, electronic warfare, and human-machine teaming in combat.¹² From a functional standpoint, experts in defense and military affairs expect AI to matter depending on the AI model type, broadly divided in four categories: generative AI, classification, prediction, and autonomy.¹³ This includes tasks in which large volumes of data must be processed quickly, where patterns are too complex for human perception, where actions need to follow real-time operational intelligence fast, and where simulated environments can meet high training requirements.

Generative AI: Content, coaching, and cognitive effects

Generative AI models create novel content that mimics the statistical properties of the data on which they are trained in response to human prompts. In the military context, these systems are likely to be used as “agents” or virtual advisers that support commanders and staff in alleviating their daily administrative burdens and automating less critical processes, such as drafting routine reports, summarizing long documents, and translating technical information.¹⁴ In training and simulation, generative AI models can serve as simulation tools in war games and exercises. They populate synthetic environments with plausible adversarial actors and behaviors. This role improves scenario realism and generates alternative courses of action.

At the same time, these features can also be weaponized for offensive information operations. Adversaries can use generative AI to run large-scale, low-cost disinformation campaigns. This may involve producing tailored propaganda or impersonating Alliance leaders, journalists, and civil society voices. Generative AI will therefore be a powerful tool in the hands of adversaries seeking to manipulate perceptions and erode NATO’s cohesion.¹⁵

Classification: Noise and signal in a sensor-saturated battlespace

Classification models excel at recognizing patterns in labeled data and assigning new inputs to categories they have learned. Militaries already use such models for computer vision, facial and object recognition, and behavior detection. Computer vision models can identify vehicles, aircraft, ships, and infrastructure in imagery from satellites, aircraft, and UASs against their regularly updated data libraries. Classification tools can become crucial for early warning systems, from detecting stealthy cyber intrusions to flagging irregular troop movements. In sum, over the next decade, these systems are well-suited to sit at the core of intelligence, surveillance, reconnaissance, and targeting architectures.

Much is expected from AI-enabled electronic warfare too. In a battlespace saturated with sensors, classification tools can automate filtering of the electromagnetic spectrum, such as distinguishing signal from noise and highlighting anomalous signals that warrant human attention. Furthermore, signal processing algorithms can suggest waveforms to counter hostile signals and thus help overcome adversarial jamming in real time.¹⁶ As the electromagnetic spectrum becomes more contested, the ability to recognize and respond to subtle patterns faster than an adversary will be a critical advantage.

Prediction and data fusion: Scaling decision support

Prediction models analyze historical and real-time data to identify trends and forecast likely future events. In military settings, they underpin decision-support systems (DSS) designed to help commanders cope with complexity and information overload. The transition to multidomain operations underscores the importance of such multimodal data fusion and analytics.¹⁷

This type of AI model is therefore suitable to support battle management, as they fuse information from multiple sources and data streams from land, air, maritime, cyber, and space assets, and integrate them into a single operating picture that is updatable in real time.¹⁸ However, this also means that such data-centric decision-making processes can narrow commanders’ perceptions and constrain their choices.¹⁹

They can also highlight early warning indicators, propose likely adversary courses of action, and flag emerging risks in logistics and supply chains. In logistics, in particular, AI can support predictive maintenance of critical stockpiles; forecast demand for ammunition, fuel, and spare parts; and anticipate bottlenecks in transportation networks.²⁰ Predictive systems can also assist with medical support by estimating casualties and optimizing the positioning of medical resources.²¹

Autonomy: From perception to action

Autonomy involves AI systems that perceive their environment, process real-time data from sensors, and make decisions in pursuit of a mission objective without constant human intervention. In this case, AI models can cause kinetic effects, as they can direct hardware and/or software to react within the physical realm based on the input from the immediate environment.

Onboard AI enables uncrewed aircraft, ground vehicles, and maritime platforms to filter and fuse sensor inputs, navigate in contested environments, and pass the most relevant information back to human controllers. Advances in machine vision, for example, allow drones to compare real-time imagery from downward-facing cameras with stored satellite images and inertial data to determine their position without reliance on global navigation satellite systems. This is particularly important in GPS-denied or heavily jammed environments.²²

Autonomy is also extending to terminal guidance and target recognition. Today, many drones operate on autopilot for parts of their mission, with humans in- or on-the-loop for final engagement decisions. Over time, fully autonomous solutions that combine visual navigation, target recognition, and terminal guidance are likely to proliferate. Seamless data flows, however, are crucial. The Ukrainian forces use a practice that resembles “Uber targeting,” where one unit identifies a target, shares the observation on an encrypted network, and the targeting assignment goes to whichever unit is available, even facilitating joint-strike capability from multiple vectors.²³ AI-enabled systems that can collect, process, and act on information in real time will make such dynamic targeting more common, especially when communications with higher headquarters are degraded.

From incremental adoption to algorithmic warfare

Together, developments in these functional areas point toward the algorithmic future of warfare. Broadly speaking, algorithmic warfare refers to integrating automated, autonomous, and AI technologies into the conduct of war, while decreasing the role of human elements.²⁴ In algorithmic warfare, the military conducts operations through AI-enabled capabilities that collect, analyze, and act on data at speeds and scales beyond human capacity. Artificially intelligent means operate when human warfighters cannot and reduce their exposure to danger. Such AI-enabled autonomous capabilities will especially be assigned tasks at the edge of the battlespace to handle time-critical sensing and response functions without human supervision and with minimum guidance.²⁵

Yet the most transformative effects of military AI are likely to appear in two use cases. First, AI in DSS will expand the scale and speed of information processing, giving commanders a richer but more mediated view of the operating environment. Decision-support tools will not only help humans make better-informed choices but also shape the decision space by highlighting some options and obscuring others. Second, AI embedded in weapons platforms will use speed and autonomy to compress the kill chain, shrinking the time between detection, identification, decision, and engagement.²⁶ This has implications for escalation control, the rules of engagement (ROE), and the role of commanders in supervising rapid, machine-driven engagements.

Drivers of change

Several structural drivers are signaling greater reliance on AI and algorithmic approaches to warfare. These drivers are particularly important for NATO as it implements its Digital Transformation Vision and prepares for multidomain operations.

Digital modernization of defense

First, the broader digital modernization of defense is creating the conditions in which AI can thrive. Modern militaries are upgrading their IT infrastructure and moving to software-defined capabilities that deliver new functionality to existing platforms.²⁷ This also means adopting data-centric approaches to capability development through collaborative digital spaces.

As militaries continue implementing digital modernization of their forces, their dominance in the electromagnetic spectrum is crucial for their new dependencies on sensors, satellites, and networked systems. Russia’s war in Ukraine has underscored the importance of EM warfare, including GPS jamming and communications blackouts.²⁸ These developments push militaries to design more resilient, autonomous, and decentralized command-and-control structures with better cybersecurity measures. At the same time, electromagnetic warfare in the West has not gotten the attention it needs and is still seen as largely subservient to or stovepiped from cyber.²⁹

Interconnected domains

Second, the move toward multidomain operations (MDO) requires integrating effects across land, air, maritime, space, and cyberspace, as well as in the virtual and cognitive dimensions. MDO aims to “[orchestrate] military activities, synchronize non-military instruments of power, and deliver converging effects at the speed of relevance.”³⁰ To make this possible, allies are building a digital backbone that can enable command and control across all domains. However, the effectiveness of this backbone depends on interoperable data sharing, secure and reliable communications, and advanced analytics capable of fusing data into a real-time consolidated multidomain picture. Turning well-integrated AI models into C4ISR systems that enhance situational awareness and support decision-making becomes part of the key conditions for conducting multidomain operations.

Autonomy pursuits

Third, recent and ongoing conflicts are accelerating experimentation with AI-enabled autonomous and decision-support systems. In Ukraine, AI-driven platforms already analyze extensive sensor and signal data to generate real-time targeting suggestions and logistical predictions.³¹ In Gaza, reports indicate that machine-learning systems such as “Gospel” and “Lavender” have been used to support dynamic targeting and terminal navigation by combining multi-source imagery with other intelligence inputs.³² These cases illustrate a shift from isolated, weapon-centric AI applications toward more comprehensive systems that inform planning, targeting, and force deployment at all command levels.

Drones are no longer only agents of remote warfare but are fast becoming agents of algorithmic warfare as well. Demand has surged for battlefield drone footage. Thousands of drone-camera videos depicting successful strikes are used to train computer-vision models, while engineers race to design uncrewed systems that can navigate and coordinate in GPS- and communications-denied environments using on-board processing and limited power.

Two motivations stand out: building “mass for precision” and supplementing shrinking human force structures. Swarm tactics and swarm command seek to saturate defenses and compress reaction times through the coordinated use of large numbers of low-cost platforms. At the same time, demographic trends and recruitment challenges will incentivize greater robotic integration and human-machine teaming. Forward-deployed, uninhabited platforms on standby will increasingly redefine how militaries think about force projection and readiness.³³ For instance, large drone formations can provide the aggressor with an edge in the invasion of foreign territory, highlighting the challenge to the capacity of air defenses.³⁴ Across these trends, AI is fast becoming more than just a technological tool; it is a vital strategic competency,³⁵ and will likely determine which militaries can exploit AI—at scale and under stress. For NATO, understanding where AI is most likely to transform operations, and how adversaries might target the vulnerabilities of AI-enabled systems, is a prerequisite for credible deterrence and effective defense in the emerging era of algorithmic warfare.

Part two: The specter of algorithmic warfare

Militaries have not yet realized the full potential of AI technologies, but it is not difficult to see how AI will shape the strategic environment and wartime paradigms. As the AI race intensifies, potent AI-enabled capabilities will be deployed as part of NATO’s digital transformation and decision-support ambitions.³⁶ This section translates interview insights and workshop discussions into a structured analysis of AI’s core components and their vulnerabilities and the likely vectors of adversarial attack. Two case studies used in the workshop—AI applications in autonomous weapons platforms and in a decision-support system—further informed the analysis of the limits of main AI countermeasures and the conditions under which escalation in algorithmic warfare may occur. This is because the likelihood of an adversary attacking NATO for using AI models for predictive maintenance is comparatively low.

AI triad

Military AI rests on three interlocking components often described as the AI triad: data, algorithms, and computing power.³⁷ Each component has a specific implication for offense-defense parameters. For instance, algorithms imply attacks on model architecture, computing power involves disrupting semiconductors and supply chains, while data concern cyberattacks to poison datasets.

Data refers to information about the focus area of the machine-learning system, collected from sensors and other sources, organized, stored, and made accessible. Algorithms are the series of instructions used to process information; machine-learning algorithms derive insights from datasets and the learnable parameters that encode the core capabilities of an AI model in model weights. Computing power provides the speed and capacity to execute algorithms at scale, train models to determine weights, and run inference offline on deployed systems.³⁸ In practice, computing power includes processors and graphics cards, advanced semiconductors, content delivery networks, power supplies, and cooling. Defense applications often need to run offline on edge devices under strict size, weight, and power constraints, or on government cloud resources with limited GPU availability. Data, sometimes dubbed the new “munition” due to their importance for modern warfare, encompasses issues such as volume, quality, salience, and labeling. The amount of training data strongly influences effectiveness, though collecting the right operational data and labeling it correctly are important for accuracy and alignment. Algorithms feed data into model weights through training, and their resulting internal architecture determines future data analysis in real-time operations.

AI vulnerabilities and vectors of attack

Integrating AI introduces several challenges along the entire triad. Core datasets are massive, models can be opaque, and natural-language prompting expands input surfaces. These characteristics create multiple entry points for adversaries and raise the importance of disciplined processes and safeguards. Adversaries will attempt to degrade NATO’s AI-enabled capabilities by targeting the triad across cyber, electromagnetic, and conventional kinetic dimensions. This section outlines how such attacks would prevent the Alliance from enjoying advantages from AI.

Computing power

Vulnerabilities associated with computing power reflect the physicality of AI infrastructure. This is because advanced semiconductors and specialized chips must be sourced, supplied, and integrated into systems that also require stable energy and cooling. The performance of inference-heavy applications may depend on AI-optimized hardware. These dependencies create risks during material shortages, expose weak points in data centers, and constrain performance at the tactical edge.

Adversaries can exploit material attributes of semiconductors. They can disrupt the supply of specialized AI chips, seed vendor-supplied Trojan backdoors, or manipulate cloud architectures built with commercial technology. They can target the electricity supply of data centers and sabotage their water-cooling systems to cause outages, or damage undersea cables and content-delivery networks to disrupt data flows.

Data

Data is vulnerable across the lifecycle of AI models. Adversaries can poison training datasets through cyber operations that mislabel data or introduce hidden triggers that cause the model to misbehave. Poorly labeled or biased datasets degrade performance, making certain classes of objects invisible to the system or misclassifying them at critical ranges. If the wrong data is collected, or if the right data is corrupted, the entire decision-support chain can lead a model to malfunction and reduce its reliability in the long term.

Adversaries can also interfere with real-life data collection. Because drones and other autonomous systems rely on environmental input, adversaries can tamper with surroundings to impact sensory input and cause abnormal behavior. For instance, blinding sensors on ISR platforms with optical illusions, or adjusting the sensors themselves, and generating spoofing signals can mislead the model into inappropriate responses.³⁹ In addition to onboard perception and planning modules, adversaries can target control interfaces, power management, data relays, and user interfaces used to coordinate connected autonomous systems. Alternatively, disabling low-orbit satellites can also stop real-time input and data sharing.

Algorithms

Incorporating AI into the digital architecture makes the existing systems susceptible to attacks that target the AI model itself. Because model parameters encode internal configuration variables crucial for its operation, compromising weights and biases gives an attacker significant leverage. Adversaries can also try to steal model weights through espionage or proxy hackers, gaining access to the core capabilities of the model for manipulation.⁴⁰
Adversaries can thicken the fog of war for algorithms by flooding AI-enabled DSS with inputs that are inaccurate, uncategorizable, or nonpatternable. They can exploit the rare and unpredictable features of the battlefield, since AI models are mostly trained on either synthetic data or on datasets from previous conflicts that may not quite fit the type and circumstances of the current war zone.

Interviewed experts and workshop participants indicated that the most likely adversarial action against military AI architecture would include:

1. Blinding sensors on ISR platforms to stop the real-time input of new data.
2. Spreading misinformation to confuse the algorithms with nonpatternable data.
3. Physically damaging undersea cables to disrupt data sharing.
4. Conducting espionage in the suppliers’ private lab facilities.

Surprisingly, however, the most vulnerable component of AI seems to be the human; data and algorithms follow, with the computing power being the least vulnerable of AI components. Such human-related vulnerabilities include personalized phishing, social engineering, cognitive bias, and deskilling.

Countering military AI

Having discussed the vectors of adversarial attacks on AI-enabled military systems and capabilities, this section now briefly comments on the means of such attacks. These AI countermeasures include cyber operations, conventional kinetic attack, electronic warfare, directed energy weapons (DEW), and tailored nuclear weapons with enhanced electromagnetic pulse (EMP). Each has distinct advantages and limitations.

Cyber operations

Cyber operations can interfere with how AI models learn and operate by manipulating ones and zeros. Cyberattacks can degrade the model’s performance or integrity, limit its availability by delaying responses or rendering command-and-control systems inoperative at crucial moments.⁴¹ Integrating AI into military systems increases their vulnerability simply by creating more targets for computer hacking.⁴² These AI vulnerabilities include compromising software libraries, poisoning training data, hijacking AI infrastructure, or stealing sensitive AI properties. Such cyberattacks, however, require prior intelligence to target the right datasets and processing centers. Their effects can be difficult to assess and attribute in real time, which increases the potential for miscalculation.

Conventional kinetic action

Conventional kinetic attacks can target ISR assets including space-based systems, airborne warning and control system aircraft, and other hardware components integral in critical AI infrastructure. Traditional air defenses can target offensive AI onboard small autonomous vehicles with low-cost interceptors, nets, and guns. Kinetic action is tangible but can be escalatory depending on target and context, and it may be expensive or resource-intensive if used at scale against saturation attacks.

Electronic warfare

Electronic warfare uses electromagnetic energy to degrade hostile systems by jamming or spoofing. EW can produce reversible, nonlethal effects, but it is constrained by range, power, antennas, and by the need for detailed knowledge of enemy waveforms and code. Focused jamming and signal spoofing in case of multisensor platforms can confuse AI into analytical errors and lead to wrong reactions. Jamming, however, is possible only in the case of collaborative autonomous platforms that communicate among themselves the adaptive course of their action.

Directed-energy weapons

High-power microwaves and high-energy lasers widen the range of electromagnetic spectrum operations (EMSO). They can disable or destroy electronics on autonomous platforms using concentrated electromagnetic energy.⁴³ While microwaves are suitable for area defenses and perimeter denial against swarms of drones, lasers with their energy beams perform point defense similar to short-range air defense and counter-rocket, artillery, and mortar missions. They have low logistics tails and low cost per shot, but they are power hungry and range-limited. Atmospheric conditions, such as rain and fog, can reduce beam quality and effectiveness, as well as increase fratricide risks. Their applications for space missions look promising given their reusability and the potential to degrade or destroy a satellite.⁴⁴

Tailored nuclear weapons with enhanced electromagnetic pulse

Nuclear explosions of all types—from underground to high altitudes—are accompanied by an electromagnetic pulse. The strength and area coverage of this intense time varying electromagnetic radiation depends on the warhead type and yield, and the altitude of the detonation.⁴⁵ This means that while high-altitude airbursts can have a continent-wide deposition region, for explosions in the atmosphere at altitudes below 30 kilometers, the radius ranges from 5 to 16 kilometers.⁴⁶

Since the 1960s, EMPs, either man-made or natural, have been known to have a potential to disrupt, damage, or destroy a wide array of electrical and electronic systems.⁴⁷ Degradation of electrical and electronic system performance as a result of exposure to the EMP may cause either permanent functional damage or a temporary operational impairment, lasting from seconds to hours.⁴⁸ Computers used in data processing systems, communications systems, and semiconductors belong to the category of devices most susceptible to failure.⁴⁹

While airbursts have little or no fallout and no residual radiation, it is difficult to predict their effects and impact on today’s sensitive electronics, as well as avoid collateral damage and civilian casualties. Together with the difficulty to signal limited nuclear use, since the adversary cannot distinguish low-yield from high-yield weapons, such employment of nuclear EMP weapons remains highly problematic and inherently escalatory.⁵⁰ Experimental exercises over the past decades have identified no assurance that a nuclear strike would remain limited.⁵¹

Escalation and algorithmic warfare

The workshop assessed the salience of AI-enabled lethal operations along an escalatory pathway from minor cyber operations to DEW and nuclear EMP. The following paragraphs summarize the expert participants’ discussion on the conditions under which the use of military AI could increase the risk of escalation.

Escalation is defined as “an increase in the intensity or scope of conflict that crosses threshold(s) considered significant by one or more of the participants.”⁵² Escalation thresholds then depend on retaliation in response to some form of attack. The workshop discussion highlighted the distinction between effects-based and means-based escalation logics. While effects-based logic identifies thresholds depending on the impact that is irrespective of the weapons type, means-based logic emphasizes the qualitative difference between nuclear, conventional, and cyber domains. Some means are regarded as less escalatory than others. For instance, cyberattacks have proven capable of restraining the escalation dynamic and even de-escalating geopolitical crises.⁵³ Similarly, attacks on large drones are less likely to lead to escalation than attacks on inhabited aircraft.⁵⁴

Most researchers studying the AI-nuclear intersection focus on AI amplifying existing risks in nuclear command, control, and communications that can spark accidental nuclear confrontation,⁵⁵ undermining deterrence with AI-enabled conventional systems,⁵⁶ incentivizing first strike,⁵⁷ or exacerbating the proliferation/verification dilemma.⁵⁸ This workshop addressed the concern of a possible deliberate use of nuclear weapons as a warfighting tool designed to produce electromagnetic pulse effects to counter military AI. Previous experimental war-gaming showed that although low-yield nuclear weapons do indeed destabilize international security since they are seen as a substitute for high-yield nuclear use, they do not seem to increase the likelihood of crossing the nuclear threshold.⁵⁹

The workshop scenario described an AI-enabled fast and lethal drone saturation attack into the Baltic region. The scenario listed a number of possible responses:

1. Diplomatic action.
2. Economic sanctions.
3. Cyberattack.
4. Conventional kinetic response.
5. Electronic warfare measures.
6. Directed energy weapons.
7. Tailored nuclear weapons with enhanced electromagnetic pulse.

The workshop participants ranked responses by their perceived escalatory potential. Diplomatic action and electronic warfare tended to come first and often in parallel. Kinetic action, cyber operations, and DEW followed as second-ring responses. Economic sanctions were seen as medium-term tools, not immediate response levers. Tailored nuclear EMP was considered least probable but most escalatory, with a consensus that its use over NATO territory would be unacceptable. Among the most prevalent concerns against the nuclear EMP use, the participants noted: lowering the threshold for strategic nuclear weapon use; observing the nuclear “taboo,” the response’s proportionality, proliferation of nuclear weapons following nuclear use, and setting a negative precedent.

The follow-on discussion highlighted that adversaries may exploit AI structural risks. Complex AI systems can make attribution and intent assessment harder as AI and autonomy create conditions for plausible deniability. In addition, increased speed and data volumes can work against the user, since time-pressured scenarios increase the risk that decision-makers may rely more heavily on potentially compromised AI outputs, without even understanding the source of unanticipated inputs or system failures.⁶⁰

The workshop confirmed that military AI is not escalatory because offensive AI-enabled capabilities do not meaningfully increase the nature or intensity of a conflict. What matters is the choice of target, the physical damage, and the presence of casualties. At the same time, the properties of AI—speed, autonomy, and opacity—can increase the risk of inadvertent escalation. Despite the fight for EM spectrum dominance, the AI status of an attack does not lower nuclear thresholds—effects on the ground determine response. Ultimately, the vicinity of the adversary’s troops continues to be perceived as more escalatory than an AI-powered swarm attack.

Part three: Future scenarios

Juxtaposing the possible transformative effects of military AI against the threat perception (table A), this foresight study outlines three military AI future scenarios: Guarded opportunism, brave new world, and minority report. The goal is to anticipate long‑haul innovation in countering adversarial attacks on NATO’s AI systems and to inform military research and development decisions.⁶¹

The scenarios are modeled after two variables with a graduated level of likelihood. The first variable concerns the transformative impact of AI: whether countries achieve any strategic advantage from integrating AI into their militaries. And the second variable addresses an adversary’s threat perception: whether integrating AI provokes the development of new countermeasures and/or changes on the escalation ladder.

The fourth quadrant—AI fatigue—represents the most unlikely scenario with no decisive AI advantage and no heightened threat perception. It is less policy‑salient but remains useful as a control for future policy planning.

Scenario I. Guarded opportunism

This is the most plausible future scenario. AI meaningfully transforms military affairs and confers comparative advantage on states that integrate it well, yet it does not worsen adversary threat perceptions. Business continues largely as usual. AI‑enabled decision support and autonomy systems transform the character of warfare through expanded scale and increased operational speed yet without changing the nature of war.

NATO’s digital transformation and integrated AI-enabled military capabilities do not introduce qualitatively new risks or vulnerabilities. These remain familiar to cyberspace and can be managed with disciplined cyber hygiene and resilient power-supply architectures. However, AI may heighten some of the existing threat pathways and security risks. As AI becomes integral to the ability to operate and respond, degraded situational awareness and power outages, for instance, could become more consequential—and a new center of gravity—in digitalized, software-defined defense. Decision‑support systems help commanders filter the noise and frame choices faster, but they do not demand new categories of resilience beyond what Part Two already identified for the AI triad.

Hybrid pressure intensifies below the threshold of armed conflict. Cable cuts, data center intrusions, and information operations become routine. Russia continues sabotaging critical AI infrastructure to disrupt supply chains and cyber and drone intimidation campaigns across Europe.⁶² Yet technology knowledge and investments into resilient computer systems limit these escalation attempts. Better engineering and AI literacy shorten detection and attribution loops and make recovery faster.

Two challenges stand out. The first is the intergovernmental character of the Alliance. NATO relies on its member countries for certain types of cyber operations. This dependence on capitals to act creates latency in time‑sensitive crises and may result in inefficient responses that may not prevent further escalation of hybrid warfare. The second is information warfare targeting the Alliance’s reputation. NATO publics in left‑leaning governments are targeted with disinformation campaigns that frame AI‑enabled capabilities as unethical “killer robots,” arguing that NATO violates its own principles of responsible use of AI. Adversaries are further fueling domestic opposition to reduce tech-sector cooperation.

Still, guarded opportunism is defined by low escalation risks. Algorithmic warfare remains bounded by existing ROE and proportional responses. The only time AI and nuclear fields cross their paths with real-world consequences is in the widespread adoption of small nuclear reactors across the military to power demanding computations of AI models.

Scenario II. Brave new world

In the second scenario, AI is transformative and threat perception worsens. The AI triad delivers a real strategic and operational edge. However, AI-related risks grow with it over time due to insufficient literacy, lack of regular training, lagging skill development, and sloppy implementation of zero‑trust policy across armed forces. Furthermore, rapid and widespread integration of AI models creates new vulnerabilities, stemming from limited human agency, which complicate the cognitive aspects of decision-making.⁶³ The result is an increased probability of flash wars among autonomous robotic systems, in which algorithms interact at such a fast pace that humans would not be involved.⁶⁴

Such a degraded security environment sees multiple escalation spirals. Compressed decision-making times and fully autonomous systems contribute to perceptions of asymmetric disadvantage between Russia and NATO. Russia’s doctrine and force structure amplify the problem. Russia’s revision of its nuclear doctrine in 2024—with its greater emphasis on “aerospace attacks,” explicitly including drones, as one of the conditions under which nuclear weapons may be used—seems to lower the threshold for nuclear use.⁶⁵ This demonstrates that Russia became more reliant on its nonstrategic nuclear weapons after its conventional forces degraded in the war on Ukraine.⁶⁶ This seems to strengthen the Russian leadership’s belief that nonstrategic nuclear weapons are Russia’s “competitive advantage” over NATO.⁶⁷ Furthermore, Russia’s vision of new generation warfare builds upon weapons based on new physical principles, including radio frequency, laser, infrasonic, and electromagnetic. Russia has indeed been developing a precision-strike system built on integration of EW, uncrewed strike and reconnaissance systems, hypersonic weapons, and low-yield nuclear warheads.

In contrast, as NATO’s deterrent power derives from advanced conventional capabilities, this scenario portrays a deeper blurring of conventional and nuclear domains.⁶⁸ Yet NATO struggles to attain superiority in strategic command and control, while avoiding dependencies on commercial clouds and satellites. Large‑scale outages and cascading failures are more frequent. Allies hold regular war-gaming exercises to make sure that the Alliance’s responses remain proportionate even when attacks are AI‑generated. Yet Russia’s asymmetric countermeasures to the multidomain concept keep causing electronic damage to NATO command posts and communications centers.⁶⁹

In high tension, states embrace capabilities that manipulate the spectrum—microwaves, lasers, tailored EMP—seeking to blunt swarms and blind sensors. While EW once seemed unbeatable, jamming lost its teeth against uncrewed vehicles that do not use communication and navigation links. And if autonomy was an antidote to EW, then degrading the electromagnetic environment has become the antidote to AI-enabled military capabilities.

Some governments resume nuclear explosive testing of airburst effects, which contributes to further entangling AI with the nuclear domain. The line between conventional and nuclear war will get more fragile with the proliferation of new classes of EMP weapons. Nuclear proliferation gets out of control as more countries strive to develop their own low-yield nuclear EMP deterrent to counter AI-enabled adversaries. Worse, numerous experts inside and outside Russia believe that a nuclear EMP attack does not need to be governed by the same set of considerations as strategic nuclear weapons and nuclear doctrine.⁷⁰ Nuclear EMP weapons are understood within the category of electronic warfare or information warfare, not nuclear warfare. In this increasingly popular interpretation, an EMP attack is regarded as a legitimate use of nuclear weapons within the specter of algorithmic warfare. Even if nuclear EMP is conceptualized as a form of information warfare in some circles, its use would be profoundly escalatory.

Scenario III. Minority report

In the third scenario, technology hype drives strategy. AI does not deliver decisive comparative advantage for the military, yet threat perceptions grow worse. Exaggerated expectations about the game-changing, transformative, and inevitable impact of AI fuel anxiety about falling behind. The fear of missing out, rather than tangible advantages from AI models, pushes countries deep into the AI race. Such alarmism about phantom AI advantages has a destabilizing effect on strategic balance.

Information asymmetries deepen the problem. NATO militaries and Russian officials tout milestones and “breakthroughs,” while major AI firms speak of revolutionary models. The strategic conversation fixates on what might be developed tomorrow rather than what is fielded today. Decision‑makers overestimate near‑term effects and discount the risks and challenges of AI integration work highlighted in Parts One and Two. As a result, nuclear-armed great powers interpret routine military exercises as cover for preemptive strikes at machine‑speeds and tend to see AI-enabled ISR improvements as a direct threat to their second-strike capabilities.

Escalation pathways in this scenario are cognitive. On the one hand, leaders race to push fully autonomous prototypes forward before safety case evaluations are completed. Miscalculation risk rises not because AI-enabled autonomous weapons systems are unstoppable, but because the decision-makers believe they are. On the other, the adversaries deploy cognitive warfare tactics of “algorithmic amplification” to influence how decision-makers reason, degrade critical decision-making processes, and undermine their sense of security.⁷¹

The Alliance faces the challenge of lowering expectations while preserving its technological edge. However, while allies agreed to coordinate their political objectives of developing AI-enabled armed forces, the lack of national resources and ineffectiveness of their national AI strategies to achieve them weakened NATO’s cohesion.⁷² Leading AI countries are reluctant to institutionalize transparent metrics for AI readiness that separate laboratory promise from operational proof.

This scenario points to the need to move beyond the polarizing hopes-vs-fears dichotomy of AI in order to translate technological potential into military advantage through a sound implementation strategy.⁷³ This scenario reminds policymakers and defense planners to budget for the cognitive dimension of technological competition. Publics and markets react to hyped narratives faster than to scientific results. Adversaries will try to exploit this gap with rhetoric about their AI leapfrogging, announcing the winner of the AI race.

Across all three futures, NATO faces distinct challenges posed by future algorithmic warfare. NATO’s advantage from AI models rests on speed, scale, and autonomy delivered by a resilient AI triad under close human oversight. Guarded opportunism is the most likely scenario and highlights AI vulnerabilities in the light of hybrid and information warfare. Brave new world is less likely but the more dangerous of the three futures. In this algorithmic future, NATO is constantly on the cusp of spirals of escalation and de-escalation and points to the dangers from rapid and widespread integration of AI models without correspondingly fast doctrinal adaptation. Minority report, meanwhile, outlines the destabilizing effects of AI hype in the context of lacking safety and transparency standards.

Part four: Policy recommendations

NATO’s advantage in algorithmic warfare will depend on converting AI’s speed, scale, and autonomy into reliable military capabilities while avoiding inadvertent escalation. This report suggests that the Alliance should focus on three lines of effort. First, it must build AI readiness and resilience across the Alliance. Second, it must refine military AI doctrine to preserve information dominance and to clarify response triggers under compressed timelines. Third, it must develop a deterrence strategy for its strategic AI-enabled DSS. These policy recommendations address the AI vulnerabilities and attack vectors identified in the report’s earlier sections, providing practical steps for NATO leaders implementing the Digital Transformation Vision and preparing for multidomain operations. Each recommendation is intended for near‑term adoption to set conditions for long‑term advantages from AI.

I. AI readiness and resilience

NATO should anchor its AI strategy in two core principles—literacy and redundancy—and reinforce those principles through a coordinated approach to the AI tech industry. Such an approach will help NATO avoid the risks of stale knowledge and deskilling.

Recommendation 1: Master AI literacy

AI literacy should be treated as a strategic competency for commanders, operators, and policymakers rather than as a niche topic confined to chief information officers. NATO should integrate AI education into professional military education, operational exercises, and staff development programs so that leaders understand both the promise and the limits of current AI models. AI-literate armed forces are less likely to succumb to tech-centric thinking and automation bias in future strategy and doctrine development.

NATO should also educate wider publics and political elites so that strategy debates do not become hostage to hype. Clear explanations of how models are evaluated, how data shape military performance, and how human judgment remains central are key for preparing policymakers at all levels to make informed AI-related decisions.⁷⁴

Recommendation 2: Engineer redundancy

Maintaining the ability to transmit information is essential for coordinated actions. NATO should assume that outages and system failures will occur. The Alliance needs to exercise capabilities in communications‑degraded electromagnetic environments and design robust and rehearsed secondary systems. This involves mapping cyber and physical dependencies to avoid single points of failure.

The Alliance should pursue controlled geographic decentralization of data centers to improve resilience of its AI architecture. This will require lawmakers to align national legislative requirements on strict data standards and protocols for insider-outsider threat detection. Vetting the data that goes into AI-enabled DSS, together with delineating clear boundaries between training periods and operational deployment of AI models, will improve the ability to isolate “poisoned” data and contain their spread. Training a team of experts to ensure human oversight of AI workings can limit the consequences of system malfunctions, while limiting the number of people with authorized access to base model parameters, can reduce the risk of sabotage and espionage.

Investment priorities should include research programs that work on future novel materials for shielding and protection of high-speed digital computers against EM interference. Given that the adversaries are likely to invest heavily in spoofing and dazzling hardware capabilities, the Allies should consider hardened interfaces against exfiltration. Lastly, NATO should invest in resources for continuous active defenses that constantly look for evidence of deception and run malfunction diagnostics.

Recommendation 3: Coordinate approach to AI tech industry

NATO should develop a code of conduct for private-sector engagements. The code would require AI companies developing products for decision-support systems and autonomous platforms to adhere to safety and ethical standards. The Alliance should create a trusted group of commercial suppliers and establish clear rules for civilian software engineers and technicians deployed in war zones. To prevent adversaries from achieving tech superiority, the Allies should examine their technology dependencies, “friend-shore” supply chains, and tighten export controls of critical components.

The Alliance should try to address the knowledge gap that exists in the private sector on how EMPs affect computer-based systems. NATO should partner with space tech organizations that have experience with the most advanced research into electromagnetic disturbances. As part of coordinating government–industry unclassified information sharing, NATO could also facilitate partnerships between traditional military hardware providers with software developers so that commercial capabilities can be deployed on military‑grade platforms. Lastly, NATO should encourage forward thinking. Routine, joint red‑teaming and data‑poisoning drills with industry will expose weaknesses. Regular brainstorming on risks from new EMP weapons and postquantum cryptography should feed into the life-cycle design of current systems.

II. Military AI doctrine

Doctrine must convert technical possibility into operational advantage while reducing the pathways to inadvertent escalation. Three recommendations on doctrinal adaptation can contribute to preserving NATO’s advantage from AI.

Recommendation 4: Maintain information dominance

NATO should develop a functional framework for operationalizing AI in support of algorithmic warfare that prioritizes military objectives over abstract benchmarks. Commanders should measure success in terms of effects—such as optimized asset‑to‑target allocation on defense—rather than in terms of statistical thresholds.

Investments should focus on early warning systems, electromagnetic warfare capabilities, and a layered counter‑UAS architecture that combines continuous passive radars, electronic warfare, DEW, and point defenses.

Maintaining information dominance also requires the ability to distinguish routine probing in the form of hybrid air denial operations from preparations for larger operations using drone saturation attacks. Exercises should therefore include ambiguous data, degraded sensors, and adversarial attempts to manipulate inputs so that the troops learn to question AI outputs without losing their operational tempo.

Recommendation 5: Clarify escalation thresholds

Compressed timelines will produce decision paralysis unless allies agree on response triggers and predelegate command authority to avoid escalation risks. NATO allies should develop a shared understanding of escalation thresholds for algorithmic warfare, including thresholds defining the strategic effects of adversarial AI-enabled attacks, as well as of attacks on NATO’s own AI architecture.

NATO also should have clear protocols in place for attribution and proportionality regarding the Alliance’s responses. For instance, would poisoning an adversary’s data count as an offensive cyber operation? NATO allies also need to make sure there are clear rules of engagement for autonomous and semiautonomous response systems. In anticipating the adversary’s deniability claims in the event of AI-enabled attacks, such as “accident” or “loss of control,” NATO should not be adjusting its red lines between subthreshold manipulation and armed attack.

Recommendation 6: Assess the electromagnetic layer with accuracy

The electromagnetic spectrum should not be an afterthought. NATO defense planners need to take the electromagnetic spectrum into consideration at the beginning of warfare planning and develop a spectrum plan with assigned frequencies. Future algorithmic warfare may require NATO to update its standards for survivability (STANAG 4145) to reflect the reality that modern critical infrastructure includes data centers and commercial satellites in addition to traditional command facilities.
In planning for EM-contested environments, NATO allies should preposition shielded assets—power, fuel, generators, and communications equipment—in forward locations to avoid logistical shortages during compressed timelines. They could also invest in software‑defined or reconfigurable radios and optical/laser communications. They should also explore the use of UAS or balloon‑based repeaters to restore the ability to transmit information when ground infrastructure is compromised. Treating the spectrum as a distinct layer of multidomain operations will protect the strategic initiative and the superiority in command and control that NATO seeks to maintain.

III. Deterrence

As AI‑enabled systems underpin strategic command‑and‑control functions, NATO must develop a deterrence strategy based on black box ambiguity without locking itself into a rigid declaratory policy.

Recommendation 7: Deter by ambiguity

NATO should project resilience while keeping the internal architecture of sensitive AI systems opaque to adversaries. Black box AI would also deprive adversaries of the ability to assess the real costs of potential attack. At the same time, the Alliance must maintain the diagnostic capacity to distinguish foreign interference from technical failure in case of system malfunctions, so that ambiguity does not erode internal accountability.

Building and demonstrating resilience—technical, organizational, and informational—will enable NATO to signal confidence and control. Its strategic communication should make clear that deliberate interference with decision‑support systems could carry serious consequences, even if precise thresholds and responses remain undisclosed. Taken together, these seven recommendations translate the analytical sections into concrete actionable items. Literacy keeps humans in charge under compressed timelines. Redundancy and industry coordination make the AI triad more trustworthy. Doctrine secures the informational high ground and clarifies action in crisis. Finally, deterrence by ambiguity protects the Alliance’s AI advantage without inspiring its adversaries into building new countermeasures. Implemented in parallel, these steps position NATO to enjoy its AI advantage in algorithmic warfare on terms that contribute to a stable security environment.

Conclusion

NATO’s competitive edge in the era of emerging and disruptive technologies will come from treating AI as a general-purpose enabler embedded across the Alliance’s digital backbone, rather than as a stand-alone “wonder weapon.” AI-enabled decision support and autonomy do not create vulnerabilities that are different in kind from cyber risks, but they raise the stakes by tying mission-critical effects—speed, scale, and autonomy—to software-defined systems that adversaries will target. Escalation will continue to be governed by effects and targets, not labels, while cognitive factors complicate judgment under time pressure. The practical implication for NATO is clear: invest in literacy, engineer redundancy, clarify doctrine, and project resilience with measured ambiguity.

This report addresses NATO’s ambition to protect its AI technological edge while digitalizing defense. Part One showed how AI will matter most in two intertwined areas: decision-support systems that compress time and expand the scale of information processing, and autonomous or semiautonomous platforms that accelerate sensing, movement, and strike. These advantages rely on the secured AI triad of algorithms, data, and computing power. Part Two mapped where adversaries will try to turn those strengths into liabilities—poisoning data, spoofing sensors, stealing model weights, interrupting cloud access and cable backhaul, and attacking the AI physical infrastructure. The analysis emphasized that while attempts to degrade AI-enabled military capabilities will resemble cyberspace operations, the consequences of failure are amplified when AI is made responsible for situational awareness at the core of command-and-control decision-making.

Parts Three and Four translated those findings into future forecasting and recommendations. The foresight scenario exercise underscored that the most likely near-term pathway is one of guarded opportunism—AI improves productivity and tempo without changing the nature of war—while the most dangerous pathway blends real AI advantage with worsening threat perception, making EMSO and directed-energy tools more salient in crisis. The most deceptive pathway is driven by hype: Threat perceptions rise even when fielded capabilities do not correspond to exaggerated predictions. Across all futures, effects, targets, and collateral risk determine algorithmic warfare dynamics.

Crucially, military AI systems do not introduce vulnerabilities that are categorically new, yet the consequences of foreign interference can be greater. If AI-enabled systems are integral to a unit’s ability to operate and respond, then successful attacks on those systems may warrant responses that are more escalatory than tit-for-tat cyber exchanges. Timing matters as well. Loss of real-time situational awareness in a crisis reduces clarity about what happened and who is responsible, raising the probability of misperception and inadvertent escalation. In practice, this report calls for disciplined deployment of decision-support systems that can only rely on rehearsed secondary systems.

The study also clarified the relationship between EMSO and nuclear restraint in the context of tailored, nonstrategic nuclear weapons. Means-based analysis sheds light on how emerging technologies shape modern escalation dynamics. Rather than making technology-centric estimates, this report highlights systemic risks related to AI: How leaders perceive risk under pressure remains decisive.

Literacy is therefore more than a training agenda; it is an instrument of restraint. Educated policymakers, commanders, and publics are less likely to treat AI as “cyber pixie dust” or to confuse reversible electronic effects with strategic attack. They will be better able to choose the right mission for the AI-enabled capability. In parallel, designating data centers, cables, AI labs, and commercial satellites as critical infrastructure and strategic assets will help align strategy and doctrine with the realities of a software-defined force.

This study contributes to AI literacy by stripping away hype and clarifying where algorithmic warfare introduces new challenges. For NATO leaders implementing the Digital Transformation Vision, the immediate tasks are practical: align skill development programs, harden the AI triad, codify response triggers, and show resilience without over-specifying red lines. Doing so reduces the risk that exaggerated expectations about new technology will drive strategy.

The report’s findings point to a future research agenda that looks into how tactical actions can engage strategic effects. AI-enabled autonomy and speed can magnify the psychological impact of hybrid campaigns, especially where the cost of interceptors is high and the pace of exchange is machine-driven. Routine “gray zone” activities are already redefining the baseline of normalcy across Europe.⁷⁵ Such threshold uncertainty permits plausible deniability, keeping the adversarial action away from Article 5 territory.

Open questions remain. How robust is the “firebreak” in escalation theory when algorithmic systems increasingly shape perception and timing? Can allies maintain recognizable qualitative distinctions between domains when effects propagate across them in multidomain operations? And where, precisely, do we draw escalation thresholds when nonkinetic actions in the electromagnetic spectrum generate strategic consequences? Answering these questions will require continued red teaming, transparent metrics for AI readiness, and joint experimentation that links tactical vignettes to strategic decision-making fora.

The Alliance has long excelled at military hardware. In a data-centric, software-defined approach to defense, advantage will come from systems engineering and smart innovation adoption choices. If NATO invests in AI literacy and redundancy, elevates the EM spectrum within the multidomain operations concept, and projects resilience with measured ambiguity, it can protect its AI edge and defend against adversarial attacks. That is the path to credible deterrence and effective defense in the emerging AI era of algorithmic warfare.

The author would like to thank the interviewed experts and workshop participants for their generosity in sharing their time and knowledge, the Atlantic Council’s Transatlantic Security Initiative staff for making a home for this project, and the NATO Office of the Chief Scientist for choosing to fund this project as part of its 2025 grants program.

Fellow

Dominika Kunertova

Nonresident Senior Fellow

Scowcroft Center for Strategy and Security Transatlantic Security Initiative

Artificial Intelligence Central Europe

New Atlanticist Sep 18, 2025

How AI with ‘nurtured consciousness’ could transform warfare

By John James and Alia Brahimi

New technologies have the potential to turn an information advantage into a conscious advantage, helping determine who has strategic dominance in the twenty-first century.

Artificial Intelligence Defense Technologies

Report Jun 30, 2025

Second-order impacts of civil artificial intelligence regulation on defense: Why the national security community must engage

By Deborah Cheverton

Civil regulation of artificial intelligence (AI) is hugely complex and evolving quickly, with even otherwise well-aligned countries taking significantly different approaches. At first glance, little in the content of these regulations is directly applicable to the defense and national security community.

Artificial Intelligence Defense Technologies

The Transatlantic Security Initiative aims to reinforce the strong and resilient transatlantic relationship that is prepared to deter and defend, succeed in strategic competition, and harness emerging capabilities to address future threats and opportunities.

Learn more

The post How NATO can integrate AI to prevail in future algorithmic warfare appeared first on Atlantic Council.

Washington’s plans to rebuild its nuclear arsenal conceived in the early 2010s assumed a world in which Russia was not an acute threat, China maintained a modest nuclear deterrent, and arms control constrained US and Russian nuclear forces. None of those conditions remain.

Today, China’s extensive nuclear buildup and increasingly assertive foreign policy, Russia’s continued modernization and nuclear saber-rattling, and the erosion of arms control define a new era. These trends are prompting a reexamination of US nuclear strategy not seen since the Cold War’s end. What conflict scenarios must be anticipated? How large and diverse should the arsenal be to deter both Russia and China simultaneously? And can arms control contribute to US security amid deepening tensions?

Washington faces the challenge of preserving credible deterrence and reassuring allies against two potential nuclear peers—possibly acting together—without fueling dangerous instability or draining resources from other defense priorities. This will require a balanced approach: continuing modernization and hedging against uncertainty, while avoiding counterproductive arsenal growth and pursuing arms control to reduce risks.

The new nuclear threat environment 

Nuclear weapons are increasingly salient in international politics. China’s quest to become a world class nuclear power amid rising tensions with the United States is the most striking development. The United States projects China will field about one thousand operational warheads by 2030 and potentially fifteen hundred by 2035—up from roughly two hundred in 2020. Beijing’s construction of hundreds of new intercontinental ballistic missile (ICBM) silos, focus on increasing launch readiness, and pursuit of more flexible response options reflect a posture aimed at enhancing survivability, countering US advantages, and improving its ability to control the escalation of a nuclear conflict.

Russia continues to modernize its forces, broaden the role of nuclear weapons in its doctrine, and use nuclear bullying to deter Western support for Ukraine. Meanwhile, the arms control framework that once bounded the US-Russia nuclear relationship has effectively collapsed. The last pillar of this framework, the 2010 New Strategic Arms Reduction Treaty (New START) expired in February with nothing to replace it.

Longstanding US nuclear strategy has been that credible deterrence of nuclear attack against the US homeland and extended deterrence to US allies and partners requires several elements. These include:

• Maintaining sufficient survivable forces in the event of a large-scale strike on un-alerted US forces;
• Retaining nuclear counterforce capabilities “to reduce potential adversaries’ ability to employ nuclear weapons against the United States and its allies” (aka damage limitation) to the extent practicable if deterrence fails and; 
• Ensuring the availability of graduated response options against potential adversary attempts to escalate out of failed conventional aggression.

The United States previously had to deter only one nuclear peer and could treat China as a lesser threat. Now Washington must prepare to face Russia and a far more formidable nuclear China. Russian and China could even coordinate, or one could act opportunistically while the United States is engaged with the other.

Some former government officials and experts warn this shift presents fundamentally new challenges. Ignoring the challenges would leave Washington and its allies vulnerable and would signal waning resolve. The bipartisan Congressional Strategic Posture Commission concluded in its October 2023 report that the current US nuclear modernization program is inadequate. It recommended urgent preparations to upload reserve warheads after New START’s expiration, develop additional limited‑use options, and plan for a larger force in the longer term. 

The Biden administration acknowledged that deterring multiple nuclear adversaries might soon require a bigger and more diverse deployed arsenal, but deferred any decision to the Trump administration. Whether the Trump administration will revise US force requirements to address China’s nuclear transformation remains to be seen. The administration’s National Defense Strategy, released in January, stated: “We will modernize and adapt our nuclear forces accordingly with focused attention on deterrence and escalation management amidst the changing global nuclear landscape.”

Nuclear force sizing considerations  

Strategic forces

China is the primary driver of the concern that the current US arsenal—1,550 deployed warheads and seven hundred deployed delivery systems—is insufficient, particularly Beijing’s recent construction of more than 300 new silo-based ICBMs. Advocates of increasing the deployed arsenal to hold these targets at risk argue that doing so is necessary to fulfill US nuclear employment objectives, including the damage limitation objective, against both Russia and China simultaneously.

These advocates are correct that there is nothing magical or sacrosanct about 1,550 warheads and that New START was negotiated in a world that has changed markedly over the past fifteen years. Yet other considerations are relevant to the question of whether an increase is needed.

First, analysis conducted during President Barack Obama’s second term concluded that core US targeting objectives could still be satisfied with roughly one‑third fewer deployed weapons than New START allowed. If the US arsenal is more than enough for deterrence against Russia, that suggests some available headroom to address growth in China’s force, at least in the near term.

Second, if a US decision to grow the deployed force triggers offsetting responses from Russia and China, that could erase any relative advantage Washington might have gained from an increase.

A third consideration is why an increase is necessary on a day-to-day peacetime basis, as the deployed force can be generated and uploaded to higher levels in a crisis or escalating war. (A counter to this argument would be that there might not be enough lead time to upload in these scenarios.) Moreover, excessive uploading of warheads could reduce the operational flexibility of the arsenal.

Even if growth isn’t required in the near term, a point might come when it could be necessary if China builds up its warheads and launchers to the high end of current projections—or beyond them. But if Beijing levels off at one thousand warheads, the case for holding steady would be stronger.

Geopolitical risk is not the only challenge facing the US nuclear enterprise. Practical constraints loom large. The ongoing modernization program will yield fewer delivery systems on submarines than today’s arsenal, as the new Columbia‑class ballistic missile submarines (SSBNs) will carry eight fewer missile tubes than their Ohio-class predecessors. The program also faces mounting cost overruns, schedule delays, and performance issues, which could force difficult trade‑offs with conventional modernization priorities.

Near‑term options to expand US strategic forces are limited to reactivating four missile tubes per Ohio‑class SSBN deactivated under New START and uploading additional warheads to deployed delivery systems from the reserve stockpile. New delivery systems beyond existing modernization plans cannot begin to be fielded until the mid- to late-2030s, and their acquisition would further increase costs, depending on the scale of expansion. (Modification of some existing systems to make them more capable could potentially be achieved sooner.)

The confluence of the above geopolitical and modernization transition risks means any uploading to address one of the risks would reduce the ability to address the other—as well as any unforeseen technical problems affecting the functioning of a type of delivery system or warhead, or any operational risk caused by advances in adversary capabilities.

Nonstrategic forces

There is also a debate about whether US nonstrategic nuclear capabilities are sufficient in a two‑peer environment. One argument is that Russia and China believe their theater nuclear forces provide coercive leverage and escalation management options that Washington’s lower-yield air‑ and sea‑based weapons cannot match. (The United States fields a small number of B61 nuclear gravity bombs in Europe but has not housed dedicated theater nuclear forces in the Indo-Pacific since the end of the Cold War.) Some allies also worry this asymmetry could undermine US resolve and capacity to defend them. 

Russia’s excessive reliance on nonstrategic nuclear weapons (it is believed to possess one to two thousand such weapons) seems to be driven by its perception of a conventional imbalance vis-à-vis the United States and NATO more broadly. According to the 2025 US intelligence community’s annual threat assessment, “Russia’s vast arsenal of nonstrategic nuclear weapons helps it to offset Western conventional superiority and provide formidable escalation management options in theater war scenarios.” The Defense Intelligence Agency added that “Russia almost certainly seeks to avoid direct conflict with NATO because it assesses it cannot win a conventional military confrontation with the alliance.”

New US theater capabilities with different military characteristics—such as a new sea-launched nuclear-armed cruise missile—would give the president additional options to respond to limited Russian nuclear use. But if Russia’s theater weapons are intended to counter NATO conventional superiority, it’s not clear that additional US theater capabilities would have a significant impact on Russia’s threshold for nuclear use beyond existing US and Alliance options. According to Michael Kofman and Anya Loukianov Fink, two experts on Russian nuclear strategy: “One of the misperceptions about Russian nuclear strategy is that it takes advantage of lower-yield nuclear weapons that the United States does not have. This appears nowhere in Russian military writings or deliberations.” Meanwhile, the best way to deter Russian limited nuclear use is to perpetuate Russia’s perception that a conventional war with NATO would be unwinnable for Moscow so that it doesn’t start such a war in the first place.  

The Defense Intelligence Agency assesses, “China probably seeks lower-yield nuclear warhead capabilities to provide proportional response options that its high-yield warheads cannot deliver” for its theater-range delivery systems such as the DF-26 missile. A dedicated regional nuclear capability in the Pacific would give Washington a response option it doesn’t currently have. Yet whether China is pursuing low-yield options to gain a coercive edge over the United States in a conventional conflict or to offset perceived US advantages in nonstrategic arms remains uncertain. The answer matters for determining the degree to which a dedicated US option would strengthen deterrence.

Any potential benefits of extra US nonstrategic weapons should be weighed against the potential risks. These hazards include the unintended escalation risks of adding nuclear options to existing or planned conventional ground- and sea-launched missiles (adversaries could assume any dual-capable missile launch as nuclear) and reduced availability of launchers to fire conventional weapons. 

An additional consideration is that Washington might face conventional inferiority in one theater in a multi‑peer conflict, forcing it to consider increased reliance on nonstrategic nuclear options for war fighting. But US first use would carry high escalation risks and could require scores—if not hundreds—of additional warheads, a number likely beyond the near‑term capacity of the US nuclear production base.

Key questions

Where one falls on the sufficiency question depends greatly on what conflict scenarios the United States and its allies need to be prepared to deter and respond to, as well as the associated nuclear employment objectives, posture, and force structure one believes is required for deterrence in these scenarios. Reasonable people can disagree on these determinations and how much risk is prudent to accept given competing priorities. 

As the Trump administration grapples with the “how much is enough” question, additional analysis would be beneficial for identifying the available option space in the new strategic landscape. Key questions include the following. 

• Does the United States need to achieve a similar level of damage limitation against multiple adversaries simultaneously? Or would the ability to limit damage from one adversary while inflicting a lesser, though still intolerable, level of damage on the second adversary be sufficient? 
• Do Russia and China perceive gaps in US nuclear capabilities at both the strategic and regional or theater levels?
• How would augmented strategic nuclear capabilities—alongside improved long-range conventional strike and missile defenses—be expected to enhance deterrence, and what potential adversary responses and stability implications should be considered? 
• What are the potential benefits and risks of additional dedicated US theater nuclear capabilities for shaping adversary decision-making during crisis and conflict, and how might they affect escalation dynamics, intra-war deterrence, and conflict termination?
• What are the current and future geopolitical, transition, and operational risks the nuclear enterprise needs to hedge against? What are the options to mitigate them?
• Are there nonnuclear alternatives that could meet deterrence objectives, especially considering rapid advances in technology? 

Arms control considerations

After returning to office, President Donald Trump wasted little time in calling for negotiations with Russia and China to “denuclearize . . . in a very big way.” 

A year later, the president decided not to accept or counter Russian President Vladimir Putin’s offer to continue observing the New START limits for one year beyond the treaty’s expiration. Instead, senior administration officials have doubled down on the need to pursue multilateral arms control that includes additional types of nuclear weapons and both Russia and China.

Russia has indicated it will continue to observe the treaty’s central limits on warheads and delivery systems so long as the United States does. Given there is no immediate need for the United States to expand the deployed arsenal—and even if there were, uploading would take time—the Trump administration should not give Russia a reason to build up. At the same time, the administration should push for the resumption of a dialogue on strategic stability, risk reduction, and a successor agreement to New START. The discussions should address strategic and nonstrategic weapons not captured by New START.

Such steps would preserve at least informal limits on Russia’s strategic forces while Washington reviews requirements to address China, restore communication on nuclear issues, and increase diplomatic pressure on Beijing. In addition, this approach would be consistent with the National Security Strategy’s call to “reestablish strategic stability with Russa.” 

As the administration pursues its goals for arms control in the new security landscape, it is important to remember that arms control is a tool and not an end in and of itself. It is a means to manage competition and enhance US competitive advantages. And it is a tool that retains considerable value. 

There is value in verifiable weapon ceilings, transparency about weapon holdings, counteracting the potential peril of emerging technology, and addressing particularly destabilizing types of weapons such as the placement of strategic weapons in space. There is value given the limitations on the US ability to keep up in a nuclear competition, due to the constraints on its ability to build new weapons. And there is value in demonstrating US leadership and exercising the skills of a waning US arms control enterprise.

Some analysts assert a nuclear buildup would create leverage for future negotiations. But US-Russian arms control history suggests a more complicated story. Building new strategic systems beyond current plans isn’t possible for another decade and thus offers no near‑term bargaining value. Whether uploading reserve warheads would influence Moscow or Beijing depends on how they factor these warheads into their threat assessment. Decades of US nuclear superiority did not persuade Beijing to negotiate, and Russia conditions discussions of its exotic strategic delivery systems (e.g. Skyfall and Poseidon) and nonstrategic weapons on limits to US missile defenses and advanced conventional strike capabilities.

It remains to be seen if meaningful progress on arms control is possible so long as Russia’s aggression against Ukraine and China’s unwillingness to get off the arms control sidelines continues. But if a process does get underway, several issues will likely arise.

If the Trump administration is open to another bilateral accord on US and Russian strategic forces, what the administration proposes to Moscow is likely to be influenced by an assessment of what is needed to deter China. That assessment could yield a proposal to Moscow with higher limits on deployed strategic weapons than New START, as well as a shorter duration, to hedge against uncertainty over China’s buildup. This would reverse the trend of progressively lower limits in previous agreements. But that does not mean there wouldn’t be value in such an arrangement in terms of stability, predictability, and transparency, especially compared to an alternative with no agreement. (Such an agreement also wouldn’t require the United States to operate at the height of those limits on a day-to-day basis.) 

Missile defense will inevitably feature in any negotiation, especially one seeking limits below or beyond New START. Trump’s interest in enhancing US homeland defenses via Golden Dome has prompted unsurprising criticism in Moscow and Beijing, but pursuing arms control need not be in conflict with missile defense. Workable compromises exist if both sides are willing to bargain. Washington can both augment its missile defenses and use them as a lever for securing significant Russian and Chinese concessions.

Non‑strategic nuclear weapons are often viewed as essential to any New START successor. But as Michael Albertson of the Center for Global Security Research notes, the Trump administration should weigh potential benefits against complexity and cost. Given US concerns about Russia’s potential limited use of nuclear weapons if it is losing a conventional war, even cutting Russia’s nonstrategic arsenal in half would not resolve the issue. Greater value could come from data exchanges, notifications, on‑site inspections, and consolidating storage sites.

It remains unrealistic to expect China to immediately join a trilateral agreement with the United States and Russia that limits nuclear weapons. A more achievable near-term approach is to begin a bilateral conversation on risk reduction topics such as crisis management and guardrails at the intersection of emerging technology and nuclear risk, which could later be broadened to a multilateral conversation. If momentum can be generated, seeking a better understanding of China’s arsenal composition and plans should be a high priority. If the United States knew, for example, that China had an end point in mind for its buildup, that would provide much-needed confidence and predictability and help to avoid worst-case planning. 

Conclusion

The US response to the new strategic environment must be based on more than just a reconsideration of numbers and types of nuclear weapons. By aligning prudent military planning with purposeful diplomacy, the United States can preserve deterrence, prevent dangerous competition, and strengthen the foundations of global security in an era of unprecedented nuclear complexity.

This issue brief is part of the Scowcroft Center for Strategy and Security’s Great nuclear debate series, a curated anthology of perspectives on arms control, force sizing, and missile defense from leading experts.

Kingston Reif is a senior international and defense researcher at RAND. From 2021 to 2024, he served as the deputy assistant secretary of defense for threat reduction and arms control. 

Forward Defense leads the Atlantic Council’s US and global defense programming, developing actionable recommendations for the United States and its allies and partners to compete, innovate, and navigate the rapidly evolving character of warfare. Through its work on US defense policy and force design, the military applications of advanced technology, space security, strategic deterrence, and defense industrial revitalization, it informs the strategies, policies, and capabilities that the United States will need to deter, and, if necessary, prevail in major-power conflict.

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The post Deterrence in a two-peer world requires prudence appeared first on Atlantic Council.

Now that the New Strategic Arms Reduction Treaty has expired, the debate begins over what the United States should do next regarding its nuclear posture. The recently released National Defense Strategy (NDS) sheds little light on the Trump administration’s plans; it does not even mention New START. Instead, the NDS largely eschews details on US nuclear policy and capabilities, noting only that the United States “will modernize and adapt our nuclear forces accordingly with focused attention on deterrence and escalation management.”¹ What this means for US force size and posture will play out over the coming months and years, likely beginning with submission of the president’s annual budget request later this spring.

In anticipation of this debate, many commentators urge caution, suggesting that any expansion in US force size (even in response to actions by China and Russia) could prompt an uncontrolled arms race.² Others argue that the United States has time to prepare for the emerging threats it faces so there is no need to panic, suggesting that adjustments can wait until the country gets closer to the end of the existing modernization program of record.³ Still others contend that the United States already has enough nuclear weapons and that force growth would be expensive and counterproductive.⁴One specific argument points to a 2013 Obama administration assessment that the US nuclear force could be reduced by up to one-third, claiming this extra one-third today provides sufficient headroom to manage China’s emergence as a nuclear peer.⁵

While much of this debate focuses on numbers alone, policymakers and military officials must also account for the attributes of the deployed force necessary for effective and credible deterrence. The question of “how much is enough” is not solely a matter of numbers, but of force size and the overall capabilities of the warheads and delivery systems the United States deploys. US force posture must be capable of deterring a diverse array of nuclear-armed adversaries and, if deterrence fails, must enable the achievement of national objectives against one or more of them. In general terms, national objectives include: restoring deterrence and managing escalation; limiting damage to the United States and its allies and partners; and imposing unacceptable damage on an adversary.⁶ The capabilities needed to achieve these objectives vary from adversary to adversary. They require not just an appropriately sized force, but one with the attributes needed for the array of objectives that US nuclear forces might need to achieve against each.

Given the evolving security environment and growing demands on US strategic deterrence, a force larger and more diverse from that fielded today is needed as a matter of priority—one that provides capabilities responsive to the deterrence challenges now confronting the United States.

New START’s expiration is good news for US security

Despite the New START treaty (NST) now being in the rearview mirror, it is worth revisiting why its expiration enhances US security. First, today’s security environment is significantly more dangerous than when NST was ratified—or even when it was extended in 2021—a conclusion repeatedly documented by the US government over the past decade. In 2010, Russia was viewed as a potential strategic partner of the United States and NATO, and great-power conflict was widely seen as unlikely.⁷ Since then, both Russia and China have demonstrated a willingness to use force to advance geopolitical aims—Russia in Ukraine and China by expanding its territorial sway in and around the South China Sea. And Russia continues to brandish its nuclear capabilities to coerce Ukraine and the West.⁸ Great-power conflict is no longer a remote possibility.

Second, in 2010 China’s nuclear posture was not central to US deterrence planning. China’s nuclear force was often treated as a “lesser included” component of the Russian threat, meaning a force sufficient to deter Russia would also suffice for China. This assumption no longer holds. As two senior Biden administration officials responsible for nuclear strategy observed in 2025, “After decades of maintaining only a minimal nuclear capability, China is on pace to nearly quintuple its 2019 stockpile of some 300 nuclear warheads by 2035, in a quest to attain an arsenal equivalent in strength to Russia’s and the United States.’”⁹ China’s growth places greater demands on the US nuclear force, due not only to the anticipated size of its future arsenal but also to the quandaries it presents for US military planners who must account for crisis or potential conflict with more than one nuclear adversary.

Third, in 2010 the Obama administration still harbored hopes of negotiating a denuclearization pathway with North Korea regarding its then nascent nuclear program. By the mid-2000s, however, North Korea was already pursuing a breakout capability intended to “directly hold the United States at risk.”¹⁰ Today, North Korea possesses a more robust nuclear arsenal capable of striking the United States and its regional allies.¹¹ In fact, to date, the second Trump administration has not restated the 2018 policy (later adopted by the Biden administration) that any North Korean nuclear use would lead to the end of the Kim Jong-Un regime. This omission might reflect a reassessment of that policy’s feasibility in light of North Korea’s expanding capabilities.¹²

Fourth, in 2010 there was little apparent evidence of cooperation among rogue or revisionist actors. Today, such cooperation, if not outright coordination, is evident.“¹³ Few in 2010 would have envisioned North Korean soldiers fighting in Ukraine on Russia’s behalf.¹⁴ It would be dangerously naïve to assume conflict with one adversary would not elicit support from one or more of the others, whether direct or indirect. Simply put, Russia, China, and North Korea all being armed with nuclear weapons means that any crisis or conflict with one risks a nuclear crisis or conflict with one or both of the others. Credibly deterring all three—even if engaged in conflict with only one—requires a force larger than NST permitted and that is tailored to the distinct deterrence and targeting requirements for each.

Fifth, while NST only addressed strategic systems, the urgent need for the United States to develop and field theater-focused capabilities (so-called non-strategic or theater nuclear weapons) was a reason to allow NST to expire. Russia possesses a far larger theater-focused arsenal than the United States, a disparity NST did nothing to mitigate.¹⁵ Other adversaries similarly see value in developing and fielding such capabilities.¹⁶ While the United States is beginning to address this gap by developing a nuclear-armed sea-launched cruise missile, that system remains a decade away and is likely insufficient by itself. Moving beyond NST allows the United States to field additional strategic capabilities to help offset this imbalance, even if imperfectly.

In short, NST was “the wrong treaty for the current time.” Getting out from under its constraints will enable the United States to prepare in earnest for contemporary deterrence challenges—focusing not only on numbers, but on the force attributes required for credible and effective deterrence against a diverse group of nuclear-armed adversaries.¹⁷

The current US strategic nuclear force is inadequate

The ability to deter an adversary from taking extreme actions is not simply a matter of having a nuclear weapon that can be delivered to a target. As a senior US Strategic Command deterrence thinker has observed, deterrence is “an intentional act or set of actions aimed to influence adversaries’ decision-making, so that [they] choose restraint over aggression.”¹⁸ Because deterrence is directed at a decision-maker’s perceptions, deterrence planners “must assess our capabilities relative to the doctrine, exercises, statements, threats and behavior of potential adversaries.”¹⁹ In other words, the United States must be able to influence different adversaries differently. This approach requires maintaining tailored and flexible strategies, plans, and capabilities that can be leveraged effectively across a spectrum of adversaries and contexts. Simply retaining a force structured and sized consistent with NST would limit this flexibility in important ways.

First, US nuclear forces must be able to support multiple objectives depending on circumstances presented. While there are different ways to articulate these requirements, they generally include:

• deterring an adversary from initiating a nuclear attack;
• deterring further use if nuclear weapons have already been employed;
• and rendering an adversary incapable of continuing large-scale nuclear strikes.²⁰

A force capable of achieving all this requires flexibility and options. This is not a new concept. As the secretary of defense’s fiscal year 1975 annual report noted, to be “credible and hence effective over the range of possible contingencies deterrence must rest on many options and on a spectrum of capabilities . . . to support these options.”²¹ This requires the ability to apply the right force at the right time against the right target or set of targets, consistent with policy guidance and the law of armed conflict.

Numerous factors go into determining how best to service a particular target with a nuclear weapon, factors that multiply with a large adversary target base.²² In a simpler two-party context, planners must carefully examine the resources at their disposal and the characteristics of the specific targets identified to develop specific approaches to meet national objectives.²³ But all US nuclear weapons are not interchangeable. Among other factors, planners must consider the types of weapons available, the phase of conflict for which they are needed, their flight characteristics, their yield, their range, their time to target, the desired effect on a particular target, and long-standing policy guidance to achieve objectives at the lowest level of damage possible and to minimize unintended effects. Today and in the coming years, moreover, they need to make such plans recognizing that other nuclear-armed adversaries might be poised to exploit US distraction to pursue their own geopolitical objectives.

A nuclear force constrained in size and composition by a 2010-era treaty does not provide sufficient flexibility to effectively manage these factors across all potential adversaries. As an example, intercontinental ballistic missiles (ICBMs) are viewed as the most prompt US capability. But the need for prompt options applies to each US nuclear-armed adversary, and the United States might need to retain such prompt options for other targeting priorities that might arise as a contingency unfolds. In this context, targets that require prompt options could exceed the number of ICBMs available. Similarly, efforts to avoid overflight of one nuclear-armed state while striking another can further restrict ICBM options, increasing escalation risk or undermining mission success.

Other examples include yield and range. Policy directs achieving objectives at the lowest level of damage possible. But if only higher-yield weapons are available to the president at a given stage of conflict, presidential options narrow and escalation risks rise. Simply uploading additional warheads onto existing or future delivery systems like Minuteman III or Sentinel, moreover, is not a panacea, as increased payloads can impose range restrictions that reduce flexibility and further constrain planners.²⁴

Given considerations such as these, force adequacy cannot be measured by aggregate numbers alone. Even if the total number of delivery systems and warheads is numerically sufficient on paper to service the required targets, a force constrained by the legacy NST structure would leave little ability to offer the president meaningful options for a force that must be postured to manage a multiple adversary environment. In practice, when facing such an expanded target base, there might be only one or two approaches to a given target set, especially when facing simultaneous or sequential crises or conflicts, sharply constraining presidential decision space.

Second, the US nuclear force must account for operational limitations. For example, analyses that cite bomber payload capacity often ignore attrition that is inevitable in a high-intensity conventional conflict.²⁵ Whether B-52s, B-2s, or B-21s, some will be destroyed while flying conventional missions, bringing into question how many will be available if and when strategic bomber strikes are needed.²⁶ Losses to bombers or critical enablers such as aerial refueling tankers could significantly reduce available nuclear options. Similarly, ballistic missile submarines must periodically return to port for replenishment, and strategic bombers cannot remain on alert indefinitely.²⁷ Moreover, emerging threats spanning from quantum sensing to unmanned systems could further affect availability of strategic platforms in unknown ways.²⁸ Advocates of a size-constrained force often overlook these risks.

Third, simultaneous or sequential crises dramatically increase complexity. Planners might be required to generate deterrence options across multiple theaters at distinct stages of conflict in support of different political and military objectives, and against adversaries that might be coordinating their actions.

Complexity grows as the number of strategic adversaries increases, their level of coordination deepens, and the range of their escalation options expands. In crisis or conflict, this complexity manifests as a high level of uncertainty regarding potential escalation pathways that the United States must consider and seek to influence.²⁹

Further, this complexity can evolve over multiple pathways. Deterrence requirements will differ markedly depending on whether a crisis or conflict originates with Russia, China, or North Korea. Where and against whom a crisis begins will impact the mix of capabilities upon which the United States will lean most heavily because US plans necessarily rely on different mixes of capabilities in each case to deter or to achieve objectives.

What should US strategic force posture look like?

The United States does not need a force equal to the combined arsenals of Russia and China. And China’s nuclear growth alone should not dictate US posture. Rather, a decision on the precise nuclear force mix “will depend largely on the choices adversaries make and on how much risk a president is willing to accept in both the most plausible and worst-case nuclear scenarios.”³⁰

So far, the Trump Administration has not directly addressed nuclear force size. The NDS signals an intent to “adapt [US] nuclear forces,”³¹ and Secretary of War Pete Hegseth has similarly pledged to develop “additional options” to support deterrence and escalation management.³² While these statements suggest an openness to nuclear force expansion, it is impossible to divine the Trump administration’s intent at this time.

In the absence of more detail, the administration could be guided in future posture decisions by recommendations from the 2023 Strategic Posture Commission and other commentators, pursuing options in the short-term that include: uploading additional warheads on ICBMs and submarine-launched ballistic missiles (SLBMs); reopening SLBM tubes that were capped as part of NST; and restoring nuclear capability to the full B-52 fleet.³³ Retaining a number of Ohio-class ballistic missile submarines as long as technically and operationally feasible could also help, as could potentially re-operationalizing and loading the 50 ICBM silos that were taken offline as part of NST. In the medium and longer-term, accelerating the nuclear modernization program of record where possible and, eventually, increasing the number of new systems fielded as part of the modernization program would also provide opportunities to increase flexibility.

Of these options, the precise mix will ultimately be determined by Trump administration and military officials based upon classified analysis.³⁴Still, the foregoing considerations indicate the need for a force exceeding that previously permitted by NST—an operationally relevant force that is large and flexible enough to influence adversary decision-making at all stages of crisis and conflict, and that is capable of achieving national objectives against more than one nuclear adversary if it becomes necessary.

Specific posture decisions regarding each triad leg bring with them multiple variables that make direct comparisons difficult.³⁵ Still, given the current trajectory of adversary nuclear force developments, a US strategic deterrent capable of delivering of roughly 2,400 operationally deployed warheads in the near term should be large and flexible enough to meet US strategy requirements.³⁶ These increases should be spread across all three triad legs, further diversifying the weapons and delivery platforms available to planners – and to the president – when confronting potential crisis or conflict in today’s multiple adversary environment.³⁷

This posture would ensure the United States retains a capability, if needed, to target either Russian or Chinese nuclear forces and have a credible capacity available to deter or if necessary achieve national objectives against the other; provide the president more options to deal with multiple adversaries in simultaneous or sequential contingencies, thereby expanding decision space and increasing his ability to manage escalation; account for potential attrition to US nuclear forces in conflict; and provide the capability to deal with North Korea should that threat manifest, either before or during a crisis or conflict with a peer or near-peer adversary.

This uptick would represent a reasonable increase over NST levels and would set the stage for a more comprehensive assessment of US nuclear capabilities in the longer-term—whether less capability is needed as Russia and China show interest in meaningful arms control engagement, or more is needed if the security environment fails to improve. But today, arbitrarily adhering to limits designed for a different time and a different security environment is not in the US national interest and would stand in the way of fielding the force necessary to maintain credible and effective deterrence.

It’s not 2010 anymore

US strategic nuclear force levels that made sense in 2010 no longer suffice in 2026. The challenges facing planners today are more diverse and complex—and will only grow more so. To maintain credible deterrence, the United States must be able to deter and must be more capable of achieving national objectives against each nuclear-armed adversary individually or in combination, in both simultaneous and sequential scenarios. A force constrained by legacy NST decisions risks undermining that capacity and inviting the very conflicts US nuclear forces are intended to deter. A larger, more diverse force than the United States fields today is needed to afford the nation the flexibility it needs to maintain credible and effective deterrence in the coming years.

This issue brief is part of the Scowcroft Center for Strategy and Security’s Great nuclear debate series, a curated anthology of perspectives on arms control, force sizing, and missile defense from leading experts.

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Paul Amato

Nonresident Senior Fellow

Forward Defense Scowcroft Center for Strategy and Security

Missile Defense Nuclear Deterrence

Forward Defense leads the Atlantic Council’s US and global defense programming, developing actionable recommendations for the United States and its allies and partners to compete, innovate, and navigate the rapidly evolving character of warfare. Through its work on US defense policy and force design, the military applications of advanced technology, space security, strategic deterrence, and defense industrial revitalization, it informs the strategies, policies, and capabilities that the United States will need to deter, and, if necessary, prevail in major-power conflict.

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The post Why US strategic nuclear forces must expand after New START appeared first on Atlantic Council.

Although Maduro has been removed from office, his second-in-command Delcy Rodríguez now leads the same regime, prompting a recalibration of how China’s key bilateral relationships in the hemisphere are understood in light of US intervention in Venezuela. This piece examines whether Latin American policymakers and analysts view China’s reaction to Maduro’s ouster as evidence of a shift in Beijing’s regional diplomatic strategy—and whether this episode is influencing how other countries in the region weigh their US–China relationships.

We interviewed thirteen influential sources across diplomatic, military, and academic circles in Brazil, Colombia, Argentina, and the Dominican Republic, spanning a wide range of political perspectives. While this is by no means a representative sample, respondents with different political views were aligned on key aspects of the new playing field in Latin America as it relates to both China and the United States.

After providing a general overview of how US and Chinese actions are interpreted across the region, we turn to Brazil, China’s largest trading partner in the region, and Colombia, the country most directly affected by developments in Venezuela.

Latin America feels a seismic shift

Most of our sources, both left and right leaning, agree the US intervention in Venezuela is a game changer and it will likely modify the power dynamics in the region. They see it as a hard blow to China and a strengthening of US influence in Latin America. For example, Ernesto Samper, former president of Colombia (1994–1998) and former secretary general of the Union of South American Nations (UNASUR, 2014–2017)—who has been close to the region’s left-wing leaders—doesn’t believe the US intervention in Venezuela was meant to combat drug trafficking or strengthen access to oil revenues. Instead, he sees it as a geopolitical strategy. The intervention represents an attempt to weaken alliances between Latin American governments and external powers, particularly China. The objective is to consolidate what might be termed a Monroe Doctrine 2.0, reasserting US hegemonic control over Latin America. Venezuela is a symbolic target in a wider approach that seeks to assert regional dominance in the face of China’s growing influence. “This catches the Latin American region in its worst moment. We had never been so disconnected,” Samper said. “We’re very divided because part of [Donald] Trump’s diplomacy is not having relations with states, but with governments.”

Yet Samper warns against reading this rapprochement as a definitive realignment. Chinese economic penetration in Latin America, he argues, has already reached a point of near irreversibility—China is now the primary trading partner for most South American countries, and its infrastructure investments are deeply embedded in the region’s development strategies. For most major Latin American economies, China is either the largest or second-largest trading partner. The United States doesn’t have the capacity to replace China economically in the region. “The Chinese have a lot of experience in something Trump simply does not have, which is patience,” Samper said. “And I believe they have been penetrating Latin America to the point where those advances should be considered irreversible.”

Carlos Calderón, researcher and defense expert at the military-run Colombian War College, whose views are more aligned with the center-right than Samper’s, nonetheless has a similar take: “‘Operation Southern Spear’ and Maduro’s capture, ‘Operation Absolute Resolve,’ no doubt send tectonic waves throughout the region, and are meant to signal the United States is back and wants to have a stronger influence than China in the region. Events are too recent to say that Latin American countries are reorienting their relations with China, but I’d say it’s very likely that relations with China will be restructured.”

Behind closed doors, according to Calderón, military leaders in Colombia and neighboring countries that struggle with organized crime networks are welcoming the change in US tactics—not necessarily because they agree that operations such as blowing up drug boats in the Caribbean and Pacific are appropriate, but because they signal what they feel was a needed change in the status quo. They welcome a United States that is more assertive regarding its military presence in the region. “Behind closed doors, military leaders are glad about Operation Southern Spear,” Calderón said. “They wanted a government, either Democrat or Republican, that doesn’t matter to them, that would kick the chess board, so to speak. We’ve been at that [war on drugs] two decades and no pieces have been moved, then we need a reset. Sometimes you have to introduce a little bit of chaos to make a situation more dynamic.”

As the United States assumes this hard-power stance, China’s lack of such power is starker. Maurício Santoro, a political scientist specializing in Brazil–China relations, said the US operation in Venezuela revealed China has limited capabilities when projecting military power in the Western Hemisphere. China is economically vital to Latin America but is not a strong and effective military actor in the region.

A senior Brazilian source familiar with the matter, who asked to remain anonymous, said Chinese officials had privately expressed concern about how the lack of a Chinese military response after Maduro’s removal might be interpreted in Latin America. According to this source, Chinese officials asked whether the region would view China as weak or unable to defend its political partners against unilateral US actions.

Paulo Filho, a retired Brazilian Army colonel who holds a master’s degree in defense and strategy studies from China’s National Defense University, said China’s leadership is still “learning how to be a superpower” in the sense of projecting power beyond its traditional zone of influence. Retired Colonel Rafael Almeida, who is also a graduate of China’s National Defense University, said that the crisis had produced a “reality check” for the region. He summed this up in a single phrase: “China is economically indispensable, but the United States remains politically central.” Almeida also said the episode stressed the urgency of reassessing security concerns and drove home the idea that aligning with either the United States or China has become dangerous and strategically costly.

Caribbean observers, in the meantime, have their eyes on Cuba and are anxious to determine if there will be a domino effect that will cause the decades-long communist regime to follow a path similar to that of Venezuela. “Dominicans are hopeful that Cuba will have a similar outcome for the best, and that Venezuela’s developments lead to improvements,” said Campos de Moya, former assistant to the vice president of the Dominican Republic and former ambassador assigned to the Foreign Ministry. “There are some voices that don’t agree with this view, but the way the situation has unfolded leads most Dominicans, politicians and business leaders, to support what the US is doing in Venezuela and Cuba.”

De Moya says there were concerns in the region that US action against Venezuela and Cuba could spark a wider military conflict with China and Russia, but recent developments signal that won’t happen. He further suggests it’s a good moment for the United States to pressure the Dominican Republic to flip its diplomatic recognition once again from China to Taiwan. “The business community in the Dominican Republic is very upset with China and everything is in place for the country to step back from that relationship,” de Moya said. “The possibility of flipping back to Taiwan is even stronger now.”

One of our few sources who had a different view and didn’t believe the US removal of Maduro is a game changer for regional diplomatic relations was Ricardo Ferrer, fellow at the Center for Secure Free Society and former national director of criminal intelligence for the right-wing Javier Milei government in Argentina. Ferrer doesn’t think China’s position in Venezuela has meaningfully weakened because Beijing’s influence is structural. Ferrer notes that China’s influence in Venezuela is rooted in telecommunications, digital governance, logistics, data systems, and opaque contracts that persist across leadership changes. As an example, he cited Huawei’s extensive role in telecom infrastructure and ZTE-linked databases tied to citizens’ IDs as forms of durable leverage that shape political control through technology. He thinks China’s muted response follows its long-standing strategy toward the hemisphere: avoid direct security competition with the United States while maintaining embedded commercial and infrastructural influence. “There is absolutely no sign of a decline in Chinese influence, which in Venezuela is not solely determined by the economic situation,” Ferrer said.

Brazil: Adapting to a new context and diversifying

Brazil publicly condemned the bombings of alleged drug boats and Maduro’s removal through an official statement that characterized the US action as a “grave affront to Venezuela’s sovereignty,” a highly dangerous precedent, and a violation of international law that threatens Latin America’s long-standing aspiration to remain a “zone of peace.” President Luiz Inacio Lula da Silva echoed this position on social media, calling the events unacceptable and urging a robust response through the United Nations. Collectively, these messages reaffirm Brazil’s emphasis on multilateralism and the principle of non-intervention.

Some recent Lula administration initiatives suggest defense issues are garnering greater attention—at least behind the scenes—following the Venezuelan crisis. This has prompted discussions on budget strengthening, deterrence stances, and expanding the institutional role of the armed forces in Brazil’s national strategy. According to high-level sources, the crisis and the volatile regional environment have emphasized the need to strengthen defense capacities.

Rather than a departure from the country’s diplomacy-first tradition, Brazilian decision-makers are framing this readjustment as an adaptation to a new era of major-power competition in which non-intervention norms are weakened. The US operation has renewed fears that it will apply intervention and unilateral coercion whenever its interests are at stake.

The context of the US intervention also caught Brazil in a sensitive position. Brazil had just resolved its own dispute with the Trump administration, which began on April 2, 2025, when Trump imposed a 50-percent tariff on Brazilian imports in retaliation for the prosecution of his political ally, former President Jair Bolsonaro, over an attempted coup d’etat. The tariffs were suspended on November 14, 2025, after several rounds of diplomatic negotiations.

Against this backdrop, Brazil and the European Union (EU) formally signed the EU–Mercosur agreement on January 17, 2026, concluding more than two decades of negotiations. The agreement, which will need ratification by the European Parliament and national legislatures before entering into force, is described as creating one of the world’s largest bilateral free trade areas, covering roughly 700 million consumers and giving Brasília an additional avenue to diversify trade and investment partners amid heightened uncertainty. The timing suggests an effort to increase economic resilience and reduce strategic vulnerability by deepening ties with other players besides the United States and China.

Colombia: Getting closer to the United States

Colombia’s Ministry of Foreign Relations rejected US military intervention in Venezuela and issued a statement that echoed Brazil’s stance, describing the intervention as “actions that have placed at risk the territorial integrity and political autonomy of the Bolivarian Republic of Venezuela.” It called for the issue to be taken to the UN Security Council and treated multilaterally. The day of the attack, the Colombian government also sent thirty thousand troops to patrol the border at several crossings, from northern Guajira to Arauca.

In the days following the capture of Maduro, President Gustavo Petro—whose left-wing politics are aligned with Lula’s—received threats from Trump, who hinted at conducting a similar operation in Colombia. As part of a deescalation approach, Petro sought an urgent one-on-one meeting with Trump in the White House to discuss the US intervention, oversight of Venezuela, and the role Colombia could play, signaling Colombia was willing to work with the United States.

No press was allowed in the room but statements from each side offer a glimpse into the conversation. Petro said they discussed counternarcotics operations targeting transnational kingpins (and that he gave Trump a list of names), skepticism toward the effectiveness of sanctions against Venezuela, ways to reactivate the Venezuelan economy (including energy projects), having the United States mediate tensions between Colombia and Ecuador’s President Daniel Noboa, declassifying US intelligence related to violence in Colombia, and diplomatic optics such as inviting Trump to Cartagena and reframing Trump’s slogan as “Make the Americas Great Again.” Trump and the White House said the meeting went well, emphasized counternarcotics cooperation as the main focus, and characterized Trump’s approach as preferring diplomacy.

The rapprochement follows a deeply confrontational 2025 between Trump and Petro. In September, the Colombian president’s US visa was revoked, and in October, he and several members of his family were placed under Office of Foreign Assets Control (OFAC) sanctions, despite the absence of any US indictments against them. According to Calderón, one objective of the visit was to persuade Trump to lift those sanctions before Petro leaves office in August. Securing their removal would not only ease personal and political constraints on Petro’s final months in power but also signal a partial normalization of bilateral relations after a year marked by open hostility.

Although the immediate outcome of the US intervention in Venezuela has been a reset in US–Colombia relations, Calderón also noted that, in recent years, the Colombian military has felt a need to diversify its partnerships, including in security cooperation and arms procurement. “We can’t help but see that countries such as Brazil and Peru cooperate tightly with the US, but that doesn’t stop them from also talking and establishing security relations with China or Russia . . . They buy Chinese aircraft and Russian helicopters,” Calderón said.

The end of strategic ambiguity

The removal of Maduro should not be read primarily as a Venezuelan event, nor as a narrow bilateral episode between Washington and Caracas. It was a stress test that clarified the real distribution of power in the hemisphere.

On one hand, the episode exposed the asymmetry that has long structured great-power competition in Latin America. The United States retains escalation dominance and the capacity to shape outcomes through force, while China’s influence remains concentrated in finance, infrastructure, trade, and institutional penetration rather than in deterrence. On the other hand, Maduro’s ouster does not signal the collapse of Chinese influence in the region. It reveals the limits of China’s ability to translate rhetorical commitments about sovereignty into material responses when confronted with hard-power realities. What unfolded was not the unraveling of China’s regional presence, but a clarification of its priorities, its risk tolerance, and the boundaries of its foreign policy reach in the Western Hemisphere.

The operation also clarifies that China’s preferred tools of influence are largely irrelevant in moments of kinetic disruption in the region. Years of loans, political backing, diplomatic cover, and rhetorical alignment did not translate into leverage when the core issue became one of coercive force. This matters because much of the current debate on foreign influence assumes a continuity between influence and power. Venezuela shows that this continuity breaks down under pressure.

Latin America’s apparent conditional tolerance of US intervention does not stem from ideological realignment with Washington, but from exhaustion. The United States had not carried out an overt military intervention in South America in modern times, and the last comparable interventions in the hemisphere occurred more than three decades ago in much smaller Central American and Caribbean states. Given the region’s long historical memory of US interference, one would have expected sharp and unified backlash. Instead, the reaction has been restrained and, in some cases, openly appreciative. That alone signals how disruptive Venezuela had become.

Maduro was no longer simply an authoritarian outlier. Venezuela had turned into a sustained source of regional instability, driving mass migration, facilitating organized crime networks, and deepening cross-border insecurity. Even governments publicly critical of US power were privately aware that the status quo had become untenable. The controlled response to Washington’s action reflects a hierarchy of priorities that has become harder to ignore.

Economic development remains central, and this is where China’s role is most visible. But dealing with migration pressures, drug trafficking, transnational criminal networks, and border security have become immediate political imperatives. In those domains, cooperation with the United States remains indispensable. The convergence of security interests that emerged around Maduro’s removal is therefore significant, but it is also narrow and contingent. It reveals less about renewed faith in US leadership than about the degree to which Venezuela had become a destabilizing force that governments felt unable to manage on their own.

If Washington interprets this moment as a blank check and settles for stability without democratic transition, it risks reinforcing long-standing suspicions that intervention is primarily driven by hegemonic control. Removing a destabilizing authoritarian is not the same as resolving the conditions that produced him. The strategic window created by January 3 is real, but it is not self-sustaining.

Lastly, China is unlikely to retreat from the region. It will adapt, recalibrate risk, and continue expanding where economic statecraft remains effective. The competition is now clearer. The United States demonstrated that it retains coercive primacy in the hemisphere. China demonstrated the limits of its willingness to contest it. Latin America is left navigating a landscape in which the space for ambiguity has narrowed and the costs of miscalculation have grown.

Fellow

Santiago Villa

Nonresident Fellow

Global China Hub

Africa China

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Thayz Guimarães

Nonresident Fellow

Global China Hub

Americas Brazil

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Parsifal D’Sola

Nonresident Senior Fellow

Global China Hub

China Chinese

The Global China Hub tracks Beijing’s actions and their global impacts, assessing China’s rise from multiple angles and identifying emerging China policy challenges. The Hub leverages its network of China experts around the world to generate actionable recommendations for policymakers in Washington and beyond.

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The post After Maduro: Latin America’s policy community reassesses the US-China balance appeared first on Atlantic Council.

The Trump administration has taken adversarial and unconventional approaches with European allies on subjects ranging from trade to content moderation, but in another important area the United States is proceeding more traditionally. The subject is politically controversial: biometric information sharing for purposes of border security. In late January, European Union officials flew to Washington to start low-key formal talks with the Department of Homeland Security (DHS) aimed at an international agreement. Despite the sensitive nature of the endeavor, EU member states and the European Data Protection Supervisor have endorsed it. 

Why is the United States taking a consensual approach with Europe on border security information sharing, and why is the European Union so far willing to accommodate? Why is this agreement on a fast track in Washington and Brussels when law enforcement initiatives such as the projected EU-US CLOUD Agreement have been paused by the Trump administration? Is the border security information-sharing effort a one-off or could it be a harbinger of a return to traditional transatlantic legal diplomacy?

DHS seeks enhanced border security partnerships

DHS operates an international biometric information-sharing program to assist in “assessing the eligibility or public security risk of individuals seeking an immigration benefit or encountered in the context of a border encounter or law enforcement investigation related to immigration or border security issues,” according to the department’s privacy impact assessment (PIA). The program entails “automatic comparison of the fingerprints collected by DHS or a foreign partner on international travelers, suspected criminals, asylum seekers, irregular migrants, refugees, [and] applicants for visa and/or immigration benefits,” the PIA states. Biometric identifiers potentially include facial and iris scans and DNA, as well as traditional fingerprints.

In 2022, DHS decided that all forty-three countries that benefit from visa-free entry to the United States through the Visa Waiver Program (VWP) must conclude agreements, dubbed enhanced border security partnerships (EBSP), enabling DHS to screen their biometric records for immigration or border security purposes. When DHS queries a name against a foreign state’s identity records and it yields a match, DHS automatically receives the responsive biometric data. Other identity information also could be conveyed by the foreign state. In the absence of a match in the foreign database, no fingerprints or other biometric information would be supplied to DHS.

Shared competence: EU and member-state roles

Twenty-four of the EU’s twenty-seven member states (all but Bulgaria, Cyprus, and Romania) participate in the VWP; they comprise more than half of all VWP members globally. Each EU state maintains its own national biometric information records for border purposes. Thus, DHS could take an important step toward fulfilling the overall EBSP goal by reaching biometric information-sharing agreements with these EU countries.

The EU, for its part, also has two relevant responsibilities: setting rules protecting personal data transferred outside its territory, per Article 16(2) of the Treaty on the Functioning of the European Union (TFEU); and setting common policy on visas and external border checks, per Article 77(2) TFEU.

As popular sentiment for stricter border controls has swelled across Europe in recent years, the EU’s policymaking role in this area has become more prominent. In the past year, it has finalized a Pact on Migration and Asylum, a new set of rules on managing migration and asylum applications. In addition, new systems for tracking the entry and exit of foreign travelers and collecting the personal data of those entering EU territory on a visa-free basis are being put in place. These new systems show the EU moving in a similar direction as the United States in collecting information on foreign visitors.

DHS’s demand for biometric information-sharing agreements with EU member states thus touches on an area of “mixed” competence, i.e., one shared between the EU and its member states. In such a situation, the EU and its member states had to decide who would be responsible for negotiating with the United States.

The question took time to resolve. Only in 2024 did the Council of the European Union—which comprises the member states’ national ministers—invite the European Commission to develop a mandate for an international agreement at the EU level. Member states reportedly were eager to bring the collective negotiating strength of the EU to the table with the United States, rather than facing Washington individually.

A year passed before the Commission presented its draft negotiating mandate. It did so based on the understanding that the agreement sought by the United States related to the VWP and thus fell within the EU’s visa policy competence. Negotiations between the Council and Commission on the final contours of the mandate ensued during the second half of 2025.

Finally, in December 2025, the Council adopted a decision authoring the negotiation of an EU-level “framework” agreement with the United States. The framework would provide an overall legal structure for EU member states to conduct bilateral information exchange with DHS, setting the general conditions under which EU member states could provide biometric information to the US border agency. Each eligible member state subsequently would conclude an implementing agreement or arrangement with DHS identifying its relevant databases and operationalizing the data transfers.

Other relevant EU-US agreements

Over the past two decades, the EU has entered into a series of law enforcement and security information-sharing agreements with the United States—ranging from airline passenger name records (PNR) data to financial messaging data (via SWIFT) to mutual legal assistance in criminal matters. DHS is the principal beneficiary of PNR data sharing; the US Department of the Treasury receives SWIFT data used in tracking terrorist finance; and the Department of Justice manages information exchanged for criminal investigations and prosecutions. The United States and the EU also have concluded an agreement elaborating the data protection safeguards that must accompany transfers for law enforcement purposes, the so-called Umbrella Agreement.

In addition, DHS already enjoys access to foreign biometric and biographic data for purposes of preventing and combating serious crime (referred to as PCSC agreements), under a separate negotiating program that commenced in 2009. This earlier generation of agreements assists DHS in border encounters with persons suspected of terrorism and other serious offenses, but they do not apply to all foreign persons seeking to enter the United States.

The EU at that time had also sought to negotiate a PCSC agreement collectively on behalf of its member states, but DHS rebuffed Brussels and instead chose to negotiate individually with each EU member, believing the agency would have better leverage that way. The first two PCSC accords were concluded with Greece and Italy, and eventually all the European participants in the VWP program reached agreements as well.

An EU-level agreement on broad-scale border security information-sharing cooperation with the United States would represent a novel departure for Brussels. “It would be the first agreement concluded by the EU implying large-scale sharing of personal data, including biometric data, for the purpose of border and immigration control by a third country,” the European Data Protection supervisor has observed. 

This time, DHS appears to have appreciated the relative speed and efficiency that comes from negotiating one uniform set of access conditions that will apply to all EU VWP participants. The EU and its member states, meanwhile, seem to have reached a sensible division of labor that respects member states’ prerogatives for controlling their own biometric information databases and for managing technical interactions with DHS.

EU negotiating goals

One major EU ambition in setting the rules and procedures governing DHS queries is to preclude generalized processing of all travelers’ data. A Commission press spokesman emphasized the “non-systematic nature of the information exchange and that the exchange is limited to what is strictly necessary to achieve the objectives of this cooperation.”

The EU mandate further stresses that the EU seeks an agreement that would be reciprocal in nature, enabling member states’ border authorities to query corresponding DHS databases. A leaked Council presidency working paper suggested that a monitoring mechanism should ensure reciprocity in implementation: “Information on member states’ citizens should be exchanged under the framework only if the U.S. exchanges information on American citizens.”

It is not clear that the United States and the EU are entering into these negotiations with entirely congruent views on the scope of the framework agreement. DHS envisages checking the biometric databases of travelers from VWP countries on a routine basis. However, the European Commission, as noted above, views the information exchange as “non-systematic.”

In addition, the US international biometric information-sharing program envisages access to foreign databases “in the context of a border encounter or law enforcement investigation related to immigration or border security issues,” according to the DHS Privacy Impact Assessment (italics added). The EU mandate, by contrast, concentrates on security screening and identity verification at the border, with subsequent law enforcement data access to be exclusively governed by other bilateral agreements. 

The EU’s data protection rules are its main tool in ensuring that information conveyed to DHS pursuant to the EBSP agreement remains targeted. For example, the negotiating directive insists that processing of personal data be limited to what is “necessary and proportionate in individual cases.” Necessity and proportionality is a key concept in EU data protection law, including in the Schrems jurisprudence of the European Court of Justice, albeit one that is hard to define a priori.

The EU also seeks to include other traditional data protection safeguards in the EBSP agreement with the United States, according to press reports. One reported provision would require human involvement in decisions having significant adverse effects on individuals, rather than permitting entirely automated decision-making. Another would allow for the transfer of “special categories” of personal data—such as sensitive data regarding political opinions, religion, and sexual orientation—only when necessary and proportionate to prevent criminal or terrorist offenses, and with additional protections that limit the universe of individuals who may access it and the duration of retention. Onward transfers of foreign-supplied biometric data to third countries would require the explicit consent of the country from which the data originated.

According to the European Commission version of the negotiating mandate, the EU also seeks to limit DHS retention of transferred personal data to cases of “travelers in respect of whom there is objective evidence from which it may be inferred that there is a continuing risk to public security or public order.” In other words, DHS would not be permitted to store fingerprint data supplied by EU VWP countries on a generalized basis; it could do so only if it has reason to believe that the person would continue to be a threat—a difficult prediction for a security agency to make at the time of the initial border encounter.

The European Data Protection supervisor stated in his opinion that he “largely supports” the proposed approach with the United States. At the same time, he pointed to certain information-sharing constraints the EU would face. Two important EU data repositories prohibit sharing of information with third countries: Eurodac, which contains biometric information on persons who have applied for refugee status in an EU member state or otherwise have migrated irregularly, and ECRIS, which links together member-state records of third country nationals with criminal convictions within the EU. However, the member states themselves regard the exclusive focus of negotiations with the United States on national databases as “without prejudice to any further reflections on the possibility for information exchange with selected third countries from EU databases,” the leaked Council presidency document suggested.

Finally, the EU mandate also seeks the right to an “effective remedy” for persons whose information has been transferred to DHS. This principle, enshrined in the EU Charter of Fundamental Rights, consistently has proven very difficult to resolve in past EU information-sharing agreements with the United States.

Major issues and possible solutions

The existing web of EU-US information-sharing agreements offer valuable precedents for the latest negotiation on access to biometric data for border security purposes. The PCSC agreements, for example, can provide a template for structuring technical interaction between DHS and EU member-state databases. Equally, the types of data protection provisions contained in the law enforcement Umbrella Agreement could be mirrored in the EBSP agreement, even if the former cannot directly be applied to the border security context.

Remedies for misuse of information likely will prove more difficult to resolve. The Data Privacy Framework (DPF), which offers safeguards against illegal US intelligence agency access to personal data transferred from Europe in the commercial context, provides redress in the form of a special tribunal established within the US Department of Justice. Europeans may not petition an ordinary US court if they believe a US intelligence agency has improperly used their data, however. The Court of Justice of the European Union has yet to decide if this specialized form of recourse meets EU fundamental rights standards.

By contrast, the EU did secure US judicial redress for EU citizens whose information is exchanged for law enforcement purposes, under the terms of the EU-US Umbrella Agreement. It took a US statutory change, through the adoption of the Judicial Redress Act, to extend such a right to foreign persons. (The US Privacy Act otherwise limits the right of judicial redress only to US individuals.) Extending this right to Europeans’ whose biometric data is transferred to DHS for the purposes of border security—as opposed to law enforcement—likely would require a further US statutory amendment. Persuading Congress of the necessity of such a change would be challenging.

The necessity and proportionality concept in EU fundamental rights law serves as a legal technique for balancing data protection rights with legitimate public order and public security interests. In the DPF, the United States accepted explicit reference to the EU’s necessity and proportionality standard—in a sensitive context dealing with potential intelligence agency access to personal data. Incorporating this concept in the border biometric information-sharing setting could similarly assure the EU and its member states that DHS is not engaged in mass data collection.

Legal and political dynamics

DHS faces a complex legal situation in pursuing negotiations involving both the EU and its member states. It is consistently difficult for a US government negotiator to be certain where a particular responsibility lies within the EU’s confederal system. In this case, the task is complicated by the cumbersome division of competences for visa and border policy.

In addition, since DHS seeks information for not just border security but also related law enforcement purposes, it must engage with two separate and varying sources of EU data protection law. Data protection rules for immigration control and visa policy are governed by the General Data Protection Regulation, while the rules for protecting law enforcement data fall under a separate directive.

Political factors in Europe also could slow completion of the agreements with the United States. Some members of the European Parliament who belong to the liberal Renew parliamentary group wrote to the European Commission in January, stating: “Looking at the current geopolitical context, we consider it undesirable for the European Commission to start or continue such negotiations.” Although the European Parliament does not have the power to stop the negotiations, it must approve any international agreement that the EU reaches with the United States.

The Trump administration’s removal of Democratic members serving on the Privacy and Civil Liberties Oversight Board (PLCOB) and on the Federal Trade Commission (FTC) have undermined confidence in European privacy circles in US institutions charged with privacy protection. Moreover, DHS’s proposed rule requiring visitors to the United States to supply five years of details on their social media activity has generated widespread outrage abroad. Although this initiative is formally separate from the VWP program, the European public might well conflate the social media and biometric information demands of the United States.

DHS’s goal of wrapping up both the EU framework agreement and, subsequently, the twenty-four implementing agreements with EU member states by the end of 2026, as has been reported, will likely prove overly ambitious. A more achievable ambition would be to complete the EU framework by that date, with the necessary member states implementing agreements afterward. (The leaked Council presidency document sternly states that it considers “Member States’ commitment to refrain from bilateral negotiations with the US while material discussions on the framework are ongoing to be of critical strategic importance.”)

Nevertheless, there is reason for optimism that the US-EU engagement on border security biometric information sharing will yield success. Both sides appear to have entered talks pragmatically, the EU and its member states by agreeing on a sensible division of labor between themselves, and the United States by accepting the practical benefits of negotiating with both Brussels and member-state capitals. Each is impelled by a desire to have greater control of its borders and sees reciprocal information sharing as a promising approach. However, flexibility on both sides will be indispensable to overcoming divergent positions on issues such as remedies.

Further, by winning support in principle for the framework agreement from the EU’s data protection supervisor, the EU already has shown its commitment to achieving a broadly acceptable agreement. Europe’s collective approach to these negotiations also reflects a sober appreciation of power realities. EU citizens value the ease of visa-free travel to the United States, so member states ultimately will do what is necessary to retain VWP status, within the confines of fundamental rights.

Finally, the EU’s decision to take a leading role in the EBSP negotiations reflects its increased institutional maturity and importance in the field of border security. DHS’s willingness to pursue a framework agreement with the EU may show a corresponding recognition of Brussels’ growing role in this area. As popular sentiment has converged in Europe and America on more tightly controlling borders, there is now an opportunity to achieve a balanced transatlantic agreement on sharing information to that end.

Kenneth Propp is a nonresident senior fellow with the Atlantic Council’s Europe Center, an adjunct professor of European Union law at the Georgetown University Law Center, and a senior fellow with the Cross-Border Data Forum. His prior experience includes serving as legal counselor at the US Mission to the European Union in Brussels and in the Office of the Legal Adviser at the US Department of State. 

Dispatches Feb 2, 2026

To increase its autonomy, Europe must look to its strengths

By Piotr Arak

The challenge for Europe in the coming decade is not to imitate the United States and China, but to mobilize its own considerable strengths.

Economy & Business European Union

Report Jan 14, 2026

Digital sovereignty: Europe’s declaration of independence?

By Frances Burwell, Kenneth Propp

In Brussels, “digital sovereignty” may be the new “strategic autonomy”: a push for Europe to go its own way and depend less on the United States. As US tech companies and EU regulators clash, catch up on a policy debate with consequences playing out online and in the halls of power.

Digital Policy Economy & Business

New Atlanticist Aug 15, 2025

Talking past each other: Why the US-EU dispute over ‘free speech’ is set to escalate

By Kenneth Propp

Republican-led US lawmakers and the White House are likely just getting started in critiquing the European Union’s Digital Services Act.

European Union Internet

The Europe Center promotes leadership, strategies, and analysis to ensure a strong, ambitious, and forward-looking transatlantic relationship.

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The post Negotiating an EU-US biometric information-sharing agreement appeared first on Atlantic Council.

The strategic context: The rise of autocratic regimes worldwide poses an alarming challenge to the global community of democracies, leading to an international system marked by instability and increasing fragmentation. Debates over how to approach the threat have divided the community, with traditional alliances and coalitions under increasing strain. Further, the current US administration’s response to these challenges is strikingly different from those of past administrations. Over time, the US presence in Europe is likely to decline, and Europe must rapidly increase its defense capabilities in response.

The threat: Despite its losses in Ukraine, Russia is reconstituting its forces and continues to pose a formidable military threat. The Russian economy has rebounded from 2022’s historic sanctions and looks unlikely to collapse in the near term. Further, there are no political checks within Russia on Putin’s desire to re-establish dominance in Eurasia.

The risk: NATO isn’t ready— militarily, intellectually, diplomatically—to confront Moscow’s determined testing of the Alliance’s resolve. Should Moscow actually seek to enact one of these scenarios, the Alliance is at risk of fracturing–nothing short of a robust Article 5 response from the Alliance would be sufficient to credibly reset allied deterrence against any further provocations against NATO territories by Russia and thereby preserve the alliance itself.

Here are five potential Russian attack scenarios for which NATO must prepare, ordered from least to most risky from Moscow’s perspective.

Target 1: Svalbard archipelago

The Svalbard archipelago, a lightly populated Norwegian territory near the North Pole, could be a target of Russian occupation. Remote and militarily undefended, Svalbard is governed by a 1920 treaty, which stipulates that military installations cannot be placed there. Citizens of any treaty signatory can reside and pursue commercial opportunities on the islands, subject to Norwegian law, and all parties must respect and preserve the local environment. Russian nationals make up seventeen percent of the population on Svalbard, with their presence largely focused in the Barentsburg settlement (population of 343 in 2025) where Russia operates a mine and a research station.

The attack

A Russian occupation of Svalbard would likely begin with hybrid measures, cyber disruption, telecommunications sabotage, and disinformation about treaty violations, followed by a rapid insertion of Russian special forces or naval infantry to seize the airfield and key infrastructure before NATO can react.

The risks for Moscow

Given the archipelago’s lack of defenses and small population, occupying Svalbard would strengthen Moscow’s geostrategic position in the High North while presenting NATO with an immediate credibility dilemma under Article 5, making it a tempting opportunity for Russia to test Alliance resolve at relatively low risk. This target presents the lowest risk of the five presented.

What might prompt Moscow to act?

A perception of declining US engagement in Europe, visible NATO political divisions, or intelligence suggesting that the Alliance would struggle to generate a rapid and unified military response.

How to prevent it

To prevent occupation of Svalbard, Norway and NATO should

• strengthen deterrence through visible political signaling
• establish a small rotational military or paramilitary presence on the archipelago (which is allowed for under the 1920 treaty banning permanent military installations on Svalbard)
• enhance intelligence and surveillance focused on early warning
• regularly conduct exercises demonstrating rapid reinforcement capability, such as through the existing BALTOPS exercise

Target 2: Åland islands

The Åland islands, demilitarized, undefended, sovereign Finnish territory at the strategic entrance to the Gulf of Bothnia, could also be targeted for Russian occupation. The Åland islands sit near three NATO capitals—Stockholm, Tallinn, and Helsinki—making the islands an attractive target. Their seizure would dramatically shift the balance of power in the Baltic Sea, strengthening Russia’s defensive depth around St. Petersburg and Kaliningrad, and confront NATO with an immediate test of credibility.

The attack

The operation would likely begin with the covert insertion of Russian special operations forces to secure Mariehamn’s airfield and key infrastructure, followed by a rapid deployment of naval infantry or airborne units supported by Russia’s Baltic Fleet assets and air defense systems.

The risks for Moscow

This target presents a low to moderate risk for Russia. The risk is higher than with Svalbard, given Finland’s stronger military capacity and the islands’ proximity to NATO forces, but still potentially attractive if Moscow anticipates any hesitation or delay in Alliance response.

What might prompt Moscow to act?

Perceived NATO political fragmentation, a reduced or limited forward presence in the Baltic region, or signals that Finland would hesitate to remilitarize the islands could convince Moscow that a swift fait accompli would succeed before reinforcements arrive.

How to prevent it

Finland, together with Sweden and NATO, should end the islands’ effective military vacuum by

• forward deploying a credible mechanized defensive force
• strengthening air and maritime patrols
• pre-positioning supplies
• conducting regular exercises to ensure rapid reinforcement and deny Russia the possibility of an uncontested landing on the Åland Islands.

Target 3: Eastern Estonia

Eastern Estonia, particularly the region including and surrounding Narva near the Russian border, combines geographic proximity, a significant ethnic Russian population, and limited national military depth, making it a plausible target for calibrated aggression. A limited seizure or engineered separatist enclave would test NATO’s Article 5 credibility while exploiting hybrid tactics and ambiguity to divide the Alliance.

The attack

The scenario would likely begin with the covert insertion of Russian paramilitary units and special operations forces posing as “local self-defense groups,” backed by cyberattacks, disinformation, and unrest in Narva, with the intent of carving out a separatist enclave of “oppressed” Russian minorities. These actions would be followed by rapid reinforcement from nearby Russian airborne and ground units under the pretext of protecting ethnic Russians.

The risks for Moscow

This target presents a low to moderate risk for Russian occupation. Such action would represent a higher escalation potential than Svalbard or Åland due to the likelihood of direct fighting and seizure of a contiguous region of a NATO territory. However, this target is still potentially attractive if Russia judges NATO’s likely response to be slow, divided, or limited.

What might prompt Moscow to act?

Perceived NATO hesitation, insufficient forward-deployed heavy forces in the Baltics, domestic unrest in Estonia, or signals of reduced US commitment to European defense could convince Moscow that a limited territorial grab would succeed before a robust Alliance response materializes.

How to prevent it

Estonia and NATO should strengthen deterrence by

• expanding Estonian force structure
• forward-deploying a full NATO brigade with enablers
• enhancing cyber and hybrid resilience
• preparing territorial defenses
• conducting frequent rapid-reinforcement exercises to deny Russia the possibility of a quick fait accompli.

Target 4: Gotland

Another potential target of Russian aggression is the Swedish island of Gotland, which sits at the center of the Baltic Sea. Its position confers decisive advantages in air and maritime control, making it strategically vital in any regional conflict. Its seizure would shift the Baltic balance toward Russia’s favor, secure access routes to Kaliningrad, and deliver a major strategic and symbolic blow to NATO.

The attack

A surprise coup de main by Russian naval infantry or airborne (VDV) forces, preceded by sabotage, cyber disruption, and covert special operations reconnaissance, could aim to overwhelm the island’s garrison before Swedish mainland reinforcements arrive.

The risks for Moscow

This target presents a moderate risk—higher than Svalbard, Åland, or eastern Estonia because Sweden has standing forces on the island. The direct conflict with armed forces mean NATO involvement would be more certain, increasing the likelihood of escalation.

What might prompt Moscow to act?

If Russian planners assess that NATO reinforcement timelines are slow, Swedish defenses remain limited to battalion strength, or Alliance unity is politically fractured during a wider crisis, the perceived opportunity for a rapid fait accompli could grow.

How to prevent it

Sweden, with NATO support, should

• expand Gotland’s defense from battalion to brigade strength
• reinforce it with artillery, air defense, and anti-ship systems,
• pre-position supplies
• rehearse rapid multinational reinforcement to ensure Russia cannot seize the island quickly or cheaply.

Target 5: Land bridge to Kaliningrad

Russian aggression through Lithuania to connect Belarus with Kaliningrad is a fifth potential attack scenario. Kaliningrad is a critical Russian exclave and home to the Baltic Fleet, whose overland access through Lithuania is vulnerable in a NATO-Russia conflict. A sudden Russian strike through Lithuania could link Russian forces to Kaliningrad, isolate the Baltic states, and achieve strategic depth, making rapid forward defense and NATO reinforcement essential.

The attack

Russia could initiate a sudden, large-scale invasion from Belarus and western Russia, preceded by airborne and special operations units, cyberattacks, and disinformation, advancing along the most direct roads to Vilnius and Kaunas to secure a land corridor to Kaliningrad.

The risks for Moscow

This is a high risk, high reward target for Russia. NATO and Polish forces, combined with the vulnerability of Russian supply lines and the potential for escalation, make such an operation costly and politically dangerous despite the operational advantage of surprise.

What might prompt Moscow to act?

Perceived NATO disengagement, diversion of US or EU resources elsewhere, internal pressures in Russia, or a belief that Baltic defenses are weak and NATO reinforcement delayed, encouraging Moscow to act before defenses harden.

How to prevent it

Lithuania, supported by NATO, should

• expand active and reserve forces to divisional strength
• establish a combined Baltic corps with NATO enablers
• fortify key terrain and infrastructure
• pre-position supplies
• rehearse rapid multinational reinforcement to deter or defeat a Russian push toward Kaliningrad.

By themselves, none of the Nordic or Baltic countries can deter or fend off Russian aggression in any of these five scenarios. At this time, NATO is not postured to do so either. To deter these scenarios, here are the first steps:

• Place NATO brigades in the Nordic-Baltic region, as promised at the Madrid summit in 2022.
• Create a comprehensive exercise schedule building on or similar to BALTOPS, specifically for Svalbard and Åland, to demonstrate capability to rapidly move in and defend the territory.
• Mobilize the NATO alliance and Europe writ large to provide the Baltic states with critical financial assistance beyond what already exists, to a level that has not been forthcoming to date.
• Accelerate the preparation of the populations of these countries for the reality of the risk of Russian aggression. While this is primarily a responsibility for the national governments, NATO can and should have a role to play.

Report

Feb 12, 2026

Putin’s next move? Five Russian attack scenarios Europe must prepare for

By Richard D. Hooker, Jr.

Whether emboldened by victory in Ukraine or motivated by a loss to pursue success elsewhere, Russian president Vladimir Putin is likely to continue his campaign of aggression. The Nordic and Baltic region, already subject to a campaign of intimidation, is in the Kremlin’s crosshairs—with these five places at greatest risk.

Defense Policy Eastern Europe

Fellow

Richard D. Hooker, Jr.

Senior Fellow

Scowcroft Center for Strategy and Security Transatlantic Security Initiative

Europe & Eurasia National Security

Report Feb 12, 2026

Putin’s next move? Five Russian attack scenarios Europe must prepare for

By Richard D. Hooker, Jr.

Whether emboldened by victory in Ukraine or motivated by a loss to pursue success elsewhere, Russian president Vladimir Putin is likely to continue his campaign of aggression. The Nordic and Baltic region, already subject to a campaign of intimidation, is in the Kremlin’s crosshairs—with these five places at greatest risk.

Defense Policy Eastern Europe

Issue Brief Nov 26, 2025

How the Baltic Sea nations have tackled suspicious cable cuts

By Elisabeth Braw

Two places in the world’s oceans see a lot of suspicious maritime behavior: the Baltic Sea, and the waters around Taiwan. Elisabeth Braw reports from the NATO task force charged with protecting the undersea cables and pipelines essential to daily life in Europe, with lessons for Baltic states and Taiwan, too.

Europe & Eurasia Maritime Security

New Atlanticist Aug 6, 2025

Dispatch from the Russian border: The Curonian Spit and the contest of the Baltic Sea

By Justina Budginaite-Froehly

A recent visit to Lithuania’s border with Kaliningrad reveals how the Baltic Sea has become one of Europe’s most contested maritime zones.

Eastern Europe NATO

The Transatlantic Security Initiative aims to reinforce the strong and resilient transatlantic relationship that is prepared to deter and defend, succeed in strategic competition, and harness emerging capabilities to address future threats and opportunities.

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The post Toplines: Deterring Putin’s aggression against NATO appeared first on Atlantic Council.

Demographic change is a critical variable affecting long-term economic development, including economic growth, capital accumulation, government budgets and debt, technology adaptation, and prosperity. Global demographic trends differ markedly, with some countries experiencing population stagnation or even decline, while other countries’ populations expand rapidly. Governments are not powerless in the face of the headwinds these demographic shifts produce. Mitigating the effects, however, of a shrinking working-age population in advanced economies and leveraging demographic expansion in developing economies will require far-sighted public policies.

Countries with declining working-age populations face significant challenges. Economically, the combination of low growth and increased government social spending creates financial pressures. Politically, demographic aging creates so-called “gray majorities” that can make it difficult for governments, particularly democratic ones, to enact the reforms necessary to maintain long-term financial stability. To the extent that voters view health and pension expenditures as acquired rights, political opposition to reform tends to be significant. Similarly, countries with a large share of young people may be more prone to political instability, particularly in the context of uneven economic growth and limited employment opportunities. These countries also often lack the ability to mobilize the resources necessary to invest in human and physical capital.

This issue brief is divided into three parts. First is an overview of demographic trends in advanced, emerging, and developing economies. These three groups of countries largely coincide with those identified in the Atlantic Council’s Freedom and Prosperity Indexes: high prosperity/high freedom, medium and low prosperity/medium and low freedom, and low prosperity/low freedom. Second is a discussion of the various economic, financial, and political challenges faced by the three groups, followed finally by high-level recommendations to cope with the economic challenges of demographic change.

Demographic change in advanced, emerging, and developing economies 

When discussing the impact of demographic change on prosperity, it is helpful to divide countries into three categories: advanced economies (or high-income countries), emerging economies (or middle-income countries), and developing economies (or low-income countries). Demographic trends in advanced, emerging, and developing economies differ markedly, leading to different economic and political challenges. The median age in high-, middle-, and low-income countries is forty, thirty, and twenty years old, respectively.

Advanced economies are characterized by high per capita income, slow economic growth, and a rapidly increasing elderly population. (See Figure 1.) In some cases, even the overall population is declining after decades of below-replacement fertility rates. (See Figure 2.) Where the overall population continues to increase, it is often due to net immigration. The so-called old-age dependency ratio—the share of people over sixty-five relative to the working-age population—averages thirty in advanced economies, meaning that for every person of retirement age there are roughly three people of working age. In Japan, a demographically very advanced country, the ratio is currently fifty, meaning there are two people of working age for every person over sixty-five.

Emerging economies, characterized by middling per capita income but generally fair economic growth, are also aging, in some cases very rapidly (e.g., China). Their old-age dependency ratios, however, remain lower than those of most advanced economies. Until recently, emerging economies were in a demographic sweet spot as they experienced declining overall dependency ratios. Today, fertility rates have fallen to near or below replacement levels in many upper-middle-income countries, setting them up for what are likely to be rapid increases in their old-age dependency ratios over the next few decades. In advanced economies, this transition was comparatively gradual. In many emerging economies, the transition will be considerably faster. The related economic challenges will affect these countries more precipitously, if more predictably.

Developing economies have low per capita income and are characterized by young, growing populations. The variability of economic growth is significant within this group of countries, with some registering very rapid economic expansion, while others are experiencing stagnation, typically in the context of domestic civil strife and political instability. Like high old-age dependency in advanced economies, a high youth dependency ratio in developing economies translates into a large share of economically inactive youth relative to the working-age population. This in part helps explain low levels of savings and investment.

How demographic change affects prosperity 

Favorable demographic momentum enhances a country’s economic potential. But there are many other factors that can affect economic outcomes, either favorably—sensible economic policy, strong human capital (e.g., high-quality schooling)—or unfavorably (e.g., political instability). The economic and financial outlook for each group differs markedly.

First, advanced economies have a significantly lower growth potential than emerging and developing economies. (See Figure 3.) Advanced economies grow less rapidly because they operate near the so-called technological frontier. By comparison, emerging and developing economies find it easier to generate productivity gains due to physical capital accumulation and the adaptation of existing technologies. In principle, developing economies are even more favorably positioned, but they often fail to fully exploit their potential catch-up growth because of political and economic instability.

Second, advanced economies are faced with adverse labor supply dynamics, compared to emerging and developing economies. An increasing old-age dependency ratio means the share of workers shrinks relative to older, economically inactive individuals. (See Figure 4.) According to the standard economic growth model, labor, in addition to capital and technology, contributes to economic output. Provided they are fully employed, expanding working-age populations will add to economic output, while a declining working-age population will subtract from it, all other things equal.

Third, advanced economies’ aging can affect the level of savings and hence investment and economic growth. As the share of economically inactive people—namely retirees, who do not produce but consume—increases, consumption tends to also increase and savings to decrease (relative to the baseline scenario where the old-age dependency ratio remains constant). This is akin to the life cycle hypothesis, which posits that savings peak in middle age. Indeed, the savings ratio in “middle-aged” emerging economies is significantly higher than in advanced and developing economies. (See Figure 5.) Of course, many other factors affect savings and investment in an economy, but an increasing old-dependency ratio should, all other things equal, reduce or at least limit savings, while a declining overall dependency should increase savings.

Fourth, advanced economies are, on average, characterized by high debt–to–GDP ratios and face significant increases in age-related government spending. (See Figure 6.) Social transfers and age-related spending (e.g., on health care and pensions) typically constitute the largest spending category in advanced economies. Moreover, advanced economies, and also some emerging economies, face large increases in age-related expenditures, as represented by the net present value of future pension and health care spending. By contrast, the government debt burden (measured as a share of GDP) in developing economies is typically lower, as is age-related spending. But while advanced and emerging economies have higher debt than developing economies, they also have a broader tax base, a more captive investor base, superior governance, and higher per capita income. Nonetheless, the financial challenges in the face of demographic change are significant in advanced economies; somewhat less significant, though rapidly increasing, in emerging economies; and virtually absent in developing economies.

Finally, distributional conflict is easier to manage in rapidly growing emerging economies than in slow-growing advanced economies, particularly in regard to age-related spending. It is more challenging to rein in spending or increase revenue in slow-growing economies, as a “pie” that is growing less rapidly makes distributional conflict more intense. In advanced economies especially, an expanding “gray majority” keen on defending acquired rights is electorally influential given its growing share of the voting population. By contrast, a rapidly expanding youth population can lead to instability (“youth bulge”). This also can make it harder to pursue a forward-looking policy consistent with long-term financial stability. Compared to advanced economies, emerging economies may find it easier to deal with distributional conflict given generally high economic growth rates as well as less pressure to rein in age-related spending. (See Figure 7.)

Policy recommendations 

Demographic change will have a major impact on economic outlook and government finances, particularly in advanced economies and increasingly in many emerging economies. Developing economies also face demographics-related economic challenges. Following are high-level recommendations for coping with demographic change.

For advanced economies

Advanced economies faced with declining or slow-growing working-age populations, slow economic growth, and increasing government debt should do the following:

• Devise policies aimed at slowing and, if possible, reversing declines in fertility rates. Few if any countries have thus far proved successful at increasing fertility rates. Even countries with supportive childcare and education policies have seen their rates decline significantly (e.g., Scandinavia). It is worth experimenting with policies to prevent a further, potentially catastrophic decline.
• Pursue policies to prevent further decline in economic growth. Such policies include creating incentives for older workers to remain in the workforce for longer, if only part-time, and supporting the development and integration of productivity-enhancing technologies (e.g., AI). Higher growth will help make demographic aging slightly more manageable.
• Reduce upward pressure on age-related spending. Adjust benefits and make spending more targeted and efficient in addition to automatically adjusting expenditures for increases in longevity.
• Increase immigration to counteract an accelerating decline of the labor force and thus slow the increase in old-age dependency ratios. In view of political headwinds in many advanced countries, it is important to explain the benefits of immigration and put in place appropriate policies aimed at rapidly integrating immigrants economically, politically, and socially. Consider issuing temporary or conditional work permits and conduct recurrent cost-benefit analysis of various types of immigration based on economic needs (e.g., individuals with specific educational or professional backgrounds, like medical professionals to meet increased demand in healthcare sector).

For emerging economies

Emerging economies faced with a rapidly slowing demographic momentum, a fair economic growth outlook, and middling debt levels should avoid replicating the mistakes of advanced economies and do the following:

• Devise policies to sustain continued high economic growth. Individual policies will vary by country, as different economies face different challenges (e.g., China has a high rate of saving; Brazil’s is low). Economically closed countries can generate efficiency gains by way of trade liberalization or creating more attractive conditions for foreign investment.
• Attract high-quality, low-risk capital inflows from less rapidly expanding advanced economies. This requires a credible commitment to sensible economic policies and macroeconomic stability and favorable regulatory and attractive tax policies, among other things. Enshrining such commitments in difficult-to-change laws or constitutional law may prove helpful.
• Limit future age-related government spending in view of rapid demographic aging. Avoid making expenditure commitments that will put stress on government finances by, for example, tying contributions and expenditures to projected demographic developments before a politically strong gray majority capable of preventing forward-looking age-related policies emerges.

For developing economies

Developing economies have low savings rates due to a high youth dependency ratio, while a rapidly expanding young population creates economic and political challenges. To address this, they should do the following:

• Maintain and/or increase political and economic stability to exploit their considerable economic catch-up potential and reduce the incentives for skilled individuals to immigrate to high-wage economies where there is strong demand and both political stability and living standards are higher. Political and economic stability are likely to prove self-reinforcing.
• Mobilize greater fiscal and financial resources, including from abroad, to invest in infrastructure and education in order to increase physical and human capital and facilitate integration of young people into the formal economy.
• Pursue policies aimed at lowering the youth dependency ratio to enhance the economy’s savings potential. This should be done through incentives, ideally by providing women with better access to education and offering targeted, affordable age-related policies to reduce the incentives to have large numbers of children, particularly in poor, rural areas.
• Create conditions to facilitate the return of skilled emigrants through incentives, such as tax benefits. Emigrants often gain valuable economic experience and skills in their host countries. They can also help create transnational economic networks, allowing knowledge, skills, and even capital to move more easily between advanced and developing economies. The easier it is for emigrants to return to their country of origin, without forfeiting the right to reside in either country, the more likely they are to return or engage in economic activities in their home country.

Fellow

Markus Jaeger

Senior Advisor

Freedom and Prosperity Center

Central Europe Economy & Business

Report Jun 23, 2025

2025 Freedom and Prosperity Indexes: How political freedom drives growth

By Ignacio Campomanes, Nina Dannaoui-Johnson, Annie (Yu-Lin) Lee, Joseph Lemoine

As the Freedom and Prosperity Indexes show political freedom declining worldwide for the twelfth straight year, new data analysis shows its importance for lasting prosperity: Though authoritarians promise economic rewards, democratizing countries gain an 8.8 percent GDP per capita boost over twenty years than their autocratic peers. With democracy on the ropes, what else can the Indexes tell us?

China Civil Society

The Freedom and Prosperity Equation Sep 18, 2023

Pathways to economic prosperity: Theoretical, methodological, and evidential considerations

By Markus Jaeger

Economic development is a complex, multi-causal phenomenon and it is useful to consider how different elements, including policies and institutions, interact to produce sustained economic growth. Depending on the situation, various reforms can nudge nations toward certain paths.

Freedom and Prosperity Macroeconomics

Report Mar 24, 2025

Why democracies stick together: The theory and empirics behind alliance formation

By Markus Jaeger

Democratic peace theory holds that democracies do not go to war with each other. The democratic alliance hypothesis suggests democracies prefer alliances with fellow democracies over nondemocratic powers. If both theories hold, US foreign policy should prioritize democratization, as prosperous, democratic nations are less likely to align with authoritarian states.

China Freedom and Prosperity

Trackers and Data Visualizations

Jun 15, 2023

Freedom and Prosperity Indexes

The indexes rank 164 countries around the world according to their levels of freedom and prosperity. Use our site to explore twenty-eight years of data, compare countries and regions, and examine the sub-indexes and indicators that comprise our indexes.

The Freedom and Prosperity Center aims to increase the prosperity of the poor and marginalized in developing countries and to explore the nature of the relationship between freedom and prosperity in both developing and developed nations.

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The post The economic and political traps awaiting aging societies appeared first on Atlantic Council.

Introduction

According to the Pentagon, “[China’s military] continues to refine multiple military options to force Taiwan unification by brute force. Those options include, most dangerously, an amphibious invasion, firepower strike, and possibly a maritime blockade.”

To address this threat, the new National Security Strategy unveiled in late 2025 declares that “deterring a conflict over Taiwan, ideally by preserving military overmatch, is a priority” and emphasizes, to this end, “reinforcing U.S. and allies’ capacity to deny any attempt to seize Taiwan. The new National Defense Strategy of January 2026 further reinforces the goal to establish a “strong denial defense along the First Island Chain” and the need to “supercharge the defense industrial base.”

For this approach to succeed, the United States and its allies must rapidly field new military systems to counterbalance China’s military buildup. To offset China’s tremendous rate of military production, US defense thinkers and policymakers are increasingly focused on unmanned systems—particularly those far cheaper and faster to produce than the most advanced manned warships and aircraft. Such low-priced unmanned systems would be a key element of accelerating a buildup of US military capability to deter or defeat Chinese aggression against Taiwan at a feasible cost.

As Admiral Samuel Paparo, commander of the US Indo-Pacific Command, told the Washington Post: “I want to turn the Taiwan Strait into an unmanned hellscape using a number of classified capabilities so I can make their lives utterly miserable for a month, which buys me the time for the rest of everything.”

Thanks to both sides’ mass use of unmanned aircraft in Russia’s war against Ukraine, this quote might bring to mind swarms of flying drones dropping munitions or ramming into targets. But Ukraine is largely a land war, and a fight to control Taiwan would be a different kind of warfare. Undersea drones could play a critical role in defending Taiwan, particularly if they could be produced relatively cheaply and paired with AI that would allow them to operate autonomously while submerged and maintain communications silence to preserve their stealth. Given the long distances involved in the Indo-Pacific region and the distance of US bases from Taiwan, such drones could be particularly useful for the US military in a Taiwan conflict if they had a range of over 1000 kilometers. This led to the Atlantic Council’s Indo-Pacific Security Initiative (IPSI)’s interest in exploring, through wargaming and analysis, the potential of US LRAUVs in a Taiwan contingency. This issue brief is the result of Aquatic Tiger, an initial two-day wargame and post-wargame analytic effort conducted by IPSI, using the expertise of former US military, intelligence, and defense officials, along with non-government scholars and industry experts. This wargame, conducted over two days in November 2025, was the first of its kind with publicly available results, and is summarized below from the perspectives of a range of participants.

Aquatic Tiger’s initial results suggest that additional analysis, wargaming, modeling, technical experimentation, live exercises, and simulation on key issues related to such LRAUVs are warranted, including: how units of such drones would be best organized and employed by the United States, Taiwan, and US allies in such a contingency; whether such LRAUVs could be produced at a low enough cost and in sufficient scale to be effective; what tactical-level synergies these LRAUVs would have operating in concert with other manned and unmanned platforms; and the potential efficacy of various Chinese countermeasures.

LRAUV capabilities: A submariner’s perspective

The LRAUVs employed in Aquatic Tiger are systems still in development that have not been fielded in large numbers or used in combat. For the purposes of Aquatic Tiger, we made assumptions about the capabilities they would have in the next few years. The LRAUVs for Aquatic Tiger were uncrewed, extended-duration, multi-mission submersible platforms controlled by AI. Due to communications limitations imposed by the need to remain submerged and minimize the risk of detection when approaching their targets, they relied heavily on mission planning, programmed autonomous action, and post-mission data recovery. They were modular and configurable to various mission roles such as intelligence, surveillance, and reconnaissance (ISR), seabed survey, mine countermeasures (MCM), electronic warfare (EW), and maritime kinetic effects (high-explosive warhead) delivery. For the purposes of Aquatic Tiger, we also assumed that they would have an austere deployment capability, meaning they could be launched directly from the back of a truck or dropped from a ship or aircraft.

LRAUVs reduce personnel risk and are low cost, expendable, and less attributable than crewed submersibles. However, they lack the speed, endurance, mission versatility, stealth and survivability, payload, and real-time situational awareness and decision-making capability of crewed platforms like US attack submarines.

Compared to unmanned aerial systems (UAS), LRAUVs benefit from longer range and time on station, underwater concealment, and reduced exposure to the adversary’s anti-access/area denial (A2/AD) capabilities, particularly sensors and missiles. However, LRAUVs are also much slower, lacking the rapid deployment and potential wide-area coverage of UAVs, while their limited communication capabilities preclude the same level of immediate dynamic tasking and constant sharing of situational awareness with other platforms.

Wargame director’s overview of Aquatic Tiger

To explore LRAUVs’ potential in a near-future Taiwan scenario, we conducted the two-day Aquatic Tiger wargame with three teams including former US military, intelligence, and defense officials, along with non-government scholars and industry experts. The Blue Team representing the US military, including notional LRAUV capabilities, was led by a former US Defense Department senior executive with extensive experience with East Asian issues. The Red Team, representing China, was led by a former senior defense intelligence analyst whose career focused on China’s military. The control team planned and ran the wargame, adjudicated the results of player actions, and addressed the roles of countries other than the United States and China as needed. It consisted of former US government and military leaders with experience running wargames and tabletop exercises—including one retired US Navy officer with extensive experience directing wargames on undersea warfare—and a distinguished scholar bringing academic rigor to the analytic methodology.

Road to crisis and first turn: Chinese pressure on Taiwan building

To provide a starting point for the scenario, we began with a notional crisis, set a few years from now, in which China’s military placed unprecedented military pressure on Taiwan to convince its people to seek reconciliation with Beijing and oppose further defense budget increases. As tensions rose, a Chinese military aircraft crashed after a collision with a drone from Taiwan. Chinese Communist Party (CCP)-controlled media claimed several members of the aircrew were killed, and Chinese fighter jets soon shot down three more drones. CCP leadership threatened further escalation, warning that a “wrong decision” would trigger “decisive military action.” For its part, Washington announced stiff new economic punishments against China, warning they would remain in place until Beijing agreed to “maintain peace and to renounce aggression.” With that, the scene was set for a confrontation.

Figure 1: Turn one of the Aquatic Tiger wargame

The Red Team, simulating China, initiated the wargame planning to keep the Taiwan situation “an internal matter,” using an air and sea quarantine to pressure Taiwan while keeping out the US military and preparing for a potential armed conflict. China’s priorities included

• enforcing a quarantine of Taiwan framed by the CCP as a domestic law-enforcement action (attempting to force all air and sea cargo to Taiwan to be routed via air and seaports on China’s mainland for inspection);
• enhancing defensive military posture, including surveillance assets to detect potential US military intervention; and
• conducting a messaging campaign targeting the populations of Taiwan, the United States, and the international community, along with diplomatic actions around the world to underscore that the goal is a peaceful resolution.

The Blue Team’s overall concept at the outset was to “flood the zone” to signal resolve and deter escalation. Its priorities included: surging ISR assets, including LRAUVs, into the area around Taiwan; increasing military posture, including with LRAUVs; and engaging allies and partners for support.

During the first turn of the wargame, US military-operated LRAUVs, along with small numbers operated deniably by the US government and others operated by non-government research entities and private contractors, successfully deployed into key areas to conduct surveillance and support public release of information on Chinese activities—though non-LRAUV assets proved to be more effective collectors of images compelling for public release. Beijing’s calculus and plans were ultimately unaffected. The information campaign built some international support and sympathy, but China leaned into its narrative and US key allies and partners ultimately remained hesitant due to risks and costs.

Second turn: China escalates and the United States responds

Figure 2: Turn two of the Aquatic Tiger wargame

In the second turn of the wargame, the situation rapidly escalated as Chinese coast guard vessels attempted to enforce the quarantine and Taiwanese coast guard vessels moved to escort incoming ships. Chinese military vessels intervened, with a People’s Republic of China (PRC) frigate sinking one of Taiwan’s coast guard vessels. A short time later, this frigate exploded and sank quickly, apparently hit by a torpedo or unmanned underwater vehicle.

The Red Team escalated under the premise that China would “prepare to achieve a resolution to the Taiwan question.” China declared a full blockade of Taiwan and, shortly thereafter, conducted limited joint firepower strikes on Taiwan bases. To stifle international opposition and justify its position, Beijing simultaneously conducted a strategic messaging campaign targeting the international community.

The Red Team’s pivot from pressuring Taiwan to use of force was a major and rapid escalation and a reaction to perceived US direct intervention. China was trying to impose costs to compel the United States to back off, not hesitating to destroy LRAUVs and other “interference” in the Taiwan Strait, while assuming US involvement in LRAUV operations and the sinking of the frigate. The Blue Team’s posture adjusted to provide broader military options and complicate PRC efforts beyond the vicinity of Taiwan, while leveraging allies and partners. LRAUVs were augmenting, but not replacing, a wide range of other surveillance assets and saw some limited use for counter-mine operations.

Third turn: Military conflict to control access to Taiwan

Figure 3: Turn three of the Aquatic Tiger wargame

At the start of the third turn, the Red Team continued wanting to convince the Taiwan government to come to the negotiating table. But it shifted to primarily focus on defeating (but not destroying) US military operations supporting Taiwan, while still attempting to avoid an all-out war with the United States and its allies. The PRC approach included three main elements.

• Prevent US/allied military interference and support to Taiwan: Conduct A2/AD focused on chokepoints south and northeast of Taiwan in order to keep the US military at bay and impose costs on Washington, while warning the United States that China has deployed portions of its nuclear triad.
• Defeat Taiwan’s forces with standoff attacks: Conduct joint firepower strikes on Taiwan’s military and infrastructure targets in order to damage logistics, disrupt command and control, and reduce Taiwan’s ability to resist.
• Control the Taiwan Strait: Reinforce China’s control of the Taiwan Strait in order to deny US support and unity of action, and to enable cross-strait access for an amphibious assault, if needed.

The Blue Team’s overall concept, meanwhile, was to “throw Taiwan a lifeline” by securing access corridors east of Taiwan while countering and complicating PRC military efforts to threaten Taiwan. This included three main elements.

• Stop the blockade:​ Attrit Chinese forces in the Taiwan Strait, continue mine countermeasures, and degrade Chinese blockading forces.​
• Increase US posture: Neutralize Chinese control of the South China Sea and demonstrate counter-invasion capabilities and rehearsals south and east of Taiwan.
• Support Taiwan​: Resupply and reinforce Taiwan, prioritizing mine countermeasures, anti-ship weapons, and beach defenses​.

China successfully established clear maritime superiority in the Taiwan Strait despite some US LRAUVs entering. The control team, based on analysis of China’s countermeasures, adjudicated that China was able to take advantage of the geographic constriction and relatively shallow waters of the strait to detect, disable, and destroy the LRAUVs through various means faster than replacement LRAUVs could enter the strait through the passages at its north and south ends. China was also able to disrupt and interdict much of the air and maritime traffic coming into Taiwan from the east, particularly given the limited east coast port capacity.

The conflict began to coalesce around four key geographic areas prioritized by Blue Team forces.

• The northern end of the Taiwan Strait: China achieved clear air and surface superiority in this area. LRAUVs were the primary US capability directly contesting Chinese control of this area, due to the Blue Team’s unwillingness to risk losing any of its relatively small number of high-value attack submarines.
• Ryukyus, including Okinawa: In this area, the United States and Japan established a clear advantage by employing aircraft and warships supported by land-based assets and LRAUVs. China did not attempt to contest US control of this area but was content to block movement toward Taiwan by US and Japanese forces in this area.
• The Luzon Strait: This area was heavily contested, including by air, surface, and subsurface forces engaged in intense combat with high attrition on both sides. US LRAUVs were a significant contributor to this fight, swarming and sinking Chinese surface vessels as they attempted to move through the strait.
• South China Sea: The United States kept its carrier strike groups in this area well protected and away from the Chinese mainland, which limited China’s ability to find and strike them. There was little role for US LRAUVs in this area.

The wargame concluded with the conflict escalating and no end in sight, with all three teams having learned some important lessons. Observations from key members of the Red Team, Blue Team, and Control Team follow.

Red (China) Team leader’s perspective

For Beijing, managing the Taiwan issue in this type of scenario encompasses three principal components. The first is to convince Taiwanese authorities that actions opposing Beijing’s desires will be punished. China does this by demonstrating the capacity to ratchet up military or paramilitary pressure at points around the island. The second is to convince Taiwanese authorities that they have no realistic hope of decisive support from outside powers. These efforts primarily leverage the suite of US-focused A2/AD capabilities the People’s Liberation Army (PLA) has been developing for more than two decades. The third is to ensure that China retains a credible capacity to take control of the island by force.

LRAUVs present some, albeit limited, opportunity to impact each of these components.

The platform presents some utility to provide enhanced warning of PRC pressure operations or intent to use violence to impose Beijing’s will. China has been posturing kinetic assets for a short-notice use of force against Taiwan for decades. There has been a marked increase in their coercive posture around Taiwan in recent years. A transition to violent resolution could begin within days, or even hours, of receiving an order from Beijing. With the ability to loiter in place (unlike low-earth-orbit satellites or aircraft), LRAUV swarms in surveillance positions in the Taiwan Strait and off PRC marshalling points could augment national technical means to help differentiate between ambiguous and unambiguous warning.

The platform has the potential to shape PLA operations but not to deter them. The decision whether to use armed force to compel Taiwan to submit to CCP control will be a political decision, with relative military postures being only one of several considerations. Once the decision is made to place military force in the leading role, the PLA will calculate optimized campaign operations designed to mitigate the effect of Taiwanese or US resistance, including the already anticipated presence of LRAUV platforms. Platforms with counter-mine payloads could complicate blockade operations that include mining Taiwan’s ports. Swarming attacks by LRAUV platforms against PRC support vessels or capital ships could complicate PRC countermeasures. Thus, LRAUV platforms might have effect at shaping, but not deterring, PRC military operations.

LRAUVs’ contributions to defeating PRC blockade operations or an invasion will be a function of numbers of platforms, payload types, and their integration into larger US or Taiwanese systems of systems. PLA War Control theory and Systems Warfare doctrine emphasize warfare that is highly intense but also highly focused on carefully defined objectives. The result is a hybrid of maneuver and position warfare fought in a resource-intensive, and therefore potentially highly attritive, manner. PRC emphasis on optimization of military operations includes the ability to adapt to unforeseen battlefield developments. For these reasons, the impact of LRAUV platforms on PRC operations will be closely linked to volume and flexibility.

Strategic level

PRC military and paramilitary elements play a supporting role at the strategic level. Beijing’s objective at this level is to shape political thinking, primarily in Taipei and Washington. This is true even in more extreme strategies such as quarantines or blockades. Military coercion is more central in these strategies, but the objective remains to shape political thinking.

The utility of LRAUVs at the strategic level is less straightforward than at the operational level. It will probably be limited to shaping the choice and execution of China’s military operations to implement its strategy.

LRAUV platforms will likely be ineffective at providing enhanced strategic warning. A PRC decision to turn to armed force to resolve the Taiwan issue will almost certainly be rooted in CCP leaders’ political assessments that peaceful (albeit coerced) unification is no longer possible. LRAUVs are not positioned to monitor political decisions—only their operational manifestations.

These platforms will also likely be ineffective at deterring PRC strategic action. Although LRAUVs, in concert with other systems, have the potential to impose costs on China for military action, PRC leaders will almost certainly calculate that these platforms will be unable to deny them the achievement of key political objectives.

LRAUV platforms will not prove decisive in defeating a PRC strategy to resolve the Taiwan issue by use of military force—but they could play a role in shaping the course of the conflict. The CCP uses military force to drive political outcomes. The theory of victory underlying a blockade or invasion of Taiwan will be based on shaping political dynamics, not strictly military outcomes. By complicating certain types of operations, such as minefield components of blockade operations, LRAUV platforms could—in concert with other systems—help shape PRC military strategies so that Chinese leaders seek offramps from conflict rather than pursue complete domination of Taiwan.

Contextual limitations and political considerations

China has developed a wide range of military tools to deal with a Taiwan conflict scenario. Only those tools that operate in the maritime domain appear to be susceptible to LRAUV influence. This leaves significant elements of China’s toolkit unaffected. Notably, these include the mainland-based ballistic missiles, long-range artillery, and aircraft that would constitute the major part of a joint firepower strike designed to put logistical, communications, psychological, and political pressure on Taiwan’s leadership. Similarly, the majority of the A2/AD tools China has developed to hold potential US or third-party intervention at risk also operate predominately from PRC territory and are therefore beyond the influence of LRAUVs.

It is worth noting that the ways in which LRAUV kinetic payloads shape PRC operations will probably vary significantly depending on which party employs them. LRAUVs or shorter-ranged underwater platforms employed by Taiwan will almost certainly generate a different response than those employed by US forces. China will likely see Taiwan’s use as staying within the confines of a domestic conflict. Under its Active Defense doctrine, China might seek to avoid striking US targets—which would likely draw the United States into the conflict as a direct combatant—unless the United States has already struck PRC targets. Kinetic employment by US forces against PRC targets would likely escalate to a larger exchange of fires between the two sides. Depending on the scope and scale of escalation, this could increase PRC perceptions of the need to project larger amounts of military force across the Taiwan Strait earlier in the conflict, in an effort to compel resolution before the United States could posture forces for open-ended conflict.

Blue (US) Team leader’s perspective

From a US Blue Team perspective, Aquatic Tiger highlighted both the potential value and the inherent limitations of LRAUVs in a plausible China-Taiwan conflict. For Blue Team planners, the appeal of LRAUVs rested less in their ability to deliver decisive military effects than in their capacity to operate persistently and at scale, with comparatively low political and operational risk, in highly contested maritime environments. The wargame demonstrated that LRAUVs could support Blue Team objectives during selected phases of a crisis, while also revealing how quickly their utility narrowed as conflict escalated and China accepted higher levels of military risk.

Blue Team objectives and strategic logic

Across the turns of the wargame, the Blue Team pursued three consistent objectives: deterring further PRC escalation, maintaining access to the Western Pacific—particularly east of Taiwan—and preserving alliance cohesion while managing escalation risks with a nuclear-armed peer competitor. Blue Team decision-making was shaped by concerns related to attribution, proportionality, and alliance politics, which constrained both the timing and visibility of military actions.

Within this framework, Blue Team force posture prior to hostilities served two distinct purposes. The first was signaling—demonstrating resolve to deter PRC aggression, reassure allies and partners, and support diplomacy and strategic messaging with third parties. The second was positioning—quietly placing forces to gain an operational advantage should conflict occur. Aquatic Tiger demonstrated that LRAUVs were far better suited to the latter than the former.

Pre-hostilities posture and strategic messaging

LRAUVs’ low detectability, while operationally advantageous, limited their utility as signaling tools. Unlike air or surface platforms that can be employed deliberately for visible demonstrations of presence, LRAUVs operate largely outside public view. As a result, they contributed little to strategic messaging with allies, partners, or the broader international community.

During the wargame, strategic messaging and diplomatic efforts were more effectively supported by other assets, particularly those capable of generating clear, shareable imagery and data. Although contractor-operated concepts were discussed as a means of increasing volume, LRAUVs remained ill-suited to strategic messaging due to their limited fields of view and constrained sensor outputs. In short, their primary value before hostilities lay in positioning rather than persuasion.

ISR: Tactical value and strategic limits

LRAUVs contributed to intelligence, surveillance, and reconnaissance during the wargame, but Aquatic Tiger underscored clear limits to their ISR utility from a Blue Team perspective. These systems did not provide the strategic or operational indications and warning that Blue Team decision-makers would prioritize in a Taiwan contingency, such as detecting large-scale mobilization of PRC amphibious forces, munitions, or logistics.

Instead, LRAUV ISR proved most relevant at the tactical level, supporting localized awareness for operators already engaged in contested environments. In this role, LRAUVs complemented rather than substituted for airborne, space-based, and other ISR platforms, which proved more effective for broad-area coverage and early warning. The wargame reinforced that LRAUVs should not be viewed as primary ISR platforms for strategic or operational warning, but as contributors to tactical awareness once hostilities were imminent or under way.

Employment across escalation phrases

As the scenario progressed into the second turn and China declared a blockade, Blue Team objectives shifted from deterrence toward complicating PRC operations and imposing costs. LRAUVs were employed to augment ISR, support counter-blockade efforts, and contribute to mine countermeasures and maritime awareness. These contributions were incremental rather than decisive. LRAUVs enhanced the Blue Team’s ability to contest the blockade at the margins but did not alter the underlying balance of forces in the Taiwan Strait.

By the third turn, once China adopted a more explicit A2/AD posture along the First Island Chain, the constraints on LRAUV utility became more pronounced. Attrition increased rapidly as PRC forces demonstrated a willingness to destroy autonomous systems with limited concern for escalation. In the Taiwan Strait itself, LRAUVs were lost faster than they could be replaced, reinforcing the conclusion that constricted waters close to the mainland favored PRC countermeasures, including unconventional approaches.

In contrast, LRAUVs proved more effective in geographically differentiated areas such as the lower Ryukyus and portions of the Luzon Strait, where Blue Team and allied forces enjoyed greater standoff advantages, and where LRAUVs could complement land-based and maritime capabilities.

Blue Team leader perspectives on LRAUV capabilities in the Aquatic Tiger wargame

Within the wargame, the LRAUV system capabilities in the Blue Team’s inventory resonated with Blue Team planners because they reflected attributes aligned with their team’s operational needs—including long endurance, modular payloads, and forward deployability—without placing personnel at risk. These characteristics made such systems suitable for early deployment and for missions emphasizing persistence and access in contested environments.

At the same time, the LRAUV systems employed by the Blue Team during Aquatic Tiger proved not to be decisive platforms. Limited payload size and maneuverability constrained individual kinetic effects, while relatively slow transit speeds required advance planning and careful positioning. Once PRC decision-makers assumed Blue Team ownership of LRAUV operations, the political advantages of ambiguity diminished and kinetic employment risked escalation.

Kinetic employment and the access problem

During the wargame, the Control Team expressed skepticism regarding the kinetic utility of the LRAUVs in the Blue Team’s inventory, particularly against high-value targets such as large surface combatants or invasion force transports. Concerns focused on warhead size and maneuverability, leading to an adjudication that kinetic effects of individual LRAUVs would be limited.

Subsequent reflection suggests that this assessment might have undervalued the role LRAUVs could play in addressing one of the central challenges of a Taiwan contingency: gaining kinetic access inside heavily defended, shallow-water environments dominated by PRC A2/AD systems. In such environments, the principal constraint on Blue Team operations was often the ability to deliver kinetic effects at scale, rather than targeting information.

Viewed through this lens, the limitations appear less constraining than initially assumed. Employment as a form of point defense or a limited, mobile minefield aligns with the operational reality that adversary forces—particularly invasion and transport elements—must move through predictable maritime approaches. While individual warheads might be insufficient against large platforms, employment at scale could generate meaningful aggregate effects, consume PRC decision-maker bandwidth at multiple echelons, complicate PRC operations, and impose costs in areas otherwise inaccessible to Blue Team kinetic forces.

Constraints and integration challenges

Several clear constraints emerged from a Blue Team perspective. First, scale mattered. Individual LRAUVs had limited impact and were mission constrained by their pre-planned payloads. Only through numbers and pre-positioning could they influence PRC operations, and even then primarily at the tactical level. Second, command-and-control and integration challenges limited effectiveness. In this first iteration of wargaming, LRAUVs were considered largely as a standalone capability, fully leveraging neither the operational benefits of collaboration between and among LRAUVs at scale nor of teaming LRAUVs with other manned and unmanned systems.

Third, geography was decisive. LRAUVs were most useful in areas where PRC land-based sensors, aircraft, and missile forces constrained Blue Team air and surface operations, but least effective in narrow waters where maritime militia and other countermeasures could be employed. Attrition, while expected, raised questions regarding sustainment and replacement under combat conditions.

Strategic implications for the Blue Team

From a Blue Team perspective, Aquatic Tiger suggests that LRAUVs should be regarded as enabling capabilities rather than decisive instruments of deterrence or warfighting. Their greatest value lies in pre-hostilities and early crisis phases, where they can support positioning, access, and selected tactical effects at relatively low risk to personnel. As conflict escalates, their role narrows and must be integrated carefully with broader joint and allied operations.

The wargame also underscored the importance of allied and partner considerations. LRAUVs’ employment by third parties, including Taiwan and regional allies, could complicate PRC political and military calculations in ways distinct from their employment exclusively by Blue Team forces, particularly given Beijing’s sensitivity to legitimacy and escalation dynamics.

Bottom line for Blue Team planners

The Blue Team perspective emerging from Aquatic Tiger indicates that LRAUVs could occupy an important, but bounded, role in a Taiwan contingency. When employed with disciplined expectations and integrated into a broader operational framework, they can improve access, complicate adversary planning, consume adversary decision-maker bandwidth, and reduce risk to personnel. They cannot substitute for robust force posture, alliance coordination, or timely Blue Team strategic decision-making. Their value lies not in decisiveness, but in enabling options in environments where other capabilities face prohibitive risk.

Technical and tactical limitations

A number of technical and tactical considerations arose during the wargame that are relevant to consider in terms of potential challenges to the effectiveness of the small, autonomous, expendable LRAUVs employed in Aquatic Tiger, including limitations on intelligence collection, difficulties in attacking moving targets, and potential countermeasures.

ISR limitations

The collection of optical, electromagnetic, and sonar data by sensors on a small LRAUV is limited by the size of sonar carried and the low height of optics and collection antennas. The high density of maritime traffic along the Chinese coast—particularly of military vessels during a crisis—creates an extremely cluttered environment in which acoustic sensors with limited range and aperture, and lacking accurate positional information, offer limited insight. Small, lightweight, electromagnetic spectrum sensors and limited on-vehicle processing capability offer similarly limited capability to provide intelligence-quality electromagnetic spectrum data. Wide-area collection of limited-quality data can be leveraged to contribute to maritime domain awareness in general, but is more applicable to tracking commercial vessels of interest or sanctions enforcement than supporting military operations. A mast height of about one meter offers limited visibility in open ocean environments, where swells of 1–2 meters are common, offering significant periods of obstructed observation and difficulty ascertaining range, target angle, and vessel identification at more than a few nautical miles.

Target detection, classification, identification, localization, tracking, engagement, and assessment

Many of the challenges to intelligence collection are also relevant to completing a “detect to engagement sequence” or “kill chain” for an LRAUV to attack a target with its onboard warhead. Acoustic sensors for individual vehicles offer limited directional discrimination and require robust communications among swarms to reduce errors by taking directional readings from multiple vehicles. Detecting a potential target in a likely target-rich environment is not necessarily difficult, but the other steps to determine how effectively a target can be engaged pose different challenges depending on whether they are based on acoustic, optical, or electromagnetic sensing. The difficulty ascertaining range makes a decision to start a “run in” especially problematic because LRAUVs have only a limited amount of battery power to make a high-speed run to a target. They must also be close to have reasonable potential to intercept a fast-moving target, or even to chase down a slower target from behind.

The wargame did not explore the specifics of how decisions to authorize individual autonomous lethal attacks would be made. The decision to conduct a kinetic attack autonomously also could add considerable complexity to the planning aspect of the mission. Current US Department of Defense restrictions on autonomous lethal engagement might be difficult to satisfy without communications between a weapon release authority and the LRAUV. The workaround of having a contractor operate the vehicle might not eliminate this complication. These policy restrictions could also affect the viability of foreign military sales. Assuming policy issues can be worked out, aspects of international law (e.g., The Hague Convention on mines) require restrictions on location of use and notification of third parties that complicate planning and operational employment of “indiscriminate attack” by lethal autonomous systems.

Potential countermeasures

A number of potential counters to small LRAUVs were raised in Aquatic Tiger, ranging from broad sweeping using modified minesweeping or fishing gear, localized use of such sweeps to “clear limiting lines of approach,” the use of obstructions (nets, modified oil containment equipment), intervening lower-cost vessels to guard flanks of transit lanes, use of “hunter-killer” unmanned underwater vehicles (UUVs), and UAVs alone or in conjunction with the above (vulnerability while snorkeling/surfacing might be exploitable). Defensive barrier modifications and active defense systems on ships themselves are possible in analogous fashion to those on tanks for aerial drones. Double-hulled vessels are fairly resilient to contact explosions and are used to sweep areas as attractors. Reviving the historical use of torpedo nets in various configurations could prove effective. The development of torpedoes that ran at depth and exploded under the keel rendered such nets ineffective, but they could effectively counter UUVs impacting the hull at slow relative speed, particularly against ships at anchor or in port.

Recommendations for Congress

Autonomous systems broadly provide US and foreign forces the benefit of ambiguity of attribution and deployed intent. LRAUVs can particularly shine, given their potential oceanographic and environmental use, which might obfuscate the purpose, to be deployed at or before the first sign of indicators or warnings at the strategic level. However, to be effective, the systems must be better resourced and included in existing Foreign Military Sales (FMS) programs or through more creative export means such as encouraging co-production or direct commercial sales.  

• Oversight and acquisition follow-through: Congress should consider how LRAUVs can be used across theaters. Due to technical requirements, LRAUVs perform best in calmer waters, including in littorals and inland seas such as the Black Sea. Congress has already recognized the importance of such systems and included them in the Fiscal Year 2025 National Defense Authorization Act (FY 2025 NDAA), Section 1032, which defines LRAUVs as systems that exceed one thousand nautical miles in range and are capable of operating completely submerged at sea with modular payloads. Section 1032 further requires competitive demonstrations of these systems for the services. Congress, however, has not yet passed follow-up legislation on these competitive demonstrations or on the acquisition of LRAUVs. In the medium term, Congress should follow up on the required competitive demonstrations outlined in Section 1032 of the FY 2025 NDAA and solicit immediate feedback from the services on next steps for LRAUV development.
• Export controls and dual-use framing: Congress should consider leveraging the oceanographic and environmental uses of LRAUVs with modular capacity to reclassify such systems for export from the more-restrictive ITAR (International Traffic in Arms Regulations) list to the less-restrictive EAR (Export Administration Regulations) category. By encouraging the sale of the LRAUVs separate from specific advanced kinetic and electronic effects, the United States can enhance the credibility of such systems for environmental and oceanographic use and encourage further indigenous modular innovations. To support such efforts, Congress should direct the Department of Commerce to consider additional support for the export of US LRAUVs to countries of interest. It should also consider a pilot program for a special license exemption for select countries purchasing such systems for environmental purposes.
• Further analysis of LRAUVs’ impact: Congress should encourage more research and wargaming on the utility of LRAUVs as the technology develops. While this report posits that the strategic and operational effects of these systems are presently limited, continued technological development and the integration of LRAUVs into larger frameworks—such as regional maritime surveillance and interdiction—might yield higher-tier effects. Providing further encouragement—and, importantly, appropriations—toward analysis of LRAUVs is essential to maintaining a qualitative edge in this frontier technology and realizing its potential as a contributor to deterrence and war preparedness.

Key findings

The Aquatic Tiger Wargame and follow-on analysis led the authors to a set of key findings.

• These types of LRAUVs are uniquely suited to forward deployment into sensitive areas during a crisis prior to hostilities, when US senior leadership is likely seeking to minimize escalation risks and conserve resources for a potential conflict. The lack of personnel placed at risk, along with LRAUVs’ low cost and low signature, could allow these platforms to conduct surveillance for extended periods to provide situational awareness and warning of impending attack. Their long-range capability could also equate to a long dwell time in a target area during an extended, open-ended period of crisis, meaning they offer a lower risk of burnout than other types of surveillance platforms. Their deniable, unclear national origin is also an advantage in terms of limiting the risk of crisis escalation. However, this lower risk profile, deniability, and ambiguity also mean that China could attack or interdict US LRAUVs prior to the outbreak of hostilities (including with unconventional means like fishing nets) with a relatively low fear of uncontrolled escalation.
• Geography is a key consideration for LRAUV employment, and chokepoints can be a double-edged sword. US LRAUVs could be deployed into areas—including into constricted areas north and south of Taiwan—where PRC land-based sensors, surface-to-air missiles, aircraft, surface ships, and missile strike forces and sensors make air and surface operations high risk and high cost. Though constricted waters advantage Chinese countermeasures against LRAUVs moving through such areas, maritime chokepoints can also be excellent places for LRAUVs to loiter and detect vessels, as well as a good location to mass large numbers of LRAUVs to conduct swarming ambushes against surface vessels moving through the area. For sustained combat operations in the Taiwan Strait itself, the wargame’s results suggested it would be far preferable to have autonomous underwater vehicles deployed directly from Taiwan’s west coast into the strait rather than attempt to sustain a presence of LRAUVs in the strait by moving them via chokepoints where they could be more easily interdicted.
• Sufficient numbers of platforms and sufficient advance planning are key factors for successful LRAUV employment. The limited payload size and relatively slower speed of LRAUVs require advance planning to ensure the right mix of payload capabilities is in the right place at the right time. Swarming capability and multiple types of LRAUV payloads could provide synergy, particularly to better position for attacks against fast-moving military vessels. Though attrition of LRAUVs will likely be high, large numbers of LRAUVs sustained over time could have a great impact.
• Alternative uses for LRAUVs discussed in the wargame after-action discussions could dramatically increase their cost efficiency in a conflict if the United States is willing to operate them across an area much broader than the vicinity of Taiwan, particularly against slower, non-military vessels. Use against military targets and in constricted areas close to China could be effective, but this is probably not the most efficient use of such LRAUVs. They could instead be used, for example, to shadow high-value Chinese merchant and transport ships moving through the region to support China’s war effort—selectively signaling the US ability to put these ships at risk to influence Beijing’s calculus and then disabling or sinking them to hamper China’s war sustainment effort. LRAUVs could also be used to block access in and out of China’s mainland ports from a distance, as a sort of maneuverable minefield. LRAUVs could also be used in a conflict to bog down Chinese naval, paramilitary, and commercial vessels in areas north and south of Taiwan as part of a maritime insurgency approach.
• The results of this initial Aquatic Tiger wargame suggest that additional analysis, wargaming, modeling, technical experimentation, live exercises, and simulation on key issues related to such LRAUVs are warranted. Subjects to consider include: how units of such drones would be best organized and employed by the United States, Taiwan, and US allies in such a contingency; whether such LRAUVs could be produced at a low enough cost and in sufficient scale to be effective; what tactical-level synergies these LRAUVs would have operating in concert with other manned and unmanned platforms; the potential efficacy of various Chinese countermeasures; and China’s potential employment of its own LRAUVs.

Markus Garlauskas is the director of the Indo-Pacific Security Initiative of the Atlantic Council’s Scowcroft Center for Strategy and Security and was the wargame director for the Aquatic Tiger wargame.

Nicholas Takeuchi is a retired US Navy submarine officer and was a Blue (US) Team participant in the Aquatic Tiger wargame.

Drew Holliday is a former US deputy defense intelligence officer for China and was the Red (China) Team leader for the Aquatic Tiger wargame.

Paul Vebber is a retired US Navy and former assistant director for wargaming and future warfare research at the Naval Undersea Warfare Center. He was a part of the Control Team in the Aquatic Tiger wargame.

Adam Kozloski is a nonresident senior fellow with the Indo-Pacific Security Initiative and former congressional staffer. He was a Blue (US) Team participant in the Aquatic Tiger wargame.

The Aquatic Tiger wargame and this associated issue brief were made possible by a financial grant and technical input from Albacore Inc., a developer of autonomous underwater vehicles, but Albacore personnel did not participate in developing the issue brief and the brief does not represent Albacore’s views. The Atlantic Council maintains strict intellectual independence for all of its projects and publications. The Council requires all donors to agree to the Council maintaining independent control of the content and conclusions of any products resulting from sponsored projects. 

The authors are especially grateful to Colonel Gittipong “Eddie” Paruchabutr, IPSI nonresident senior fellow (US Army, retired) for his generosity in donating his time and support as wargame coordinator. The authors are also thankful to David Helvey for his time, expertise, and support in the project. Thanks also go to IPSI nonresident fellow Andrew Brown for his contributions to this project, and to IPSI program assistant Audrey Roh for her support. 

The views expressed in this publication are those of the individual authors of each section.

Issue Brief Apr 24, 2025

Defending Taiwan means mobilizing society, not just the military

By Marvin J. Park

Taiwan is under unprecedented pressure from the People’s Republic of China (PRC), facing coordinated threats on multiple fronts.

China Defense Industry

Report Oct 15, 2025

What Taiwan can learn from China’s gray-zone actions against the Philippines

By Chung-Yu Chou

China uses different tactics for different aims: slow but persistent maritime incursions off the coast of the Philippines and high-speed aerial harassment in Taiwanese airspace. But Manila’s responses offer useful lessons for Taipei. A new study of the Philippines’ experience shows what Taiwan can do to create limits on Chinese action without triggering open conflict.

Conflict Crisis Management

Dispatches Nov 24, 2025

Dispatch from Taipei: Now is the time to encourage Taiwan’s assertiveness, not hold it back

By Markus Garlauskas

A recent visit to Taiwan reveals how the government, the armed forces, and the citizens there are strengthening both their capability and resolve to defend themselves from Chinese aggression.

China Indo-Pacific

The Indo-Pacific Security Initiative (IPSI) informs and shapes the strategies, plans, and policies of the United States and its allies and partners to address the most important rising security challenges in the Indo-Pacific, including China’s growing threat to the international order and North Korea’s destabilizing nuclear weapons advancements. IPSI produces innovative analysis, conducts tabletop exercises, hosts public and private convenings, and engages with US, allied, and partner governments, militaries, media, other key private and public-sector stakeholders, and publics.

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The post Aquatic Tiger: How long-range submarine drones could play a role in a Taiwan conflict appeared first on Atlantic Council.

The hours are long and the pace rarely eases, including shifts of twelve to fourteen hours that inevitably erode family and social life. In theory, there are guardrails. In practice, the approval processes meant to limit overwork can become a formality: the reality of excessive hours reduced to a signature on a page, without changing the workload or capturing the extent of the time burden. The culture reinforces it. Leadership may say the right things, but the cycle doesn’t break, and in some corners of the institution, burnout is even treated as a point of pride. The quiet signal that this has become normal: the organization celebrates the 2 a.m. email. People are mentally drained, but stepping back to recover can feel professionally risky because there’s a persistent sense that if you can’t do it, someone else will, and asking for help can damage your credibility.

The above vignette is a composite scenario, drawing on multiple examples raised by participants—national security practitioners, psychiatry and health experts, and think tank experts on individual resilience—across a series of roundtables conducted by Atlantic Council researchers in 2025 and held under the Chatham House rule.

The roundtables focused on an underappreciated problem: The institutions charged with keeping the United States secure—including US military services and combatant commands, the intelligence community (e.g., CIA, National Security Agency), the Department of Homeland Security, and the State Department—operate under chronic strain that can make them dangerously prone to failure in moments of crisis. Many of the “resilience” efforts created to address this problem—wellness training and mindset workshops—focus on helping individuals operate within flawed systems.

Only by adapting those systems can the US government deliver long-term readiness enabling reliable performance under stress that US national security requires. Other key takeaways included:

• Individual resilience is not the solution to chronic strain in national security institutions. It is a signal that reveals where systems, incentives, and workload assumptions are misaligned with human limits.
• In national security roles, moments of surge, uncertainty, and high-consequence decision-making are frequent. When these moments arise, systems need more than just extraordinary individual effort; they need built-in buffers and redundancies.
• Many resilience initiatives are designed to expand coping tools and wellness support programs yet leave the stressors themselves—tempo, staffing, and decision bottlenecks—unchanged. While certainly well-intentioned, these initiatives unintentionally shift the responsibility to overcome the stressors back on the individual. Other incentives then reinforce this overextension as the operating model. A credible systems approach requires measurable leadership accountability, usable leading-indicator data, and explicit trade-offs about tempo, mission scope, redundancy, and availability norms. The goal is sustained readiness and reliable performance under stress.
• Leadership behavior is key. Ideally, leaders would express their own vulnerabilities by openly expressing uncertainty, acknowledging moments of strain, and modeling both recovery and the soundness of seeking help. This could increase trust among team members, as well as the likelihood that risks are addressed early.

Resilience is an attribute of systems

Building individual resilience has become a default response to strain across national security institutions. As organizations confront sustained operational tempo, recurring crises, and prolonged uncertainty, resilience is routinely invoked as a way to preserve individual performance under pressure. In practice, however, the term is often used in ways that misidentify both the source of strain and the locus of responsibility.

This issue brief argues that resilience—which the Adrienne Arsht National Security Resilience Initiative defines as “the ability of individuals, societies, and systems to anticipate, withstand, recover from, adapt to, and bounce forward from shocks and disruptions”—is not primarily an individual attribute. It is a property of systems that shape, support, and sustain individual resilience over time. Individual resilience matters, but not because it can be strengthened indefinitely or relied upon to compensate for structural misalignment. Human adaptation and resilience do have limitations, and through insights from research and roundtable discussions with national security leaders, practitioners, and subject-matter experts, we have underscored the need for a more deliberate systems design in national security institutions.

People do not enter national security roles with identical baselines, nor do they experience or recover from stress in the same way. Those differences are important, because prolonged exposure to ambiguity, moral complexity, and high-stakes decisions can be a relentless strain on attention and judgment. These demands cannot be carried indefinitely, regardless of an individual’s motivation or commitment. It is simply a matter of human limits.

Many institutions appear resilient, often because of highly committed individuals whose extended availability and personal sacrifice can compensate for system strain in the short term. Over time, however, that compensatory model becomes unsustainable, and the earliest cracks often show up in decision-making. Attention narrows, teams become less flexible in how they think through options, and risk judgment becomes less calibrated. Those effects can accumulate quietly over time, until an organization is less adaptive precisely when adaptation is most needed.

The strategic costs of system strain are significant. In national security work, one frequently sees surge conditions, leadership transitions, and external shocks as recurring features of the operating environment. Systems that depend primarily on individual efforts and resilience often lack the buffers needed to respond effectively when those stressful moments arrive. When an individual starts to feel that inevitable burnout, their performance falters precisely when resilience is most needed. The appropriate response is not to ask people to absorb more. Rather, it is to relocate responsibility from individuals to institutions themselves; to overhaul systems so that they operate within human constraints, protect sound judgment, retain expertise, and remain effective over time.

Where current “resilience models” fall short

The concept of resilience is now embedded in the language of national security institutions. Here, “national security” refers to the interconnected ecosystem of defense and security organizations that plan and execute operations, generate intelligence, manage crises, and sustain readiness, as well as the enabling systems that support that work (including the military health system and other readiness services). In these settings, the day-to-day reality is high-consequence decision-making under uncertainty, persistent time pressure, constrained staffing pipelines, and recurring exposure to morally complex and emotionally salient material—including, increasingly, remote operations such as unmanned aircraft systems.

Faced with persistent crises, extended operational tempo, and mounting uncertainty, leaders routinely invoke resilience as a way to sustain performance. In many cases, however, resilience functions less as a strategy than as an expectation: that individuals will adapt to conditions the system itself does not adequately address.

Most contemporary resilience efforts rest on a quiet assumption that personnel are broadly interchangeable and capable of absorbing increasing demands if given the right tools or training. From this perspective, resilience becomes a personal skill set, something that can be strengthened through workshops, coaching, wellness programming, or mindset interventions. These efforts are often well-intentioned. They are also insufficient in environments where strain is chronic and the stakes remain high.

The predictable result is compensation, where highly motivated people bridge structural gaps through personal sacrifice. They devote longer hours, defer recovery, and suppress their own distress, all in service of the mission. For a time, this preserves output and the system appears functional. But the apparent stability is misleading. It requires extraordinary effort from a finite group of people, while quietly depleting the attention, judgment, and recovery that sustained performance depends on.

The evidence increasingly reflects this pattern. Burnout is a recurring occupational risk among military personnel, with documented links to work environment factors (e.g., workload and shift work), psychological strain, and downstream consequences that matter for readiness and mission effectiveness. Within the Military Health System, burnout has also been associated with adverse health outcomes and reduced retention—exactly the kind of expertise loss that “individual resilience” programming cannot offset on its own. And concern about chronic psychological risk is not limited to traditional deployment patterns: Recent defense policy has directed the Department of Defense to study mental health impacts among military drone pilots, underscoring the growing recognition that remote and high-tempo operational roles can carry meaningful mental health burden.

When depletion shows up, it often does not look like a dramatic failure. It can appear first as degraded decision quality, with narrower thinking, reduced creativity, lower tolerance for ambiguity, and less willingness to challenge assumptions. It can also surface as interpersonal strain, reduced patience, and a diminished ability to adapt quickly when new information changes the picture. These shifts are consequential in national security contexts because the central work of these institutions is making sound judgments in real time, under uncertainty, with high consequences.

Many resilience initiatives inadvertently reinforce the conditions that require resilience in the first place. When the organizational answer to overload is “be more resilient,” the system signals that overload is expected and adaptation is the solution. This normalizes strain and diverts attention away from the real drivers of chronic demand, including sustained operational tempo, understaffing, unclear priorities, and incentives that reward constant responsiveness. It can also create a double bind: The system continues to demand extraordinary individual effort, while the individual is expected to treat strain as a personal shortcoming to be managed privately.

This brief takes a different view of individual resilience. It is not irrelevant, nor is it the solution. Instead, it should be treated as an important signal. Properly understood, levels of individual resilience give leaders a clearer read on how the system is functioning, where strain is coming from, and what needs to be redesigned. Used this way, resilience does not justify asking individuals to absorb more. It clarifies where institutions are demanding too much and why.

This is the point where individual resilience becomes a critical tool, not as a mandate for people to adapt indefinitely, but as a way to see how systems’ choices interact with human limits and where redesign is most urgent.

Why individual resilience should force system overhaul

Resilience is ever evolving: It is shaped long before individuals enter national security roles and continues to be influenced by the environments in which they operate. Biology, early development, and cumulative stress exposure contribute to how individuals tolerate and recover from pressure. The point is not to pathologize normal human responses to sustained strain. The point is to be honest about variability and limits.

Institutions typically treat individual variability in one of two ways. Either they ignore it, designing for an “average” person who does not exist, or they attempt to manage it primarily through individual interventions. Both approaches miss the core insight. Individual resilience is not primarily something systems can manufacture. It is something systems must account for and nurture within people. Thinking seriously about individual resilience makes the system’s assumptions visible, including the ones baked into missions, tempos, staffing models, career pathways, and leadership expectations.

People bring vastly different resilience profiles into roles that demand sustained judgment, adaptability, and high-quality decision-making. Some tolerate prolonged stress with fewer immediate effects. Others experience faster depletion of cognitive reserves. These differences are not moral failures or character defects. They are simply predictable variations in human functioning. The systems that assume each person has the same capacity is, in essence, baking inequality into its performance expectations, and then treating individual differences as deficits.

The more consequential issue, however, is not baseline variability. It is the cumulative effect of depletion and what it does to decision-making over time. National security environments place sustained demands on attention and judgment. Under chronic load, the first changes are often subtle: Thinking narrows. People rely more heavily on familiar patterns. Uncertainty becomes harder to sit with. Teams may lock in on a conclusion too early or simplify complex choices. They may default to routine when adaptive thinking is required. Over time, judgment can become more rigid and less reliable, with people either narrowing or widening their threat interpretation in ways that are not well matched to the situation. The work still gets done, but the quality of analysis and the ability to adjust course can quietly erode, leaving the system less adaptable precisely when conditions shift.

This is why the individual resilience conversation matters, but only if it is used correctly. Individual resilience research does not tell institutions to teach more coping skills and declare success. On the contrary, it tells institutions that the operating environment is placing sustained demands on people in predictable ways, and that these effects compound. If leadership does not manage cumulative demand, decision quality will degrade regardless of how committed individuals are.

Some institutional responses can become counterproductive. Institutions often try to “select for resilience” by screening, hiring, and promoting those who appear to handle stress well, but that does not eliminate human limits. Even the most capable people struggle under sustained load; the difference is the timing and visibility of their strain, not immunity to it. Similarly, short recovery windows do not solve the problem if baseline demand remains high. Recovery is not only about time off. It is about whether systems allow genuine disengagement and whether demand is paced in a way that permits replenishment.

The implication is straightforward: Systems that rely on constant availability, chronic overload, and surge-as-normal operation are not built for long-term effectiveness. They not only put decision-making at risk, but they also erode readiness, retention, trust, and institutional memory over time. Individual resilience should be treated partially as a signal about how the system is functioning and where strain is being generated. Taken seriously, it should drive a rethinking of what “systems approaches” to resilience actually mean in practice. In addition to programs that train individuals to cope, it means redesigning the conditions of work (workload, staffing, priorities, and decision processes) so sustained performance is built into the institution. It also means clarifying decision rights and escalation pathways, and protecting recovery time, so the system is not dependent on extraordinary individual sacrifice.

If individual resilience helps identify where strain accumulates, the next question is why many systems approaches fail to correct it. Participants at the three Atlantic Council roundtables pointed repeatedly to a familiar pattern: Even when supports are added, the underlying drivers and incentives remain unchanged.

How systems approaches often fail

Many systems approaches to resilience fail because they stop short of redesign. They add support without changing assumptions. They layer resources without recalibrating expectations. In practice, they still rely on individual adaptation to keep the system running.

This is the central weakness of many resilience initiatives: They look like systems interventions but function as burden-shifting by making chronic demand more tolerable rather than making demand sustainable. Too often, they treat coping as the solution by expanding training, wellness resources, and self-management expectations, while the structural drivers of overload, including tempo, staffing, and decision bottlenecks, remain unchanged. Roundtable participants described this dynamic directly: The organization “puts resources forward,” but the underlying cycle doesn’t change, and resilience becomes a required module to complete rather than a redesign of how the work is structured.

Incentives then reinforce the underlying dysfunction. Leaders may endorse sustainability while still rewarding constant responsiveness, and organizations may speak about boundaries while promoting those who violate them. In practice, incentives foster behavior or action more quickly than policies, and they can lock in a model of success that depends on continual overextension.

The result is a system that appears robust but is structurally fragile. It performs because individuals compensate, stretching time, attention, and availability to keep the mission moving. Over time, the costs show up in quieter but consequential ways: Decision-making becomes less reliable, teams lose range, and experienced personnel disengage or leave, taking hard-won knowledge with them. When surge conditions, leadership transitions, or external shocks hit, there is often little remaining slack to absorb the shock, and systems without real buffers struggle to adapt quickly enough.

True systems resilience is not achieved by adding more support to an unchanged structure. It requires making deliberate choices about how demand is created, prioritized, and resourced, including how tempo is set, how work is handed off, where redundancy is built in, and what leaders are rewarded for. The goal is not comfort. The goal is sustained readiness and reliable performance under stress.

What an overhaul requires

If resilience is to be treated seriously in national security contexts, then systems approaches must be overhauled, not layered. This begins with acknowledging that many current efforts focus on helping individuals operate effectively within flawed systems rather than redesigning those systems.

First, institutions must address cumulative demand directly by treating operational tempo as a design choice, not a fact of life. That means defining what qualifies as a true surge, setting guardrails so that surge mode does not become the baseline, and building real slack into staffing and schedules. High-tempo periods should then be absorbed by the system rather than by individual overextension. Leaders can put this into practice through workload triage and explicit lists of things employees should stop doing during a period of high demand. They can set clearer thresholds for what gets paused during surges and lead routine after-action reviews that examine not only operational outcomes but the cost in capacity. The goal is straightforward: Create pacing, redundancy, and decision space so readiness is protected even when the environment remains demanding.

Second, leadership accountability must extend beyond crisis performance to include sustainability, which must be measurable. Leaders should be evaluated on whether they manage workload and tempo responsibly, protect decision space, and retain and develop talent over time. That means making incentives explicit: rewarding leaders who build redundancy, delegate authority, and normalize handing off work and scheduling time for recovery. Alternatively, it is essential to correct leaders who rely on constant responsiveness and chronic overextension as their operating model.

In addition, leadership behavior matters in a more human, immediate way than institutions often acknowledge. Roundtable participants emphasized that when leaders are willing to show up as humans, including naming uncertainty, acknowledging strain, and modeling both the action of seeking help and recovery without stigma, it can reset the temperature of an entire team. That kind of credible vulnerability builds trust, widens the space for honest upward feedback, and makes it more likely that problems are surfaced early rather than managed privately until they become crises. In practice, it is one of the fastest ways leaders can shift culture without launching a new program.

Third, training should be used to reinforce sound system design, not to compensate for its absence. Institutions can keep resilience training, but they should pair it with concrete changes that reduce avoidable strain. Training should focus on the skills that improve team and mission performance under stress. Examples of these skills include communication under pressure, decision-making in uncertainty, escalation and delegation norms, and how leaders recognize early signs of overload (aided by data, as discussed below) and make appropriate changes. Most importantly, training should come with a feedback loop. What trainees report about friction points and recurring strain should be treated as operational data that informs redesign, not as an individual coping gap.

Fourth, measurement needs to shift from documenting damage to preventing it, and the roundtables made it clear that good data is one of the few levers that reliably alters behavior. Attrition and burnout rates are lagging indicators. By the time they move, the system has already been drawing down its people and its capacity for a while. A more serious approach is to track leading indicators of strain that leaders can act on, including workload distribution, surge frequency and duration, after-hours expectations, backlogs, approval bottlenecks, vacancy and coverage gaps, and the amount of time teams are operating in “urgent” mode.

Equally important, though, is the usability of data. Leaders need a small set of metrics that can be reviewed routinely, not an elaborate dashboard that no one trusts or uses. The goal is to make strain visible early and tie it to decision points. When surge becomes the baseline, something needs to be paused, rescoped, or resourced. When bottlenecks appear, authority and process need to be adjusted. When certain roles show chronic after-hours load, something needs to be redesigned such as staffing, handoffs, and coverage.

In addition, measurement should be paired with accountability and action. Teams should be able to surface what the data means in plain language, and leaders should be expected to respond with a corrective plan, not a wellness reminder. Over time, this creates an institutional habit of using data to manage tempo and protect readiness, rather than using data only to explain why people are leaving.

Finally, institutions should make trade-offs explicit and operationalize them, rather than leaving them implicit and pushing the costs down to individuals. A genuine overhaul requires leaders to define what “sustainable tempo” means for their mission sets, establish thresholds for when work is rescoped or paused, and build redundancy as a deliberate design feature in critical functions. It also requires resetting norms around constant availability by clarifying what truly constitutes an emergency, creating predictable coverage and handoff models, and rewarding teams that protect continuity without relying on chronic overextension.

The practical question is not whether the work is important. It is how the institution will prioritize, resource, and pace the work so that readiness is preserved when conditions tighten. When those choices are made openly, organizations can align expectations with capacity and reduce the hidden risk created by always-on operating models.

Conclusion

National security institutions will always operate in environments defined by uncertainty, periodic surge, and high stakes. The question is whether those institutions treat resilience as a personal expectation or as a systems responsibility. The next step is to choose a small set of measurable indicators, align accountability to them, and redesign the points of highest friction, where chronic strain is generated. Done well, this shifts resilience from a story we tell people to a capability that institutions strengthen.

Caitlin Thompson spent over a decade at the Department of Veterans Affairs, where she served as the executive director’s Office of Suicide Prevention. She holds a PhD in clinical psychology from the University of Virginia and is a nonresident senior fellow at the Adrienne Arsht National Security Resilience Initiative.

This issue brief draws on a series of three Atlantic Council roundtables with national security practitioners, experts in psychiatry and health, and think tank experts on individual resilience to identify what national security institutions must redesign to sustain readiness under chronic strain.

Fellow

Caitlin Thompson

Nonresident Senior Fellow

Adrienne Arsht National Security Resilience Initiative Scowcroft Center for Strategy and Security

Entrepreneurship Resilience

Dispatches Feb 18, 2026

National preparedness starts at the state level with governors and the National Guard

By Jeanne Thorpe and Sarah Wallace

US state governors must retain meaningful access to the National Guard as a critical, time-sensitive resource for their own populations.

Resilience Resilience & Society

Report Jul 8, 2025

For the US and the free world, security demands a resilience-first approach

By Elizabeth Sizeland

This report is the foundational document of the Adrienne Arsht National Security Resilience Initiative and outlines a bold vision to embed resilience as a core pillar of US and allied security. As crises compound, this report calls for investing across individual, institutional, and international levels of resilience to withstand, adapt, and thrive amid disruption. 

Crisis Management Cybersecurity

The Adrienne Arsht National Security Resilience Initiative, in the Scowcroft Center for Strategy and Security, works to advance resilience as a core tenet of US and allied national security policy and practice.

Learn more

The post Federal agencies under pressure need smarter systems, not tougher people appeared first on Atlantic Council.

This is the ninth chapter in the Freedom and Prosperity Center’s 2026 Atlas, which analyzes the state of freedom and prosperity in ten countries. Drawing on our thirty-year dataset covering political, economic, and legal developments, this year’s Atlas is the evidence-based guide to better policy in 2026.

Evolution of freedom

If one focuses exclusively on aggregate indicators of institutional quality, Italy’s political and economic evolution since the mid-1990s scores high. Indexes such as those produced by Freedom House consistently classify the country as a consolidated democracy with strong political rights and civil liberties, while measures of market orientation point to broadly open and competitive economic institutions. In line with this broader assessment, the Freedom Index also places Italy among countries with strong democratic and market-oriented institutional frameworks. Yet these reassuring classifications coexist with chronic political instability and a persistent sense that institutions do not work as intended. The central question, therefore, is not whether Italy’s institutions are formally free, but why they have increasingly struggled to generate predictability and effective governance in practice.

To understand this tension, some country-specific context is essential. Since the early 1990s, Italy has undergone a profound political transformation following the collapse of its postwar party system. What is often described as the transition to the “Second Republic” was accompanied by repeated electoral reforms, the emergence and disappearance of new political parties, and a persistent pattern of short-lived governments. Since 1994, Italy has had many prime ministers and governments, and even the average time in office for senators and house representatives has shortened significantly. This instability has not weakened democratic rules as such: Alternation in power has remained regular, elections have remained competitive, and constitutional guarantees have held. But it has profoundly shaped the incentives under which political and administrative institutions operate.

The high score Italy receives on the legislative constraints on the executive component of the Political subindex should be interpreted carefully. The score is due to the perfect bicameralism and to the fact that governments are typically formed by coalitions, which require ongoing negotiation among parties with heterogeneous preferences. However, these legislative constraints are often bypassed by the executive governments of the second republic with more and more frequent government decrees and confidence votes, which reduce the quality of laws. In an environment characterized by frequent government turnover and weak retrospective accountability, unfettered executive power would increase the risk of large and difficult-to-reverse policy mistakes. Under such conditions, strong checks and balances operate as a form of institutional insurance, limiting the potential damage associated with political instability rather than generating it. In other words, given Italy’s political volatility and informational constraints, the institutional frictions that limit executive power play a stabilizing role, and the real worries relate to the frequent government decrees aiming to bypass such checks and balances.

Political instability has far-reaching consequences for how governing takes place. Short political horizons systematically alter legislative incentives. When governments expect a brief tenure, the political drive for visible action exceeds careful implementation. In Italy, this logic has translated into a sustained increase in legislative output since the mid-1990s (see, for example, Gratton et al., 2021). In the early 1980s, the Italian Parliament typically approved on the order of 250–300 laws per year. By the late 1990s and early 2000s, annual legislative output regularly exceeded 500 acts, a large share of which consisted of emergency decree-laws later ratified and expanded by Parliament. When political survival depends more on signaling activity than on long-term outcomes, frequent lawmaking becomes individually rational even if it increases systemic complexity (Aghion et al., 2006; Gratton et al., 2021).

Repeated attempts to reform public procurement in Italy provide a concrete illustration. Successive revisions of the public procurement code (Codice dei contratti pubblici) were introduced (notably in 2016, with major amendments in 2020 and 2023) with the stated objective of simplification and acceleration. Yet each reform layered new rules onto an already dense regulatory framework, generating long transition phases and widespread uncertainty for administrations and firms. Rather than resolving bottlenecks, reform activity itself became a source of legal opacity. This outcome is not accidental: It reflects a political environment in which legislating serves as a signal of decisiveness under instability, while the costs of complexity materialize only after governments have moved on.

Given this sustained accumulation of legislation, the burden of adjustment shifts to the administrative and judicial system. Bureaucracies are required to implement rules that are frequently amended, internally inconsistent, and embedded in dense webs of cross-references. As a result, administrative effort is increasingly diverted from implementation to interpretation. Discretion narrows not because rules are clear, but because ambiguity raises the risk of error and ex post sanction. Faced with unstable legal frameworks, public officials adopt more cautious and formalistic behavior, slowing decision-making and amplifying delays. In my view, the sustained deterioration observed until the mid-2010s in the control of corruption and bureaucratic quality components of the Freedom Index is driven primarily by the latter: It reflects a gradual weakening of bureaucratic effectiveness rather than a sharp increase in corrupt behavior. After 2014, the apparent change in trend seems to be largely explained by improvements in perceptions of corruption control, while underlying bureaucratic quality may not have experienced a comparable structural improvement.

Courts face a similar challenge. When legislation is complex and rapidly changing, judges are required to interpret overlapping provisions with limited guidance. This increases divergence across jurisdictions and over time, even in cases involving similar facts. Legal outcomes become less predictable, not because enforcement is weak, but because interpretation itself becomes uncertain. Firms and citizens, in turn, face a moving legal target: Compliance depends not only on what the law formally prescribes, but on how it will eventually be read and enforced. Legal uncertainty thus emerges as an endogenous consequence of legislative overproduction.

Taken together, these dynamics mark a profound change in how public authority operates in practice. The Italian state still relies on formal rules, written procedures, and legal guarantees, but the proliferation and instability of those rules increasingly undermine their coordinating role. Where a rules-based system is designed to reduce discretion and uncertainty, legal complexity has had the opposite effect. For citizens and firms, interacting with the administration often feels less like following clear rules and more like navigating a maze of overlapping requirements, exceptions, and interpretations. Outcomes depend not only on compliance, but on timing, jurisdiction, and the specific office involved. In this sense, legality itself ceases to be a source of predictability and instead becomes an additional layer of risk. The problem is not the absence of rules, but their excess: When the legal framework becomes too dense and unstable to be reliably understood, the promise of rules-based governance is hollowed out.

Legal uncertainty has significant economic consequences. If Italian laws were written with a level of clarity comparable to that of Italy’s constitution, the country’s GDP today would be almost 5 percent higher. In current terms, this corresponds to roughly €110 billion per year in foregone output. This cost reflects the cumulative effect of legal ambiguity on investment, innovation, and firm growth: When rights and obligations are difficult to interpret, economic actors delay decisions, scale back projects, or avoid activities that are most subject to regulatory scrutiny. These aggregate losses do not arise uniformly across the economy, but are mediated by systematic changes in firm behavior and by who is better able to cope with legal complexity.

These costs are not borne uniformly across firms. Legal uncertainty disproportionately penalizes firms that operate transparently, invest in scale, and rely on predictable enforcement of contracts and regulations. By contrast, firms that operate at a smaller scale or in more informal ways are better able to adapt to unstable rules, absorb ambiguity, or avoid exposure altogether. In environments characterized by complex regulation and uneven interpretation, informality and opacity can become competitive advantages rather than constraints. A large body of evidence shows that regulatory complexity and legal uncertainty systematically shift activity away from more productive, formal firms toward smaller, less transparent ones, with adverse consequences for aggregate productivity. In Italy, this selection mechanism reinforces a bias toward small firm size and low growth strategies, amplifying the long-term economic costs of institutional fragility.

Another important phenomenon that cannot be captured by the freedom scores relates to political participation and trust: Citizens’ engagement with politics is a dimension that most institutional indexes only partially capture. Italy continues to meet high standards in terms of electoral competition and political rights, yet participation has declined markedly over time. Voter turnout in national parliamentary elections fell from around 90 percent in the 1970s to about 64 percent in the most recent election in 2022, one of the lowest levels in postwar Italian history. Participation in European and local elections has declined even more sharply, with turnout in European Parliament elections falling below 50 percent in recent cycles (ISTAT; International IDEA). These trends suggest that disengagement results not from the erosion of formal rights but from a weakening belief that political participation meaningfully affects outcomes in an institutional environment perceived as opaque and ineffective.

The gap between formal institutional quality and lived experience has repeatedly shaped Italy’s political trajectory over the past two decades. Since the early 2000s, Italian politics has oscillated between technocratic solutions—invoked in moments of crisis to restore credibility and stability (as under Mario Monti and later Mario Draghi)—and populist reactions that promise to bypass institutional complexity and reassert political control (seen most clearly in the rise of the Five Star Movement and the League under Matteo Salvini). Neither approach has proved fully successful. Technocratic governments have often stabilized short-term outcomes without addressing deeper institutional fragilities, while populist experiments have struggled to translate political mandates into effective and predictable governance. This pendular movement has contributed to political volatility and reinforced public frustration with both expertise and representation. As shown in a forthcoming book by Guiso et al., the 2008 financial crisis served as the watershed of populism in Europe, but in Italy, distrust in politics and government institutions is also due to the country’s political dynamics. In this context, the relative stability of the current government led by Giorgia Meloni marks a potential turning point: For the first time, a populist-led administration is joining political durability with a rhetoric—particularly on immigration and national identity—that raises concerns about the implications for political and civil rights. Whether Italy’s institutional safeguards will continue to prevent slippage along these lines is a question without an obvious answer and will be addressed more fully in the final section.

Overall, Italy’s experience shows a widening gap between formal institutional strength and institutional effectiveness. Democratic procedures and legal guarantees remain largely intact, and this is reflected in Italy’s relatively strong performance on many aggregate institutional indicators. Yet the capacity of these institutions to generate predictability, sustain investment, and foster broad-based economic opportunity has weakened. This disconnect helps explain why dissatisfaction and disengagement can coexist with formally strong institutions. It also provides the starting point for understanding Italy’s prosperity record since the mid-1990s, and why improvements in formal institutional characteristics have not translated into comparable gains in economic performance.

From freedom to prosperity

Measured along many conventional dimensions, Italy remains a prosperous country. Income per capita is high by international standards, life expectancy is among the longest in the world, and access to education, health care, and basic infrastructure is widespread. Material deprivation is limited for most of the population, and inequality, while not low, is broadly comparable to that of other large European economies. At the same time, these relatively favorable aggregates mask important compositional shifts beneath the surface, which pose a significant risk for the country’s long-term growth and social cohesion.

Although Italy remains a high-income country, its growth performance since the mid-1990s has been consistently weak. Over the past three decades, economic stagnation has become a defining feature of the Italian economy rather than a temporary deviation. Real GDP per capita has grown by less than 10 percent since the mid-1990s, compared with roughly 30 percent in France and more than 40 percent in Germany. Labor productivity growth, which averaged close to 2 percent per year during the postwar decades, has been close to zero since the late 1990s. These patterns point not to a sudden deterioration in living standards, but to a prolonged slowdown in economic dynamism that has reshaped expectations and long-term prospects.

A central feature of Italy’s stagnation is the persistent structure of its productive sector. Employment remains heavily concentrated in small firms, with businesses employing fewer than ten workers accounting for roughly half of total employment—far more than in France or Germany. While this structure once supported growth, it has become increasingly ill-suited to an economy characterized by scale economies, global value chains, and the mounting importance of intangible capital. Productivity dispersion across firms is high, yet reallocation toward more productive firms has been weak, limiting aggregate productivity growth. A substantial empirical literature documents how Italy’s skewed firm-size distribution constrains investment, innovation, and organizational upgrading, contributing to persistently low productivity.

Italy’s firm structure is closely reflected in investment behavior. Business investment as a share of GDP has trended downward since the late 1990s and remains below the euro area average, with particularly weak investment in productivity-enhancing and intangible assets such as software, organizational capital, and research and development. The institutional environment described in the previous section helps explain this pattern. Legal uncertainty and regulatory instability raise the fixed costs associated with expansion and long-horizon projects, increasing firms’ exposure to administrative procedures and judicial risk as they grow.

Italy’s weak growth performance has been accompanied by a gradual but persistent deterioration in distributional outcomes. While overall income inequality, as measured by standard Gini coefficients, remains close to the European average, the aggregate masks important shifts in how income is generated and distributed. Real wage growth has been largely stagnant since the late 1990s, particularly for large segments of the workforce, while income streams less directly exposed to economic volatility have proven more resilient.

Alongside weak growth and limited firm dynamism, Italy’s education system has struggled to function as a channel of social mobility. While average educational attainment has increased, learning environments have become increasingly segmented by family background, neighborhood, and territory. Students from lower-income households are disproportionately concentrated in schools with fewer resources, higher teacher turnover, and more challenging classroom climates. Evidence suggests that perceptions of discrimination, disengagement, and exposure to conflict are significantly more prevalent in schools serving Italy’s disadvantaged populations, and that the differences are strongly correlated with parental income and socioeconomic status. Rather than acting as a powerful equalizer, the education system increasingly mirrors existing inequalities, reinforcing differences in cognitive and non-cognitive skill formation from an early age. These patterns risk entrenching social stratification and limiting intergenerational mobility over the long run, even as aggregate indicators of educational access continue to improve.

Prolonged stagnation and repeated economic shocks disproportionately affect middle- and lower-middle-income groups whose welfare depends on stable employment and the returns to long-term investment in skills. Rather than primarily increasing demand for redistribution, this form of insecurity tends to undermine trust in mainstream political actors and institutions, fueling support for alternatives that promise protection through exclusionary policies. In this sense, social tension is less about inequality per se than about the loss of expected mobility for groups that previously experienced steady, if moderate, progress.

Expectations play a central role in this dynamic. Economic growth depends not only on material inputs or formal rules, but on whether individuals believe that effort will be rewarded over time. As Isaiah Berlin emphasized, a meaningful distinction exists between negative freedom, understood as protection from coercion, and positive freedom, understood as the effective ability to act on one’s choices (Berlin 1969). In Italy, formal guarantees and rights remain largely intact, yet the practical capacity to turn effort, education, and investment into progress has weakened. When income prospects are uncertain and educational opportunities are uneven, formal freedoms coexist with constrained agency. This gap helps explain why improvements in institutional indicators have not translated into stronger productivity growth or renewed economic dynamism.

These constraints are felt most acutely by younger generations. Entering the labor market after two decades of weak growth, today’s young Italians face lower expected returns to education, fragmented career paths, and delayed economic independence. For many, higher educational attainment no longer guarantees stable employment or upward mobility, while access to quality learning environments and early career opportunities remain strongly shaped by family background and territory. As a result, uncertainty is experienced not as a temporary phase but as a persistent condition, influencing decisions about work, mobility, and family formation.

This erosion of confidence in institutions also shapes outcomes in areas where prosperity depends on collective action over long horizons, most notably environmental policy. Italy has made measurable progress in reducing emissions and expanding renewable energy, yet its performance has lagged behind that of several peer countries. Resistance to environmental transformation often reflects concerns about local costs, distributional effects, and the credibility of promised compensation rather than outright opposition to climate goals. In an environment where trust in institutions is fragile, commitments to future benefits carry limited weight. Policies that require short-term adjustment in exchange for long-term gains become harder to sustain, even when they are economically sound and socially desirable. Environmental outcomes therefore reflect not only policy design, but the broader institutional capacity to generate belief in credible, shared returns over time.

Taken together, these patterns point to a central tension in Italy’s recent trajectory. Formal institutions have remained broadly stable, and material living standards remain high, yet the capacity of those institutions to sustain investment, mobility, and credible long-term expectations has weakened. Economic outcomes reflect not a single failure, but the cumulative effects of legal uncertainty, constrained firm growth, segmented education, and eroded confidence in future returns. Prosperity has become more uneven, more fragile, and more dependent on background and position than headline indicators suggest. Whether the equilibrium that has characterized Italy over the past two decades is sustainable in the medium term is the core question addressed in the next section.

The path forward

Italy’s medium-term prospects are shaped by a small number of risks that revolve around institutional credibility, economic sustainability, and demographic pressure, and that together will determine whether the current equilibrium can endure.

The most immediate concern is politico-legal. A proposed constitutional reform of the judicial system, scheduled for a general referendum vote on March 22nd, could result in a significant shift in the balance of powers. Public debate has focused on a narrow and largely symbolic issue—the possibility for prosecutors to become judges—which in practice affects a very small share of magistrates. The more consequential element of the reform is the creation of a new body, appointed in part by the political majority, with the authority to oversee and evaluate the actions of the judiciary. This introduces a clear risk to judicial independence. Even in the absence of direct interference, the mere possibility of executive oversight may discourage the pursuit of sensitive cases involving politically connected actors or the government itself. The institutional risk is amplified by the political process through which the reform is advancing. Because it failed to obtain a two-thirds majority in parliament, the reform will be decided by referendum. In a context of low political participation and widespread disengagement, there is a non-negligible possibility that a far-reaching constitutional change could be approved by a relatively small share of the electorate. Such an outcome would further weaken the perceived legitimacy (or lack thereof) of institutional checks and balances.

A second risk concerns civil and political rights. Italy has long exhibited a gap between strong formal guarantees and uneven lived experience. Recent developments suggest that this gap may narrow—in an unfavorable direction. Since 2022, a stronger emphasis on security and anti-immigration rhetoric has yielded policy initiatives and administrative practices that have already begun to affect indicators of political and civil rights. While the changes observed so far remain limited, the concern is one of persistence rather than rupture. If these trends continue, Italy risks moving from a situation in which dissatisfaction coexists with formally strong protections to one in which the erosion of rights is tangible. This would represent a qualitative shift relative to the past three decades.

The third challenge is economic and structural. Italy’s traditional development model, centered on small, family-owned firms operating in established sectors, has become increasingly inadequate in an economy driven by innovation, scale, and intangible capital. A transition toward more dynamic and technologically intensive activities is necessary. Yet the incentive structure produced by the current institutional environment remains unfavorable. Legal uncertainty, administrative complexity, and limited predictability discourage the long-term investments required to develop new sectors and expand firm size. Without changes to these underlying conditions, the prospects for a meaningful shift in the growth model remain weak, despite the urgency of the challenge.

Demographic and fiscal pressures reinforce these concerns. Stagnant incomes, persistently low fertility, and high levels of public and private debt interact in ways that constrain policy choices. Italy’s population is aging rapidly, and the working-age population is shrinking—placing an increasing strain on the pension system and welfare programs. At the same time, high public debt limits fiscal space, reducing the government’s ability to respond to shocks or to support growth through expansionary policies. In the absence of stronger growth, the sustainability of existing social arrangements will become increasingly difficult to maintain.

Finally, there is the risk associated with the conclusion of the Next Generation EU program. In recent years, these funds have supported public investment and contributed to stabilizing economic activity. There is a concern, however, that they may also have masked underlying weaknesses. Whether these resources have been systematically directed toward projects capable of raising long-term productivity remains unclear. Moreover, they will have to be repaid. When combined with already high debt levels, this raises the possibility that the apparent stabilization of recent years could give way to renewed strain once extraordinary support fades. Temporary fiscal expansions can relax political and financial constraints in the short run while delaying necessary adjustments and amplifying vulnerabilities when support is withdrawn. If growth does not materialize, the adjustment required could be abrupt.

Taken together, these risks point to a fragile equilibrium. Italy has so far avoided abrupt institutional breakdowns and severe economic crises, relying instead on gradual adjustment and external anchors. Whether this equilibrium can be sustained in the medium term will depend on the ability of institutions to preserve independence, restore credibility, and support a development path capable of generating durable growth under tighter economic and demographic constraints.

Massimo Morelli is professor of political science and economics at Bocconi University and senior research scientist at the Luxembourg Institute of Socio-Economic Research (LISER). A political economist, he earned his PhD in economics from Harvard University in 1996. He spent twenty-two years teaching and conducting research at leading American institutions, including the Institute for Advanced Study at Princeton and Columbia University, where he held a full professorship in economics and political science. Since returning to Italy in 2014, he has continued his work at the intersection of economics and political science, publishing in leading journals across both fields.

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• Executive summary
• Introduction
• Methods
• Characterizing the complicated: Defining intermediaries
• The driving and narrowing effects of brokers and resellers on the OCC marketplace
• Policy recommendations
• Conclusion
• Acknowledgements
• About the authors

Executive summary

The marketplace for offensive cyber capabilities (OCCs) has become increasingly complex over time. Contributing to this complexity are intermediaries—entities that serve a critical yet poorly understood role in the proliferation of this industry. Largely due to the private nature of intermediary relationships and transactions, there is limited public knowledge about these intermediary entities that bridge relationships and transfer goods within the OCC supply chain.

As governments and international processes seek to establish norms and regulations for this highly fragmented OCC industry through initiatives including the ongoing multistakeholder Pall Mall Process, the lack of shared public knowledge is a significant hurdle. The opacity of this market subsection poses policy challenges and complicates efforts to regulate these entities. This undermines transparency, accountability, compliance, and due diligence, and threatens to enable the unchecked proliferation of these capabilities to end users who abuse them.

This research draws on expert roundtable interviews and vignettes that shine light on intermediary functions and their effects on the wider market—features of the supply chain that still confound researchers and policymakers alike. Building on research in the Mythical Beasts project series, this issue brief maps intermediary roles and effects, with an aim to enable more precise, effective policies to curb abusive proliferation while maintaining the legitimate security research and defensive capabilities that these entities can offer.

Introduction

As technological and regulatory evolutions in offensive cyber capabilities (OCCs) continue, the landscape of tools, vulnerabilities, and skills leveraged for sophisticated and targeted operations continues to adapt. However, many states turn to the open market to procure these often highly specialized products and services, due in part to limited in-house capacity among other factors. In recent years, the marketplace for these OCC products and services has continued to evolve and proliferate—as evidenced in the Atlantic Council study on the global spyware market, Mythical Beasts and Where to Find Them: Mapping the Global Spyware Market and its Threats to National Security and Human Rights. This research and other global mapping initiatives shed light on the complex supply chains of OCCs, a complexity and opacity that pose challenges tomeaningful marketplace transparency and accountability.

A key feature of the marketplace—intermediaries, which are entities that provide essential products or services that support a final OCC product—continues to be largely fragmented, with minimal shared public knowledge on the characteristics, influences, and norms on of the entities operating within the OCC supply chain. As surveyed in the Mythical Beasts project, open-source information about what roles intermediaries play in proliferation and the effects they have on marketplace dynamics is limited, despite academic research and public reporting indicating that there is a heavy reliance on commercialintermediaries.

Intermediaries are fundamentally different than other entities that operate within the marketplace for OCC. Intermediaries are largely found as partners within the OCC supply chain, complimenting product development through vulnerability research to complete exploit chains or as auxiliary support during technology deployment. Unlike OCC vendors, intermediaries are typically not the public face of products; rather, they are better known within private client bases. Intermediaries can be a one-person shop, relying on personal relationships to establish a client network. They can drive up business by facilitating new relationships to previously inaccessible or new customer bases and to increase profits for both themselves and on behalf of vendors that employ them. Altogether, these factors make it more difficult to track and understand the types of relationships and effects that intermediaries have on the OCC market, as limited public information exists about them outside of hacked and leaked documents, investigative reporting, and sporadic transparency initiatives.

As an important aside, the concept of an intermediary can be applied not only to private sector entities but also to states. Third-country intermediaries typically operate in permissive trade environments that act as favorable “stepping stone” jurisdictions; for example, they may offer legal or logistical support that facilitates the movement of spyware and exploits across regulatory boundaries. These jurisdictions themselves operate as an intermediary state hub that is hosting intermediary companies locally domiciled to provide services such as the transfer or export of goods onward to a third country. Although the permissive or restrictive nature of states is a feature of the OCC supply chain, the design of policy interventions for state exports differs from those applied to intermediary entities and, thus, is beyond the scope of this issue brief.

These questions surrounding the characteristics and effects of intermediaries persist not only as they pertain to spyware, but also in how they interact with other components of the OCC supply chain— from the foundation from which they are built, such as vulnerability and exploit research, to the services like training or educational materials they might provide. With the Mythical Beasts project as a jumping-off point, this piece explores intermediary relationships, products, and their effects on submarkets within the larger OCC supply chain for high-end cyber intrusion products. These products, often referred to as spyware, range fromsoftware and tools that enable remote access to a computer system without the consent of the user, administrator, or owner of the computer system. With system access, intermediaries are able to collect, exploit, extract, intercept, retrieve, alter, delete, or transmit content.

The limited and siloed knowledge regarding intermediaries creates a significant policy hurdle—these entities contribute to the opaque proliferation of the OCC industry. But how can policymakers enact effective regulation and standards to curb the abusive effects of vendors when they do not understand the perimeters within which these entities operate? This issue brief explores the characterization of intermediaries, the difference between different intermediary types (i.e., broker, reseller), how different intermediaries carry varying effects on the market (i.e., price increases, supply chain muddling) and concludes with policy recommendations to mitigate the effects of these issues, specifically for the ongoing Pall Mall Process.

Methods

To investigate intermediaries in the OCC marketplace and product supply chain, this brief combines expert interviews with desk review to present a rich description of the characteristics, influences, and norms of intermediaries. The interviews were conducted in fall 2025 in a roundtable format with subject matter experts on the cyber capabilities ecosystem from across the national security and private sectors as well as in one-on-one conversations. Individual interviews were conducted with sources from private sector firms who have interfaced with or researched intermediaries or can be identified as intermediaries themselves (e.g.,exploit brokers). For privacy considerations, interviewees remain anonymous but represent the following profiles:

• leaders and senior employees of offensive hacking or vulnerability research companies in the United States or Europe,
• security researchers with expertise in offensive hacking and regional specialties both within and outside the United States, and
• individuals acting as intermediaries that have facilitated relationships and access from individuals or companies to buyer countries based in Five Eyes countries and Europe.

Individual interviews will be cited based on the roundtable that interviewees participated in (e.g., Roundtable #1) to avoid attribution. Due to the lack of public information on intermediaries, interviews are a significant source of descriptive data for this brief. Prior to the roundtables, the authors reviewed academic, policy, and recent media reporting to identify the terms used to refer to entities intermediate to the OCC supply chain. Below, the authors map these terms and seek to clarify the terminology.

Characterizing the complicated: Defining intermediaries

Cyber intrusion products like spyware are characterized by their sophisticated infection chains, meaning they can combine vulnerabilities and exploits to achieve greater levels of compromise. They are also often valued for their stealth on a target device. A maturing marketplace has emerged to enable the development, sale, and deployment of these products, with intermediaries playing a crucial role in ensuring robust and effective exploit chains and in deploying products with varying degrees of anonymity. Notably, as France’s national cybersecurity agency (ANNSI) explains, an intrusion product typically exploits several vulnerabilities as an exploit chain to bypass each application layer and deploy the desired surveillance as close as possible to the system’s core. Given this interrelated set of permissions or access points at both a technical and organizational level, there are numerous opportunities for intermediaries to supply products or services.

Across industry materials, policy documents, and technical reporting, a range of terms are used to describe intermediary entities that operate at various junctures in the OCC supply chain. Intermediaries are entities that provide essential products or services that support a final OCC product. For example, they can facilitate access to or transfer of goods (e.g., vulnerabilities) or services (e.g., access-as-a-service) between two or more parties. In different literatures, intermediaries encompass a variety of relationships, including brokers, resellers, contractors, partners, middlemen, infrastructure providers, and even countries as third-party intermediaries. Some of these terms share overlapping responsibilities, while others are distinct. Here, these terms will be addressed and categorized.

Brokers, sometimes referred to as vulnerability brokers, broker firms, or middlemen, will purchase vulnerabilities or exploit components from researchers and sell them to governments or other clients. Brokers establish their clientele based on relationships with sellers and buyers, and for each transaction, there can be an individual or a chain of brokers that sell said good or service onward to a buyer.¹ Thus, brokers can serve as direct links between the seller and a buyer or can sell to another broker in the chain who then sells to an end client or another broker. Oftentimes, brokers sell a single component of an OCC, rather than a bundled product (i.e., selling an exploit versus selling an OCC product containing an exploit bundled with malware). For instance, Operation Zero, a Russian vulnerability brokerage firm, specializes in acquiring and selling zero-day exploits.

Resellers, on the other hand, typically procure and then repackage or rebrand cyber intrusion products to new customers. Crucially, a reseller obtains the rights to a software product and may even modify the product before selling it onward to a new buyer. In practice, repackaging or rebranding means bundling spyware or exploit capabilities with services including technical support, training, and adapting products to local contexts, thus making exploits easier for clients to deploy.²Oftentimes, and distinguishable from brokers, resellers bundle products together, reselling a package of products rather than a single component of OCC. Resellers may also lease supporting infrastructure to multiple vendors, such as virtual private networks (VPNs) or domain hosting. Frequently, resellers operate within jurisdictions that have favorable or limited regulations, thereby enabling sales across borders.³ An example of a reseller is RCS Lab, which sold Hermit spyware (Hacking Team/Memento Labs spyware) on behalf of Hacking Team.⁴

Notably, brokers and resellers can operate both “in-house” or as “contractors” for the entity they broker or resell the products for. In-house intermediaries are entities that are owned by an OCC vendor, or other entity in the supply chain. For example, a spyware vendor can own a reseller whose purpose is to resell its spyware to specific countries. Alternatively, vendors can contract a broker or reseller to procure a specific capability, product, or service, or facilitate the sale of a specific capability, product, or service. Below, the authors do not distinguish between in-house and contracted brokers or resellers as it cannot be determined whether they have varying degrees of effect on driving or narrowing proliferation in distinct ways.

Other terms in the literature combine brokers and resellers into one category. For example, in the defense and intelligence communities, “contractors” serves as a stand-in term for resellers and brokers, used also with “prime contractors” for large system integrators and “sub-contractors” for boutique firms or individual researchers.

Partner is another term that combines the functions of brokers and resellers with the specific context of the offensive cyber capability of spyware. “Partner” is a term observed in industry materials and used in theAtlantic Council’s Mythical Beasts research to encompass a broad range of actors—business and operational partners, technical or analytical tool providers, and, in some cases, entities that also function as brokers or resellers.

On the other hand, other terms carve out brokers and resellers and focus on other functions of intermediaries. For example, infrastructure providers are characterized as entities leasing domains, hosting, or operating infrastructure to multiple vendors, providing a commoditized, reusable operational layer for multiple exploits. Access providers are described as firms or individuals that integrate exploits into tools and sell “access-as-a-service” to clients.

The term of intermediary also takes on various meanings and implications across mentions, or lack thereof, in policy. For example, the 2025 Pall Mall Code of Conduct uses “intermediary” explicitly, grouping “resellers, distributors, brokers, and system integrators” of commercial cyber intrusion capabilities together under a single umbrella. In contrast, the Code distinguishes another category for the role of access providers. While this represents a step toward articulating the diversity of actors in the OCC marketplace, there is little attention devoted to the functions and effects of these intermediaries. Rather, this report highlights the instances in which distinguishing between terms is beneficial to policymakers in ongoing industry code-of-practice to effectively include entities that fit more granularly within the market, bolstering potential implementation of outcomes from the code-of-practice.

On the other hand, some policy documents do not directly mention the role that intermediaries play in the OCC marketplace. For example, the 2023 US State Department’s Guiding Principles focuses on government procurement, transparency, and human rights obligations of states and vendors that deploy surveillance technology. In this instance, “vendors” and “surveillance technologies” are treated as broad, catch-all categories, but the guiding principles do not specifically include brokers, resellers, infrastructure providers and the other obscure players in this ecosystem—even though these actors are drivers of price distortion, supply-chain opacity, and risk.

Finally, within the technical and threat-intelligence community, intermediary terminology is more closely tied to specific entities in case studies: Singaporean brokers for Indonesian spyware procurement, third-country intermediaries in Hungary, and exploit brokers or suppliers like COSEINC in Singapore or firms operating in China. Reports from these groups reference the functions that “middlemen,” “brokers,” “regional partners,” and “local distributors” take such as repackaging, resale, and routing logistics, but often without drawing specific lines between the terms and which specificactions they take. In the industry and vendor ecosystem itself, marketing language includes “partners,” and “value-added resellers,” which flattens important distinctions.

There is overlap across this landscape, specific intermediaries connect entities within the OCC supply chain to support product development. Where they diverge is when and how clearly roles are named, differentiated, and assigned responsibly. Policy frameworks tend to underspecify intermediaries altogether; technical reporting documents their behavior without standardizing definitions; and industry terminology combines multiple roles under ambiguous labels. Without clarification and specificity, it is difficult to surface accountability or design effective policy to encourage market regulation. Without clear differentiation, policymakers risk applying underdeveloped, misdirected policies that may have minimal or counterintuitive effects on marketplace transparency. Therefore, disentangling the functions of these entities is a necessary step toward understanding the landscape and designing policies that address how this market functions in practice. For example, policy solutions to curb an individual operating as a broker versus a companyoperating as a reseller might take different approaches, with governments having their own priorities. Thus, for this piece, the authors rely on specific terms to clarify the function that each entity type(s) serves in the market and will use the term most closely aligned with an intermediary type versus a more general term such as “middlemen” or “contractor” to inform policymakers seeking to address specific characteristics of these entities.

A note on related markets

Taking a step back from the cybersecurity marketplaces, intermediaries are observable across complex and sometimes illicit supply chains, with parallel effects on connectivity and opacity. They are key components of global supply chains ranging from diamond trade and critical minerals to commercial data brokers and the wider defense sector. Across these supply chains, intermediaries play an important role in aggregating, transforming, or legitimizing goods as they move across regulatory lines. Brokers may resemble commodity traders who arbitrage information and relationships, and there are parallels to commercial data brokers who package digital assets sources indirectly through oftentimes untraceable or illegitimate means. These commonalities highlight how the OCC marketplace similarly is characterized by multilayered supply chains and shaped by asymmetrical information and specialized labor.

These comparisons surface considerations of how, if at all, the OCC marketplace can achieve rigorous and legitimate responsible purchasing protocols for cyber capabilities. While these sectors, including entities supporting OCC development, are shaped by state and industry-imposed due-diligence norms and obligations including Know Your Customer requirements, beneficial-ownership disclosures, and chain-of-custody documentation, an overall lack of vendor and intermediary reporting and transparency persists. Given this, the following section aims to fill in some of these knowledge gaps regarding the operation of and the effects posed by intermediaries in the OCC supply chain.

The driving and narrowing effects of brokers and resellers on the OCC marketplace

This section draws on the insights from roundtables to characterize the effects brokers and resellers appear to have on the OCC marketplace. A limited body of public research has investigated the economy of vulnerability trades and exploitations, analyzed the business practices of known exploit vendors, and articulated the relationship between exploits and the spyware marketplace. In each of these cases, analyses rely on public knowledge and rare leaked documents to draw insights about the ecosystem. To compliment this and to expand the landscape of shared public knowledge, this analysis follows the methodology of recent policy research by turning to experts in a roundtable format to drive conversation and insights into underattended areas of the marketplace.

How intermediaries link entities together in the supply chain of offensive cyber capabilities

Here, effects are grouped in two major categories—features that drive proliferation of the OCC marketplace and features that narrow or limit the scope of the OCC marketplace. While these effects pose different consequences for different actors ranging from those seeking wider access to the marketplace to those seeking a far more contained and heavily regulated ecosystem, the authors frame these effects principally in terms of how brokers and resellers shape the marketplace itself. Thus, on the one hand, this analysis demonstrates that entities drive proliferation through the development, sale, and deployment of products. On the other hand, this piece observes the narrowing effects to widespread proliferation principally by driving costs, limiting the diversity of product types, and presenting roadblocks to necessary transparency and due diligence.

As detailed in the subsequent subsections, the presence of intermediaries can be characterized as both enabling proliferation and contributing to the homogeneity of the marketplace. While intermediaries fuel the proliferation of OCC, layering additional opacity into already murky supply chains, they also offer policymakers essential leverage points. Their market position, and critical functions they provide in supporting OCC deployment and transactions, make them uniquely effective targets for the needed transparency and enhanced due diligence requirements to curb the rampant proliferation of tools.

Driving market mechanics

Emerging from expert interviews and case study compilation are three critical roles that intermediaries play in connecting entities in OCC supply chains and driving market proliferation. First, brokers and resellers facilitate sales across jurisdictions, increasing overall access to these capabilities oftentimes to new vendors or markets that otherwise could not directly procure these capabilities directly from a vendor. Second, they enable product development by providing skills, services, or pieces of an end-product that could not be easily developed in-house by a vendor. Finally, brokers and resellers can aid with operation deployment, to assistwith the hands-on tasks of using an offensive cyber capability. Notably, the authors highlight that these features are not the only enabling effects intermediaries have on OCC marketplace proliferation, but rather, there are three major trends highlighted throughout interviews and case study analysis.

Facilitating sales across jurisdictions

Reports from civil society suggest that brokering and reselling intermediaries have played key roles in numerous high-profile transactions. Specifically, intermediaries have facilitated transactions that otherwise could not have taken place given regional export controls or trade bans.

For example, in 2017, spyware vendor Quadream Inc. established its own reseller, InReach Technologies Limited. Sourcing revealed InReach Technologies Limited was “solely founded for the promotion of Quadream products, like Reign, outside of Israel” to bypass the EU’s dual-use export.

Later, in 2018, Bangladesh acquired Israeli-made surveillance technologies through Hungarian and Thailand-based resellers to circumvent the Bangladeshi trade ban that prohibits direct trade with Israel. Without intermediaries, it is unlikely this acquisition would have occurred. Again, in 2021, Bangladesh acquired surveillance technology by relying on intermediaries. The state procured surveillance technology from the Intellexa Consortium’s reseller Passitora Ltd (formerly WS WiSpear Systems Limited). The Intellexa Consortium is known for its Predator spyware. Passitora Ltd had sold its product to broker Toru Group Limited, a Swiss company operating out of the British Virgin Islands. This case highlights an example of an intermediary chain, working jointly in service of an end-use OCC vendor, which, through these multiple sales introduces additional opacity into the supply chain for these goods and services.

Intermediaries also expand the total geographic market for spyware vendors by connecting regional markets, which might otherwise be constrained by export regulations or limited regional capacity. For example, the South African company VASTech, connected spyware vendor Hacking Team (now named Memento Labs) to sell the vendor’s spyware to “local customers.” Other times, as noted by roundtable participants, third-country intermediaries facilitate sales where vendors cannot or do not want to appear directly, oftentimes to avoid unwanted public attention and potential reputational harm.⁵ As noted in Mythical Beasts Diving into the Depths of the Global Spyware Market, ten intermediaries (resellers) facilitated NSO Group’s Pegasus sales to government buyers. Unlike the case with VASTech, Mexican intermediaries created misleading and vague contracts that concealed both the products and the original vendor, illustrating how intermediaries can be used as a tool to avoid transparency in the marketplace for OCC.

Overall, both brokers and resellers widen the reach of cyber-intrusion vendors into jurisdictions that would be otherwise inaccessible due to reputational, political, export-control, or trade barriers widening and driving the sales of these capabilities.

Enabling product development

Throughout the expert roundtables and individual consultations, a recurring observation was that exploit brokers and resellers fill a commercial gap in the development and, ultimately, the proliferation of OCC products. Notably, experts reiterated that OCC products rarely rely on a single exploit, rather they require an interdependent chain of exploits and sometimes additional infrastructure.⁶ Intermediaries meet this need by bridging the gap between security researchers and vendors seeking their exploits. In doing so, they can increase the rate of OCC development by reducing the time needed to identify and negotiate between researchers and buyers. As noted in the roundtables, successful vulnerability brokers maintain regular relationships with government entities and private contacts, thereby establishing some trust in an ecosystem reliant on reputation and word of mouth, meaning that they can more efficiently match customer demands with the current supply of vulnerabilities.⁷

In addition to matching supply with demand, exploit brokers can bundle components of the supply chain so that vendors do not need to establish individual relationships and transactions themselves. Evidence from recent reporting suggests that brokers and resellers are meeting these product development needs not only through the sale of exploits but also by providing infrastructure setup support or by arranging transactions through platforms with limited traceability to circumvent oversight. Taken together, these entities meet a marketplace need by connecting skills, services, and products to OCC vendors who may, for a variety of reasons discussed above, seek these external services.

Supporting operational deployment

Brokers and resellers often meet vendor needs by facilitating the transaction of infrastructure, where they provide platforms or services to assist with operational deployment of a capability. This allows OCC vendors to scale operations across multiple regions without having to rely on local infrastructure built in-house from scratch.⁸ Recorded Future’s analysis of Predator spyware reveals the diverse operational deployment roles that resellers fulfill, from establishing operational training centers to operating front companies to ship products to providing data analysis systems.

This case is especially significant, as the Intellexa Consortium—the business cluster behind Predator spyware—is renowned for incorporating intermediaries “in house.” Meaning, the vendor itself owns various resellers, brokers, and infrastructure providers versus contracting them externally, suggesting that even sizeable spyware vendors that “own” various intermediaries also require external contracted intermediary support for operational deployment for certain targets.

Limiting market proliferation

While the previous three broker and reseller effects demonstrate how these entities can meet the needs of the OCC marketplace and advance the market’s proliferation, experts and case studies similarly highlighted how, on the other hand, intermediaries can contribute to increased homogeneity off the marketplace in several ways. Specifically, this includes driving up cost, limiting the diversity of product types, and impeding due diligence and transparency efforts.

Escalating costs

Brokers and resellers, across the marketplace, anecdotally appear to drive up the final cost of OCCs. Multiple roundtable members with industry experience at many junctures of these supply chains described how each broker in a chain adds its own markup, layering on a 10-15 percent markup to the exploit for each onward sale.⁹Popular and open-access exploit marketplaces, like Zerodium, will list the prices of vulnerabilities, but what remains unclear is the extent to which these public prices reflect the intermediary markup.

Evidence suggests that the costs of exploits range drastically, with some of the most sought-after exploits, like zero-click or mobile-messaging exploits being notably more expensive. Similar cost escalation occurs at other junctures in the OCC marketplace. For example, MATIC—a reseller of NSO Group‘s Pegasus spyware—sold Pegasus to the Polish Central Anticorruption Bureau with a nearly $1.5 million markup.

These markups exist at virtually every step of building and selling OCCs, which push higher-end capabilities out of reach for smaller states and agencies, effectively restricting market access to those with the most purchasing power. As reiterated throughout this section, brokers and resellers appear to fill an open commercial gap and charge a fee for their services. Consequently, the lack of transparency on pricing and inflation contributes to overall marketplace ambiguity for the industry as a whole by increasing opacity on costs associated with developing, selling, and procuring OCCs.

Limiting the diversity of products

Roundtable participants noted that a consequence of both the current intermediary ecosystem and in-house vulnerability research is an overall narrowing of what is considered a top-priority commodity. With buyers’ focus on the most popular target vectors (such as iOS and Android devices) and on final products that prioritize speed, timing, precision, and anonymity, downstream intermediaries respond by focusing their discovery and procurement on these few, high-value exploits.¹⁰

These experts narrowed in on this unintended market effect, in which buyers seek out and buy certain vulnerabilities (i.e., remote bypass for popular operating systems), which contributes to knock-on effects for the wider intermediary marketplace. Roundtable participants explained that as resellers and brokers prioritize acquiring these few high-value exploits, there is limited buyer interest and purchasing power for smaller bugs that can be used in complimentary or alternative ways to reach similar end goals.¹¹. In essence, while it is not possible to have full view into the demand-and supply-side activities, “all eyes are trained on the same targets.”¹²One participant noted an exception to this marketplace norm, highlighting a positive externality in the public-private ecosystem in Israel that has created an incentive system in which researchers and intermediaries have access to funding and investments necessary to create and prove product viability for OCCs that exploit less or obvious sources.¹³

What was observed, in general, is that most of the attention and purchasing power is directed at a relatively narrow slice of the vulnerability marketplace to build out the exploit chains of OCC products. Experts speculated on the consequences of this intermediary and product homogenization. For instance, they highlighted that from an engineering perspective, products appear to be “less creative.” Others noted that this zeroing in on the same few exploits incentivizes brokers and resellers to engage in disreputable and insecure business practices such as selling the same exploit to different vendors, threatening security breaches or bottlenecks when exploits are discovered and patched.

Impending transparency and due diligence

Overall, the introduction of more actors in the form of intermediaries to the OCC ecosystem poses additional considerations to the tracking and reporting necessary for transparency initiatives. Given the relationship-based nature of brokering and reselling, where deals and transactions oftentimes rest on preexisting, trusted contacts or references, the ability to surface and track these transactions within a digital “supply chain” is limited.¹⁴ This has implications for the growing advocacy and policy guidelines for which “responsible purchasing” has been offered as a potential remedy to market proliferation.

The analyses above highlight how brokers and resellers can drive-down transparency efforts in the marketplace for OCC by muddying supply chains and creating confusion for end-buyers as to the source of a product or product component, which in turn complicates due-diligence efforts and “responsible purchasing.” Even vendors of OCCs have indicated how intermediaries complicate their own alleged due-diligence efforts. For example, the CEO of spyware vendor Memento Labs, recently asserted that one of its clients misused outdated variants of their malware. This demonstrates that OCC vendors can lose control of variant propagation once intermediaries and resellers are involved. Members of the industry echoed this sentiment, describing the “ceiling of capabilities” problem—as resold or outdated capabilities continue to circulate in the market, sometimes through third-country intermediaries, the likelihood of detection increases and the effectiveness of the exploit is reduced.¹⁵ On the other hand, current market opacity enables unchecked vendor transparency reports, including the recent 2025 NSO transparency report, which lacks any concrete details on annual disclosures, supply chains, customers, and more.

Further complicating transparency and due diligence efforts are incentive structures in the marketplace for OCC. Emerging security researchers and brokers are often incentivized by the appealingly sizable and rapid profit potential, shifting the focus to speed and margin overdue-diligence obligations. Discovering and selling vulnerabilities is not geographically restricted to certain markets and thus the profit margins can be “transformative” for some researchers and intermediaries, particularly in the global majority.¹⁶

An ultimately observable theme in the OCC supply chain, like many other illicit flows, is that entities are largely incentivized by factors including profit and reputational protection, which oftentimes are measured by high levels of discretion and privacy. As a consequence, supply chain transparency and publicly accessible and meaningful due diligence contrasts with these appealing payouts and an inherent culture of opacity.

Policy recommendations

The policy recommendations below aim to address the aforementioned effects that brokers, resellers, and other intermediary types pose. Based on analysis from interviews and background research, this report sets out four recommendations aimed at confronting the consistent issue set across the Mythical Beasts project—increasing and incentivizing transparency at multiple levels of the OCC supply chain.

These specific recommendations are oriented toward governance regimes in the United States, the United Kingdom, and the multilateral Pall Mall Process to develop Know Your Intermediary requirements, improve corporate registries to capture more details about intermediary relationships, and create certification programs.

I. Implement Know Your Vendor requirements

To facilitate more effective due diligence of cyber capability transactions, governments should gain a better understanding of brokers and resellers enabling these transactions. Know Your Vendor requirements would mandate that OCC brokers and resellers disclose their supplier relationships, vendor partnerships, investors, subcontractors, and parent entities to develop a consistent reporting environment where governmentlicensing officers can assess whether prospective intermediaries have ties to sanctioned or restricted entities before signing contracts.

Within the United States, the Federal Acquisition Regulatory Council should update the Federal Acquisition Regulation, Defense Federal Acquisition Regulation Supplement, and Defense Logistics Acquisition Directive to require any broker or reseller bidding on government cyber operations contracts to disclose vendor relationships, supplier networks, investors, subcontractors, and holding entities. While the Defense Logistics Acquisition Directive requires the disclosure of “the name and location of all supply chain intermediaries,” it does not require information about access providers, parent companies and holding companies, investors, and others.

Within the United Kingdom, the Cabinet Office should update procurement regulations to require intermediaries providing spyware-related services to disclose complete supply chains.

II. Improve corporate-run registries for brokers and resellers

Government-run corporate registries are essential resources for due diligence and accountability in tracking OCC behavior. As indicated in the Mythical Beasts project series, there is work to be done to ensure these registries are comprehensive, publicly accessible, and contain verified information to bolster transparency and accountability efforts.

National regulations should determine comprehensive requirements for brokering and reselling related entities in corporate registries. At minimum, registries should include:

• Basic company information: Name, registration number, tax ID, address, contact details, and date of registration
• Ownership details: Senior executives, management board, beneficial owners, and investors
• Operational details: Number of employees, geographic scope of operations, and jurisdictions where licensed to operate
• Corporate history: Name changes, mergers and acquisitions, and predecessor entities

This information serves as a baseline but could be expanded to include relationships with known spyware manufacturers, telecommunications partners, and access providers.

Within the United States, there is no centralized “nationwide” corporate registry, as each state maintains their own. The National Association of Secretaries of States can build out guidance on what individual states can do to bolster disclosure requirements of dual-use technology companies on their respective registries, which will more holistically capture information about brokers and resellers.

By contrast, the United Kingdom has a more robust corporate registry system. Nevertheless, to improve this system to capture additional information about OCC intermediaries, the United Kingdom should encourage Parliament to amend the Companies Act 2006 to include additional information about entities connected via supply chains in the national registration. When it comes to international fora, the United Kingdom,through the Pall Mall Process, should establish a Working Group with Code of Practice signatories on how states can improve corporate registries to better capture information pertinent to intermediary and OCC marketplace behavior. The UK government should also consult civil society organizations to provide expertise through this process.

III. Certified brokers and resellers program

As leaders of the Pall Mall Process, the United Kingdom and France should establish internal certification programs recognizing brokers and resellers that demonstrate exceptional compliance practices and encourage other signatories to the Pall Mall Process Code of Practice for States to do the same. Utilizing the Pall Mall Code of Practice for industry as a jumping off point to establish a certification, certified brokers and resellers are eligible to receive streamlined licensing processes for low-risk transactions and have a greater likelihood of winning government contracts, encouraging other brokers and resellers in the ecosystem to pursue this certification. This recommendation is a voluntary certification program, where interested brokers and resellers can apply to be certified for the benefits overviewed above, as not every broker and reseller seeks to work directly with government clients.

Certification criteria must include a government-led due diligence effort to ensure a demonstrated history of accurate disclosure, implementation of human rights impact assessments, participation in industry best practice fora, cooperation with government due diligence investigations, and consultation with civil society actors. More detail on assessment of these criteria is below.

Within the United States, Bureau of Industry and Security (BIS) should administer the certification program, serving as the entity that issues, maintains, and revokes certifications. Shoring up technical expertise willenable BIS to leverage its existing expertise as the entity that oversees export controls of dual-use goods that pose potential risks to national security and can evaluate compliance through access to export violation records and licensing records. BIS can also enforce compliance, as it already oversees the “Export Controls List” on which some OCC vendors are listed.

The US Department of State should coordinate and share human rights impact assessments for certification applicants, providing country and regional human rights risk assessments, and compliance with international law. This can be informed through expert consultation by civil society organizations to review and bolster the rigor of the assessment’s methodology and focus. Finally, the Office of Foreign Assets Control at the US Department of the Treasury should provide sanction screening and verification services for the certification program.

In the United Kingdom, the Export Control Joint Unit (ECJU) within the Department for Business and Trade should administer the certification program, serving as the entity that issues, maintains, and revokes certifications. The ECJU, similar to BIS, can leverage its existing expertise in UK export control regulations and licensing requirements to implement and oversee this program.

The Foreign Commonwealth Development Office, similar to the US Department of State, should coordinate and share human rights impact assessments for certification applicants, providing country and regional human rights risk assessments, compliance with international law, and adherence to UK human rights commitments and the Consolidated EU and National Arms Export Licensing Criteria. Finally, the Office of Financial Sanctions Implementation of His Majesty’s Treasury can administer UK sanctions screenings and compliance verifications for the certification program.

Information sharing, coordination, and harmonization between various intermediary certification programs in the United States and the United Kingdom can be coordinated during the Pall Mall Process or other appropriate international fora.

Conclusion

The opacity of intermediaries in the OCC marketplace represents a discernible gap in current policy frameworks. This research demonstrates how intermediaries—be it brokers, resellers, or other entities—are essential enablers and connectors of the OCC supply chain. They drive proliferation by expanding market access across jurisdictions, supporting product development, and facilitating operational deployment while introducing market complications through cost escalation, product homogenization, and supply chain obfuscation.

The policy recommendations highlighted in this piece reinforce a core point—transparency. They seek to bolster publicly accountably transparency without pushing legitimate vulnerability research underground. These recommendations recognize and reflect on treating intermediary roles in OCC marketplace not as a collective unit, but rather as distinct categories with a range of policy responses.

When journalists, political leaders, activists, and private citizens become targets of OCCs like spyware that has been developed through intermediary chains, the opacity complicates accountability and enables ongoing surveillance of personal information and private communication. Each layer of the supply chain makes it increasingly complicated to trace the technology and sales, further complicating accountability. Adding to this, intermediaries can create vulnerabilities for national security when states are unknowingly reliant on adversarial infrastructure or indirectly funding, through acquisition of these capabilities’ adversarial vendors.  

Through international momentum via the Pall Mall Process and the wide variety of policy actions to curb the proliferation and misuse of spyware and other OCC, a critical window exists to shape the future of intermediaries’ operations within the OCC supply chain and bring them out from the shadows.

Acknowledgements

The authors owe a debt of gratitude to the security research community, particularly to the individuals who spoke candidly about their many years of learned experiences during our roundtables and in interviews; the report authors are eternally grateful.

Thank you to Winnona DeSombre Bernsen and Nikita Shah, whose valuable conversations shaped the early focus of this issue brief. To all who have contributed to the Mythical Beasts projects over the years, this project would not be the same without your valuable contributions.

About the authors

Jen Roberts is an associate director with the Cyber Statecraft Initiative, part of the Atlantic Council’s Tech Programs. Roberts leads CSI’s Proliferation of Offensive Cyber Capabilities work, including the management of the Mythical Beasts project series. Roberts holds an MA in International Relations and Economics from Johns Hopkins University’s School of Advanced International Studies (SAIS) and a BA in International Studies from American University’s School of International Service.

Sarah Graham a nonresident fellow with the Cyber Statecraft Initiative, part of the Atlantic Council’s Tech Programs. She is also a European Union Schuman Fulbright fellow working with the Center for Democracy and Technology in Brussels. Her work focuses on European digital policies and how they might respond to intrusive and harmful uses of technologies ranging from spyware to digital platforms. Graham is also a policy research affiliate at New York University’s Center for Social Media and Politics, where she previously served as the Center’s research and operations manager and oversaw a diverse portfolio of projects and data access initiatives for interdisciplinary research teams. She has contributed to publications at the Journal of Experimental Political Science and Journal of Quantitative Description, and her writing has appeared in Brookings and Tech Policy Press. She holds degrees from the University of St. Andrews and New York University.

Lyla Renwick-Archibold is a research associate in Artificial Intelligence at the Council on Foreign Relations. Renwick-Archibold previously interned at the Atlantic Council’s Cyber Statecraft Initiative, where she researched the spyware market. She also served as a Princeton in Africa Fellow based in Tanzania, where she led digital literacy and tech education initiatives in partnership with schools and local organizations. She graduated from Washington University in St. Louis with a degree in computer science, where she focused on the intersection of technology, policy, and equity. Renwick-Archibold has worked in research and product roles across the public, private, and nonprofit sectors. She served as a researcher for Coda Media, where she reported on AI, surveillance, and human rights in East Africa. Before that, at the Surveillance Technology Oversight Project, she published articles on facial recognition and digital surveillance.

Report Sep 4, 2024

Mythical Beasts and where to find them: Mapping the global spyware market and its threats to national security and human rights

By Jen Roberts, Trey Herr, Nitansha Bansal, and Nancy Messieh, with Emma Taylor, Jean Le Roux, and Sopo Gelava

The Mythical Beasts project pulls back the curtain on the connections between 435 entities across forty-two countries in the global spyware market.

Cybersecurity

Issue Brief Sep 10, 2025

Mythical Beasts: Diving into the depths of the global spyware market

By Sarah Graham, Jen Roberts, and Nitansha Bansal

The second edition of the Mythical Beasts project assess how the global spyware market has developed and changed over the past year.

Cybersecurity

Conflict, Risk, and Tech Sep 4, 2024

Mythical Beasts and where to find them: Data and methodology

By Jen Roberts, Trey Herr, Nitansha Bansal, and Nancy Messieh, with Emma Taylor, Jean Le Roux, and Sopo Gelava

Learn more about the methodology and dataset behind Mythical Beasts and where to find them: Mapping the global spyware market and its threats to national security and human rights

Cybersecurity

The Atlantic Council’s Cyber Statecraft Initiative, part of the Atlantic Council Technology Programs, works at the nexus of geopolitics and cybersecurity to craft strategies to help shape the conduct of statecraft and to better inform and secure users of technology.

learn more

The post Mythical Beasts: Investigating the role of intermediaries in the proliferation of offensive cyber capabilities appeared first on Atlantic Council.

Financial agency for Palestinians is the missing piece in most proposed plans to rebuild Gaza after the destruction of the post-October 7 war. Gaza has historically been a primarily cash-based society and economy, but under the current financial system, Palestinians in Gaza and the West Bank are dependent on Israeli banks for cash and access to the global financial system. Today, inside Gaza, civilians navigate collapsing markets, shrinking access to goods and services, and an economy increasingly mediated by whoever controls distribution and cash. In the West Bank, fiat currency surpluses have caused alarm and chaos. This all continues while reconstruction proposals, ceasefire sequencing, security arrangements, and donor pledges are discussed at the highest political echelons, without meaningful Palestinian representation.

Economic exclusion is known to fuel instability. More political rhetoric cannot resolve it. Just as employment needs to be central to Gaza’s security strategy, Palestinians need access to reliable, dependable, and readily available monetary systems. The absence of jobs and ready access to methods of payment to buy daily necessities leaves a vacuum that will continue to be filled by patronage networks run by Hamas or other armed actors.

Because the West Bank and Gaza Strip are not a country, their financial institutions don’t issue currency. Transactions within the Palestinian territories occur in the new Israeli shekel (NIS). Palestinian banks thus depend on corresponding Israeli banks to clear their transactions. The Israeli government has passed laws designed to prevent the financing of designated terrorist organizations, such as Hamas, so those Israeli banks need a waiver from the government to do business with the Palestinian banks. This gives the Israeli government significant leverage over money and how the flow of value and exchange is controlled.

Under these circumstances, there will always be new recruits for armed struggle. This is why the mechanics of exchange—the microeconomics of daily life, including the ability of ordinary Palestinians to receive, hold, move, and spend money safely—are central to any path forward for Gaza and the Palestinian national project.

A systemic choke point 

Today, the Palestinian economy stands on the brink of systemic financial collapse. For over a year, Palestinian banks and the Palestine Monetary Authority (PMA) have raised the alarm. Palestinians in both occupied territories (Gaza and the West Bank) have access to banking services that depend on Israeli banks providing correspondent banking relationships, and that relationship is at a breaking point.  

All Palestinian shekel settlements, shekel cash repatriation, and a large share of trade-related payments rely on two  Israeli banks,  Bank Hapoalim and Israel Discount Bank. These correspondent banks operate under an indemnity waiver issued by Israel’s Ministry of Finance. The indemnity waivers shield the banks from legal or regulatory exposure when processing Palestinian-linked transactions (including transactions for the Palestinian Authority). These relationships allow Palestinian banks to clear shekel transactions, repatriate excess cash, process trade-related payments, and maintain access to international transfers and cross-border payments through SWIFT messaging and international bank account number codes—the core financial tools for international transfers between banks.

Cumulatively, this reliance on Israeli indemnity waivers for correspondent banking, dependence on Israeli central bank decision-making, and Palestinian’s inability to manage their own financial sector has resulted in the current absurd state of affairs for the Palestinian economy: West Bank banks hold a growing number of physical shekels while their digital balances in Israeli correspondent accounts are depleted—threatening trade settlement and clearance payments—while there is also insufficient cash in Gaza for everyday transactions.

As early as 2024, Israeli banks were raising various concerns about the future of the indemnity waivers. Throughout 2024, the United States and others urged the Israelis to maintain the indemnity. However, by mid-2025, Israel’s finance minister, the right-wing politician Bezalel Smotrich, ordered the cancellation of the waivers, though they were later temporarily extended amid quiet diplomatic pressure.

The most recent renewal of this temporary status was for two weeks and was last issued on February 12. Smotrich meanwhile had been arguing that the entirety of the Palestinian banking system rides on the profit of the Palestinian Authority’s reported practice of issuing payments to Palestinians convicted of terrorist offenses and to the families of those killed carrying out terrorist attacks (often called its “pay for slay” policy in Israeli politics). Despite Finance Ministry demands, the Bank of Palestine did not agree to de-bank the Palestinian Authority, even as its Israeli correspondent bank was only two weeks away from being forced to cease its correspondent banking operations due to the expiring indemnity coverage.

How we got here

The Israeli banks providing services to the Palestinian economy, either directly to the Palestinian banking industry or to Jordanian banks operating in the Palestinian market, are the only linkage to the traditional international banking and fiat currency systems.

To understand the scale of the Palestinian banking industry today, however, consider that in 2023, Palestinian banks reported processing approximately NIS fifty-three billion through Israeli banking channels. Clearance dependence means that all remittance or donation transfers, as well as the ability of millions of Palestinians to access savings held in Palestinian banks, rely on the renewal of these indemnity waivers, underscoring one of the many reasons that Palestinians need to be able to transact with the international banking system, and have equitable access to its fiat currency, for the territories’ future stability.

Palestinians’ structural dependency on the shekel was established under the 1994 Paris Protocol on Economic Relations, which designated NIS as the central medium of exchange. That agreement established the Palestine Monetary Authority to perform central-bank-like functions, though without control of the issuance or settlement of currency. The Paris Protocol also established the Palestinian-Israeli Joint Economic Committee as a mechanism to oversee implementation of the agreement; however, the last meeting on record was in September 2009, according to EU records, meaning the structure has been effectively dormant for more than sixteen years.

In Gaza, major humanitarian organizations rely on Palestinian banking channels to distribute digital cash assistance and pay operational expenses. Cash scarcity and disrupted physical aid routes have increased reliance on digital transfers, a model that has also proven more transparent and auditable than any other aid model over the years since October 7, 2023.

The humanitarian and financial crises are linked

The weakening of the already fragile banking system continues to unfold in parallel with a significant expected reduction in humanitarian aid and access. Recent reporting indicates that Israel has imposed new registration requirements to continue operating in Gaza on dozens of international nongovernmental organizations, including the requirement to disclose more information about NGO staff. Several prominent organizations have refused, including Médecins Sans Frontières (Doctors Without Borders), Norwegian Refugee Council, Oxfam, and others, which initially raised the threat of these major aid organizations being fully denied access to Gaza and the West Bank by the end of February. The Israeli Supreme Court’s temporary injunction delayed implementation of the new rules, pending its hearing and ruling.

The indemnity waiver also allows aid organizations to pay their local staff; therefore, an end to indemnity waivers would collapse aid organizations’ capacities, hobbling the broader Palestinian economy. Such a scenario would be absolutely devastating and have lasting, disastrous consequences for the Gaza Strip, the Palestinian economy, and especially the people it would impact directly.  

As the US-assembled Board of Peace raises its own $10 billion without clarifying where it will be directed to, and is applauded in Washington, the entire Palestinian economy faces the potential of restricted access to the international financial sector. Gaza, especially, faces the prospect that even the minimal aid that was and is being delivered, including medical care, is set to cease, with no clear plan to replace it.

Today, the Israeli government effectively has executive authority, especially through the Finance Ministry led by Smotrich, over whether to bank the West Bank and Gaza. Furthermore, the ministry oversees access to Palestinian tax income sources; since 2019, the ministry has continued to withhold billions of shekels in tax revenues from the Palestinian Authority. 

The question for policymakers is whether Israel would allow Smotrich to leverage this power in a move that, given its wide-ranging implications, would inevitably further destabilize the region.

Digital wallet growth is a sign of resilience

Over the past year, digital wallet adoption has expanded significantly, with platforms such as PalPay and JawwalPay now functioning as core transaction methods, amid a shortage of physical cash. The United Nations Development Programme (UNDP), RedRose, and others have partnerships with digital wallet providers, which have strengthened this digital financial solution in response to the liquidity crisis and decreasing access to physical aid. Still, the majority of these wallets are tied to banking systems for account settlement, and PMA data indicate that cash withdrawals still dominate wallet transactions, underscoring the crucial role of physical cash, even with digital wallet adoption at scale. A recent report, however, provides evidence that many recipients in Gaza have been able to retain their assistance in digital form and transact for their needs accordingly.

This has been a year of market transition toward digital transactions and the active use of e-cash via digital wallet platforms. The Palestinian system has now had substantial adoption. In 2023, it began with about 684,000 active Palestinian e-wallets holding over $32.3 million, including almost 18,000 affiliated merchants, 4,100 authorized agents, and 2.15 million transactions completed. By 2025, reports show wallet usage nearly tripling over the first six months of the year, from processing $40 million to $115 million, and nearly 800,000 active wallets. The PMA’s own digital payment system in 2025 reportedly saw 2.8 million transactions exceeding $550 million.

The recent announcement by the Board of Peace of an initiative to introduce a stablecoin to the Palestinian economy, alongside increased digital infrastructure for Gaza, is a much-needed step toward a short- or medium-term solution. In the long term, however, this solution remains tethered to the same banking systems subject to external control through Israeli banks.

New beginnings for Palestinian financial sovereignty

A new vision of Palestinian financial sovereignty must provide individuals with access to reliable, secure, and readily available transaction mechanisms. For example, this would include a monetary environment with predictable settlement capabilities, diversified banking relationships, accessible international digital financial corridors, integrated standards for anti-money laundering and countering the financing of terrorism (AML/CFT) and compliance mechanisms, and an infrastructure that enables microenterprises to safely store value and grow.

Financial sovereignty for Palestinians does not imply secession from central-bank monetary systems, but rather a principled, human-rights-based approach to (re)creating a Palestinian economy. Continued failure to provide access and lawful options, however, leaves average Palestinians behind with their existing informal broker networks—often charging fees between 20 percent and 40 percent—and a cash payment structure in which Hamas patronage thrives. It provides another example of Hamas’s financial power and ability to raise and move funds existing in the places where the formal (financial) systems fail.

Economic resilience requires financial sovereignty and market access, which can enable peace and conflict resolution through economic development, resilience, stability, job creation, and more. Every person should have the ability to pursue and have reasonable access to financial inclusion and market stability. This is in part why many developing economies have supported and integrated digital assets, including stablecoins, into their markets. Stablecoins are also paired with new technology for tracking and oversight, such as services like Chainlysis or other providers offering software for investigation, compliance, and risk-management services for on-chain transactions.

True financial sovereignty for Palestinians remains a diplomatic challenge that will only be fully resolved with state-level negotiations and agreements.

Yet, in the meantime, Palestinians can develop pathways to financial agency while accounting for Israeli security needs. For example, there can be new efforts to develop industry-standard AML/CFT networks compliance, without putting Palestinians at personal added risk, including putting KYC (“know your customer”) information on blockchain and other new innovations now available in the field.

Technology as a stabilization tool

There are several emerging models that demonstrate that compliant digital infrastructure and aid rails can operate without undermining international financial regulatory systems. Humanitarian platforms such as Red Rose and UNDP demonstrate that transparent, rules-based digital distribution and transactions are possible, even in the most fragile economic environments.

Though these efforts have proven successful, these digital-cash-distribution projects still rely on Palestinian banking and, therefore, Israeli bank clearing. They nevertheless demonstrate the adaptability of these tools in creating digital aid rails and cash-settlement opportunities, with embedded compliance screenings and point-of-sale integrations, in an extremely constrained context. These models of cash distribution still provide protections, auditability, and accountability for regulations on anti-money laundering and sanctions compliance.

Other futures are possible

A humanitarian crisis is brewing that Israel has a unilateral opportunity to either prevent or exacerbate. Much of this power is centralized with Smotrich and depends on Israeli political decisions, and therefore, it is ever more critical to build financial inclusion, autonomy, and resilience for Palestinians.

Israel and the international community have very real security needs when it comes to Palestinian banking and finance due to the sophisticated use of crypto, cash, and international shell companies by Hamas and its core funder, Iran. Yet, ordinary, civilian Palestinians have very real financial needs. These are not zero-sum.

There are methods for the Palestinian economy to be granted reasonable access to financial inclusion and transaction models that are not dependent on Israeli banking.

While the options to preserve correspondent banking access, restart shekel repatriation, and other solutions are priorities in the immediate term for the Palestinian financial sector, in the medium and long term, Palestinians and their allies can and should be supported in efforts to build both new, accessible, and low-cost economic models and transmission rails, using innovative fintech, which are interoperable with international financial actors, compliant with international regulations, and secure.

A credible plan for Gaza and the future Palestinian state must account for financial agency at the household and small enterprise levels. The “last mile” for Gaza will not rely entirely on physical infrastructure or even on the military defeat of Hamas; it will be its financial future and the corresponding financial infrastructure. Now is a moment when Palestinian tech entrepreneurs, economists, and business leaders can begin moving toward a future free of dependence on Israeli political decisions or external central bank infrastructure.

Staff

Melanie Robbins 

Deputy Director, Realign for Palestine

Rafik Hariri Center & Middle East programs

Civil Society Extremism

Melanie Robbins is the deputy director of Realign for Palestine, a project of the Atlantic Council’s Rafik Hariri Center and Middle East programs. 

MENASource Dec 19, 2025

Employment needs to take center stage in Gaza security plans

By Melanie Robbins 

The best way to undermine Hamas’s power in Gaza is to employ the people Hamas pays today.

Civil Society Economy & Business

MENASource Feb 5, 2026

Washington’s UNRWA report shows how public discourse is divorced from reality

By Melanie Robbins 

The UN Relief and Works Agency for Palestinian refugees has become a proxy theater for unresolved political questions.

Education International Organizations

Through our Rafik Hariri Center for the Middle East, the Atlantic Council works with allies and partners in Europe and the wider Middle East to protect US interests, build peace and security, and unlock the human potential of the region.

Learn more

The post Reconstructing Gaza starts with giving Palestinians financial agency appeared first on Atlantic Council.

This is the eighth chapter in the Freedom and Prosperity Center’s 2026 Atlas, which analyzes the state of freedom and prosperity in ten countries. Drawing on our thirty-year dataset covering political, economic, and legal developments, this year’s Atlas is the evidence-based guide to better policy in 2026.

Evolution of freedom

The trajectory of freedom in Benin since the mid-1990s is inseparable from the political rupture of February 1990, when the National Conference laid the foundations of a constitutional democracy that would soon be regarded as a reference point in West Africa and beyond. The period covered by the Freedom Index begins a few years later, when it already captures the effects of that foundational moment: competitive elections, peaceful alternation of power, and the gradual construction of institutions meant to restrain executive authority and embed the rule of law. For roughly two decades, Benin stood out in a region marked by recurrent political instability, authoritarian reversals, and military interventions. While the country faced persistent economic and social challenges, its institutional framework was widely seen as relatively robust.

This overall picture is reflected in the early evolution of the Freedom Index. From the mid-1990s through the first half of the 2010s, Benin maintained a comparatively high level of aggregate freedom, well above the sub-Saharan African average. Political freedom was the main driver of this performance. Elections were generally considered free and competitive, civil and political rights were largely respected, and legislative constraints on the executive, though imperfect, functioned in practice. The legal subindex, while weaker, also benefited from a degree of institutional continuity and predictability uncommon in the region. Economic freedom evolved more unevenly, reflecting structural constraints and the limits of reform, but it did not fundamentally undermine the broader institutional equilibrium.

This trajectory changed markedly after 2016, with the election of Patrice Talon to the presidency—followed by his reelection in 2021. The decline in Benin’s aggregate Freedom Index over the past decade is driven overwhelmingly by a sharp deterioration in the political subindex, and to a lesser extent by changes in the legal framework that weakened checks and balances. The data captures not a sudden collapse, but a deliberate and cumulative transformation of the political system—a shift rooted in a particular diagnosis of Benin’s post-1990 democratic experience as one in need of major restructuring.

Talon came to power on the basis of a critique that resonated with part of the population. In his view, the democratic system that emerged from the National Conference had succeeded in guaranteeing political freedoms but had failed to deliver economic development and effective public policy. He frequently pointed to what he described as a “corrupt democracy,” in which elections were held regularly but governance was undermined by clientelism, fragmented political parties, and pervasive rent-seeking. He often used the example of the National Assembly, where even members of the parliamentary majority were allegedly susceptible to financial inducements in exchange for supporting government legislation. According to this narrative, democracy had become an obstacle to decisive action rather than a framework for collective progress.

This diagnosis was not entirely unfounded. Benin’s political system prior to 2016 was indeed characterized by weakly institutionalized parties, fluid parliamentary alliances, and a high degree of personalization of power. Corruption was widely perceived as endemic, and successive governments struggled to implement ambitious reforms. Talon’s response to these shortcomings, however, involved a profound rebalancing of power in favor of the executive, with lasting consequences for political freedom.

The most visible changes occurred in the realm of elections and political competition. Reforms of the electoral code progressively narrowed the political field by introducing new requirements for party registration and participation. Their effects became fully apparent in the 2019 legislative elections, when opposition parties were excluded from the ballot, resulting in a parliament composed exclusively of parties supporting the president—an unprecedented outcome in post-1990 Benin. These elections triggered widespread protests, followed by a severe crackdown by security forces, leaving four people dead according to Amnesty International. Subsequent electoral reforms reinforced this dynamic by increasing national thresholds for representation that effectively prevented opposition forces from securing parliamentary seats. Although elections continued to be held on schedule, these changes significantly reduced the level of political competition and weakened the role of elections as mechanisms of accountability.

Civil liberties and political rights have evolved along clearly divergent paths. The civil liberties component remains relatively stable, reflecting the absence of generalized repression or a collapse of basic freedoms such as freedom of movement or physical integrity. By contrast, political rights have declined sharply, driven by the progressive restriction of the space for political organization, competition, and expression. This contraction has also affected freedom of the press and media, not through overt censorship or systematic bans, but through legal and judicial mechanisms. New laws regulating online activity and digital expression have introduced strict provisions on defamation and related offenses, which have been actively enforced, including against journalists and civil society activists, often by special courts initially designed to deal with economic crimes and terrorism. The result has been a more constrained and cautious media environment, marked by self-censorship rather than blanket repression, consistent with a pattern in which political freedoms are curtailed primarily through changes in the law and their application rather than through widespread violations of civil liberties.

The legal subindex reflects a more complex and increasingly fragile trajectory. Historically, Benin’s legal framework benefited from the constitutional architecture established in the early 1990s, in which the Constitutional Court played a central role as a guarantor of the rule of law and a key counterweight to executive power. For many years, the court acted as one of the strongest institutional legacies of the National Conference, arbitrating political disputes and enforcing constitutional limits in a way that helped stabilize the democratic system.

Over the past decade, however, this equilibrium has been progressively undermined. Legal uncertainty has increased as successive reforms reshaped the institutional landscape without broad consultation or consensus. The Constitutional Court has gradually lost its capacity to act as an independent check on executive authority, evolving instead into an institution perceived by many citizens as aligned with the governing majority. This shift has weakened confidence in the judiciary more broadly and contributed to a sense that fundamental legal guarantees are increasingly contingent on political considerations rather than constitutional principles.

At the same time, the security component of legal freedom has deteriorated significantly. Benin now faces threats that were largely absent from its territory until recently, particularly in the northern regions bordering Burkina Faso and Niger, where armed groups linked to the Sahelian insurgencies have carried out deadly attacks. These incursions have placed sustained pressure on the state’s security apparatus and introduced new legal and institutional tensions, as the government has sought to respond to an evolving threat environment while operating within a framework already strained by political and judicial centralization. Rising insecurity has combined with declining legal certainty to produce a marked weakening of the rule of law as captured by the legal subindex.

Overall, the evolution of freedom in Benin since 1995 can be divided into two distinct phases. The first, spanning roughly two decades, corresponds to the consolidation of a pluralistic constitutional democracy that, despite its flaws, preserved a relatively high level of political freedom. The second, beginning in 2016, is characterized by a deliberate reconfiguration of the political system that reduced democratic constraints in the name of efficiency and development. The Freedom Index captures this inflection point clearly, highlighting the central role of political institutions in shaping the country’s institutional trajectory.

From freedom to prosperity

The evolution of prosperity in Benin over the past three decades reflects both the achievements and the limits of its development model. Unlike the sharp movements observed in the Freedom Index, changes in the Prosperity Index have been more gradual, shaped by long-term structural factors rather than abrupt political shifts. While Benin has made measurable progress in several dimensions of human development, it continues to rank among the least prosperous countries globally, underscoring the persistence of deep socioeconomic constraints.

Income levels remain low, despite steady growth over extended periods. Real GDP per capita increased gradually from the mid-1990s onward, supported by macroeconomic stability, regional trade, and modest diversification. However, growth rates were insufficient to generate a decisive break with poverty. The country’s economic structure, heavily reliant on agriculture, informal services, and transit trade linked to neighboring economies, limited productivity gains, while income improvements translated only slowly into broader prosperity. This pattern of modest but unspectacular economic progress fed a growing frustration with the democratic system established after 1990 and became a central element in the critique advanced by Talon and his supporters.

Education and health outcomes improved over time, but at a noticeably slower pace than in much of sub-Saharan Africa. Mean and expected years of schooling increased gradually, and life expectancy at birth rose, reflecting expanded access to basic education and healthcare services. However, these gains consistently lagged behind regional averages, pointing to persistent weaknesses in the effectiveness of public provision rather than to a lack of formal progress. Schools and health facilities expanded, but quality, coverage, and outcomes improved unevenly, limiting their impact on human capital formation and overall well-being. The result was a pattern of incremental but comparatively underwhelming advances in education and health, which informed a broader sense that social progress was not keeping pace with expectations or with trajectories observed elsewhere in the region.

Inequality presents a more nuanced picture. Income inequality in Benin has historically been moderate by regional standards, partly reflecting the overall low level of income and the predominance of informal livelihoods. The inequality component of the Prosperity Index does not show dramatic deterioration, but this relative stability should not be interpreted as social equity. Widespread poverty and limited opportunities mean that low inequality often coexists with generalized deprivation rather than shared prosperity.

The minorities component, which assesses equal access to public services and opportunities, remained relatively stable. Benin has not experienced the kind of entrenched ethnic or sectarian exclusion seen in some neighboring countries. However, regional disparities, particularly between the coastal south and the northern regions, have widened in recent years. These disparities are increasingly relevant in the context of rising insecurity in the north, placing additional strain on already fragile social and economic structures.

The relationship between freedom and prosperity in Benin cannot be reduced to a simple causal chain in either direction. The democratic system established after 1990 undeniably expanded political freedoms and opened civic space, but it also generated high expectations regarding the state’s capacity to deliver economic transformation and effective public services. Over time, the gap between these expectations and the modest pace of socioeconomic progress became increasingly visible. It was this discrepancy, more than poverty itself, that began to shape perceptions of failure and fed skepticism toward democratic governance as it had been practiced.

The central issue is not democracy as such, but the weakness of the state that accompanied democratization. Political liberalization advanced without a parallel effort to build strong public institutions, professional administrations, and accountable political parties. Democratic competition therefore often revolved around access to state resources rather than policy performance, while the provision of education, health, and infrastructure remained inefficient and uneven. In this context, economic and social outcomes improved only gradually, reinforcing the perception that political pluralism had not translated into effective public policies or shared prosperity.

This diagnosis helps explain why the promise of a more centralized and decisive model of governance gained traction. The argument advanced under Talon was that political freedom had come to impede state capacity, coherence, and results, and that tighter control was therefore necessary to move the country forward. Yet the prosperity data does not bear out this argument. At least not yet. It shows no clear acceleration of income growth or human development since the curtailment of political freedoms, and certainly no break with the long-standing structural constraints facing the country.

Undeniable progress has been made in the area of infrastructure and in promoting new economic sectors such as tourism, textiles, and the industrial processing of agricultural products, including soybeans, pineapples, cashews, and shea nuts, through a new special industrial zone in the south of the country. However, the concentration of economic power in the hands of a very limited number of entrepreneurs close to the political establishment raises doubts about the sustainability of the public-private partnerships established under Talon and the lasting transformative effect of these initiatives.

The concentration of power and the weakening of democratic checks have introduced new risks—political, institutional, and social—without delivering the promised economic transformation. On November 15, 2025, Beninese citizens woke up to discover that the National Assembly had revised the constitution overnight, introducing major changes to the country’s political and institutional architecture. The terms for the president, members of Parliament, mayors, and municipal councilors were extended from five to seven years. The Senate, a new institution with very significant powers, was created, composed primarily of figures who had held high political office, including former presidents and former speakers of the Parliament but no elected representatives. The Senate will play both a legislative role alongside the National Assembly and a regulatory role to discipline political actors—including possible sanctions such as the deprivation of political rights in the event certain constitutional provisions are violated. Until then, the role of regulator of institutions had been played exclusively by the Constitutional Court in Benin.

The amended constitution also introduced a clause calling for a six-year “grace period” during which the opposition party cannot take initiatives likely to impede the actions of the government in power. Criticism of the ruling government would only be permitted one year before general elections. These constitutional reforms were justified as necessary for the country to avoid being in a permanent election campaign and to allow the government to govern. Details for how the measures, which are unprecedented in Benin and quite disturbing in a democratic country, will be enforced remain vague, which can only raise serious concerns about the implications for the rule of law and the preservation of civil liberties and civic space in Benin after Talon’s departure.

The extremely restrictive provisions of the electoral law for political parties to obtain even a single seat in Parliament produced the predictable result of the legislative elections in January 2026: a return to a National Assembly composed exclusively of MPs from the two parties that support Talon and back Minister of Economy and Finance Romuald Wadagni, Talon’s candidate for the presidential election scheduled in April 2026. The election will include only two candidates, and Wadagni is widely expected to win, extending the power of the ruling bloc.

The path forward

Benin narrowly escaped a sudden descent into institutional chaos on December 7, when soldiers led by a lieutenant colonel commanding the special forces attached to the National Guard launched an attack on Talon’s private residence and announced on public television that they had taken power. The coup attempt failed, but the sequence of events was unprecedented in the country’s recent history and deeply shocking for a society long accustomed to political stability and the strict subordination of the military to civilian authority. The attempted takeover triggered a decisive regional response, with the intervention of the Nigerian Air Force in support of Beninese loyalist units, the rapid mobilization of Nigerian troops on the ground, and the activation of the ECOWAS Standby Force. France, a long-standing security partner of Benin, also provided operational support and intelligence assistance. That such a scenario could unfold in what had widely been perceived as one of the most stable political systems in West Africa revealed vulnerabilities that had long been underestimated or deliberately ignored.

Beyond the immediate shock of the coup attempt, the episode points to a far more uncertain security horizon for Benin. The country is now entering a phase in which insecurity can no longer be viewed as a peripheral or temporary phenomenon confined to its northern borders. Armed groups operating in the central Sahel are likely to continue probing the resilience of state authority, exploiting geographic, social, and institutional vulnerabilities over time rather than through large-scale confrontations alone. The central challenge ahead will be one of endurance: whether the state can sustain effective security responses without exhausting its forces, undermining civil–military cohesion, or eroding public trust as the threat becomes more diffuse and persistent.

Benin’s rapidly evolving security environment coincides with a deteriorating political and regional context. Relations with several neighboring countries have become increasingly strained, against a backdrop of diverging political trajectories and growing mistrust within West Africa. The risk is not only that regional cooperation will weaken but that Benin will find itself more isolated at a moment when cross-border coordination is essential. Domestically, prolonged insecurity is likely to interact with political exclusion and institutional centralization, further testing social cohesion and the legitimacy of state authority. In such a scenario, security challenges cannot be dissociated from political choices, as each has the potential to amplify the other over time.

The assessment of Talon’s two terms in office is highly divisive in Benin and will likely continue to be so for a long time to come. The country’s political and security developments over the next few years will be a determining factor in assessing a decade of political, institutional, economic, administrative, and judicial reforms, which have been implemented with determination, consistency, efficiency, and coldness by an atypical president who came directly from the private sector. On the one hand, there are those who believe that the end justifies the means and it took a strong-willed, self-assured man like Talon to lay the foundations for economic, social and human development that will eventually come to fruition.

On the other hand, there are those who believe that nothing justifies undermining the principles of democracy; protection of rights and freedoms; and political, economic, and social inclusion, which form the basis of a nation’s cohesion, security, stability, and sustainable and shared prosperity. If we consider that development and prosperity include the continuous extension of people’s freedoms to choose their own paths in life, as argued by Indian economist and Nobel Prize winner Amartya Sen, we then must question the appropriateness of both the end goal and the means employed over the last decade in Benin.

Looking ahead, the country faces a choice that is often framed in misleading terms. The years prior to Talon’s arrival fostered the perception that political freedom and effective development are inherently at odds, as if pluralism necessarily implies inefficiency and institutional paralysis. Yet this conclusion rests less on an “excess” of freedom than on the failure to consolidate capable public institutions, accountable political parties, and a professional state able to translate democratic competition into policy performance. Political openness and efficient development are not incompatible; they tend to reinforce one another when institutions function properly. The real danger for Benin is not that democracy might fail to deliver prosperity, but that the erosion of political freedoms, justified by Talon in the name of stability and efficiency, may ultimately weaken both development outcomes and the legitimacy of the state, leaving the country more fragile rather than more resilient.

Gilles Olakounlé Yabi is the founder and CEO of WATHI, a participative and multidisciplinary citizen-focused think tank on West African issues. He worked as senior political analyst and later as West Africa project director of the International Crisis Group and as a journalist for the weekly magazine Jeune Afrique in Paris. He holds a PhD in development economics from the University of Clermont-Ferrand in France.

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Violence in 2025 in the coastal region and Suwayda put the world on alert, testing the control of new authorities. Did anyone expect that those who lost influence with Assad’s fall, such as Iran, Russia, and their proxies, would sit idle and do nothing disruptive during the transitional period? External pressures would certainly challenge the establishment of a “normal” Syrian government.

Domestic pathologies abound after many decades of dictatorship: Sectarian mobilization, torture, corruption, and external patron relationships were tools to undercut potential resistance within the society. Under Assad, intelligence agencies and the Ba’ath party were instrumental in decision-making, operating beyond the reach of formal government institutions. After fifty years of authoritarian rule, and a dozen years of civil war, the country was governed by factions within the security services, power brokers tied to the Assad family, and increasingly by Assad’s foreign backers. This ad hoc but long-standing power structure fell apart in 2024 when Assad fled to Russia on December 8, leaving a power vacuum with no easy fix.

Lack of mandate

Put simply, the current Syrian government inherited an exceedingly complex and dire set of challenges from the Assad regime, both within the country’s borders and beyond. The fact that the most unified and potent military force in the country did not have a broad political mandate caused concern amid the general rejoicing that Assad was gone. The new government in Damascus assumed office upon taking control of the capital and appointed individuals from within Hay’at Tahrir al-Sham (Organization for the Liberation of the Levant, or HTS) to key positions to manage the transition, driving international concerns over continued extremism and the lack of representation. The announcement of a more diverse transitional government in March 2025 was a good sign, as were President Ahmed al-Sharaa’s negotiations with Kurdish and Druze factions, but the potential for inclusive governance remains far from being realized.

Internationally, Syria has been under painful and wide-ranging sanctions since the 1980s, isolating the banking system, restricting trade, and limiting import-export activities. The December repeal of the Caesar Act—which was a US response to war crimes under the Assad regime—lifts nearly all sanctions on Syria and is an important step in both unlocking the investment needed for the nation’s reconstruction and improving economic conditions. However, the scale of needs is immense, with conservative reconstruction estimates exceeding $200 billion.

President Trump’s “peace through prosperity” policy, implemented under the leadership of Ambassador Thomas J. Barrack Jr., is pushing Syria to be open to the West and its allies, a big shift from sponsorship by the likes of Russia, Iran, and China. European and American engagement has brought focused attention from international firms—especially US and Turkish companies. Google and Apple have resumed service in the country, ending what has been called “a digital siege,” while the US Chamber of Commerce has seen strong interest in its new Syria program. Turkish firms engaged in energy, construction, and other critical stabilization sectors have flocked to their southern neighbor.

Trump’s influence

Trump’s return to the White House played a crucial role in creating an opening for positive change in Syria and its relations within the region for two key reasons. First, his excellent relationship with President Erdogan enabled diplomatic coordination and top-level trust during the final eleven days of the Assad regime and the immediate aftermath of its fall. “Erdogan is somebody I got along with great. . . . He’s built a very strong, powerful army,” Trump said on December 16, 2024. He added: “Right now, Syria has a lot of, you know, there’s a lot of indefinites . . .  I think Turkey is going to hold the key to Syria.”

Second, Trump’s strong pro-Israel stance and unrivaled popularity among Israelis gave him unique standing to press back on Prime Minister Benjamin Netanyahu when he called for action in Syria to deter Turkey and weaken the grip of al-Sharaa. Trump’s admonition “you have to be reasonable,” regarding Turkey in Syria, lowered the temperature a few degrees at least, buying important breathing space for the new government to try and stabilize a fragile situation.

Following the appointment of former HTS head al-Sharaa (nom de guerre Jolani) as interim president, the United States initiated the removal of sanctions, including those that had been in place since 1979 This action was prompted by Trump’s meeting with al-Sharaa in Riyadh on May 14, 2025, brokered by Saudi Crown Prince Mohammed bin Salman. This meeting provided hope for the Syrian people and offered an opportunity for their future reconstruction; it also gave the international community a sign of normalizing engagement with the newly created regime in Damascus.

A key focus has been the unity of Syria. The United States, Turkey and the Syrian government have consistently emphasized the need for Syria to stay united with a central government in Damascus. This stance is crucial in countering the narratives and demands of advocates for decentralization, including Kurdish groups in the northeast, which advocate for a federal system, and the Druze aligned with Hikmet al-Hijri in Suwayda, who seek independence. Damascus has refused both while insisting that differences should not be overcome “through blood.”

Internal dynamics with minorities

The Kurds and the Druze received a lot of press over the summer months in 2025, but lingering problems in predominantly Alawite areas pose another challenge to successful stabilization. Following Assad’s ouster, the coastal area, once the primary base for Assad’s loyalists and a major source of volunteers for the Syrian army, transformed into a haven for former army and intelligence officers. Tensions boiled over into a significant cycle of atrocities when Assad loyalists attacked the new government forces, killing hundreds. The Syrian army responded with overwhelming force, leading to clashes that claimed numerous lives—and atrocities against civilian communities described by the United Nations as “widespread and systematic.”

A Syrian investigative committee acknowledged provocations and atrocities by both pro- and anti-government forces, and the Syrian government committed to accountability on all sides. International scrutiny and concern grew, however, when Druze and Bedouin fighters in Suwayda engaged in another round of attacks and atrocities, resulting in hundreds of casualties. By late summer there had been no new major incidents to add to the list of 2025 armed uprisings, reprisals, and atrocities, but the general impression of fragility and low trust persists.

Incidents likes these prompted some Washington-based observers to oppose removal of sanctions. Others argued that isolating or punishing the new authorities in Damascus would not moderate them, though engagement and incentives might. In the end, much of the international community, and most critically Trump and Barrack, chose to support relief and engagement with al-Sharaa.

A year-end  deadline for the March 2025 agreement between Damascus and the Kurdish-led Syrian Democratic Forces (SDF), long backed by the United States, and the SDF’s associated Democratic Union Party (aka PYD), came to naught: The Kurdish side faced a stalemate as they refused to take any trust-building steps and persisted in their demand for “federalism.” The American side, led by Barrack, committed to a political solution and held multiple talks in Damascus, Erbil, and northeast Syria, but these efforts yielded no tangible results.

On January 16, al-Sharaa issued a presidential order granting Syrian citizenship to Syrian Kurds. This decision, which had been denied by the Assad family for decades, included other privileges such as recognizing Nowruz, marking the first day of spring, as a national holiday and allowing the Kurds to use and teach the Kurdish language.

This presidential order came in response to clashes between the Syrian government and Kurdish groups in Aleppo that lasted for two days and resulted in the evacuation of those groups to northeast Syria.

Following further clashes, the Kurdish-led forces withdrew from the Aleppo countryside, which served as the front line for the PYD against the Syrian government. This withdrawal led to a rapid domino collapse, resulting in the withdrawal of Kurdish forces from Raqqa and most of  Hasakeh province. This allowed the Syrian government to seize control of the oil resources and liberate two major cities overnight.

In an attempt to salvage what could be salvaged, Mazloum Abdi, the head of the SDF, flew to Damascus to meet with Barrack on January 18, 2026. Abdi announced that a new agreement had been reached with Damascus, allowing the SDF to be integrated into the Syrian army and interior ministry. Additionally, the Syrian government would receive control of the oil wells and all governmental institutions, including prisons. After Sal-haraa and Abdi signed a revised implementation agreement on January 30^th, fighting subsided and substantive, though preliminary and fragile, reintegration began.

Fragile ideological middle

Al-Sharaa has gone through a massive personal transformation that may presage the political transformation envisaged for Syria. He removed his military attire and addressed the Syrian people in a suit, adopted a conciliatory approach to various communities within Syria, and sent a clear message to the international community that Syria would be governed by a president rather than the military or religious councils of some sort.

This transformation faced—still faces, to a degree—challenges from his own base. Al-Sharaa wasn’t the only leader in HTS and other opposition movements, and some who shared his objective of defeating Assad advocated a more theocratic vision as the endpoint of revolution. This placed al-Sharaa in the fragile ideological middle: He needed to avoid a clear breach with more radical elements to gain their acquiescence to a governance model far different than that applied in Idlib during the war, one rooted in pragmatism and good relations among Syrians and with neighboring countries.

At the same time, the interim government must balance Turkish-Israeli competition, repatriation of refugees, and a massive reconstruction challenge. Will the path al-Sharaa publicly advocates—moderation, integration, balancing—succeed in managing the various pressures and challenges? It is too soon to say, but nearly a year after Assad’s fall, al-Sharaa is clearly on the right path. Continued pressure from Israel, internal challenges from Syrian hard-liners, the difficult path to reintegrating Druze and Kurds amicably, and immense reconstruction challenges mean that al-Sharaa remains at a critical juncture. Failure on any of these files could undermine faith in his leadership at home and abroad to a degree that momentum in stabilizing Syria would stall. Yet for now, al-Sharaa remains the indispensable man: The lack of alternatives may be his surest safeguard for staying on the path and keeping key domestic and international backers on board.

Asaad Sam Hanna is an intelligence analyst specializing in conflict resolution, regional security, policies, and strategic affairs.

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In this context, compromise should be viewed not as romanticism but as a geopolitical necessity and a cost-reduction mechanism. The interests of Turkey and the United States do not coincide one to one but, when they clash, the costs paid by both sides increase. Therefore, the emerging picture can be summarized as the two countries moving toward greater coordination in areas where they cannot replace each other and managing their disputes by compartmentalizing them. The return of leadership diplomacy, coordination aimed at producing results on the ground in Gaza, the window of opportunity for cooperation in post-Bashar al-Assad Syria and the Middle East, signals of controlled normalization in the defense sector, the institutional leverage created by the July 2026 NATO Summit, and Trump’s visit to Ankara beforehand all lead to the same conclusion: the relationship can progress not only through crisis-producing issues but also through crisis-preventing areas of agreement.

Leadership diplomacy

The first practical result of leadership diplomacy was the reactivation of that crucial channel with President Recep Erdoğan’s visit to Washington in 2025. The critical implication of this is that most of the problems in Turkish-US relations are political, not technical; even those that appear technical carry the burden of domestic politics, bureaucratic resistance, and intra-Alliance bargaining. Leader-level diplomacy does not eliminate this burden, but it does two things. First, it removes a deadlock from being a permanent obstacle; second, it produces the political authorization that makes technical negotiations possible. What is needed to expand areas of compromise in 2026 is to anchor this momentum in institutional channels: regular strategic dialogue, coordination between defense and foreign affairs channels, and rapid contact mechanisms that can be activated in times of crisis. Turkish Foreign Minister Hakan Fidan’s functional contribution on Syria and Gaza in 2025 serves as proof for the White House of improved Turkish-US relations.

Gaza: Despite differences in rhetoric, results-oriented cooperation on the ground

The Gaza issue in Turkish-US relations can be positioned as an important example of compromise in 2025. Although Turkey and the United States have different discourses and priorities regarding the region, it was possible to produce results on the ground in areas such as establishing a ceasefire, access to humanitarian aid, practical implementation mechanisms, and diplomatic coordination. This stands out as a model in which compromise means producing the same result rather than establishing the same discourse.

In 2026, the strategic value of the Gaza file is twofold. First, it demonstrates that a joint crisis management capacity can be developed despite the long-standing normative divergence in Turkish-US relations. Second, this capacity is not just a momentary agreement. If it evolves into a process that can be sustained through multilateral formats, it creates a common output area that reduces regional costs for both countries. But the lesson of 2025 is clear: harmony is not absolute; it is sustainable when it is functional and goal oriented. Despite Israel’s objections, the White House’s support for Turkey’s participation in the International Stabilization Force and Ankara’s willingness to participate are among the most promising recent developments on the Ankara-Washington front. More importantly, the Turkish foreign minister’s presence as a signatory—standing alongside Trump at the inaugural meeting of his Board of Peace in Davos—underscores the weight Washington assigns to Turkey in addressing the Gaza crisis and highlights the potentially constructive role Ankara could play on the ground.

Syria and the Middle East after Assad

The Syria issue has long been a source of tension in Turkish-US relations. However, the past year has shown that the post-Assad era offers an opportunity to reframe this issue. The survival of the new order, the country’s territorial integrity, the establishment of central authority, the easing of sanctions, and the start of reconstruction processes create broad common ground between Ankara and Washington.

The key point that makes compromise possible here is this: for Turkey, stability in Syria means not only increasing border security but also preventing the risk of fragmentation and ensuring that terrorist threats are not reproduced. For the United States, a stable Syria is an outcome that limits the risk of regional wars spreading and reduces the need for costly military engagement. Therefore, in 2026, Syria might cease to be an area where the two countries pursue the same goal with different means and instead evolve into a partial convergence of means.

The file on the YPG and the YPG-dominated Syrian Democratic Forces (SDF) is not completely closed; however, with the SDF withdrawing from areas it had long controlled in the face of advancing Syrian forces, Ankara-Washington ties appear to be entering a new phase in terms of Syria. In particular, US Ambassador Tom Barrack’s remark that the conditions on the ground—and thus the perceived need for the SDF in the fight against the Islamic State of Iraq and al-Sham (ISIS)—have changed could be read as a historic turning point in Turkish-US relations. The critical element that will increase reconciliation in 2026 is verifiable progress on the ground in the post-SDF era: an integration timetable, security arrangements, the alignment of local administrations with the central state, and the limitation of moves by external actors that undermine stability. When this happens, the Syria file could transform from an unsolvable crisis to a manageable transition in the relationship. Furthermore, Washington’s goal is both to align with Ankara on the SDF/YPG issue and to play a role in bringing Israel to an understanding with Syria. Washington and Ankara are on the same page regarding Turkey’s political and military role in Syria providing security for Israel. When considered alongside the constructive and reasonable progress on the Gaza file, this could put the United States, Arab states, and Gulf countries on the same page—and, in turn, create an opportunity for Washington to renew its image as a Middle East peacemaker. This is a new historical threshold and allows for a restructuring of the Middle East regional security architecture that produces security for everyone. With its diplomatic capacity and crisis resolution capabilities, Turkey stands out as a key country in such a process. Saudi Arabia and Pakistan’s evolving defense pact—and the ongoing talks on Turkey’s potential participation—constitute a noteworthy development, signaling that regional security is shifting from ad hoc responses toward a more institutionalized architecture.

The issue of Iran—one of the critical topics in Turkish-US relations in the Middle East—stands out as an area to be managed (rather than to seek full agreement). Before the conflict broke out, Turkey pursued a cautious approach based on regional balance, economic interaction channels, and border security and cautioned against the military option.

Ankara and Washington share many interest vis-à-vis Iran, including preventing instability by Iranian proxy networks, securing maritime trade routes, limiting Iran’s nuclear program, and ensuring the resilience to shocks of regional energy and connectivity projects. However, Turkey’s security concerns related to potential outcomes of regime collapse and a power vacuum take precedence in policymakers decision-making.

Nevertheless, the United States and Turkey need to stay closely coordinated to prevent fallout from the conflict creating shocks to bilateral relations. Turkey is also poised to play a role in an eventual deescalation and resolution, in tandem with other regional countries.

Defense cooperation

Defense cooperation in Turkish-US relations is both the most fragile and the highest strategic lever. Throughout 2025, signals of normalization and controlled progress at the rhetorical level in the defense sector are coming to the fore: the F-35 issue becoming renegotiable, the emergence of more flexible language on US sanctions on weapons and military systems subject to the Countering America’s Adversaries through Sanctions Act, the F-16 procurement and modernization process advancing to a certain stage, and Turkey continuing its air force modernization with different options. Ankara’s Eurofighter initiative is a striking example of this.

It would be wrong to interpret this table as an immediate solution, but to say that there is no solution at all would miss the mark for 2026. In the defense sector, compromise is achieved not through a single major decision but through a series of complementary, small steps: technical working groups, oversight and transparency mechanisms that address compliance and security concerns, supply chain and subsystem cooperation, joint production, and modernization packages. In particular, the emergence of Turkey’s need for critical components such as domestic fighter jets and engines presents an opportunity to shift the relationship from the crisis files of the past to the capacity partnership of the future. Real compromise could grow in 2026 as the parties shift from the language of maximum demand to the language of feasible packages.

NATO and European security

One of the most important topics to emphasize in bilateral relations is Turkey’s hosting of the 2026 NATO Summit. This is not a protocol detail in terms of bilateral relations; it is a strategic framework opportunity. NATO is the historical backbone of Turkish-US relations. When the backbone is strengthened, the management of side issues also becomes easier.

Washington’s approach in 2026, which pushes Europe to take on more responsibility and pressures it to share the defense burden, increases Turkey’s value within the Alliance. For Ankara, this opportunity is not just about rehashing the rhetoric of strategic importance—it is about institutionalizing coordination through concrete agendas: southern flank security, Black Sea balance, defense industrial capacity, readiness levels, and new threat areas. If the summit process is well managed, Turkish-US relations could enter a more predictable trajectory over the next year, fueled by a common Alliance agenda rather than scattered crisis headlines.

Russia-Ukraine and the Black Sea

In the context of the Russia-Ukraine War, Turkey’s mediation and balancing policy is seen by Washington as a complementary diplomatic role. This area offers one of the most realistic forms of compromise: not complete alignment but a division of labor. There are differences between the US approach and Turkey’s concerns about Black Sea balance, but both sides acknowledge the strategic value of keeping diplomatic channels open and striving to manage the war in a controlled manner. Trump’s frequent references to Turkey’s mediation capacity on Ukraine is more than a normative position; it is an indication that Turkey’s military diplomatic capacity is understood.

What will increase consensus in 2026 is the institutionalization of this division of labor: preventing escalation in the Black Sea, managing trade and maritime security risks, and maintaining concrete mechanisms such as prisoner exchanges and humanitarian mechanisms could make Turkey a burden reducer from Washington’s perspective. Success in this area will be measured less by declaring a common position and more by operating a common crisis management capacity.

South Caucasus

The capacity for compromise in Turkish-US relations can be interpreted as a quiet coordination that manifests itself in the Middle East, the NATO axis, and the South Caucasus. Although Washington and Ankara’s perspectives on this region do not always fit within the same conceptual framework, the common ground between the two capitals is clear: strengthening lasting stability in the South Caucasus, ending cycles of conflict, and preventing the region from becoming a fierce proxy arena for external power competition. For this reason, the Caucasus could form a constructive agenda in the Turkey-US relationship, one that does not generate major headlines but makes the relationship more predictable.

The logic of this compromise takes shape on two levels. First, it supports normalization and peace processes (e.g., between Armenia and Azerbaijan). Progress toward regional peace is consistent with Turkey’s goals of security and connectivity in its immediate neighborhood, while also contributing to the erosion of Russia-centered security dependencies. Second, a security approach that enhances the capacity of regional actors but does not encourage conflict requires a more measured form of engagement aimed at deterrence and stability without completely overwhelming the field with military competition.

In these early days of 2026, there is another reason for addressing the Caucasus as a separate point of agreement in Turkish-US relations: this region is a rare area in which the two countries’ interests often produce complementarity rather than competition. Turkey’s proximity to the region, its political influence, and its capacity for connectivity—combined with the United States’ diplomatic weight and its ability to generate international legitimacy—increase the likelihood of producing a solution file rather than a crisis file. Of course, there are vulnerabilities. The slowdown of peace processes, disruptive moves by external actors, and internal political fluctuations could turn this area back into a source of tension. However, precisely because of these risks, the Caucasus will be an important testing ground in 2026 for what compromise means in Turkish-US relations: not complete alignment in rhetoric but coordination that enhances stability on the ground.

Conclusion

In 2026, Ankara and Washington can create strategic breathing room in their relations through well-designed compromises. The common character of these compromises is cost-reducing functionality rather than ideological convergence. This includes results-oriented coordination on the ground in Gaza, common ground for the sustainability of the post-Assad order in Syria and the Middle East, a shift from crisis to process management in the defense sector, a strengthened institutional backbone within the NATO 2026 framework, and a division of labor in the Black Sea. They all point to the same thing: the future of the relationship lies not in denying disagreements but in accumulating enough common ground to prevent disagreements from holding the relationship hostage.

If these areas of compromise are linked to shared timelines, verifiable steps, and regular consultation mechanisms, Turkish-US relations could make a real leap from controlled fragility to institutionalized pragmatism. And this leap would produce what both sides need most in today’s stormy international environment: predictability.

Murat Yeşiltaş serves as director of foreign policy research at the Foundation for Political, Economic, and Social Research, a policy think tank based in Ankara and also known as SETA. In addition, he is a professor of international politics at the Social Science University of Ankara.

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Within the Atlantic Council’s longstanding commitment to strengthening the transatlantic relationship, the Atlantic Council Turkey Program conducts research, provides thought leadership, and offers a platform for strategic dialogue between the US, Turkey, and NATO allies to address the region’s toughest challenges and explore opportunities, including in the fields of energy, business & trade, technology, defense, and security.

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The post Ankara and Washington can build on recent groundwork to improve relations and stability appeared first on Atlantic Council.

Mutually antagonistic narratives have served domestic political purposes in both countries and have become something of a staple in the age of populist democracy of the twenty-first century. Yet the two countries rely on each other extensively in matters of trade, diplomacy, and security. State-to-state relationships are sometimes smoothed over in public but fractious in practice; the US-Turkish dyad is the rarer obverse: disagreeable in public for domestic audiences while resting on a high degree of alignment and collaboration.

Where do bilateral relations go when trust is low, mutual perception negative, but operational collaboration frequent? The answer depends less on rhetoric or polemical discourse and more on alignment of practical interests: We therefore must clear away the smoke of domestically motivated rhetoric to instead focus on mutual benefit. If two states pursue compatible goals and interests, room remains to balance internal political benefits with geopolitical cooperation in a form of complex interdependence. Whether that is the case for the United States and Turkey is a matter of substantial interest, given the weight that both have in the international system and the substantial number of crises and international matters that affect them.

Rorschach test

Articulating interests is more of a political than an academic exercise. It also presents something of a Rorschach test: If you ascribe ideological frames as determinative of status for Ankara (e.g., neo-Ottomanism, Muslim Brotherhood Islamism, reckless aggression) it brings you to one implied set of Turkish interests. If you accept declarative policy as the whole story you get another implied set. It is similarly the case for the United States: If you assume hegemonic interests are the primary driver, it takes you down a certain path; however, that road shifts significantly between and sometimes within presidential administrations. American interests as viewed by Trump differ significantly from those of his predecessor. Yet pattern analysis over time—observed behaviors and statements toward particular goals—tell us how specific a US president and his Turkish counterpart actually perceive the degree to which their interests overlap.

As an imperfect but useful generality, we can ascribe the following traits to Turkish foreign policy: multiaxial engagement and balance-seeking, nationalistic, hard power/realpolitik, traditionally but conditionally attached to the status quo. For decades, Ankara has sought to maximize autonomy while pressing for positive coalitions, where possible. For most of the current century, the United States has focused on maintaining a privileged or primary position in the international system, leavened increasingly with a dose of parsimony and pragmatism, but resting on what might be called enduring counter-revisionism (still in the tradition of US naval strategist and historian Alfred Thayer Mahan).

Ankara and Washington have demonstrated a generally cooperative approach across numerous regional and global issues in recent decades because their top-line approaches are compatible: one a retrenching-but-potent leading power, the other a rising middle power, both disinclined to establish imperial arrangements or to allow others to do so. A brief review of these issues illustrates this general (if imperfect) alignment by assigning numeric values reflecting relative alignment of strategic and diplomatic approaches between the two. Any such numbers game comes with attendant risk of overgeneralizing and missing some context, but statecraft and policy analysis at the higher levels of abstraction unavoidably entail some risk in this regard. So the numbers below are presented as suggestive rather than determinative.

In the table below, full interest alignment equals 1, partial interest alignment 0.5, neither alignment nor friction 0, friction -0.5, counteralignment -1. Descriptions of the cases follow the table.

Table 1: Sizing up US-Turkish alignment and friction on sixteen issues

Black Sea/Ukraine: Both sides wish to see the war end with Ukrainian independence intact; neither recognizes Russian claims over Crimea or Donbass, though Washington has signaled willingness to negotiate the status of territories Russia partially or fully occupies at present. Some differences exist regarding Black Sea access: The United States might like to have access for its own ships and more broadly for a NATO presence and routine access, while Turkey has preferred littoral NATO states do the lifting and a strict interpretation of the Montreux Convention; but neither wants a Russian conquest of Ukraine’s coastline. For a Trump administration interested in some compromise deal with Moscow, the Turkish position is complementary.

Caucasus/Russia: While the Trump Route for International Peace and Prosperity (TRIPP) offers wins for the region and the United States, the Armenian position is a wildcard with elections approaching. Should Armenian Prime Minister Nikol Pashinyan get the boot in parliamentary elections (to be held no later than mid-June 2026), the United States may tack back to a position that pressures Azerbaijan and marginalizes Ankara. Russian and Iranian pushback on a deal that opens the region to trade on US-friendly terms can be expected. Interest alignment here between Ankara and Washington is solid, though the prospects for realized gain uncertain.

Central Asia: The TRIPP shows US interest in opening up more trade to Central Asia and balancing against outright domination of the region by Russia or China. The Middle Corridor and the Organization of Turkic States both have value in this regard—and have generated more interest from the Trump administration than its predecessor. Central Asia has not traditionally been an area of high investment for the US government; however, energy companies are interested, so having an ally be more engaged is an advantage.  

Africa: US investment and engagement in Africa has lagged, but Washington has concerns about Chinese or Russian influence on the continent. Meanwhile, Turkey has dramatically increased its diplomatic, military, and economic presence in Africa over the past two decades. In countries like Somalia and Libya, Turkish presence has lent heft to US diplomatic and counterterror initiatives. Africa demonstrates the complementarity of having compatible goals but varying levels of commitment.

Syria: Trump has made clear his policy that Syria will be stabilized and maintained as a unitary state and that Ahmed al-Sharaa is an acceptable figure to lead. This comports with Turkish policy, despite Israel’s objections. The assignment of Trump confidant Thomas J. Barrack Jr. as special envoy and positive statements from the US-Turkish working group on Syria have shown close convergence on Syria policy, a remarkable turnaround from the previous decade. The January 2026 agreement to reintegrate northeast Syria with the Syrian Transitional Government was a sign that this alignment was proving determinative on the ground. 

Iraq: Washington wants a stable Iraq that is: not dominated by Iran; oriented to Western energy markets more than Iranian or Chinese; and working amicably with the Kurdistan Regional Government. Iraq may not fulfill all those interests, but Ankara shares them, and the Development Road project to foster Eastern trade with Europe provides a vehicle for all three countries to earn profits while tightening Baghdad’s ties to Western economies. The presence of PKK fighters in northern Iraq remains a point of friction, but ongoing negotiations to disarm the PKK – and US support for those talks – has taken helped reduce that friction.

Gaza: Washington and Ankara both pressed Israel and Hamas, respectively, to accept a ceasefire deal, return of hostages, and military withdrawal from Gaza in return for disarmament. While the truce remains shaky as of late 2025 and the end state Trump and Erdoğan have in mind may differ somewhat, the coordination on diplomatic efforts has been unambiguous.

Iran: There is divergence here between the hard line taken in Washington toward the Islamic Republic and the modus vivendi approach in Ankara. While Ankara may not want regime change in Tehran, and wants to protect trade with its neighbor, the Turkish government has no illusions about Tehran’s destabilizing regional behavior and shares an interest in deterring it. Ankara has tightened enforcement of multilateral sanctions on the Iranian nuclear program—partially redressing a long-standing US grievance with Ankara. The launch of Israel-U.S. Operation Epic Fury to destroy Iran’s power projection and nuclear capabilities has driven fears of instability and chaos along the Turkish border, turning this from an area of some overlap into an area of friction.

Energy: Ankara’s energy diplomacy has sought to position the country as a hub for multidirectional energy transit and major new gas, oil, and nuclear deals have been signed with Washington. US pressure to decrease oil purchases from Russia has created some strain, as Ankara cannot shift to alternate suppliers as quickly as it can with gas.

US global leadership: American leadership that cooperates with Ankara on key strategic objectives, praising in public and transacting in private, plays like music to the ears of Turks. This contrasts greatly with the constraining approach Turkish leaders called for regarding perceived American overreach in Iraq, Syria, and other regions over the past two decades, including demands to reform the United Nations to lessen the power of the five permanent members. Still, this middle power and the great power have imperfect but positive alignment at present.

Trade/defense trade: The relatively light 15 percent tariff levied on Turkish goods and the $100 billion shared goal for bilateral trade are clear indicators of positive intentions. But defense trade is thorny, with a congressional role and some competition between rising Turkish defense players and US prime defense contractors.

European Union: Ankara and Washington remain at odds with Brussels ideologically and stylistically, while maintaining strong strategic and trade ties with numerous members states. Yet the tensions stem from different sources: Turkish desire to enter the bloc and the American administration’s desire to end what it perceives as the EU’s exploitative trade and security practices.

Eastern Mediterranean: The continuing friction between Greece and Turkey redounds against US-Turkish bilateral relations—a problem that continues to play out in the region and in Congress.

Sanctions: The divergences are clear regarding imposition: Ankara supports multilateral but generally not unilateral sanctions and enforcement, whereas the Turkish track record looks spotty from Washington’s perspective.

Israel: Ankara and Jerusalem pursued a rapprochement in the months before October 7, 2023; since then, rancor, acrimony, and mutual suspicion have become the norm. While regional competition over Syria, the Palestinians, and other issues can be managed, related tensions spill over into US-Turkish bilateral relations in a major way—and that seems likely to persist.

Venezuela: Erdoğan’s quixotic friendship with President Maduro had its roots in terms of oil sales and multipolarity theory, but was a clear point of policy divergence as Trump upped the pressure level on Caracas. With the early 2026 arrest of Maduro and muted response from Ankara, this seems likely to be a decreasing source of tension in U.S.-Turkish relations.

A clear trend and policy takeaway

In conclusion, this assessment sketch of sixteen complicated cases of regional and global policy matters yields eleven that demonstrate substantial bilateral alignment, four with significant unalignment, and one somewhere in between. The aggregate score by the simple rubric of “words and deeds reflect alignment” was positive (+4.5 – with the caveat that these numbers are illustrative but rooted more in subjective alignment rather than formal quantitative criteria). An honest critic might quibble with individual ratings and the framing of the cases or argue for the salience of other matters. Yet sixteen is a reasonable sample size, the thought exercise is revealing, and the trend clear: more alignment than friction overall.  

The policy takeaway is equally clear: maintaining a working relationship is vital for both countries. Those arguing for punitive approaches (by the United States) or hedging (by Turkey) disregard potential mutual benefits as well as both opportunity costs and implementation costs. Managing differences and satisfying domestic sentiment require an adaptive response from policy elites in both countries, but the record of cooperation in 2025 indicates that the pragmatism of both presidents fits the moment—and the alignment.

Rich Outzen is a geopolitical consultant and nonresident senior fellow at the Atlantic Council in Turkey with thirty-two years of government service both in uniform and as a civilian. Follow him on X @RichOutzen.

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Within the Atlantic Council’s longstanding commitment to strengthening the transatlantic relationship, the Atlantic Council Turkey Program conducts research, provides thought leadership, and offers a platform for strategic dialogue between the US, Turkey, and NATO allies to address the region’s toughest challenges and explore opportunities, including in the fields of energy, business & trade, technology, defense, and security.

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The post Foe or friend? US-Turkey bilateral relations seem set to improve as interests align appeared first on Atlantic Council.

This interview was conducted on January 26, 2026 and has been lightly edited for style.

DJ: We’ve heard that you have agreed to join the Caucus on US-Turkish Relations and Turkish Americans—great news for the bilateral relationship and those interested in it. Can you tell us a little bit about the role of congressional caucuses in general and why we need a Turkey Caucus?

Walkinshaw: I served as chief of staff to the late Rep. Gerry Connolly for nearly a decade. During that time, Rep. Connolly was a member of the House Foreign Affairs Committee and served as a co-chair of the bipartisan Caucus on US-Turkish Relations and Turkish Americans. In my capacity as chief of staff, I supported his leadership on the caucus and, in response to constituent engagement and the strategic importance of the US–Turkish relationship, chose to join the caucus myself.

Congressional country caucuses can play a constructive role in strengthening bilateral relationships, while also providing a bipartisan forum to raise concerns and address areas of disagreement. Rep. Connolly understood the importance of maintaining a strong diplomatic relationship with Turkey, but he was also clear-eyed and outspoken about President Erdoğan’s persistent efforts to consolidate power and suppress political dissent. He used his position as co-chair to consistently sound the alarm about the erosion of democratic norms in Turkey.

I spent years supporting Rep. Connolly’s work in this space, and I intend to use my role on the caucus to continue advocating for a stable, prosperous, and democratic Turkey, and a strong US-Turkish relationship.

DJ: Turkey plays an important role in several major foreign policy priorities for Washington: ending the war in Ukraine, stabilizing Syria, finding a better way out for Israel and the Palestinians in Gaza, and forging a lasting peace in the South Caucasus. And despite the prevailing polarization in US politics, there have been encouraging signs of bipartisan approach in these areas—illustrated by the trip of Sen. Jeanne Shaheen, a Democrat, and Rep. Joe Wilson, a Republican, to Syria and the region last August. How hard is it to work across the aisle on foreign policy matters in the current environment?

Walkinshaw: US foreign policy is framed through bilateral ties, diplomatic and security agreements, treaties, and international organizations with guiding principles to promote democracy, ensure stability, and to invest and work with partners while deterring escalation or military action by adversaries.

It requires balancing the three D’s: defense, diplomacy, and development. Congress may not always agree on how the three D’s should be best implemented, but it’s important to acknowledge that one should not exist without the other and that’s the balance we are always trying to strike when working on foreign policy matters in Congress. Nevertheless, my approach is to identify a path to “yes.” Effective governance requires bipartisan engagement and a willingness to work constructively with colleagues across the aisle. Even in such a polarized environment, I am pleased that Congress worked on consequential issues such as reunifying families separated after the Korean War by passing the Korean American Divided Families National Registry Act, repealing the 1991 and 2002 Authorizations for Use of Military Force, and reestablishing the program at the US State Department to support the Ukrainian government in tracking Ukrainian children abducted by Russia. While significant work remains, these efforts underscore that there are serious foreign policy challenges where Congress can, and must, continue to act in a bipartisan manner.

DJ: How do you see the role of Congress—both houses—in shaping US foreign policy and interacting with the executive branch? What is the right balance between oversight/checks and balances on the one hand and “divisions stop at the water’s edge” on the other?

Walkinshaw: Congress is the preeminent branch of government, with broad powers outlined in Article I of the Constitution. What we have seen over the last twenty years, when the White House and Congress are controlled by different parties, Congress finds its Article 1 powers, and when the White House and Congress are controlled by the same party, Congress loses sight of its Article 1 powers. Article 1 of the US Constitution states clearly that Congress has the power to declare war, to lay and collect taxes and duties, and regulate commerce with foreign nations. President Trump is running roughshod and Congress has the responsibility to assert its authorities under the Constitution. President Trump illegally invaded Venezuela with no congressional authorization, putting US service members’ lives at risk, has implemented tariffs unilaterally and illegally, and recently foolishly threatened to purchase or invade Greenland.

Congress must reassert its powers under Article 1 in a bipartisan manner. I’ve supported War Powers resolutions to withdraw troops from hostilities that haven’t been authorized by Congress and voted to terminate the president’s misuse of International Emergency Economic Powers Act (IEEPA) authorities to implement tariffs on long-standing US allies. This is a consequential moment in modern American history. President Trump has repeatedly undermined the postwar, rules-based international order and pressured long-standing US allies. Congress possesses clear constitutional authorities to act as a check on this behavior. The challenge is not a lack of power, but a lack of political will among some members to exercise it in the face of partisan pressure and potential political retaliation.

DJ: Your district is one of a handful in the Congress that have massive intrinsic interest in foreign policy and foreign affairs—because of a significant foreign-born population, businesses with foreign interests, and constituents involved with foreign policy and defense. Do you get a lot of input from constituents in your district about foreign policy?

Walkinshaw: I’m proud to represent such a diverse district: 31 percent of the residents in my district are foreign-born. VA-11 is home to a vibrant Korean American community, Uyghur community, South Asian community, and many other immigrant communities that enrich our civic life. VA-11 is also home to more than 50,000 federal employees, many of whom bring national security, foreign policy, and public service experience shaped by our proximity to Washington, DC, and the Pentagon. As a result, my constituents are deeply engaged, highly informed, and passionate about international affairs and US foreign policy.

I value that engagement and actively seek input from constituents, welcome substantive dialogue on their priorities and concerns, and work to ensure their perspectives inform the actions I take in Congress. Representing this district carries both a responsibility and an opportunity; to listen, to lead, and to translate constituent expertise into effective policymaking.

DJ: The US-Turkish relationship has traditionally been focused on defense and security and followed the ups and downs of regional crises. Is it possible to broaden that scope a bit through people-to-people ties, parliamentary exchanges, and greater business cooperation? Is there a role for Congress to play in catalyzing that sort of growth?

Walkinshaw: It is possible to broaden and deepen the US-Turkish relationship, and Congress can play a constructive role in catalyzing that progress. Increased people-to-people ties, parliamentary exchange, and greater business cooperation can and should play an important role in advancing the dialogue around the benefits of civil society and democracy.

DJ: Your predecessor, Congressman Connolly, was a co-chair of the Turkey Caucus, and you were a major support to him during your previous work. Is there unfinished work for the caucus, and what do you see as the best priorities for it after several years of being relatively quiet?

Walkinshaw: The late Rep. Connolly was a steadfast advocate for democratic governance and the rule of law in Turkey. He forcefully condemned the 2016 coup attempt and was equally clear-eyed about President Erdoğan’s subsequent consolidation of power and erosion of democratic institutions. I share those concerns.

At the same time, it is important to recognize Turkey’s significant diplomatic role in a volatile region. Owing to its geostrategic position at the crossroads of Europe, the Middle East, and the South Caucasus, Turkey has at times served as a key intermediary, including through its role in brokering the Black Sea Grain Initiative and supporting US efforts to secure a ceasefire between Israel and Hamas.

Moving forward, my approach is to uphold democratic principles while engaging with strategic realities.

DJ: What are your greatest concerns regarding US-Turkish relations currently, and what (if any) advice would you have for leaders in both countries to address those?

Walkinshaw: My primary concerns regarding US-Turkish relations center on President Erdoğan’s consolidation of power and his continued engagement with US adversaries. His suppression of political dissent and pursuit of closer alignment with blocs such as BRICS raise serious questions, particularly given Turkey’s status as a NATO ally.

A stronger and more durable US-Turkish relationship ultimately depends on shared democratic commitments. Reaffirming respect for free and fair elections, the rule of law, and the expressed priorities of the Turkish people would not only strengthen Turkey’s democratic institutions but also improve trust and cooperation with the United States and our allies. With respect to President Trump, his record reflects a disregard for democratic norms and the postwar rules-based international order. While his tenure is limited, Congress retains an enduring responsibility to assert its constitutional authorities. I remain confident that Congress will be positioned to more effectively reassert its role, restore oversight, and serve as a meaningful check on executive overreach in the near future.

Congressman James Walkinshaw is a first-term representative of Virginia’s eleventh congressional district. Congressman Walkinshaw serves on the influential House Oversight and Government Reform Committee, on the Military and Foreign Affairs Subcommittee, and on the Committee on Homeland Security. He is the Founder and Co-Chair of the Federal Workforce Caucus, launched alongside Rep. Steny Hoyer (D-Md.) and Sen. Chris Van Hollen (D-Md.)

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Within the Atlantic Council’s longstanding commitment to strengthening the transatlantic relationship, the Atlantic Council Turkey Program conducts research, provides thought leadership, and offers a platform for strategic dialogue between the US, Turkey, and NATO allies to address the region’s toughest challenges and explore opportunities, including in the fields of energy, business & trade, technology, defense, and security.

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The post Q&A with Rep. James Walkinshaw (VA-11) appeared first on Atlantic Council.

As we enter the second year of the Trump Administration, US-Turkish relations and developments in regions critical to both have been dramatic and fast-paced. Events in Syria and Libya are trending towards state consolidation and strategic opportunity for both Washington and Ankara, while the continuing Russian invasion of Ukraine at NATO’s doorstep, the volatile situation in Gaza, and the unfolding war in Iran present challenges both sides seek to navigate in complementary ways.

Technological and geopolitical developments have increased the need for close consultation between the NATO allies, and bilateral coordination has been evident across a range of issues. Yet strategic cooperation remains constrained by a variety of factors. This issue of the Defense Journal takes up several of the regional, military-technical, and policy issues of interest to readers in both countries and to those tracking US-Turkish relations. In an era of positive relations between the two countries’ presidents, parliamentary relations and policy influence also carry great weight—and in this issue we are pleased to have interviews with US Congressman James Walkinshaw and the chairman of the foreign affairs committee of the Turkish Parliament Fuat Oktay to add the legislative perspective to bilateral strategic ties.

Rich Outzen and Can Kasapoglu, Defense Journal by Atlantic Council Turkey Program co-managing editors

Honorary advisory board

The Defense Journal by Atlantic Council Turkey Program‘s honorary advisory board provides vision and direction for the journal. We are honored to have Atlantic Council board directors Gen. Wesley K. Clark, former commander of US European Command; Amb. Paula J. Dobriansky, former Under Secretary of State for Global Affairs; Gen. James L. Jones, former national security advisor to the President of the United States; Franklin D. Kramer, former Assistant Secretary of Defense for International Security Affairs; Lt. Gen. Douglas E. Lute, former US Ambassador to NATO; and Dov S. Zakheim, former Under Secretary of Defense (Comptroller) and Chief Financial Officer for the Department of Defense.

Gen. Wesley K. Clark

Chairman and CEO of Wesley K. Clark & Associates & Board Director, Atlantic Council; former Supreme Allied Commander Europe of NATO

Amb. Paula J. Dobriansky, Ph.D.

Senior Fellow at Harvard University JFK Belfer Center for Science & International Affairs; Board Director, Atlantic Council; former Under Secretary of State for Global Affairs (2001-2009)

Gen. James L. Jones

President, Jones Group International and Executive Chairman Emeritus, Atlantic Council; former National Security Advisor to the President of the United States

Franklin D. Kramer

Distinguished Fellow & Board Director, Atlantic Council; former US Assistant Secretary of Defense

Lt. Gen. Douglas E. Lute

CEO, Cambridge Global Advisors & Board Director, Atlantic Council; former US Permanent Representative to NATO

Dov S. Zakheim

Senior Advisor, Center for Strategic and International Studies; Senior Fellow, CNA Corporation; Board Director, Atlantic Council; former US Under Secretary of Defense

Explore the journal

Within the Atlantic Council’s longstanding commitment to strengthening the transatlantic relationship, the Atlantic Council Turkey Program conducts research, provides thought leadership, and offers a platform for strategic dialogue between the US, Turkey, and NATO allies to address the region’s toughest challenges and explore opportunities, including in the fields of energy, business & trade, technology, defense, and security.

Learn more

The post Navigating change: US-Turkish defense relations in 2026 appeared first on Atlantic Council.

The interview was conducted on February 18, 2026 and has been lightly edited for style.

DJ: Recent developments in Syria appear to have removed a long-standing elephant in the room in US–Turkish relations. Washington and Ankara now seem aligned on preserving Syria’s territorial integrity and on the primacy of a centralized government in Damascus under President Ahmed al-Sharaa’s leadership. How do you assess this convergence, and what does it signal for the future of US–Turkish security cooperation?

Oktay: It is true that Türkiye and the United States have converged in recent years on a number of foreign policy issues. This convergence is visible not only in Syria, but also in efforts to end the war in Ukraine, support a durable framework in Gaza, and encouraging progress in the Azerbaijan-Armenia peace process, among other areas. This convergence is for the establishment of sustainable peace and stability in our region. Our region is tired of conflicts and war. The issues in our region should be solved through dialogue and not through armed clashes and war.

In Syria, Türkiye has been supporting the unity and territorial integrity of this country since the very beginning. Now both Türkiye and the United States support Syria’s territorial integrity and unity and recognize the importance of a centralized and effective government in Damascus. A united, stable, inclusive, and prosperous Syria is, first and foremost, in the interest of the Syrian people. It is also in the interest of the broader region.

This convergence reflects a realistic reading of regional dynamics and a mutual understanding that sustainable solutions require regional actors and inclusive diplomacy.

It is the right time to reinforce the positive momentum in Türkiye–US relations to a resilient, future-oriented, principled relationship, grounded in mutual respect and strategic responsibility.

DJ: Do you see this more constructive atmosphere on Syria translating into movement on bilateral defense ties? In your view, what should both sides do to enhance the defense portfolio? And to follow up, what are the odds of Türkiye’s eventual return to the F-35 program in the near to medium term?

Oktay: Defense cooperation should be viewed in the wider context of the overall relationship. One of the main drivers of a more constructive atmosphere has been the direct and cordial dialogue between President [Recep Tayyip] Erdoğan and President [Donald] Trump. Strong engagement at the leadership level has generated momentum across multiple areas of cooperation.

Economically, our bilateral trade volume is approaching $40 billion, and we share the objective of reaching $100 billion. Major items—such as Turkish airline companies’ aircraft purchases, long-term LNG [liquefied natural gas] arrangements, and potential future cooperation in civil nuclear energy—can further deepen our economic ties.

In this spirit, defense cooperation should mirror the positive trajectory in our bilateral relations, as well as the growing convergence on regional policy issues. For this reason, it is important to overcome the existing restrictions affecting Türkiye in the defense industry domain. Restrictions between allies are, by definition, inconsistent with the spirit of alliance and partnership.

At present, there are efforts at the governmental level in both countries to identify a workable path forward, including on the question of Türkiye’s access to the F-35 program. In February, as the Foreign Affairs Committee of the Turkish Grand National Assembly, we visited Washington, DC, and held constructive discussions with our counterparts in both the Senate and the House of Representatives. We conveyed our view that it is neither coherent nor sustainable to maintain such restrictions among partners and allies. We hope to see tangible progress at the congressional level to strengthen defense industry cooperation.

DJ: Türkiye’s defense industry has undergone a remarkable transformation over the past decade. Where do you see Turkish defense industrial capabilities today, and what do they represent for both Türkiye and the NATO Alliance? Looking ahead, what should be Ankara’s strategic priorities in this domain?

Oktay: Türkiye’s defense industry has achieved significant and sustained progress over the past two decades. During this period, we have transitioned from an import-procurement model toward a high-volume domestic design and production model, with a growing export dimension.

The share of local and national production in the defense industry has increased from around 20 percent to more than 80 percent, and we expect this rate to reach 85 percent in the near future.

Today, Türkiye is producing manned and unmanned fighter aircraft, such as the Kaan and Kızılelma jets, warships, armored vehicles, missiles, and rockets, as well as advanced sensors and related systems. At the same time, Türkiye is increasingly localizing critical electronic subsystems, including avionics, data links, communications, and mission computers, as well as smart munitions. Defense exports have now surpassed $10 billion annually. Turkish defense industry exports and cooperation cover 185 countries covering all continents, including such NATO members as the US, UK, Spain, and Italy.

In summary, Türkiye has become an important global producer of advanced defense technologies. These capabilities—both in production scale and technological innovation—represent a valuable contribution to NATO’s collective security, and particularly to European security. In this context, the inclusion of Türkiye in European defense industry initiatives is essential in order for both NATO and Europe to fully benefit from Türkiye’s achievements in this field.

DJ: The KAAN fighter program is widely viewed as a cornerstone of Türkiye’s future force structure. What vision do you associate with KAAN, both in terms of operational capabilities and Türkiye’s broader ambitions for defense cooperation and access to new defense markets?

Oktay: KAAN is among the most advanced fifth-generation fighter projects currently under development. It reflects core fifth-generation design requirements such as low observability, sensor fusion, and network-enabled operational concepts.

KAAN will represent a significant capability enhancement for the Turkish Air Force and will strengthen NATO’s southeastern flank. In addition, the program is a major driver of innovation for Türkiye’s broader aerospace ecosystem, with spillover effects across engineering, production, and advanced systems integration.

A number of countries have expressed interest in acquiring or co-producing KAAN. Last year, an agreement for forty-eight KAANaircraft was signed with Indonesia, and several other countries remain in close contact with Türkiye regarding potential cooperation.

DJ: The next NATO summit will be hosted in Ankara. What does this mean symbolically and strategically for the Alliance and for Türkiye? How do you assess Türkiye’s role within NATO today—and NATO’s importance for Türkiye?

Oktay: We look forward to hosting NATO’s next summit in Ankara on July 7–8, 2026. The summit will be an important opportunity to review progress in implementing the Hague commitments and to take decisions that further strengthen NATO’s deterrence and defense posture.

As the war in Ukraine has heightened Europe’s security concerns and uncertainty is affecting transatlantic relations, the Ankara Summit will be a critical meeting. Key issues will be discussed, and major decisions will be taken on the future direction of the Alliance.

Türkiye has always played, and continues to play, a vital role in the security of the entire Euro-Atlantic region. Türkiye holds NATO’s second-largest army and remains among the top contributors to NATO operations and missions, supporting both the Alliance’s southeastern and eastern flanks. We have already exceeded the 2-percent benchmark in defense spending, and we remain committed to further strengthening our contributions.

As we are committed to the security of our allies, we likewise expect them to be fully committed to Türkiye’s security and defense.

DJ: Türkiye’s influence across the Turkic world has grown, particularly through the Organization of Turkic States. How would you characterize Ankara’s strategic vision in this space, and what does the geopolitical horizon suggest about Türkiye’s long-term role across this geography?

Oktay: Türkiye has deep historical and cultural ties across the Turkic world. The Organization of Turkic States (OTS) is today the principal political framework for multilateral cooperation in this space. It reflects a shared vision to deepen integration and promote regional peace, stability, and prosperity. The OTS also functions as a catalyst for stronger regional ownership, and with the establishment of multiple sub-institutions, it is evolving rapidly into a more structured and specialized organization.

In parallel, the Parliamentary Assembly of Turkic States (TÜRKPA) serves as the main platform for strengthening parliamentary cooperation among Turkic states and supporting broader integration efforts. At the parliamentary level, we have also developed a mechanism for bringing together the Foreign Relations Committees of the Parliaments of Turkic States. The first such meeting took place in Azerbaijan, and the second meeting was held in Istanbul last year. 

Through these institutions—along with strong bilateral relations—Türkiye is expanding cultural, political, and economic cooperation and coordination among Turkic states, with the objective of promoting peace and prosperity across Central Asia and the Caucasus.Bottom of Form

Fuat Oktay is the Chairman of the Foreign Affairs Commission of the Grand National Assembly of the Republic of Türkiye. He served as the last Undersecretary of the Prime Ministry between 2016 and 2018. In the first cabinet of the Presidential Government System, he served as Türkiye’s first Vice President between 2018 and 2023.

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Within the Atlantic Council’s longstanding commitment to strengthening the transatlantic relationship, the Atlantic Council Turkey Program conducts research, provides thought leadership, and offers a platform for strategic dialogue between the US, Turkey, and NATO allies to address the region’s toughest challenges and explore opportunities, including in the fields of energy, business & trade, technology, defense, and security.

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For years, Turkey has backed the Tripoli-based Government of National Unity (GNU), led by Abdulhamid al-Dbeibah, which is recognized by the United Nations as Libya’s legitimate authority. Egypt and the United Arab Emirates, on the other hand, have long supported the eastern faction, the Libyan National Army (LNA), led by warlord and former CIA asset Khalifa Haftar. Interestingly, Turkey and the Tobruk-based LNA have entered a chapter of significant engagement after being sworn enemies for much of the last decade.

Turkey, for its part, seeks to expand influence over the entirety of Libya for economic and geopolitical gains, wanting to gain access to Libya’s vast oils fields in the eastern zone and aiming to impose its stance in an ongoing maritime dispute with Greece and Egypt over the Eastern Mediterranean, where both countries claim maritime territory. Meanwhile, Haftar and his sons seek recognition from regional powers such as Turkey to legitimize the family’s rule and become the de facto leadership of Libya.

Why this matters

These developments represent a significant shift in domestic and regional dynamics. Domestically, it strengthens Haftar’s LNA as it vies for that prime governing role. The LNA is contending for greater international recognition than the GNU, and a buy-in from a powerful actor like Turkey would surely tip the scales, granting the LNA a level of international legitimacy that could surpass that of the GNU.

The international community (as expressed through the UN) sees the GNU as the legitimate force, but will have to come to terms with Dbeibah’s weakened political hand. Dbeibah himself is well aware of the stakes involved, and while publicly he has endorsed what he sees as Turkey’s “backing of Libya’s stability,” it would be naïve to think he welcomes such efforts. Additionally, it will embolden the Haftar family to continue pursuing an aggressive push for regional integration under its command, potentially leading to de facto unification, albeit under leadership with an abysmal human rights record and dubious allegiance to the West.

Why the LNA welcomes Turkey’s support

In 2019, when Haftar launched his military offensive to gain control over Tripoli, the capital city, Turkish President Recep Tayyip Erdoğan sent military support to the GNU, including troops, ships, drones and advisers, for its defense, signaling Turkey’s strong commitment to the Western-backed government. Today, however, Turkey’s goal of repositioning itself regionally spurred a strategic cost-benefit calculus. Isolated after attempting to become a regional hegemon, Turkey has sought to reestablish itself in the region through strategic reengagement with countries like Egypt, Saudi Arabia, and the UAE.

For its part, the LNA stands to benefit considerably from Ankara’s strategic repositioning. First, a potential defense partnership between the LNA and Turkey is quickly taking shape, and it stands to deliver substantial benefits to the Haftar family. In April 2025, Saddam Haftar, the son of Khalifa and deputy commander-in-chief of the Libyan Ground Forces, met Turkey’s general chief of staff, Selçuk Bayraktaroğlu, to discuss a mutually beneficial defense agreement which would include joint military training, capacity building, information sharing, and the procurement of weapons and unmanned aerial vehicles (UAVs). Earlier that month, Saddam Haftar paid an official visit to Ankara, marking a new chapter in relations between the nation and the Libyan faction. A subsequent visit by a military delegation from Libya’s eastern forces to Turkey confirmed that this shift is underway, and soldiers from Haftar’s LNA have recently begun training at bases in Turkey, as forces associated with the government in Tripoli have done beginning of  2020.

Secondly, Ankara is looking to deepen its energy ties by investing in gas exploration over disputed water with Libya’s eastern faction. In 2019, Ankara signed an exploratory agreement with Libya’s western faction in Tripoli, but the agreement failed to take off due to eastern opposition. Today, Libya’s eastern powerbrokers look poised to sign it—if, that is, they are granted oversight control over the outputs, after complaining for multiple years of being excluded from key revenue streams and leadership opportunities. If signed, the explorations could provide significant financial benefits to Libya’s eastern area, which suffers from recurring fuel shortages due to its lack of refining capacity. It would also help boost Haftar’s legitimacy by aiding him with key supplies for the local population under his control, strengthening his position both domestically and internationally. 

Third, a rapprochement with Ankara would give the Haftars valuable leverage with Russia and Turkey, enabling them to extract greater concessions from both nations. The Haftars have long been supported by the Russians, especially since their Tripoli offensive in 2019; in turn, they’ve allowed Russian Africa Corps troops to run wild in parts of the country, furthering Russia’s footprint on the continent. While Russia once held greater leverage over the Haftars, this dynamic shifted after the fall of the Assad regime in Syria in January 2025, which prompted Moscow to withdraw its military equipment there and seek new military footholds in Libya. Now, with the Haftar family having the upper hand, the family can try to leverage this renewed position of strength to expand its alliances without fearing repercussions from Russia, Turkey’s long-standing rival in the region. It also can hope to exact concessions from both parties, extracting both economic and military benefits which would help consolidate domestic authority.

Implications for the Eastern Mediterranean

The engagement between Libya’s eastern faction and Turkey will likely have ripple effects across the region. First, it could sour the relationship between Egypt and Turkey over the disputed maritime zone agreements. Currently, Egypt rejects the maritime zone set between Ankara and Tripoli, considering them an infringement of Egyptian maritime sovereignty as they cut across water lines. Egyptian President Abdel Fattah al-Sisi has made it abundantly clear he will reject any association agreement between Libya and Turkey, potentially reigniting tensions after their historic 2023 rapprochement. Egypt claims that any oil exploration will infringe on its territorial seas, denouncing them as an infringement of international law. Such tensions would have enormous consequences for the Mediterranean region writ large.

Second, Haftar, could use any growing tension between Egypt and Turkey to extract greater concessions for himself by playing Ankara against Cairo. By publicly signaling deference to Egyptian authority while quietly advancing his ties with Turkey, Haftar stands to emerge stronger, consolidating his family’s hold on power and potentially paving the way for unifying Libyan territory under their control.

Karim Mezran is director of the North Africa Initiative and resident senior fellow with the Rafik Hariri Center and Middle East Programs at the Atlantic Council.

Alissa Pavia is a nonresident senior fellow at the Rafik Hariri Center and Middle East Programs at the Atlantic Council.

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Within the Atlantic Council’s longstanding commitment to strengthening the transatlantic relationship, the Atlantic Council Turkey Program conducts research, provides thought leadership, and offers a platform for strategic dialogue between the US, Turkey, and NATO allies to address the region’s toughest challenges and explore opportunities, including in the fields of energy, business & trade, technology, defense, and security.

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Russia’s invasion of Ukraine disproved this view, revealing how mass missile and drone salvos can quickly overwhelm limited interceptor supplies and unready command structures. The threat is not about somebody else’s war. When as many as two dozen Russian unmanned aerial vehicles entered Polish airspace on September 10, 2025, NATO allies responded by scrambling one of the most sophisticated tactical defensive contingents in the world. Italian airborne early warning and control aircraft, German Patriot air and missile defense systems, Polish F-16s, fifth-generation Dutch F-35s, and a Belgian A330 Multi Role Tanker Transport aircraft were all brought forth to track and engage the drones. The imbalance between the overall price tags of the offensive and defensive packages clashing in the aerial engagement was gargantuan. More importantly, Russia could pursue similar concepts of operations in a NATO showdown—whereas Europe’s air defenses would experience wear and tear quickly in a high-operational-tempo scenario.

While Europe debates between urgent gap filling and long-term industrial autonomy amid the drone wall talks, Turkey has taken a different path. The Steel Dome initiative demonstrates Ankara’s early understanding that air defense requires integrated, scalable, and mass-produced systems on rapid timelines.

Air defense as a strategic imperative after Europe’s post-Cold War illusion

During the Cold War, NATO treated air defense as a foundational mission. This paradigm eroded after 1991 as threat perceptions faded. For more than three decades after the Cold War, Europe operated under the egregiously naive assumption that peer-level air and missile threats had receded into history. That illusion collapsed with Russia’s full-scale invasion of Ukraine, which reintroduced ballistic missiles, cruise missiles, combat aviation, and mass drone attacks as central tools of interstate warfare. Moreover, the Twelve-Day War between Iran and Israel in June 2025 cemented the new air threat picture. The new conflict trends have forced Europe to confront a long-neglected reality: without a coherent, layered air and missile defense, control of the air cannot be assumed and nations cannot stay safe.

Russia fields two missile types that matter most to European defense: the 500-kilometer range, ground-launched 9M723 Iskander and the air-launched, medium-range Kh-47M2 Kinzhal. Ukrainian intelligence assesses combined annual production at roughly 840 to 1,020 missiles, higher than earlier

estimates. The ballistic and aeroballistic missiles are backed by large salvos of cruise missiles and Shahed drones—the latter marks more than five thousand kamikaze assets raining overwhelming damage onto Ukraine in a given month.

Europe’s defense relies mainly on the US Patriot and the Franco-Italian SAMP/T antimissile systems, both dependent on costly interceptors priced at around $2 million to $4 million each—often far more expensive than the missiles they are meant to defeat. Production is the choke point. Patriot interceptor output across the United States, Japan, and Germany might rise from about 850 today to 1,130 by 2027, and possibly to 1,470 by 2029. Even then, global demand means Europe might receive only a fraction of the output, and combat experience shows two or three interceptors are often needed per incoming missile. Output of the alternative, Aster 30 interceptors for SAMP/T, is projected at only 230 to 270 annually for ballistic missile defense, and their performance in Ukraine has lagged that of Patriots, implying higher interceptor consumption. Compounding the problem, Russia and Iran have been producing large numbers of long-range drones that can saturate defenses, increasing the odds that ballistic missiles penetrate targets. Cheaper, mass-produced systems might eventually counter drones, and lasers could one day address ballistic threats—but neither solution will arrive in time to close the imminent missile defense gap.

Europe’s current air defense posture remains uneven. High-end fighter fleets and a mix of European, US, and Israeli missile systems exist, but warfighting prowess lags behind capability. Interceptor stockpiles are insufficient for sustained high-intensity conflict, production timelines are slow, and short-range air defense gaps leave European forces exposed to the kind of kamikaze drone warfare now routine in Ukraine. These weaknesses are as much industrial as military. The response has revealed a strategic divide between two conceptual camps: the “gap fillers” and the “autonomists.” Gap fillers, as defined in this paper, favor rapid procurement of proven, off-the-shelf systems, primarily from the United States and Israel—predominantly the Arrow-3, Patriot, NASAMS, and Barak systems—to close urgent gaps. In contrast, autonomists, led by France, argue for long-term European autonomy through indigenous systems, even at the cost of slower fielding. This tension defines current debates over air defense initiatives and reinforces Europe’s continued reliance on US-made systems at the upper tier. Meanwhile, Turkey, a sui generis European NATO nation with its national defense technological and industrial base, has an alternative path: the Steel Dome.

Europe’s strategic air defense gaps and Turkey’s Steel Dome architecture

Turkey’s Steel Dome represents a critical leap in framing air defense as a national, system-of-systems architecture rather than a collection of stand-alone platforms. The Russian S-400, therefore, will need to be left out in the cold as a stand-alone weapon in Turkish military capabilities.

Designed as an integrated and layered air and missile defense construct, the Steel Dome aims to address threats across short-, medium-, and long-range engagement envelopes and all endoatmospheric altitude segments, while preserving operational sovereignty through indigenous development. The system-of-defensive system has been endorsed at the highest levels of defense decision-making and support for it continues rising as additional components reach operational status. In late August 2025, Turkey crossed a critical threshold in its pursuit of strategic autonomy in air defense with the first operational delivery of the components for the indigenous Steel Dome air defense system. The delivery coincided with the expansion of military electronics company Aselsan’s industrial base, reflecting Ankara’s view of defense production as a pillar of sovereignty. In November 2025, Turkey’s defense industrial base took a significant step forward with the signing of contracts valued at approximately $6.5 billion to procure a broad range of systems for the Steel Dome.

At the force-employment level, the Steel Dome integrates point and area air defense assets with longer-range interceptors into a unified command-and-control framework. Close-in defense is provided by antiaircraft artillery and very short-range systems optimized for counter-UAS (unmanned aircraft system) and low-altitude cruise missile threats. The Hisar family forms the short- and medium-range surface-to-air missile layer, while the Siper system anchors the long-range air and missile defense mission, extending coverage against high-performance aircraft and missile threats. An artificial intelligence (AI)-assisted command-and-control architecture fuses sensors, shooters, and electronic warfare elements into a unified air picture, compressing decision timelines and enabling commanders to operate in a dynamic, contested airspace. In an era defined by unmanned systems and saturation salvos, this coherence is as decisive as kinetic action. The strategic significance of Steel Dome lies less in individual interceptors than in its integration logic. By fusing sensors, effectors, and command elements into a single air picture and prioritizing serial production under national control, Turkey is building an air defense posture designed for sustained competition rather than episodic procurement. In other words, Steel Dome epitomizes the Turkish leadership’s strategic autonomy agenda. The most critical lesson of Ukraine is not merely about the quantities of missiles or radars, but about strategic coherence. Air defense is no longer a procurement problem to be managed in peacetime cycles. Turkey has already grasped the bitter truth and made its choice to act rapidly and decisively through the Steel Dome initiative—a response Turkey’s European allies should study. The Steel Dome initiative also serves industrial and geopolitical purposes. It is intended to reduce dependence on foreign air defense systems while positioning Turkey as a supplier to states facing similar threat environments. The emphasis on modularity and scalability suggests an export-oriented mindset, enabling partners to buy into the architecture incrementally rather than commit to a single, rigid system.

Conclusion

Europe’s current air defense dilemma is defined by scarcity and sequencing. Interceptors are expensive, production is slow, and operational experience shows that quantity alone does not translate into resilience. The deeper vulnerability lies in fragmentation: multiple systems, limited stockpiles, and insufficient integration across sensors, shooters, and command layers. As long as air defense remains divided between national stopgaps and Alliance bottlenecks, Europe will struggle to convert capability into credible deterrence.

Turkey’s Steel Dome offers a contrasting defense industrial policy. By building a layered, integrated architecture under national coordination from the outset, Ankara has prioritized coherence over perfection and sustainability over symbolic capability or overpriced foreign sales. The emphasis on systems integration, domestic production, and serial scalability is key to the Turkish government. In an era in which airspace is increasingly contested by mass and speed, the strategic advantage revolves around a defense that can endure, adapt, and sustain in highly attritional and prolonged wars.

Dr. Can Kasapoglu is a non-resident senior fellow at Hudson Institute. Dr. Kasapoglu holds a Ph.D. from the Turkish War College and an M.Sci. degree from the Turkish Military Academy. Previously he was an Eisenhower Fellow at the NATO Defense College in Rome and held a visiting research post at the NATO Cyber Center of Excellence in Tallinn.

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Within the Atlantic Council’s longstanding commitment to strengthening the transatlantic relationship, the Atlantic Council Turkey Program conducts research, provides thought leadership, and offers a platform for strategic dialogue between the US, Turkey, and NATO allies to address the region’s toughest challenges and explore opportunities, including in the fields of energy, business & trade, technology, defense, and security.

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Forward Defense leads the Atlantic Council’s US and global defense programming, developing actionable recommendations for the United States and its allies and partners to compete, innovate, and navigate the rapidly evolving character of warfare. Through its work on US defense policy and force design, the military applications of advanced technology, space security, strategic deterrence, and defense industrial revitalization, it informs the strategies, policies, and capabilities that the United States will need to deter, and, if necessary, prevail in major-power conflict.

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The United States faces a pivotal moment in the post-New Strategic Arms Reduction Treaty (New START) strategic environment. Almost fifty years of forward progress on nuclear arms control culminated with the treaty’s signing in 2010. While it was largely effective in managing US-Russian strategic nuclear competition, New START expired in February 2026 after existing as a hollow shell since Russia’s unilateral “suspension” in February 2023. Over the past fifteen years, other long-standing treaties have unraveled, little has taken their place, and remaining treaty frameworks face uncertainty. Experts debate whether arms control remains a viable approach or is dead, almost dead, or not quite dead yet.¹

The central question for the United States is how to balance cooperation and competition in this moment. There are open debates about how the United States should change its strategic posture in the wake of new geopolitical realities. There are also deep concerns about the lack of guardrails and an unconstrained arms race. Despite recent erosions of the global arms control framework, the logic and purpose of formal arms control treaties remain valid, particularly in the present moment. Far from obsolete, formal arms control measures offer a durable and applicable tool for US management of great-power nuclear competition even amid deep political mistrust.  

Who’s to blame?

Two notes of caution should be stated up front. Much of the blame for the current geopolitical situation can and should be attributed to the absence of constructive partners in Moscow and Beijing. Russia’s undermining of the existing treaty-based order, its maximalist negotiating posture, and its obstinate unwillingness to constructively engage have all undermined existing arms control frameworks. China, meanwhile, has continued to reject engagement, even as it undertakes a rapid and opaque expansion of its nuclear forces.² Over the last few decades, Russia and China have also explicitly rejected US offers of the restraint they sought on issues such as missile defense, conventional forces in Europe, conventional long-range strike, counterspace, and cyber.³

But blame can also be placed on the arms control and disarmament community, both within the United States and globally, which has sidelined itself by tying its approaches and proposals to the disarmament project as a whole, thereby delinking its agenda from historical approaches to strategic stability and the hard realities of the security environment. Much of its institutional knowledge and perspective regarding practical arms control via negotiation, ratification, implementation, and verification has vanished.⁴ Its public proposals, meanwhile, have resulted in little follow-through.⁵ It continues to push ideas that lack US bipartisan understanding or consensus.⁶ It has grown unaligned with the needs of the deterrence community and the realities of the security environment.⁷ It has lost the interest of the other side of the negotiating table.⁸ It has spent time and energy finalizing agreements or making statements that are quickly ignored or broken.⁹ It has searched for low-hanging fruit that does not exist.¹⁰ It has failed to cultivate a strong voice in the military services or the Department of Defense.

This implies the need for a new, more brass-tacks approach to arms control—one grounded in security realities and one that can be pursued either in partnership with or in the absence of viable partners.

Distinguishing the substantive from aspirational and performative

In considering arms control approaches, most analyses focus on format, contrasting the pros and cons of legally binding treaties with other mechanisms (e.g., politically binding agreements, transparency measures, or norms). While these form a natural pairing, a more helpful contemporary contrast lies in distinguishing between substantive, aspirational, and performative arms control proposals. Loose conceptions of the three are as follows.   

Substantive: The function of substantive arms control proposals is to create leverage and consensus through formal processes such as interagency negotiations around a proximate or impending national security goal. While interests and approaches must be negotiated, there is typically recognition of hard security challenges best managed through selective cooperation amid broader competition. Defense officials are integral to this process. Goals are seen as achievable in the short term.¹¹ Leverage is created in negotiations between internal stakeholders in the process. Outside the negotiations, external measures can be taken to demonstrate that negotiating is beneficial.    

Aspirational: The function of aspirational arms control proposals is to create leverage by setting high standards or goals that other states will be pressured to meet. Interests and approaches might differ sharply, but there are believed to be shared positions on conceptual or normative desires on overarching concepts such as strategic stability, transparency, or risk reduction. Goals are typically ambitious and longer term. Leverage is created by creating consensus or coalitions of the willing, which can depict non-participants as non-adherents to proper ethical or moral standards.  

Performative: The function of performative arms control proposals is to create leverage through virtue signaling, scoring points on the international stage, or casting blame on others. Other actors’ interests and approaches might be largely irrelevant, as there is little expectation of needing to move toward an actual agreement via the more challenging processes of negotiation, verification, or enforcement. In many cases, leverage is unnecessary; the statement or display’s end goal in changing the discourse on the topic or the social reality.  

Debates about the agreement’s form, while interesting, are less important than those about its function or purpose.¹² Treaty-based arms control can be aspirational or performative, just as political statements can be substantive.¹³ Categorization can also change over time: For example, a substantive proposal made at a particular time might become more aspirational or performative as geopolitical circumstances change.¹⁴ Arms control’s overemphasis on form creates major problems when it comes to articulating the function of arms control proposals in the national security space. As former arms control negotiator Linton Brooks wrote presciently in 2020, “The commonest form of stupidity is forgetting what one is trying to accomplish.”¹⁵

Hard security realities need practical solutions

Arguments against aspirational and performative approaches at this moment are simple. Russia and China have shown they do not share US aspirations regarding arms control and disarmament concepts such as risk reduction, escalation avoidance, and strategic stability.¹⁶ There are no longer moments of shared aspirational interests as seen in past US-Soviet and US-Russian statements on strategic stability.¹⁷ China views formal arms control as a “trick” and has likewise been unwilling to engage with US proposals on risk reduction.¹⁸ Moscow and Beijing see value in creating risks, manipulating escalation, and fostering instabilities to further their revisionist aims in Europe and Asia.¹⁹ Allied or nonaligned countries that might share US aspirations have shown little willingness to pressure Moscow and Beijing to engage. Also, there is simply no time for performative approaches given geopolitical realities. Showmanship and virtue signaling are acceptable when they influence internal conversations or when others are doing the concrete work of negotiating, implementing, and maintaining substantive agreements. Absent this influence, and given rapid erosion, there is little value gained in appearances for international and domestic audiences.  

In contrast, there are many arguments for a more substantive approach to arms control. Thought and energy in the field need to be devoted to substantive work to repair and rebuild from the decay of the last fifteen years. Otherwise, remaining agreements on nonproliferation, chemical weapons, biological weapons, and outer space will be next to disappear after New START’s expiration.²⁰ Communities focused on arms control need to reconnect practical solutions and hard security realities. There is a need to rebuild a US consensus, both between the legislative and executive branches and within the US interagency (particularly in the defense and deterrence community). There is a need to ground proposals in negotiability, in terms of what the United States wants and what it is willing to include in talks. There is a need to rebuild or repair the arms control landscape in a stable and durable way to manage the emerging challenges in the strategic nuclear landscape.²¹ Finally, this must be done in a way that allows the United States to meet its deterrence and security requirements as they continue to evolve in a two-peer, multipolar, and multidomain environment.²²

Key elements of a US-Russia agreement

Substantive arms control has a clear function and purpose in managing the next decade of anticipated multipolar nuclear modernization after New START’s expiration. The trick is coming up with a substantive proposal that is durable enough to withstand partisan domestic politics and international ups and downs, flexible enough to allow for adaptation and technological surprise, and concrete enough to be grounds for detailed conversations. Key boxes must be checked in the US system regarding Russian so-called novel systems and Russia’s nonstrategic nuclear weapons.²³ How the boxes are ultimately checked will be open to negotiation between the parties. The proposal must also have buy-in from the deterrence and defense communities on both sides as well as regional offices dealing with US-Russian relations, requiring time, energy, patience, and expertise. Expectations should be managed accordingly. The needs for durability, concreteness, and interagency buy-in suggest a legally binding treaty approach, and flexibility and managed expectations suggest limited aims. 

With China’s participation unlikely, a follow-on US-Russia agreement designed to manage bilateral strategic nuclear competition over the next five to ten years makes sense. Such a substantive agreement with Russia will require discarding many of the aspirational or performative preconditions both sides stated earlier in the verbal jockeying about what should be in a New START follow-on agreement.²⁴ The focus should instead be on the key challenge of managing US-Russia nuclear competition while the United States responds to China’s nuclear buildup. The main purpose of a US-Russia agreement would be to avoid wasteful or costly bilateral misperceptions through a legally binding mechanism that consists of data exchanges, notifications, inspections, and implementation body meetings.

The key elements of a substantive post-New START agreement are all realistic and achievable.

• With this larger purpose in mind, hard US-Russia central limits—the likely key negotiating stumbling block—are either wholly unnecessary or can be set safely higher than New START limits. Again, the key goal is to have the flexibility in a bilateral agreement to respond to Chinese nuclear force expansion.
• Regarding implementation provisions, New START’s text could be updated to include Russian strategic-range nuclear systems alongside intercontinental ballistic missiles, submarine-launched ballistic missiles, and heavy bombers. 
• Data exchanges and notifications can be expanded to exchange information on total nuclear arsenals. 
• Inspections at warhead storage facilities can be added to confirm the accuracy of the declared data.  
• The treaty could be set for five years, with a further five-year extension, to take a bilateral treaty to a point at which the United States needs to make harder decisions about where to go next in its strategic modernization program vis-à-vis China. 
• Unilateral withdrawal clauses could be built into the treaty, with the United States’ clause tied to Chinese nuclear expansion and Russia’s tied to US missile defense expansion. 

The United States could propose a substantive, concrete framework of such a treaty relatively easily. Its purpose can be clearly articulated to public audiences and internal US stakeholders as a reasonable adaptation to modern realities. It does not raise the stakes too high for potential Russian engagement. It would be built mainly on the legal textual foundation of a successful legacy agreement. It would check the box on congressional interest in Russian nuclear systems of concern unaddressed by New START and begin gathering information on total warhead numbers. It would sidestep the major potential criticism by leaving the United States able to respond to China. It would set the framing and terms of the forthcoming “interregnum debate,” over where arms control is headed now that New START has formally expired. It would serve as a useful capacity-building exercise for both Congress and intergovernmental experts to relearn the process of treaty negotiation, ratification, implementation, and verification. It could serve as a bridge to a future point at which reductions are possible or more parties are willing to substantively engage. 

To encourage Chinese participation, the United States could couple this substantive bilateral treaty proposal with a multilateral treaty proposal including the five permanent nations of the United Nations (P5). Because such a negotiation would involve states with divergent force levels and limited shared experiences, it would require a trade-off between the depth and scope of the multilateral agreement, essentially trading broader engagement for deeper implementation. In this construct, the United States, the United Kingdom, and France could jointly propose a P3 agreement to Russia and China on a simple premise: information sharing regarding nuclear holdings and limited reciprocal access. Russia has already gone much further with the United States under existing frameworks and has repeatedly called for the inclusion of the United Kingdom and France—conditions that this proposal would satisfy. China would be isolated as the remaining holdout. While China will ultimately decide to engage based on its own assessment of risks and benefits, such an approach would clarify for the broader international community where the principal obstacle to progress lies. 

Former senior arms control negotiator Paul Warnke wrote in 1986, “One of the real problems in arms control is that neither side needs a deal.”²⁵ Having articulated these substantive proposals clearly, the United States should proceed with putting its own strategic and regional deterrence houses in order. If Russia and China do not engage, the United States should not chase them. There is no silver bullet that will magically turn Vladimir Putin’s Russia or Xi Jinping’s China into willing negotiating partners. The United States should instead focus on the best alternative to a negotiated agreement (what negotiations literature calls a BATNA), working to improve its own position and weaken Russia and China’s positions.²⁶ This structure—a bilateral proposal, a multilateral proposal, and a BATNA proposal—is a more holistic negotiating approach than searching for trade space or bargaining chips to create and then negotiate away.   

The merits of “old school” arms control 

Admittedly, this is an old school approach to a rapidly evolving problem set. There is a strong reliance on past mechanisms such as negotiations, interagency implementation, and data analysis, and a historical coupling of concrete, detailed cooperative agreements with continued strategic competition. There are no illusions about what these agreements can achieve or what geopolitical trends they can stop in their tracks. This will leave many in search of new approaches to arms control unsatisfied. There are no specific carveouts for emerging technologies like artificial intelligence or fast-moving issues like Golden Dome. There is no call for new, more intrusive, or more technology-dependent verification measures. This is because searches for new aspirational or performative approaches over the last fifteen years—aimed at going lower in numbers of launchers or warheads, capturing a wide range of new and emerging threats, and looping in more countries—have not proven fruitful. In pursuing these searches, time has run out for many agreements. The lack of results has validated that legally binding arms control might again be necessary.  

As Brooks wrote in 2020, “International agreements are only impossible until they aren’t.”²⁷ The present moment demands an approach that is substantive, flexible, and reactive enough to respond to the two-peer challenge posed by Putin’s Russia and Xi’s China. What has been articulated here—a bilateral treaty proposal with Russia, a multilateral P5 proposal, and a simultaneous US modernization in the absence of cooperation—might not gain near-term acceptance in Moscow and Beijing, but it offers a concrete and coherent US arms control strategy in the post-New START era. It also serves as a rallying point within the arms control and disarmament communities to begin thinking more substantively about which proposals and negotiating positions meet the present moment, encouraging a shift from aspirational or performative rhetoric to practical negotiability. Without substantive focus, aspirational and performative proposals will continue to dominate the discourse and the community will continue to lose relevance in the broader national security debate. 

This issue brief is part of the Scowcroft Center for Strategy and This issue brief is part of the Scowcroft Center for Strategy and Security’s Great nuclear debate series, a curated anthology of perspectives on arms control, force sizing, and missile defense from leading experts.

Michael Albertson is deputy director of the Center for Global Security Research at Lawrence Livermore National Laboratory. Prior to his current position, he worked in the federal government in a wide variety of Russia, deterrence, and arms control-related portfolios for the Department of Defense, the State Department, and the National Security Council staff. His work on Russian strategic nuclear arms control issues included implementation and compliance of the Intermediate-Range Nuclear Forces Treaty and New START and participation in the negotiation and ratification of the New START Treaty. 

The views expressed here are the personal views of the author and should not be attributed to his employer or any of its sponsors. 

Forward Defense leads the Atlantic Council’s US and global defense programming, developing actionable recommendations for the United States and its allies and partners to compete, innovate, and navigate the rapidly evolving character of warfare. Through its work on US defense policy and force design, the military applications of advanced technology, space security, strategic deterrence, and defense industrial revitalization, it informs the strategies, policies, and capabilities that the United States will need to deter, and, if necessary, prevail in major-power conflict.

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Electricity demand in the United States is growing rapidly, driven primarily by data centers and electrification. But the buildout of new transmission wires to deliver power from generator to end user has stalled. Expanding and modernizing the US grid is essential to meet surging electricity demand while keeping energy affordable and reliable.

To achieve these goals, however, utilities, policymakers, regulators, and other stakeholders will have to overcome four major barriers to transmission development: slow and fragmented permitting processes involving dozens of federal and state agencies; the high cost of rebuilding decades-old infrastructure; siloed utility planning that prevents regional coordination and cost-sharing; and supply chain constraints on key energy materials.

Recent Department of Energy initiatives, Federal Energy Regulatory Commission rulemakings, executive actions, and legislative efforts have made some progress to enable transmission expansion, but much more work is needed. This report outlines what actions utilities, policymakers, and regulators can take to achieve the following: proactive, long-term, coordinated system planning across regions; streamlined permitting with clear deadlines and more effective community engagement; the deployment of advanced transmission technologies like advanced conductors and dynamic line ratings; the implementation of energy efficiency and demand response programs; the development of innovative financing tools; and the diversification of supply chains for critical materials.

These actions comprise a comprehensive strategy to expand and modernize US transmission infrastructure that can yield multiples in savings over time, making grid expansion central to achieving an affordable, reliable, and sustainable energy system.

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Since the adoption of the National Energy and Mining Policy in 2017, Turkey has executed a paradigm shift in its natural gas supply architecture, transitioning from a rigid, pipeline-dependent importer to a flexible, diversified regional energy actor. This transformation has been underpinned by a strategic diversification of import infrastructure from exclusive reliance on pipelines to an aggressive expansion of liquefied natural gas (LNG) regasification capacity.

A central pillar of this strategy has been the deployment of floating storage and regasification units (FSRUs), which have allowed Turkey to rapidly scale its daily entry capacity beyond peak winter demand levels. By 2025, the country’s regasification capacity had increased approximately fivefold to 150 million cubic meters (mcm), compared to pre-2016 levels of 37 mcm. This infrastructure redundancy is not merely a security buffer; it is a calculated commercial instrument designed to foster competition between incumbent pipeline suppliers—primarily Russia and Iran—and the global LNG market.

This enhanced flexibility has fundamentally altered Turkey’s negotiating position. State-owned operator BOTAŞ has successfully created a position to substitute Russian or Iranian molecules with flexible LNG sources based on more market-based pricing mechanisms instead of long-term oil-indexed prices. The historical reliance on oil-indexed pricing is being systematically dismantled in favor of hybrid formulas (blending Dutch TTF, oil indexation, and, more recently, Henry Hub-indexed contracts with US majors).

Furthermore, this diversification strategy and the rationale for it have transcended domestic security of supply, evolving into a commercial offensive aimed at Southeastern Europe. Through the commissioning of the Saros FSRU and the expansion of the Silivri underground storage facility, Turkey has physically integrated its national gas grid with the Balkan markets, enabling gas exports to Bulgaria, Hungary, Romania, and Moldova. Combined with the phased development of the Sakarya gas field in the Black Sea, which creates a domestic production field projected to meet significant domestic demand by 2028, Turkey is effectively repositioning itself from a transit corridor to a pivotal gas trading hub at the intersection of European and Asian markets.

This report provides an exhaustive analysis of the execution of this strategy from 2016 to 2025. It examines the granular details of infrastructure investments, the commercial restructuring of the contract portfolio, the technical and economic development of the Sakarya gas field, and the geopolitical implications of Turkey’s emergence as a gas exporter to Europe.

1. Introduction: The strategic imperative for diversification

The structural transformation of the Turkish natural gas market over the last decade is rooted in a response to the geopolitical and commercial vulnerabilities that characterized the country’s energy landscape in the early twenty-first century. Historically, Turkey imported nearly 99 percent of its natural gas, with the vast majority being delivered via long-distance pipelines from Russia (Blue Stream, Trans-Balkan, and, later, TurkStream), Iran (Tabriz-Ankara), and Azerbaijan (Baku-Tbilisi-Erzurum).

These supplies were governed by rigid long-term “take-or-pay” contracts, typically spanning twenty to twenty-five years. Pricing was predominantly indexed to high-sulfur fuel oil and gas oil prices, with a lag of six to nine months. This structure exposed the Turkish economy to two distinct risks.

• Commercial exposure: During periods of elevated oil prices, gas import costs surged irrespective of underlying gas market fundamentals, placing pressure on the current account balance and BOTAŞ’s balance sheet.
• Supply security: Reliance on technically volatile flows from Iran, which frequently suffered pressure drops during peak winter demand, and politically sensitive flows from Russia left the Turkish grid susceptible to supply shocks. Disputes between Russia and Ukraine (in 2006 and 2009) and recurring technical failures in the Iranian system almost every winter underscored the fragility of a pipeline-centric model.

Turkey’s strategic inflection point emerged in the 2016–2017 period. Facing expiring legacy contracts and a volatile geopolitical environment, the Ministry of Energy and Natural Resources initiated a doctrine of “localization and diversification.” The objective was threefold: to maximize the use of domestic resources (renewables and, later, Black Sea gas), diversify import sources to reduce dependence on any single supplier to below 50 percent, and invest in infrastructure that provides optionality (i.e. the physical ability to switch suppliers based on price and availability).

2. Infrastructure Investment: The expansion of regasification capacity (2016–2025)

The cornerstone of Turkey’s diversification strategy has been the rapid development of LNG entry capacity. Unlike pipelines, which take year to construct, are capital intensive and geopolitically complex, LNG terminals—particularly FSRUs—offer speed and flexibility. Between 2016 and 2025, Turkey transformed its coastal infrastructure to ensure that daily gasification capacity exceeds peak winter consumption, theoretically allowing the country to meet its entire annual gas demand via LNG if necessary. However, practically speaking, because peak demand is exceeding 300 mcm/day in the coldest days of the winter, LNG terminals can roughly cover half of the country’s total demand or act as last resort supplier for entire household demand in case of serious flows via pipelines.

2.1 Onshore terminal modernization

Marmara Ereğlisi LNG terminal (BOTAŞ)

Commissioned in 1994, the Marmara Ereğlisi terminal is the backbone of LNG supply for the high-consumption industrial zones of Thrace and Istanbul. Operational for decades, the terminal has seen continuous investment since 2016 to upgrade its send-out capacity and storage.

• Operational capacity: in 2024, the terminal’s daily send-out capacity reached approximately 37 mcm.
• Storage capacity: 255,000 cubic meters across three tanks.
• Strategic role: located on the northern coast of the Sea of Marmara, it provides baseload stability to the region that accounts for the country’s highest industrial electricity and gas consumption.

Aliağa LNG terminal (private)

Located in Izmir, and operated by a private company.

• Operational capacity: recent investments have pushed its daily send-out capacity to 40 mcm.
• Storage capacity: high-capacity storage tanks totaling 280,000 cubic meters.
• Strategic role: supplying the Aegean region’s gas-fired power plants and industrial zones.

2.2 The strategic pivot to FSRUs

The most distinct shift in post-2016 policy was the adoption of FSRUs. These vessels provided a solution to land constraints and permitting delays, allowing Turkey to bring new capacity online in record time.

Etki Liman FSRU (private)

Commissioned in December 2016 in Aliağa, Izmir, Etki Liman was Turkey’s first FSRU project, and which demonstrated the viability of the technology.

• Capacity: daily send-out capacity of 28 mcm.
• Significance: its rapid deployment immediately following the 2015–2016 geopolitical tensions with Russia was a signal of Turkey’s intent to diversify rapidly.

Ertuğrul Gazi FSRU (BOTAŞ)

In a move toward asset ownership rather than leasing, BOTAŞ commissioned the Ertuğrul Gazi in 2021. Stationed at the Dörtyol terminal in Hatay, near the Syrian border, this vessel is critical for the energy security of southern and southeastern Anatolia.

• Investment: constructed by Hyundai Heavy Industries in South Korea for an estimated cost of $225 million.
• Storage capacity: 170,000 cubic meters and a daily regasification capacity of 28 mcm.
• Strategic role: by injecting gas into the southern transmission lines, the Ertuğrul Gazi mitigates the risks associated with the erratic flow of the Iran-Turkey pipeline, which historically suffers from pressure drops during winter. It also supplies heavy industry in the Iskenderun Bay area.

Saros FSRU (BOTAŞ)

Operational since early 2023, the Saros FSRU located in the Gulf of Saros (in the northwest Aegean Sea) is the most geostrategically significant addition to the fleet.

• Location: its position allows gas to be injected into the Thrace region without the navigational constraints of the Dardanelles and Bosphorus Straits or the need to traverse the entire Turkish grid from east to west.
• Capacity: daily send-out capacity of 28 mcm.
• Export enabler: Crucially, the Saros terminal is located near the interconnection points with the Greek and Bulgarian grids. This proximity makes it the physical cornerstone of Turkey’s gas export deals to the Balkans. It allows LNG cargoes arriving from the United States or other exporters to be regasified and piped directly into the Trans-Balkan Pipeline (in reverse flow) or the interconnector with Bulgaria.

Future fleet expansion

Looking toward 2035, the Ministry of Energy has articulated plans to expand the FSRU fleet to five active units. This expansion strategy includes a novel operational concept: deploying FSRUs abroad. Negotiations have been reported regarding the deployment of a Turkish FSRU to Egypt or Morocco to manage seasonal demand imbalances, effectively positioning BOTAŞ as a regional infrastructure service provider.

2.3 Underground storage as a balancing mechanism

Complementing the LNG intake is the expansion of underground storage (UGS), which is essential for managing the seasonality of supply and demand balances and storing gas during periods of low spot prices (summer) for use during peak demand (winter).

• Silivri UGS: expanded to a capacity of 4.6 billion cubic meters (bcm) with a daily withdrawal capacity of 75 mcm.
• Tuz Gölü (Salt Lake) UGS: currently undergoing expansion to reach 5.4 bcm by 2028, with a withdrawal capacity of 40 mcm per day.

Combined impact: by 2028, Turkey aims to have storage capacity equivalent to 20 percent of its annual consumption, aligning with European Union benchmarks for supply security.

3. Domestic production: The Sakarya gas field investment

While LNG provided import flexibility, the discovery of the Sakarya gas field in the western Black Sea in 2020 fundamentally altered Turkey’s long-term energy balance. With reserves initially estimated at 540 bcm and revised upward to 710 bcm following further appraisals (including the Çaycuma-1 discovery), this field represents the largest industrial project in the country’s history.

3.1 Technical development and phases

The development of the Sakarya field is an ultra-deepwater project (at a depth of more than 2,000 meters), requiring cutting-edge engineering and massive capital investment.

• Phase 1 (operational)
  • Status: the first gas was delivered to the Filyos Natural Gas Processing Facility in April 2023.Investment: phase 1 involved the drilling of ten wells and the construction of subsea production systems and a 170-kilometer (km) pipeline to shore. The initial production plateau was set at 10 mcm per day (approximately 3.5 bcm per year (bcm/y)).
  • Current output: as of 2024–2025, daily production has ramped up to approximately 7–9.5 mcm per day.
• Phase 2 (under construction)
  • Scope: this phase targets the drilling of approximately 26–30 additional wells.Contracting: A consortium including Saipem, SLB (Schlumberger), and Subsea7 was awarded the Engineering, Procurement, Construction and Installment (EPCI) contract for the second phase. Saipem’s share of the contract alone is valued at approximately $1.5 billion, covering the installation of 170 km of pipelines and subsurface systems.
  • Target: the objective is to raise production to 40 mcm per day (approximately 15 bcm/y) by 2028.
• Floating production unit (FPU)
  • To process the increased volumes from the wider basin, Turkey has purchased an FPU from China. This vessel, expected to be operational by 2027–2028, will process raw gas offshore before transmission, functioning similarly to the Osman Gazi platform but on a larger scale.

3.2 Economic and strategic impact

• Import substitution: At its plateau production of 15 bcm/y, the Sakarya field will cover approximately 25–30 percent of Turkey’s current domestic consumption. This will directly reduce the annual gas import bill by billions of dollars, improving the chronic current account deficit.
• Contractual leverage: The certainty of 15 bcm of domestic gas, which is expected to reach plateau levels in 2028 from the Sakarya field, and with high probability, increase as exploration continues in other parts of the Black Sea, provides BOTAŞ with a “walk-away” option in negotiations. It forces suppliers such as Gazprom and NIOC to offer competitive pricing or risk losing market share permanently.

The development of the Sakarya field is an ultra-deepwater project (at a depth of more than 2,000 meters), requiring cutting-edge engineering and massive capital investment.

• Phase 1 (operational)
  • Status: the first gas was delivered to the Filyos Natural Gas Processing Facility in April 2023.Investment: phase 1 involved the drilling of ten wells and the construction of subsea production systems and a 170-kilometer (km) pipeline to shore. The initial production plateau was set at 10 mcm per day (approximately 3.5 bcm per year (bcm/y)).
  • Current output: as of 2024–2025, daily production has ramped up to approximately 7–9.5 mcm per day.

• Phase 2 (under construction)
  • Scope: this phase targets the drilling of approximately 26–30 additional wells. Contracting: A consortium including Saipem, SLB (Schlumberger), and Subsea7 was awarded the Engineering, Procurement, Construction and Installation (EPCI) contract for the second phase. Saipem’s share of the contract alone is valued at approximately $1.5 billion, covering the installation of 170 km of pipelines and subsurface systems.
  • Target: the objective is to raise production to 40 mcm per day (approximately 15 bcm/y) by 2028.
• Floating production unit (FPU)
  • To process the increased volumes from the wider basin, Turkey has purchased an FPU from China. This vessel, expected to be operational by 2027–2028, will process raw gas offshore before transmission, functioning similarly to the Osman Gazi platform but on a larger scale.

4. Import dynamics: LNG vs. pipeline gas competition

The interplay between pipeline gas and LNG in the Turkish market is driven by contract expirations, relative price dynamics, and the strategic objective to minimize geopolitical risk.

4.1 Evolution of the import mix

Historically, pipeline gas accounted for 85–90 percent of Turkish imports. Since 2016, however, investments in LNG infrastructure have allowed LNG to capture significant market share. In 2024 and 2025, LNG imports periodically accounted for 25 percent of total demand, with spot LNG playing a crucial balancing role. The share of Russian gas in Turkey’s total supply has declined structurally, dropping from more than 50 percent in 2018 to less than 40 percent in 2025. This reduction is not accidental; it is the result of BOTAŞ declining to renew expiring pipeline contracts at full volumes, choosing instead to fill the gap with spot LNG and medium-term contracts.

4.2 The expiry wall and contract strategy

The period between 2021 and 2026 constitutes a “contract expiry wall” during which the majority of Turkey’s legacy long-term contracts (totaling more than 40 bcm) come up for renewal.

• Russia (Gazprom): Contracts for the Blue Stream and the western route (transferred to TurkStream) faced expiration. In late 2024 and early 2025, BOTAŞ extended these contracts—but, crucially, only for one year. This broke the tradition of twenty-year lock-in contract structures, allowing Turkey to reassess market conditions annually.
• Iran (NIOC): The long-term contract for 9.6 bcm/y expires in 2026. Negotiations are ongoing, but Turkey’s increased LNG capacity significantly weakens Iran’s bargaining power, which was previously bolstered by the lack of alternative supply routes to eastern Anatolia.

Thanks to LNG infrastructure, BOTAŞ has an upper hand in negotiations vis-à-vis Russia and Iran.

4.3 US LNG and the hedging strategy

The United States has emerged as a critical partner in Turkey’s diversification of gas supplies. In 2025, the United States became Turkey’s fourth-largest gas supplier, providing 5.5 bcm. Upstream investment: To manage the price volatility of US LNG (indexed to the Henry Hub benchmark), Turkey has announced plans to invest directly in US upstream assets. Turkish Petroleum (TPAO) is in talks with ExxonMobil and Chevron to acquire stakes in production fields. This acts as a physical hedge. If Henry Hub prices rise, the cost of LNG imports for BOTAŞ increases, but the revenue from TPAO’s US production assets also rises, neutralizing the fiscal impact on the Turkish state. This vertical integration strategy mimics the portfolio approach of global supermajors.

5. Commercial strategy: The new LNG portfolio and pricing

In 2024 and 2025, BOTAŞ executed an unprecedented wave of contracting, signing agreements totaling nearly 20 bcm/y of LNG supply. This portfolio is designed to be geographically diverse and commercially flexible.

5.1 Key LNG agreements (2024–2025)

The table below summarizes the major agreements signed or operationalized in this period, based on data from industry sources.

5.2 Evolution of pricing formulas

A critical element of these new contracts is a shift in pricing mechanisms.

• Legacy model (oil Indexation): Historically, contracts with Gazprom and Iran were 100-percent indexed to Brent crude and oil products (often with the price movements averaged over the past 3-6-9 months. This meant gas prices remained high even when global gas hub prices crashed, penalizing the Turkish economy.
• The hybrid transition: In contract renewals post-2021, particularly with Russia, Turkey successfully negotiated a shift to hybrid formulas. Current pipeline contracts often feature a split, such as 70 percent TTF (Dutch Title Transfer Facility) and 30-percent oil and linked. This links import costs more closely to the European spot market reality.
• The Henry Hub advantage: The deal with ExxonMobil and other US suppliers introduces Henry Hub indexation. Historically, Henry Hub prices (US domestic gas) have been significantly lower and less volatile than European (TTF) or Asian (JKM) benchmarks. By securing volumes linked to Henry Hub, BOTAŞ gained exposure to the structurally lower cost of US gas production, creating a potential for price arbitrage relative to European market prices.

6. From importer to regional hub: The export strategy

Turkey’s infrastructure buildout has created a capacity surplus. With more than 50 bcm of LNG entry capacity, 15 bcm of domestic production, and existing pipeline capacity, the total supply potential exceeds domestic demand (approximately 50–55 bcm). BOTAŞ is capitalizing on this surplus by positioning Turkey as a gas trading hub for Eastern Europe.

6.1 The “Turkish blend” concept

Actively seeking to decouple from Russian energy—Turkey has advanced a concept it describes as a “Turkish blend.” Gas entering the national grid from Azerbaijan and the United States, along with other LNG suppliers such as Oman, Qatar, Nigeria, Algeria, Australia, and Egypt etc., is comingled with gas from the Sakarya field. When BOTAŞ exports gas to Bulgaria or Hungary, the molecules are legally and chemically indistinguishable. This allows BOTAŞ to supply certain European markets that do not want to buy Russian molecules either direct or indirectly. This role as an aggregator and blender is central to the hub strategy.

6.2 Key export agreements

Since 2023, BOTAŞ has signed a series of historic export deals, leveraging the Saros FSRU by regasifying LNG volumes coming from multiple sources and the Trans-Balkan Pipeline (now operating in reverse flow, from Turkey to Europe).

• Bulgaria (Bulgargaz): A landmark thirteen-year agreement, signed in early 2023, grants Bulgargaz access to Turkish LNG terminals and the transmission grid, with a transfer volume of up to 1.5 bcm/y. This effectively breaks Gazprom’s monopoly on Bulgarian supply.
• Hungary (MVM): A groundbreaking deal made Hungary the first non-bordering country for Turkish exports. The initial volume was 275 mcm, with plans for significant expansion.
• Romania (OMV Petrom): An agreement to supply up to 4 mcm (approximately 1.5 bcm/y) via the Trans-Balkan Pipeline.
• Moldova: A contract to supply 2 mcm per day to help the country reduce its critical dependence on Russian gas supplied via Ukraine.

6.3 Political and commercial motivations

• Commercial: BOTAŞ is increasingly transforming from a national utility into a regional trader, capturing margins between its diversified import portfolio and European hub prices.
• Political: By becoming one of the energy security enablers for southeastern NATO allies (Bulgaria, Romania, and Hungary), Ankara significantly enhances its diplomatic leverage within the Alliance. It creates a mutual dependency that acts as a buffer against political friction in other areas. The United States actively supports this role, viewing Turkish FSRUs as a vector to displace Russian dominance in the Balkans.

7. Conclusion: Commercial and political implications

The period from 2016 to 2025 marks a phase of consolidation and maturation in Turkey’s gas market. The country has successfully mitigated its primary strategic weakness—energy dependence—through a capital-intensive but high-yield strategy of infrastructure expansion and resource diversification.

Commercial benefits

• Price arbitrage: access to gas indexed to multiple benchmarks including Henry Hub, TTF, and oil-indexed formulas allows BOTAŞ to manage its weighted average cost of gas (WACOG) more flexibly, shielding the domestic economy from single-market shocks.
• Trading revenue: the utilization of surplus capacity for exports creates a new revenue stream in hard currency, which is essential for BOTAŞ’s financial sustainability.

Political benefits

• Strategic autonomy: the ability to meet domestic demand without Russian pipelines (in a crisis scenario) removes the “energy weapon” from Russia’s diplomatic arsenal. Therefore LNG infrastructure and domestic gas production create important leverage.
• Regional influence: Turkey has embedded itself as an indispensable node in the European energy security architecture. The Turkish hub is no longer an aspiration but a physical reality defined by steel pipes, floating terminals, and binding contracts.

By 2028, with the Sakarya field likely at full production and five FSRUs in operation, Turkey could cease to be merely a bridge for energy and become a center of price formation—a true hub where the dynamics of Asian, European, and Middle Eastern gas markets intersect.

Eser Özdil is an energy fellow at the Atlantic Council Turkey Program & founder of Glocal Group Consulting, Investment & Trade. You can follow him on X at @eserozdil.

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Asfura’s narrow win 

Nasry “Tito” Asfura was sworn in as Honduras’ president on January 27, following one of the country’s most contentious electoral cycles in years. The former mayor of Tegucigalpa won the November 2025 general election with 40.27 percent of the vote, a margin of less than 1 percentage point over Salvador Nasralla, the Liberal Party candidate.

Mirroring the pro-business approach that characterized his tenure as mayor of the country’s capital from 2014 to 2022, when he advanced 1,142 infrastructure projects, Asfura won with a platform emphasizing job creation and legal certainty for businesses. With about 60 percent of Hondurans living in poverty and more than 38 percent in extreme poverty, economic concerns were the main issue for voters. Against this backdrop, Asfura’s “Vamos a Estar Bien [We Are Going to Be OK]” campaign emphasized attracting national and international investment and reducing red tape for starting businesses, while also reforming social services and fighting corruption.

Endorsed by President Donald Trump in the final hours of the campaign, Asfura entered office with a commitment to strengthen cooperation with the United States on shared priorities, one of the pillars of his so-called “Five-Star Vision.” He also campaigned on broader shifts in foreign and commercial policy, including cutting ties with China, rebuilding relations with Taiwan, and strengthening engagement with Israel. In the days leading up to his inauguration, Asfura traveled to Washington to meet with Secretary of State Marco Rubio, as well as to Israel to engage with President Isaac Herzog and Prime Minister Benjamin Netanyahu.

More broadly, the first month of Asfura’s presidency has signaled a sharp departure from his predecessor’s ideological orientation. While former President Xiomara Castro’s LIBRE party pursued a progressive social agenda, including alignment with left-leaning regional partners, Asfura’s National Party is more conservative. The changes in ideology and aligned partners will likely reshape the direction of domestic policy debates, whether concerning education, social spending, or health.

A congress tilted toward traditional parties 

In the November 2025 elections, Hondurans also elected all 128 members of the National Congress. In the new congress, Asfura’s National Party makes up the largest bloc with forty-nine seats, followed by the Liberal Party with forty-one and LIBRE with thirty-five. Smaller parties hold just three seats combined.

While no party holds an absolute majority of sixty-five seats, the National and Liberal Parties together control ninety, marking the legislature’s return to the more traditional two-party dynamic that dominated politics for decades prior to LIBRE’s 2021 victory. The legislature’s new makeup also marks a return to a more conservative agenda. The new configuration will generally allow the government to pass legislation without relying on LIBRE’s support, but negotiations between the National and Liberal Parties will still be essential. Tensions from the contested elections remain, with some legislators from the Liberal Party still demanding the verification of electoral results by independent or international entities. Differences over policy priorities and these lingering disputes could complicate efforts to move proposals forward. After such a contested election, translating campaign promises on the economy and social progress into tangible outcomes will be key for consolidating trust.

Early actions in office 

Asfura’s governing style became visible within his first hours in office. He was sworn in during an austere ceremony, with no international guests in attendance. In his inaugural address, he framed his presidency’s focus on fiscal efficiency by reducing the size of the state and highlighted infrastructure, education, and health as priority areas. Reporting afterward noted that the government plans to cut or merge twenty institutions to optimize resources. That framing carried into the president’s first policy actions. He closed the inauguration ceremony by signing three bills into law that reflected broader efforts to reallocate public resources and prioritize economic activity. These included authorizing the sale of the presidential plane, broadening the presence of the National Autonomous University by opening new campuses in eight additional national departments, and expanding the Temporary Import Regime. Through this last measure, 125 additional companies will benefit from the duty-free import of inputs used for export-oriented production. The government argued this will lower costs for exporters, improve national competitiveness, and generate approximately forty-seven thousand additional jobs. 

One day into the role, Asfura moved on health priorities, requesting that congress declare a national emergency to tackle surgical backlogs, which currently affect more than ten thousand patients, and to ensure the adequate supply and distribution of medicine.

On the international front, the administration initiated Honduras’ return to the World Bank’s International Centre for Settlement of Investment Disputes (ICSID), reversing the previous government’s 2024 withdrawal. This earlier decision came after investors in the Prospera special economic zone filed arbitration claims against the government following the National Congress’s 2022 attempt to repeal the 2013 Zones of Economic, Development, and Employment (ZEDE) law, which underpinned Prospera’s legal and operational framework. Castro’s move last year to withdraw from ICSID contributed to heightened investor concerns about legal certainty and access to dispute resolution mechanisms for companies operating in Honduras. Rejoining ICSID signals renewed adherence to international norms, an important first step toward attracting foreign capital and creating jobs.

Asfura’s early February meeting with Trump was another concrete step in advancing his foreign policy priorities. The Mar-a-Lago meeting reportedly focused on trade, investment, and security. In line with these priorities, Asfura has announced plans to pursue reciprocal trade negotiations with the United States to strengthen economic ties and attract investment. But the context has since shifted, with Trump now imposing global tariffs under Section 122 of the Trade Act of 1974 rather than under the International Emergency Economic Powers Act (IEEPA). The new legal justification could shift the objective of these engagements. Asfura is also one of a select few Latin American heads of state who will participate in the March 7 regional summit convened by Trump in Miami.

Opportunities ahead: How to turn early reforms into lasting gains 

Asfura’s first reforms have sent positive signals to different stakeholders, including local and international investors and the US administration. The follow-through work will now be critical. To deliver on campaign promises and achieve results, Asfura needs to consider structural reforms on trade, investment, and energy, leveraging Honduras’ early engagement with the Trump administration and the possibility of renewed ties with Taiwan.

1. Shape the economic agenda with the United States beyond tariffs

The United States is Honduras’ largest trading partner, accounting for roughly 37 percent of its total trade. With the Supreme Court’s IEEPA ruling, Honduran exports to the United States—primarily textiles, coffee, and agricultural products—will continue to benefit from preferential access under the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR). As Washington continues to advance and sign reciprocal trade frameworks with partners across the region, Honduras could have an opportunity to reframe the bilateral US trade agenda beyond tariffs, focusing more on customs and trade facilitation, as well as long-standing labor concerns. Locking in a reciprocal trade deal would help Honduras address investment fundamentals and better weather US domestic trade volatility.

Asfura and US Trade Representative (USTR) Jamieson Greer already met and announced their intent to “launch negotiations as soon as possible.” The Asfura administration should expect Greer to seek commitments in areas that the United States has previously identified as constraints on US economic engagement, including the following:

• Reducing trade barriers: Since February 2023, exporters of US poultry products and rice (and onions starting in 2024) must complete an annual registration process andapply for import permits for each shipment. The process requires engaging with multiple Honduran government agencies and navigating numerous administrative steps, which can increase costs and delay shipments. These guidelines were introduced without advance notification or a phase-in period. Reducing duplication and clarifying procedures will be key to opening opportunities for US exporters.  
• Improving labor standards and oversight: According to the US Bureau of Labor Statistics, Honduras made moderate progress in strengthening labor laws, especially those regarding child labor, in 2024 and 2025. Progress will likely remain slow because the relevant Honduran agencies lack both financial and human resources to effectively carry out their mandates, but it is important that the government continues advancing reforms. Demonstrating progress on freedom of association and collective bargaining, and guaranteeing acceptable working conditions and wages in priority sectors, will be important goalposts.
• Intellectual property (IP) enforcement: Honduras must reinforce the implementation of IP laws under CAFTA-DR, addressing concerns about the lack of border enforcement regarding the sale of counterfeit goods, online piracy, and cable signal piracy. Alignment and modernization of IP laws has issue in the new White House’s reciprocal trade frameworks with several partners in Latin America and the Caribbean (LAC).

With these priorities in mind, the government should start consultations with local private-sector actors and coordinate across relevant ministries to define commitments and ensure their timely implementation.

2. Explore targeted investment and trade deals with Taiwan

Until 2023, Honduras and Taiwan maintained a free trade agreement that was particularly important for Honduras’ shrimp sector, a key component of the country’s aquaculture industry. In 2022, for example, shrimp exports to Taiwan alone generated more than $105 million, accounting for roughly 30 percent of Honduras’ total shrimp exports, which represented the country’s fifth-largest export sector at the time.

As part of its new economic engagement with China, which followed the diplomatic switch from Taiwan in March 2023, Honduras sought to expand shrimp exports through the early harvest agreement. Producers hoped that access to China’s 1.4 billion consumers would increase demand. However, of the 250 containers initially projected for export, China purchased only one in 2024. At the same time, the loss of preferential access to Taiwan and the imposition of a 20-percent tariff led to a significant decline in export volumes to the sector’s main market, which fell to $25 million that same year, down from $51.7 million in 2023 and $105 million in 2022. It is safe to say that Honduran trade with China has been underwhelming.

Producers attempted to mitigate these losses by tapping into alternative destinations, including the European Union and Mexico. These markets, however, could only take in much smaller volumes at lower prices. As a result, total shrimp exports were 67 percent lower by 2025 compared to pre-diplomatic switch levels. This downturn also forced more than sixty companies, including two processing plants, to close, resulting in the loss of about fourteen thousand jobs.

Restoring relations with Taiwan could offer Honduras a pathway to rebuild the sector. Taiwan has a track record of providing targeted assistance and investment to its diplomatic partners, including support for aquaculture sectors in Fiji, Grenada, and Belize.

For Honduras, potential areas of support from Taiwan could include:

• aquaculture infrastructure, including processing facilities;
• technical cooperation programs to improve production and supply chain efficiency; and
• investment in complementary sectors such as transport logistics connecting key shrimp-producing departments, such as Choluteca and Valle, to major distribution hubs such as San Pedro Sula and Puerto Cortes, strengthening the sector’s competitiveness and export capacity.

Recently, Taiwanese business actors have expressed interest in restoring shrimp import levels to pre-2023 volumes. If Asfura moves forward with reestablishing relations with Taiwan, diplomatic engagements could be accompanied by trade missions that include representatives from the aquaculture sector. In parallel, consultations with producers and industry associations would help assess current production capacity and inform the design of a renewed trade framework supported by technical assistance and investment cooperation.

3. Reform the energy sector

During his Washington visit in late 2025, when he was still president-elect, Asfura emphasized the importance of attracting US capital into critical sectors such as energy. The cost and reliability of electricity are among the most significant constraints on Honduras’ investment climate. Energy reform should not be seen simply as a route to fiscal stabilization but as a key part of the country’s national competitiveness strategy.

The state-owned Empresa Nacional de Energía Eléctrica (ENEE) has been in financial and operational distress for years. As of early 2026, according to the new ENEE manager, ENEE carried an accumulated debt of more than $3 billion, including nearly $1 billion owed to private power generators. This high level of debt, combined with limited cash flow, has constrained the company’s ability to invest in critical improvements and maintenance of the energy sector.

Technical and non-technical losses in Honduras’ distribution system remain among the highest in Latin America, at roughly 40 percent. This means that more than one-third of generated electricity is either lost in transmission or goes unbilled. The country’s average industrial electricity tariff also ranks among the highest in Central America, directly undermining the competitiveness of its manufacturing and agro-industrial sectors.

To restore the sector’s stability, the government should work on a multi-layered strategy.

• Restructure ENEE’s debt while laying the groundwork for future growth and reforms: While debt restructuring is essential for short-term stabilization, long-term credibility will depend on institutional reform. Honduras should engage with multilateral banks and financial institutions to secure short-term financing and alleviate cash flow constraints. Prioritize clearing arrears with private generators to restore confidence and normalize commercial relationships. In parallel, ENEE’s new leadership should advance a restructuring of ENEE’s cash flow through transparent and competitive procurement processes. This would help ensure that future power purchases are contracted under market-based conditions that improve cost efficiency, reduce structural deficits, and avoid the accumulation of new payment arrears.
• Infrastructure investment for today: Upgrade generation and transmission systems to reduce losses and improve reliability. Public-private partnerships and international cooperation could support grid upgrades, including anti-theft measures such as automated meters. Other targeted projects, similar to the Inter-American Development Bank’s Remote Area Rural Electrification Program, could support efforts to ensure adequate supply in remote areas through mini-grids and solar systems. Investments in infrastructure will also be key if the country wants to attract data centers.
• Operational and governance reforms: To ensure reliable service and timely payments to generators, Honduras should strengthen billing and collection systems, enforce the legal framework to address non-payment and arrears, and improve ENEE’s operational capacity. In parallel, it should update existing laws to ensure the country’s regulatory framework is aligned with open and competitive market principles. Doing so would also strengthen energy-sector public institutions, provide legal certainty to investors, and establish predictable regulation that sends credible signals for long-term investment, while enabling lower electricity prices and security of supply. 
   

4. Address crime to improve investor confidence 

Honduras’ security environment remains a real, tangible constraint on investment, as noted by the 2024 update to the country guide published by the US Department of Commerce’s International Trade Administration. While homicide rates have declined from their peak earlier in the decade, the country still faces elevated levels of extortion, gang-related violence, and organized crime—all of which increase operating costs and deter both domestic and foreign investors. A 2022 World Bank “Country Private Sector Diagnostic” report also highlighted crime and insecurity as top obstacles for firms operating in Honduras. 

Asfura has signaled a tough-on-crime posture, but the approach must go beyond policing. International experience suggests that sustained reductions in crime require institutional reform in the justice system, professionalization of security forces, and investment in violence prevention programs. For investors, predictability matters as much as headline security gains: clear and enforceable property rights, transparent permitting, and judicial processes that function without corruption are all part of the security equation. 

The Honduran government should work with the United States to ensure that cooperation frameworks address both traditional security threats and the governance deficiencies that enable corruption and impunity. Strengthening the attorney general’s office and supporting anti-corruption institutions would reinforce the legal certainty message that Asfura’s early economic moves have tried to communicate.

Conclusion

Asfura has moved quickly to set the tone for four years in office. The early steps on fiscal discipline, trade openness, and alignment with Washington respond directly to Honduras’ most pressing economic realities. The expansion of the Temporary Import Regime, the move to rejoin ICSID, and the outreach to the Trump administration on trade, security, and broader cooperation are all positive signs. Turning these initial moves into lasting results will require technically sound reforms, particularly after a contested election. With favorable congressional alignment, international partners ready to engage, and a population eager for economic improvement, the administration has an opportunity to strengthen Honduras’ investment climate, support broader economic growth, and consolidate the country’s position as a reliable partner for Washington in the years ahead.

Staff

María Fernanda Bozmoski

Director, Impact and Operations and Lead for Central America

Adrienne Arsht Latin America Center

Central America

Staff

Isabella Palacios

Program Assistant

Adrienne Arsht Latin America Center

Central America Colombia

Memo to…

Nov 24, 2025

Memo to the Secretary of State: In the upcoming Honduran elections, democracy and US interests are at stake

By María Fernanda Bozmoski, Isabella Palacios, Jason Marczak

The upcoming general election in Honduras demands international attention—both because of the potential instability it could trigger and its implications for US economic interests.

Americas Central America

The Adrienne Arsht Latin America Center broadens understanding of regional transformations and delivers constructive, results-oriented solutions to inform how the public and private sectors can advance hemispheric prosperity.

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The post One month in, can Honduras’ new president put the country on the path to lasting economic gains? appeared first on Atlantic Council.

The Gulf region is at a pivotal moment as global power dynamics shift from unipolarity to a decentered system of regional powers. While the United States remains the only true global superpower, China and Russia are regional powers with limited global influence. This creates a unique opportunity for Gulf leaders to shape their own political, economic, and security agendas, prioritizing stability and development.

The states of the Gulf Cooperation Council (GCC) are leveraging interest-based partnerships, maintaining strategic ties with China and Russia while deepening defense and economic relationships with the United States. Recent agreements, such as the 2023 US-Bahrain Comprehensive Security Integration and Prosperity Agreement, highlight the Gulf’s preference for the predictability of a rules-based international order. Despite their illiberal domestic systems, GCC leaders value the stability and market access provided by Western-led governance.

De-escalation remains a key priority for the Gulf, as demonstrated by initiatives like Saudi Vision 2030, the Abraham Accords, and the India-Middle East-Europe Economic Corridor (IMEC). However, regional tensions since October 2023 have disrupted progress, emphasizing the need for external powers to support Gulf stability and development agendas. While the United States is seen as an essential partner, there is growing potential for deeper Gulf-European collaboration.

This moment of transition in the global order presents both challenges and opportunities for Gulf leaders, who are shaping their region’s future amidst great-power competition.

This issue brief is the result of a collaboration between the Atlantic Council’s Scowcroft Middle East Security Initiative and the Konrad-Adenauer-Stiftung Regional Programme Gulf States, which set the stage for a series of Track II discussions in Qatar, the United Arab Emirates, and Saudi Arabia on the state of play of great power competition in the Gulf with regional, US, and European experts and policymakers.

Fellow

Jonathan Fulton

Nonresident Senior Fellow

Rafik Hariri Center & Middle East programs Scowcroft Middle East Security Initiative

China Chinese

MENASource Jan 22, 2026

Wang Yi’s MENA tour was long on messaging, short on outcomes

By Jonathan Fulton

Wang worked to position China as a defender of free trade and a reliable partner for the Middle East region.

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MENASource Jun 3, 2025

India-Gulf relations are muted—but mobilizing

By Jonathan Fulton

The depth of Indian-Gulf relations creates a strong foundation for increased India-Middle East integration over the coming decades.

India Middle East

MENASource Sep 29, 2022

China in MENA: An EU Perspective

By Atlantic Council

Camille Lons joins us to discuss how Europeans and the EU see China as a rising global player in the geopolitics of the Middle East and North Africa.

China East Asia

The Scowcroft Middle East Security Initiative (SMESI) provides policymakers fresh insights into core US national security interests by leveraging its expertise, networks, and on-the-ground programs to develop unique and holistic assessments on the future of the most pressing strategic, political, and security challenges and opportunities in the Middle East. 

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The post The state of great power competition in the Gulf appeared first on Atlantic Council.

Carbon accounting has gained traction in recent years as the mechanism through which companies and countries can unlock competitive forces to drive innovation in decarbonization and energy availability. However, most emissions tracking today still occurs through a patchwork of carbon disclosure systems rather than through a true accounting framework. 

The limitations of today’s carbon disclosure systems are increasingly consequential as governments adopt trade and procurement policies that require accurate emissions data. For example, emerging carbon border tariff policies, such as the European Union’s mandatory Carbon Border Adjustment Mechanism (CBAM) that is aimed at encouraging trade in low-emissions products, require that each transaction be linked to a specific emissions footprint. Yet existing disclosure systems cannot consistently provide such granular and comparable information across borders or complex supply chains. To implement the tariffs, jurisdictions have resorted to simplified, partial accounting methods that cover only a narrow set of upstream, easy-to-measure products while excluding many downstream goods. This workaround, in turn, can create inadvertent deindustrializing effects and adds confusion and unnecessary compliance costs in the economy.

Market and policy developments suggest that there is an urgent need for a single, comprehensive, robust, and cost-effective carbon accounting system worldwide: one that identifies low-emissions production across all products and services and across all jurisdictions and consistently over time.

This issue brief proposes a concrete and achievable first step toward such a global carbon accounting system: for a group of proactive member countries in the intergovernmental Climate Club to launch a call for tender to select a single, robust, and cost-effective method for computing the carbon footprint of all products (and, by extension, companies) worldwide.

A common, trusted carbon accounting system would unlock several critical levers in the race to drive decarbonization while meeting global energy demand. It would enable finance to flow more efficiently toward high-impact, high-return decarbonization investments, allow governments to steer foreign trade and public procurement toward lower-emissions options, and support credible carbon labeling for customers seeking “greener” purchasing options.

Together, these mechanisms would accelerate decarbonization while strengthening economic security, energy resilience, and international competitiveness.

Vincent Aussilloux is an economist at the European Commission’s Directorate General for Trade. Just prior to his current position, he served as special adviser to the general commissioner of France Stratégie, a public think tank responsible for anticipating major challenges for the country, evaluating public policies, and informing and improving the quality of public debate. He served as the director of its economics department between 2014 and 2023. Aussilloux was also general rapporteur for the French National Productivity Council, a member of the cabinet of two ministers, and served in the Office of the Secretary of State for Foreign Trade and the Directorate General of the Treasury in France. He holds a doctorate in economics from the University of Montpellier.  

Yann Coatanlem is an economist and the president of Club Praxis, a multidisciplinary think tank that promotes the use of big data in policymaking, in particular in revamping the tax and welfare system. His work has won multiple awards, including the special prize of the political economy, statistics, and finance section of the Académie des sciences morales et politiques. He spent most of his research career at Citigroup as managing director and head of multiasset quantitative analysis. He is also a co-founder of GlassView—the inventors of Neuro-Powered Media^TM—and a member of the board of the Paris School of Economics. He co-authored Capitalism against Inequalities, with a postface from Nobel laureate Philippe Aghion, and was awarded the Prix Turgot and the Prix Louis Marin. He graduated from the École nationale supérieure d’informatique et de mathématiques appliquées and the École des hautes études commerciales de Paris. He is a recipient of the French National Order of Merit, the Gold Medal of La Renaissance Française, and the Médaille d’honneur des Conseillers du commerce extérieur. 

Karthik Ramanna is a professor of business and public policy at the University of Oxford’s Blavatnik School of Government and a fellow at St John’s College. He teaches at the Blavatnik School on managing organizations in polarized times, which led to his 2024 book, The Age of Outrage. He also serves as principal investigator and co-founder of the E-ledgers Institute, a nonprofit organization advancing rigorous greenhouse gas accounting practices. From 2023 to 2025, Ramanna was on partial public-service leave from Oxford to advise the US Public Company Accounting Oversight Board, an “auditor of auditors” in global markets. From 2016 to 2023, he was director of the school’s master of public policy program. Ramanna has also taught at the Harvard Business School in both the MBA and senior executive-education programs. His scholarship has won numerous awards, including the Journal of Accounting and Economics Best Paper Prize, the Harvard Business Review McKinsey Award for “groundbreaking management thinking,” and the international Case Centre’s prizes for “outstanding case-writing.” He has a doctorate from MIT’s Sloan School of Management.  

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Issue Brief Nov 19, 2025

Carbon markets and climate finance for Ukraine’s recovery

By Ievgeniia Kopytsia and Darka Harnyk

As COP30 unfolds, learn how Ukraine’s experience will influence climate finance mechanisms and drive sustainable recovery efforts.

Energy & Environment Geopolitics & Energy Security

Issue Brief Aug 11, 2025

Strategic energy realignment: Rethinking MDB policy for growth and global stability

By Samuel Buchan, Landon Derentz

Multilateral development banks (MDBs) have drifted from their original mission of maximizing economic growth. Instead, they prioritize climate-first lending that restricts hydrocarbon investments.

China Energy & Environment

The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.

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The post Standardizing carbon accounting worldwide with a single, robust, cost-effective system appeared first on Atlantic Council.

This is the seventh chapter in the Freedom and Prosperity Center’s 2026 Atlas, which analyzes the state of freedom and prosperity in ten countries. Drawing on our thirty-year dataset covering political, economic, and legal developments, this year’s Atlas is the evidence-based guide to better policy in 2026.

Evolution of freedom

The institutional development of the Philippines since the mid-1990s is characterized less by steady consolidation than by sharp swings in the quality of governance and rights. With almost every change in administration, the political climate shifts markedly, producing alternations between more liberal and more illiberal periods rather than a clear linear trend. This volatility is most pronounced in the sphere of politics, while legal and economic institutions tend to evolve more gradually over time. In a very literal sense, the effective scope of rights and freedoms in the Philippines has depended heavily on who happens to be president—a predictable consequence of a highly presidential system, modeled on that of the United States but operating in a context of weak parties and strong political families.

The Freedom Index captures these dynamics well, especially on the political front. In interpreting these patterns, it is important to keep in mind that several components rely on perception-based measures, so the resulting swings can sometimes amplify short-term, highly visible changes relative to slower-moving institutional features. In such a system, shifts in leadership style and rhetoric can rapidly alter perceptions of freedom even when formal rules and organizations remain largely intact.

The basic constitutional architecture has been remarkably stable since the mid-1990s. Elections are held regularly and, since the late 2000s, are administered with reasonably professional procedures and electronic counting. The dramatic swings in the political subindex therefore do not reflect repeated constitutional breakdowns. Instead, it captures how individual leaders use the leeway that this system gives them. In a system designed to concentrate power in the presidency, changes in the character and incentives of presidents—particularly the alternation between more populist or illiberal leaders and more conventional, institutionally minded ones—rather than changes in the formal rules, generate large movements in civil liberties and political rights. If one imagines a sequence of such contrasting presidencies, the resulting time series would look very much like the Philippine political subindex.

To understand why leadership matters so much in the Philippines, it is essential to understand how political power is organized below the level of formal institutions, particularly the central role of families in politics. Political parties exist, but they function less as programmatic organizations than as loose coalitions of clans. My own research shows that political power is deeply embedded in family networks formed through marriage and kinship. Politicians are disproportionately drawn from families that occupy central positions in these networks, and these family ties provide a crucial advantage in coordinating electoral alliances and sustaining clientelistic exchange. Because these alliances are personal rather than institutional, they must be continually renegotiated. While some dynastic ties persist across generations, much of the surrounding coalition is recomposed each electoral cycle, and once the incentives that hold it together weaken, it can unravel quickly. The public rupture between President Ferdinand Marcos Jr. and his former ally, Sara Duterte, is an extreme but revealing illustration of how personal these arrangements are and how little institutional discipline constrains politicians. As a result, leadership changes can produce sharp shifts in how power is exercised, even when the formal rules of the system remain unchanged.

This family‑based, coalition‑driven politics also helps explain why the Philippines can run elections that are, on paper, reasonably well administered yet still struggle with deep problems of clientelism and accountability. Since the introduction of electronic vote counting around 2010, classic forms of fraud such as ballot‑box stuffing have become much harder. The electoral commission and related institutions are increasingly able to do their jobs without formal interference, and the basic procedures of voting and counting are broadly respected. At the same time, competition within and between dynasties still centers around contingent exchange of jobs, money, and other private benefits. Vote buying is common, and access to public resources is tightly mediated by local brokers, barangay captains, and family heads. This clientelistic equilibrium does not necessarily reduce the formal quality of electoral administration, but it does limit the extent to which elections translate into programmatic policy or consistent protection of rights.

The most visible break in the political series occurs with the election of Rodrigo Duterte as president in 2016. The political subindex shows a sharp drop in the components measuring civil liberties, political rights, and legislative constraints on the executive—a pattern well documented in both journalistic accounts and academic research on the period. Duterte’s “war on drugs” involved large‑scale extrajudicial killings, often carried out by police or quasi‑official actors, and a deliberate strategy of targeting opponents and critics. Media outlets and individual journalists faced harassment, legal cases, and in some instances the withdrawal of broadcast licenses. These pressures are reflected in international press‑freedom assessments: In 2024, Reporters Without Borders ranked the Philippines 134th out of 180 countries in its World Press Freedom Index. At the same time, the Duterte presidency also illustrates how different aspects of the system can move in opposite directions. The election that brought him to power was broadly competitive and credibly run, and the electoral machinery continued to function, so the main tools at his disposal were repression and intimidation rather than the outright manipulation of elections that historically plagued Philippine politics.

The role of institutional checks and balances under these conditions is subtle. Congress in the Philippines does have real power, but in practice it is fragmented and undisciplined, because legislators are themselves embedded in family-based networks and can shift party allegiance easily. They can make and unmake presidents, but they rarely act as a coherent counterweight. The courts, by contrast, are relatively strong. The legal profession is well-trained; the bar system and judicial hierarchy closely follow US models in emphasizing judicial independence. This means that even during periods of political turmoil, formal judicial independence and the clarity of the law remain comparatively robust.

In this context, the decline in the judicial-independence component of the legal subindex around 2016 may partly reflect a misalignment between perception-based indicators and slower-moving institutional realities. Perception-based indicators understandably penalize a judiciary that failed to stop abuses like the drug war, but the core problem in the Philippines was not wholesale judicial capture or corruption. Rather, it was an aggressive president willing to push far beyond legal boundaries in a setting where courts lacked the capacity, speed, and enforcement power to impose meaningful constraints. While the judiciary undoubtedly failed to hold the executive to account, it remained formally independent. This distinction matters: judicial weakness can produce outcomes similar to capture in the short run, but it has very different implications for institutional resilience and the prospects for recovery over time.

An often-overlooked actor in this story is the military. The Philippine armed forces are modeled on the US military and, over time, have become increasingly professionalized and institutionalized. Since the end of the Marcos era, reforms emphasizing civilian supremacy, professional norms, and a clear chain of command have gradually reduced the military’s direct involvement in partisan politics. While the armed forces are not entirely insulated from political pressures, they are far more rule-bound and organizationally coherent than many civilian institutions in the country. It is telling that the military did not play a central operational role in the campaign of killings in Duterte’s drug war, which was instead carried out primarily by the police. This absence matters: It points to limits on the extent to which military power can be readily redirected for personal or partisan purposes, even under an aggressive and illiberal presidency. More broadly, the presence of a professional and institutionalized armed force helps explain why the Philippines can experience sharp swings in its political environment without the coups and sustained civil unrest that characterized the immediate post-Marcos era. In this sense, the military serves as one of several institutions that help the political system absorb even substantial shifts in leadership without collapsing.

The level of corruption in the Philippines appears anomalous when compared to its East and Southeast Asian neighbors, but this divergence is partly a function of the comparison itself. A more appropriate comparison set may be Latin America, given shared features of colonial history, legal traditions, and prolonged US influence on political and administrative institutions. Relative to Latin American countries, the Philippines looks far less exceptional, both in the overall prevalence of corruption and in the way it is organized. As in much of Latin America, corruption in the Philippines is highly personalized and fragmented rather than centralized and predictable. Securing favors or contracts often requires identifying the appropriate political or bureaucratic patron—sometimes a close associate or relative of a top public official—and repeatedly renegotiating terms as coalitions shift. Corruption is never desirable, but this particular structure makes it especially damaging: Instead of functioning as a single, if distortionary, informal tax, it generates pervasive uncertainty and forces firms and citizens to continually reinvest in relationships. This pattern of “inefficient corruption” is closely tied to family-based politics and helps explain why the Philippines has not converged toward the more rule-bound governance models observed elsewhere in East and Southeast Asia.

Informality shows a similar pattern. The Philippines diverges sharply from the East Asia and Pacific average, where informality has declined steadily since the early 2000s, but it aligns much more closely with Latin American trajectories. Informal vendors, markets, and small-scale enterprises remain a defining feature of economic life, reflecting slower progress in building the digital and administrative infrastructure that supports formalization. Only in recent years has the country introduced a national ID and expanded digital finance in ways that could encourage movement into the formal sector, and these changes have not yet fully filtered into the data. Government efforts to promote formalization have been most visible and enforceable in resource-extraction sectors, while progress in formalizing the everyday informality of urban and rural livelihoods has been slower and more uneven.

The economic subindex shows a more familiar pattern for a middle-income, globally integrated economy. Trade and investment freedom have gradually increased since the 1990s, reflecting tariff reductions and openness to foreign capital. At the same time, the property-rights component moves in ways that are not entirely intuitive from a domestic perspective. There is an improvement around the turn of the millennium—likely linked to decentralization and associated legal reforms—and then a later decline that seems more related to changes in the business environment and international perceptions than to any dramatic shift in land rights or enforcement. In practice, because property-rights indicators also respond to legal predictability and enforcement across the economy and not only specific administrative systems like land titling, it is possible for the indicator to move substantially even if the practical challenges of land titling and cadastral fragmentation remain.

The women’s economic freedom component is another area where the legalistic basis of many international indicators underestimates the Philippine reality. Measures based on formal law place the country at the regional average and show gradual improvement, as new legislation on issues such as workplace discrimination is adopted. Yet in terms of everyday economic decision-making, household bargaining power, and attitudes toward female autonomy, the Philippines looks much more like a developed country. Consequently, measures like the World Bank’s Women, Business and the Law Index on which the Freedom Index relies—based on de jure rules—likely understate women’s actual economic freedom. Putting these pieces together, the evolution of freedom in the Philippines since 1995 is best understood as the interaction of three forces. First, a stable but highly presidential constitutional order creates room for large swings in de facto civil liberties and political rights whenever a new leader takes office. Second, a legal system and military that are relatively professional and institutionalized prevent those swings from turning into outright authoritarian breakdown or civil war. Third, a bureaucracy and political system organized around families and clientelism generate persistent problems with corruption and informality and limit the extent to which legal and economic freedoms are translated into predictable, broad-based access to the state. The Freedom Index captures these tensions: Moderate and sometimes improving scores for legal and economic freedom sit alongside sharp, presidency-driven shifts in the political subindex, most dramatically during the Duterte years and, looking ahead, potentially again under Marcos Jr.

From freedom to prosperity

The Prosperity Index for the Philippines tells a more optimistic and smoother story than the Freedom Index. Despite political volatility, overall prosperity has risen steadily since the mid-1990s, with only the COVID-19 shock producing a clear dip. Income has grown and inequality has fallen over the past decade and a half, comparing favorably with several regional peers. In addition, there have been gradual improvements in health, education, and environmental outcomes. At the same time, access for minorities has lagged, and the gains in prosperity remain shaped by the same family-based and clientelistic structures that organize politics.

The evolution of real gross domestic product per capita describes the country’s growth experience: modest but sustained expansion, punctuated by a deeper contraction than many of its peers during the pandemic and a subsequent recovery. The distinctive feature of the Philippine growth model over this period is that much of the engine lies outside the country’s borders. Millions of Overseas Filipino Workers (OFWs) send remittances home, and these flows have grown dramatically. In many towns one can literally see remittances in the landscape: a cluster of simple houses and, in the middle, a large concrete home built with wages earned in Hong Kong, Saudi Arabia, or Italy. These external earnings have supported domestic consumption and smoothed shocks, helping to sustain the upward trend in income per capita even in the face of domestic political instability.

The COVID-19 period is an exception. Here the country suffered a sharper dip than experienced by many regional peers. The government struggled to translate expert advice into effective policy. Vaccine hesitancy was widespread, but unlike in some other countries, this skepticism had a rational basis: a major vaccine controversy in the years just before the COVID-19 pandemic had undermined trust, particularly in poorer communities. Combined with already low trust in government, this made it difficult to achieve high vaccination rates quickly. By contrast, some more authoritarian neighbors relied more heavily on mandates and enforcement, which reduced delays in vaccine rollout.

Just as income per capita reflects the scale of remittances, the inequality component captures their distributional consequences. The data show a relatively strong decline in inequality over the last decade and a half, and I think remittances are central to that story. The families who send workers abroad are not typically those at the very top of the income distribution; they are often lower-middle and working-class households who can finance migration through extended family networks. The jobs they obtain—construction, domestic work, caregiving—are not elite positions, but their wages are high relative to domestic opportunities. When these earnings flow back into sending communities, they raise living standards not only for migrants’ immediate families but, through informal sharing and lending, for neighbors and kin.

Remittances in the Philippines likely have measurable spillover effects through social networks: Households linked to migrants are more likely to change their economic behavior and sometimes their political attitudes. This mechanism helps explain why inequality measures improve so markedly relative to other countries. Growth driven by overseas workers is, almost by construction, growth from the bottom and middle, not primarily from capital owners or domestic elites. It is also gendered: Many OFWs are women working as nurses, caregivers, and domestic workers, which reinforces the earlier point that female economic opportunities have expanded even more than legal indicators suggest.

The health component presents a more mixed picture. For its income level, the Philippines has an impressive pool of medical professionals. Filipino doctors and nurses are highly trained and in demand abroad. The constraint is not talent so much as the systems that support it at home: infrastructure and supplies are uneven, and service delivery remains fragmented across local governments. Many facilities lack sufficient resources; operating rooms may lack adequate equipment, and local clinics are often without basic supplies. Despite the significantly higher cost of living in countries like the United States, where expenses can be two to three times higher, income disparities remain a major driver of outmigration, especially for nurses. In Metro Manila, private hospitals pay nurses as little as ₱12,000 a month (about US$203), while those in public hospitals make around ₱35,000 (roughly US$595). In comparison, nurses in the United States earn on average about US$6,417 a month. Decentralization reforms in the late 1990s devolved frontline health provision to municipalities and provinces. This helped bring services closer to remote communities, but also fragmented responsibility and made it difficult to implement consistent national strategies or large-scale efficiency improvements. The COVID-19 pandemic exposed these weaknesses clearly, as local governments struggled with logistics, data management, and public messaging. These realities are only imperfectly captured by the index, which focuses on aggregate outcomes such as life expectancy and mortality, but they help explain why the health component improves only gradually and takes a noticeable hit during the pandemic.

Education follows a similar pattern. Enrollment has expanded and average years of schooling have risen, producing an overall positive trend. Nonetheless, the data show less of a pandemic-related decline than I would have expected. Schools were closed for extended periods, and remote learning was constrained by patchy internet access and limited digital infrastructure. One possibility is that standard indicators based on attainment or enrollment miss much of the learning loss that resulted. In fact, available evidence suggests the country is suffering from acute learning poverty. According to a 2023 report, the share of children under ten unable to read and understand a simple text jumped from 69.5 percent in 2019 to 91 percent in 2021. That makes the Philippines one of the worst-performing countries in East Asia and the Pacific in terms of foundational reading skills. As with health, formal access is easier to measure than quality, and the Prosperity Index, by design, may not fully capture what happens inside classrooms.

The environmental component shows a marked improvement over the past two decades, largely driven by rising access to clean cooking technologies. Around the year 2000, only about 40 percent of the population used relatively clean fuels and stoves; today that figure is closer to 60 percent, which represents a substantial gain in terms of indoor air quality and associated health outcomes. Nevertheless, environmental challenges remain substantial outside those gains. Mismanaged waste is one of the most serious issues. Improperly disposed garbage and plastic refuse pollute waterways, worsen flood risk, and endanger coastal ecosystems. The burden of this waste problem falls heavily on poorer and coastal communities, where sanitation services are often limited or absent. By contrast, other variables captured by the index, such as industrial emissions, have seen comparatively little movement, largely because the Philippines is not a heavy industrial polluter compared with some of its East and Southeast Asian neighbors, so the main environmental challenges are not massive factory emissions but more localized problems linked to energy use, waste management, and resource extraction. The Philippines does not have the sort of racial cleavages that structure politics in some other societies, and it is overwhelmingly Catholic. The meaningful lines of difference are instead linguistic, regional, and between indigenous and nonindigenous populations, as well as between Christians and Muslims in Mindanao. Indigenous communities start from a very vulnerable baseline and tend to fare poorly across a wide range of outcomes; they are hit harder by shocks, such as COVID-19, and benefit less from growth. Muslim populations in conflict-affected areas face their own forms of exclusion. At the same time, women and many linguistic minorities have seen their opportunities improve, particularly as migration and remittance economies open new pathways. My assessment is that these offsetting trends—for some groups moving sharply up, for others stagnating or moving down—are producing a flat or slightly declining aggregate minority component in the Prosperity Index that does not fully reflect the underlying complexity.

The path forward

Economic growth in the Philippines has largely taken place in the absence of sustained political stability. The challenge now is to create conditions in which growth and political accountability reinforce one another, rather than evolve on separate tracks. Over the past three decades, the country has achieved steady gains in income, health, and education, even as its political environment has remained volatile. Living standards have improved for many households, supported by migration, remittances, and gradual human development gains, yet political rights and accountability continue to swing sharply with changes in leadership. This gap between rising prosperity and uneven freedom defines the task ahead: ensuring that economic progress deepens democratic accountability rather than reinforcing personalized and clientelistic politics.

A realistic path forward must therefore address both sides of this equation. Economic gains have expanded opportunity and resilience, but they have not consistently translated into predictable public services or stable protections of rights. Weak parties, personalized coalitions, and uneven bureaucratic capacity mean that improvements in welfare often flow through private networks rather than public systems. As a result, elections remain competitive, yet leadership changes can still produce large swings in governance outcomes. Closing the gap between prosperity and freedom will require not only stronger institutions, but changes in how political accountability operates on the ground.

A promising source of optimism lies with voters themselves. Our research during the 2016 and 2019 elections shows that citizens are not irreversibly locked into clientelistic modes of politics. Instead, how voters evaluate candidates is highly responsive to the information environment in which electoral choices are made—an especially important dynamic in a system with weak parties and personalized coalitions.

Using field experiments across multiple election cycles, my research shows that providing voters with clear, credible information about candidates’ policy positions and commitments can meaningfully change the basis of electoral choice. Better-informed voters are more likely to support candidates whose policy positions align with their own preferences and less likely to rely on clientelistic considerations such as gifts, favors, or personal ties. While these interventions do not dismantle family-based politics, they weaken its grip at the margin by shifting how candidates are evaluated.

Those marginal shifts matter. When voters reward policy alignment and performance—even imperfectly—they alter the incentives political elites face. This creates a pathway for strengthening democratic accountability without requiring rapid party institutionalization or the dismantling of entrenched family networks. In contexts like the Philippines, where parties are fluid and coalitions are personalized, information allows elections to function more effectively as tools of selection and discipline.

Information, of course, is not a substitute for institutions. Courts, professional bureaucracies, and an increasingly institutionalized military remain essential for preventing political volatility from turning into outright breakdown. But informed voters can complement these constraints by shaping incentives before leaders take office. When candidates expect voters to reward policy alignment and performance, the space for arbitrary or illiberal governance narrows.

In practice, making this mechanism effective requires concrete investments in the information environment. These need not be sweeping or expensive. Standardized disclosure of candidate positions and policy commitments, voter guides that compare candidates on salient local issues, and the dissemination of credible information through trusted intermediaries—such as civil society organizations, local media, schools, and religious institutions—can all improve how voters evaluate their choices. Importantly, information is most powerful when delivered early, before clientelistic exchanges dominate electoral campaigns.

Economic development can reinforce this process. Rising education levels, expanding digital access, and broader media reach increase voters’ capacity to process and act on political information. But without deliberate efforts to improve the quality and credibility of that information, prosperity risks reinforcing clientelism by expanding the resources available for private exchange rather than strengthening public accountability.

At the same time, accountability gains will be limited if improvements in governance remain highly dependent on individual officeholders. Even as household conditions improve, the delivery of public services continues to vary widely across localities. In many areas, progress in health, education, or infrastructure is still disrupted by leadership turnover rather than sustained by durable administrative systems.

Some local governments, however, demonstrate what is possible when incentives align around performance and accountability. Where administrative capacity, leadership, and voter expectations reinforce one another, targeted reforms—such as improvements in frontline health care, streamlined administrative procedures, and investments in school quality—have taken root. These cases remain limited in scale, but they demonstrate that accountability can emerge even within a personalized political system when performance is visible and rewarded.

Extending these gains requires supporting bureaucratic professionalism in practical ways: investing in data systems, standard operating procedures, and career incentives that emphasize reliability and service delivery; insulating frontline functions from political turnover; and reinforcing norms of performance evaluation that are legible to citizens. These do not require grand institutional overhauls, nor do they depend on wishful thinking that the country can immediately transition away from personalistic politics. Rather, they are precisely the kinds of changes that make service delivery more predictable and gain traction when they align with how citizens evaluate government performance.

The path forward, then, is not about wholesale constitutional change or institutional redesign. The Philippine political system already provides the formal mechanisms needed for accountability. What is required instead is a realignment of incentives within that system, so that economic progress translates more reliably into political accountability and the protection of rights. Strengthening the information environment and targeted investments in bureaucratic capacity can help ensure that economic growth and political accountability move together rather than on parallel tracks.

When voters reward performance and policy alignment, even at the margins, they reshape the incentives political elites face. These shifts may be gradual, but they are directional, and often self-reinforcing. They expand the space for accountable politics and narrow the appeal of purely transactional ones. The task ahead is not to wait for institutional change, but to meet voters where they already are: ready to choose differently, when given the tools to do so.nt.

Cesi Cruz is an associate professor of political science and economics at the University of Michigan. Her research examines political accountability and governance, with a focus on how information, institutions, and social networks shape political behavior in developing democracies. She serves on the editorial board of VoxDev, a policy platform that translates academic research into accessible insights for policymakers and practitioners in development. Her work has been published in leading journals in political science and economics.

The Indexes rank 164 countries around the world. Use our site to explore thirty years of data, compare countries and regions, and examine the subindexes and indicators that comprise our Indexes.

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Philippines Scorecard

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2026 Atlas: Freedom and Prosperity Around the World

Against a global backdrop of uncertainty, fragmentation, and shifting priorities, we invited leading economists and scholars to dive deep into the state of freedom and prosperity in ten countries around the world. Drawing on our thirty-year dataset covering political, economic, and legal developments, this year’s Atlas is the evidence-based guide to better policy in 2026.

Read the Book

2025 Atlas: Freedom and Prosperity Around the World

Twenty leading economists, scholars, and diplomats analyze the state of freedom and prosperity in eighteen countries around the world, looking back not only on a consequential year but across twenty-nine years of data on markets, rights, and the rule of law.

Read the Book

2024 Atlas: Freedom and Prosperity Around the World

Twenty leading economists and government officials from eighteen countries contributed to this comprehensive volume, which serves as a roadmap for navigating the complexities of contemporary governance. 

Read the Book

The Freedom and Prosperity Center aims to increase the prosperity of the poor and marginalized in developing countries and to explore the nature of the relationship between freedom and prosperity in both developing and developed nations.

Learn more

The post When growth outpaces accountability: Political volatility in the Philippines appeared first on Atlantic Council.

This is the sixth chapter in the Freedom and Prosperity Center’s 2026 Atlas, which analyzes the state of freedom and prosperity in ten countries. Drawing on our thirty-year dataset covering political, economic, and legal developments, this year’s Atlas is the evidence-based guide to better policy in 2026.

Evolution of freedom

Tunisia’s trajectory over the past several decades is often described as a story of rupture: an authoritarian stability that gave way to a singular democratic opening in 2011, followed a decade later by a dramatic reversal. The Freedom and Prosperity Indexes data help to clarify that narrative. They show that the post-2011 leap was overwhelmingly political and that legal and economic change was slower and more contested. This imbalance is central to understanding both the initial promise of Tunisia’s democratic transition and the depth of popular disillusionment that later emerged. The post-2021 turn was driven above all by the weakening of institutional constraints and judicial independence.

The presidency of Zine El Abidine Ben Ali, who ruled the country from 1987 to 2011, rested on institutional formalities and tight control. Tunisia held elections, maintained a parliament, and projected administrative capacity, but these mechanisms did not translate into meaningful competition or accountability. Political opposition was fragmented, repressed, or forced into exile, and civil society organizations operated under constant surveillance. This is reflected in the political subindex’s very low baseline prior to 2011. The country displayed an outer shell of formal politics while keeping the substance of political contestation closed, consistent with an electoral autocracy where procedural elements of democracy coexist with pervasive repression.

The pre-uprising period also explains why the 2011 revolution was propelled by the quest for dignity and fairness as much as for formal rights. Social grievances accumulated around the belief that opportunities were unequally distributed. Corruption was distorting markets and access. Regional disparities—between the more prosperous coast and the marginalized interior—had become entrenched. The tension occasionally erupted into localized protests, most notably the 2008 Gafsa mining basin uprising, which was violently suppressed and received little domestic media coverage at the time. Such episodes revealed social and economic cleavages that the authoritarian system was unable and unwilling to address, even as it succeeded in preventing large-scale political mobilization for many years.

The 2011 revolution marked a dramatic rupture in Tunisia’s political trajectory. The collapse of the Ben Ali regime triggered an unprecedented expansion of political freedom, clearly visible in the sharp rise of the political subindex after 2011. Elections became genuinely competitive, political parties proliferated, and civil and political rights were significantly expanded. The adoption of the 2014 constitution represented a high point, enshrining extensive civil liberties, protections for political pluralism, and formal checks on executive power. In comparative terms, Tunisia emerged as the most successful democratic transition to result from the Arab Spring, a status widely acknowledged by scholars and international observers over the decade that followed.

This political opening occurred despite an exceptionally challenging environment. Tunisia faced severe security threats, including terrorist attacks and instability along its border with Libya, which disrupted tourism and deterred investment. Economic performance remained weak, and unemployment persisted at high levels. Nevertheless, political elites repeatedly demonstrated a willingness to compromise in order to preserve the democratic process. In 2013, a deadlock in the “Troika” governing coalition brought the government to a dangerous edge, amid disagreements over the constitutional order and the role of Ennahda, an Islamist party, in the new system. The resolution was not a winner-take-all victory but a negotiated exit: the replacement of the governing coalition by a technocratic government, a path toward general elections, and the adoption of a new constitution in 2014 that was widely seen as liberal. This episode, in which a coalition of civil society organizations stepped in to mediate when politicians were deadlocked, reinforced the perception that Tunisia’s political class was committed to democratic consolidation, even at significant short-term political cost.

Yet the very mechanisms that stabilized the political system during this period also contributed to its longer-term fragility. After the 2014 elections, Tunisia entered a prolonged phase of grand coalition governance, most notably through the Carthage Agreement, which brought together former rivals in the name of stability and consensus. While this arrangement reduced polarization and prevented institutional paralysis, it blurred the distinction between government and opposition and weakened electoral accountability. For many citizens, political competition appeared increasingly disconnected from policy outcomes, reinforcing perceptions of elite collusion and political closure. A system designed to prevent authoritarian concentration can, if it becomes synonymous with permanent compromise among elites, generate a different kind of legitimacy problem.

Additionally, while political freedoms remained high throughout most of the post–2011 decade, improvements were not matched by parallel gains in the economic subindex or legal subindex. Rapid expansion of political freedom was not accompanied by substantive reforms capable of addressing structural economic problems or strengthening the rule of law. As a result, the lived experience of democracy for many Tunisians remained largely unchanged. Daily interactions with the state continued to be shaped by bureaucratic inefficiency, informality, and limited economic opportunity, which combined to erode confidence in the democratic system itself.

Security shocks deepened the sense of vulnerability. Tourism—an essential sector—was severely damaged by major terrorist attacks in 2015 at the Bardo Museum attack and at the resort area of Port El Kantaoui. The fallout was not only a temporary loss of revenue. It also affected employment, foreign exchange, and the confidence that sustains private initiative. Security, as reflected in the Freedom Index, was weaker than it had been before 2011. The unresolved struggle over corruption and transitional justice further complicated the path from political opening to effective governance. After 2011, expectations for accountability were high, including for business elites and networks associated with the old regime. Yet a major dispute emerged over whether to exclude and prosecute old networks or to pursue reconciliation to preserve investment and economic stability. A new network of young activists was formed under the name “I will not forgive (مانيش مسامح)” to demand accountability before reconciliation. The Truth and Dignity Commission, established in a 2013 law, became a focal point for these debates, and the broader dilemma—accountability versus “turning the page”—stoked public frustration when citizens saw that the most powerful actors often appeared to escape consequences. Tunisia’s institutional design also had a missing pillar: the constitutional court. Debated and delayed over many years, it was never established in a way that allowed it to play its intended role, leaving the system more exposed when executive power later expanded.

The growing gap between political openness and material outcomes contributed to widespread political disengagement. Voter turnout declined, trust in political parties fell, and frustration with parliamentary politics intensified. The 2019 elections revealed the depth of this disillusionment, producing a highly fragmented legislature and propelling Kais Saied, an independent candidate with no party affiliation, to the presidency. Saied’s campaign capitalized on popular resentment toward political elites, framing the post-2011 democracy as a system captured by self-serving parties and informal networks rather than a vehicle for genuine popular representation. On July 25, 2021—celebrated in Tunisia as Republic Day, marking the 1957 abolition of the monarchy—President Kais Saied dismantled key features of the post-2011 balance of power. Parliament was suspended and then dissolved, executive authority was re-centralized, and Tunisia moved toward a new constitutional framework.

Although elections continued to be held, their substance changed fundamentally. New electoral rules marginalized political parties, restricted meaningful competition, and transformed elections into largely individual, nonpartisan contests. Such a design undermines parties as channels of representation and reduces collective accountability, even if the formal mechanics of voting persist. It also reshapes how citizens can aggregate interests and how opposition can organize—core elements of pluralism that matter beyond the existence of polling stations.

The crackdown on the judiciary is central to the post-2021 reversal. After 2011, judicial independence increased dramatically according to legal subindex data—only to plummet again in 2021. One of the main institutional gains of Tunisia’s transition post-2011, the judiciary became one of the first targets of executive pressure. Judges and lawyers who opposed executive moves faced dismissal, prosecution, or detention, and the space for independent legal contestation narrowed. In a context where a constitutional court never materialized, this degree of pressure on the judiciary further reduced the system’s ability to provide institutional checks.

By 2024, Tunisia’s freedom landscape has dramatically deteriorated. While the civil liberties subindex shows a relatively steady trend through 2024, the aggregate data obscures the rapid changes that have eroded those liberties since the 2021 coup. For instance, recent evidence documents a sharp increase in arbitrary detentions, prison torture, and suspicious deaths in custody. Similarly, core institutional safeguards of democratic governance—constraints on executive power, a credible separation of powers, and an independent judiciary—have deteriorated markedly as shown by the other freedom subindexes. The Freedom Index data (with its subindexes) highlights the limits of political liberalization when it is not embedded in broader reforms of the state and the economy. Democratic transitions, like Tunisia’s, are revealed to be fragile in contexts where political institutions are not accompanied by social and economic reforms to sustain them.

From freedom to prosperity

The evolution of prosperity in Tunisia since 1995 provides a sobering counterpoint to the dramatic political changes captured by the Freedom Index. Unlike political freedom, which experienced sharp discontinuities after 2011 and again after 2021, the Prosperity Index reveals a far more muted and gradual trajectory. Income, education, health, inequality, and other components show limited responsiveness to political transformation, highlighting the structural constraints that have long shaped Tunisia’s development. The central lesson is not that the country made no social progress after 2011, but that prosperity did not accelerate in a way that matched the expectations unleashed by the political opening.

Income captures this dynamic directly. Economic performance under the Ben Ali regime was often portrayed as relatively strong by regional standards, yet this growth was unevenly distributed and heavily reliant on low-value-added sectors such as tourism and assembly-based manufacturing. Real income growth was modest, and job creation lagged behind demographic pressures. Inequality and regional disparities remained entrenched, particularly between coastal areas and the country’s interior.

In public debate, the revolution carried an implicit promise that political voice would translate into economic opportunity, especially for young people and marginalized regions. Nonetheless, the post-2011 period did not produce a decisive break with the previous pattern. Democratic transitions are often associated with short-term economic disruptions, but Tunisia’s stagnation persisted well beyond the initial adjustment period. Not only did the economy not show a clear acceleration in income growth or improvements in labor market outcomes, but economic uncertainty actually increased in the wake of the revolution, as security concerns, declining tourism revenues, and fiscal pressures constrained growth. Foreign investment remained subdued, and successive governments struggled to articulate and implement coherent economic reform strategies amid political fragmentation. When expectations are high, incremental prosperity gains can feel like stagnation, and the perception that democracy failed to deliver material benefits to the majority of citizens becomes politically consequential.

Education and health outcomes continued to improve gradually, but these trends largely reflected preexisting trajectories rather than new policy breakthroughs. Tunisia entered the post-2011 period with relatively strong human capital indicators compared to many peers in the region, and incremental progress continued despite fiscal constraints. However, these gains were insufficient to offset rising unemployment, especially among educated youth, which became one of the most visible and politically salient failures of the post-revolutionary order.

Similarly, inequality improved only modestly after 2011. The uprising was fueled in part by grievances about unequal access and regional exclusion, yet the prosperity data suggests that inclusion advanced gradually rather than decisively. Tunisia’s economic structure helps explain this. The country has long displayed a dualism between an internationally connected, often coastal economy and an interior that experiences weaker public services, fewer jobs, and less investment. Persistently high informality reinforces this dualism by limiting productivity growth and reducing the reach of social protection.

Tunisia has maintained a respectable environmental profile according to the Prosperity Index data, as the country avoided the extreme environmental degradation observed in some rapidly industrializing countries. For many citizens, the post-2011 decade was shaped more by jobs, prices, public services, and security than by environmental policy. Environmental performance matters, yet it does not substitute for the everyday pressures that drive political legitimacy.

The minorities component is where prosperity intersects most directly with the post-2021 political turn. The index shows improvement after 2011, consistent with a wider opening of civic space. But this progress reverses after 2021. The reversal aligns with an increasingly hostile discourse targeting sub-Saharan African migrants and Black Tunisians, including rhetoric drawing from a “replacement” narrative.

The path forward

Overall, Tunisia’s freedom and prosperity scores tell the unfinished story of the 2011 revolution—calls for freedom, dignity, and social justice remain partially unanswered. The path forward requires Tunisia to balance economic reforms with political liberalization. Freedom alone will not achieve prosperity, and prosperity alone will not guarantee freedom. While recent years have registered gradual increases in prosperity metrics, these numbers hide deep structural economic challenges: limited market integration, lack of investment, low buying power, and stagnation in technology and innovation.

Tunisia needs comprehensive economic reform that fundamentally addresses market structure. Breaking up concentrated market power and fostering genuine competition in key sectors must be prioritized. Competition drives innovation, efficiency, and ultimately the job creation that Tunisians desperately need. Without competitive markets, growth will remain anemic and unable to generate sustainable long-term development. New trade agreements, beyond monopolistic arrangements, will boost market access and competitiveness. Tunisia enjoys close proximity to European and African markets, and it is not fully exploiting this potential. The country must engage with new partners and expand its trade structure.

Investment also needs to reach its potential. As a Mediterranean hub with attractive potential across energy, tourism, and technology, Tunisia should nurture its private sector by encouraging domestic and foreign investment. The current legal framework and bureaucratic barriers deter new investors. The country should diversify its investment pool and position itself as a North African hub connecting Africa, Europe, and Asia.

Energy remains underrepresented despite its vast potential. Tunisia possesses exceptional solar energy capacity due to long days and abundant sunlight, yet it depends heavily on imported oil and gas while energy needs increase annually. Solar energy constitutes only a small fraction of total electricity production. In December 2025, a new solar panel project was initiated in the city of Kairouan to address this gap. More renewable energy projects are needed to reduce oil and gas dependency, satisfy citizen needs, and avoid the electricity outages that have become increasingly common during summer months. Wind energy could also be further developed to produce clean, sustainable power.

Another major barrier is low buying power among citizens, driven by high inflation, stagnant growth, high public debt, import dependency, and shortages of basic goods. In recent years, the country has faced significant medical supply crises, and several products are no longer available due to low foreign currency reserves and budget constraints. People with chronic conditions now lack basic medication or must wait for alternatives. Food prices remain high relative to incomes, and the country has experienced shortages in flour, sugar, coffee, and milk. If prices remain high and inflation persists, social unrest will intensify.

Tunisia once stood at the forefront of technological advancement but has fallen behind in digitalization, electronic transactions, and artificial intelligence. The country is not only failing to invest in new technologies but also losing its best engineers and researchers, who migrate elsewhere in search of better economic opportunities and political stability.

Yet economic reforms alone will prove insufficient without parallel political liberalization. Tunisia’s economy cannot reach its potential in an environment where property rights remain uncertain, contracts are unreliably enforced, and regulatory decisions lack transparency. Investors, both domestic and foreign, need confidence that there are legal protections for their investments, that courts function independently, and that political connections do not determine business success.

Strong state institutions that operate transparently and responsibly are prerequisites for sustained economic development. Absent these, reforms are merely cosmetic exercises that benefit connected elites instead of delivering broad-based growth. Economic rights, such as to own property, enforce contracts, and operate businesses without arbitrary interference, require robust legal frameworks and independent judiciaries to defend them.

Political freedom and economic development are not competing priorities but complementary necessities. When citizens can express grievances, participate in decision-making, and hold leaders accountable, economic policies better reflect genuine needs rather than narrow interests. Political openness creates pressure for responsive governance, reduces corruption, and builds the social trust necessary for economic cooperation.

The accumulation of unaddressed economic grievances breeds frustration that political repression cannot permanently contain. Tunisia needs a social contract where economic opportunities expand alongside political voice, where growth translates to improved living standards for ordinary citizens, not just elites. This means not only GDP growth but attention to employment quality, income distribution, and access to services. The country has witnessed increasing protests in 2025, with more occurring in early 2026, including a nationwide strike organized by UGTT, the country’s influential organized labor confederation. Tunisia’s future depends on finding the right balance between pursuing market reforms and global integration while strengthening democratic institutions and protecting fundamental freedoms. Only this combination can deliver sustainable prosperity that satisfies citizen aspirations and builds a stable foundation for long-term development.

Ameni Mehrez is an assistant professor of government at the College of William & Mary and a nonresident fellow at the Harvard Kennedy School’s Middle East Initiative program. She holds a PhD in political science from Central European University. Her main areas of expertise are public opinion surveys, political attitudes, electoral behavior, and party politics in the Arab-Muslim world. Currently, she serves as the co-principal investigator of the Arab Elections project.

The Indexes rank 164 countries around the world. Use our site to explore thirty years of data, compare countries and regions, and examine the subindexes and indicators that comprise our Indexes.

Explore the indexes

Tunisia Scorecard

Get the Freedom and Prosperity Center’s latest reports, research, and events.

2026 Atlas: Freedom and Prosperity Around the World

Against a global backdrop of uncertainty, fragmentation, and shifting priorities, we invited leading economists and scholars to dive deep into the state of freedom and prosperity in ten countries around the world. Drawing on our thirty-year dataset covering political, economic, and legal developments, this year’s Atlas is the evidence-based guide to better policy in 2026.

Read the Book

2025 Atlas: Freedom and Prosperity Around the World

Twenty leading economists, scholars, and diplomats analyze the state of freedom and prosperity in eighteen countries around the world, looking back not only on a consequential year but across twenty-nine years of data on markets, rights, and the rule of law.

Read the Book

2024 Atlas: Freedom and Prosperity Around the World

Twenty leading economists and government officials from eighteen countries contributed to this comprehensive volume, which serves as a roadmap for navigating the complexities of contemporary governance. 

Read the Book

The Freedom and Prosperity Center aims to increase the prosperity of the poor and marginalized in developing countries and to explore the nature of the relationship between freedom and prosperity in both developing and developed nations.

Learn more

The post Tunisia needs both bread and freedom appeared first on Atlantic Council.

When the New Strategic Arms Reduction Treaty (New START) expired February 5, 2026, the United States and Russia entered a new period without any legally binding restrictions on their nuclear forces. Both countries lost not only the limits on deployed nuclear warheads that New START stipulated, but also the insights and predictability provided by the treaty-mandated monitoring and transparency measures. For decades, these mechanisms helped the two nations manage their nuclear competition while avoiding misunderstandings and worst-case assessments.

The international security environment has changed significantly since New START entered into force in 2011. Russia’s noncompliance with past treaties, its invasion of Ukraine, and its malign activities across Europe have generated concerns about whether Moscow can be a credible partner in arms control agreements. China’s growing nuclear force posture, its broader military expansion, and its challenges to US allies and partners in the Indo-Pacific have also raised questions about whether the United States should engage with China in an arms control process, or expand the US nuclear force posture in response. Taken together, these challenges have reopened debate about the role arms control can play in managing great-power nuclear competition.

For the past thirty years, each new US administration has sought to align its arms control policy with US national security interests by reviewing the threat environment, identifying risks to US security, and assessing changing requirements for its nuclear deterrent. The results of these reviews have then influenced plans for the US nuclear force posture and US negotiating positions in arms control talks.  

While the current administration has so far not undertaken a formal Nuclear Posture Review, President Donald Trump has said that he would like to pursue “denuclearization” with Russia and China to reduce the “tremendous amounts of money” spent on nuclear forces.¹ He did not say what he wanted to include in this process, but an agreement would need to balance US interests in restraining Russian and Chinese forces with possible US plans to expand the numbers and types of weapons in its own arsenal. Given this complexity, the question is not simply whether the United States and Russia can preserve or extend existing arms control agreements. Rather, it is whether the United States, Russia, and potentially China can maintain some of the essential stabilizing functions of arms control in today’s competitive security environment.

This essay will assess the strengths, weaknesses, and feasibility of several alternative pathways for the future of nuclear arms control.² It will ultimately conclude that the United States can support its security and arms control interests by engaging Russia and China in a more flexible framework that combines high-level engagement among political leaders with expert working groups that can develop practical measures to foster restraint and mitigate the risks of nuclear use. This approach will both satisfy the president’s interest in engaging in arms control issues and preserve US leadership in shaping global norms.

Option one: Resume negotiations with Russia

The United States and Russia could retain the transparency, predictability, and restraint codified in New START if they negotiated a comprehensive treaty that continued to limit their nuclear-capable delivery systems and nuclear warheads. The two nations began talks toward this goal in 2021 but Russia’s full-scale invasion of Ukraine interrupted the process before they could agree on an agenda or specific provisions.³

Moscow and Washington could agree to maintain their forces within the New START limits even though the treaty has expired. Russian President Vladimir Putin suggested this approach in September 2025, when he said that observing the treaty’s “central quantitative restrictions for one year” would “prevent the emergence of a new strategic arms race and . . . preserve an acceptable degree of predictability and restraint.”⁴ He did not, however, offer to resume the data exchanges and notifications that help the United States remain confident that Russia is complying with its obligations.

Trump initially said that a one-year extension was a “good idea,” but there is no indication that the nations held further discussions on this option. Moreover, a reciprocal commitment to remain within New START limits might not serve US national security interests if it excludes any monitoring arrangements or slows US plans to respond to the emerging challenge from China.

Option two: Include China in arms control negotiations 

While China has long participated in multilateral arms control negotiations, it has rejected proposals for negotiations—or even an informal dialogue—on its current and planned nuclear force posture. It has often insisted that it would only participate in formal arms control negotiations after the United States and Russia reduced their deployed nuclear forces to numbers closer to those in the much smaller Chinese arsenal. Guo Jiakun, a spokesman for China’s Foreign Ministry, emphasized this position after Trump called for denuclearization talks, noting that it was “neither reasonable nor realistic” to expect China to participate in trilateral nuclear disarmament negotiations because “China and the United States are not at the same level at all in terms of nuclear capabilities.”⁵ China reiterated this position in its recent white paper on arms control, disarmament, and nonproliferation, noting, “Countries possessing the largest nuclear arsenals should fulfill their special and primary responsibilities for nuclear disarmament and continue to make drastic and substantive reductions in their nuclear arsenals in a verifiable, irreversible and legally-binding manner.”⁶

This, along with its long-standing objections to discussions on transparency or limits on its nuclear forces, makes it unlikely that Beijing would join the United States and Russia in formal treaty negotiations. Even if China were to participate in discussions on measures to mitigate the risks of nuclear escalation, its priorities would likely differ from those of the United States. Nevertheless, such talks could provide an opening for more substantive conversations on transparency measures and restraints on China’s nuclear buildup.

Option three: Pause arms control; prioritize nuclear modernization 

Because Russia and China have rebuffed US efforts to hold talks on arms control and risk reduction measures, the Biden administration suggested that the United States could pause its attempts to establish such dialogues while it worked to modernize its own nuclear posture.⁷ With this approach, the United States would “continue to abide by New START limits for the duration of the Treaty,” but would also prepare “for a world where constraints on nuclear weapons arsenals disappear entirely.”⁸

Several policy experts have supported a similar approach, suggesting that the United States should not restrain its nuclear forces while Russia and China add to theirs and that it should return to arms control dialogues only after it has bolstered its own nuclear deterrent.⁹ Others have disputed the notion that a buildup in US nuclear forces would give the United States leverage in future negotiations, arguing that it could instead lead to greater competition, more weapons deployments, and a higher risk of instability among the nuclear powers.¹⁰

Option four: Engage with Russia and China, but not on a treaty

Because Trump seems interested in engaging with Putin and Chinese President Xi Jinping on arms control (or denuclearization), an option in which the United States pauses arms control negotiations while it builds up its nuclear forces might not be consistent with Trump’s agenda. The administration might, therefore, consider a fourth option that envisions two tracks—one in which the president and his counterparts in Russia and China address broad principles of nuclear stability, and a second in which expert working groups craft concrete measures to foster cooperation and mitigate the risk of nuclear war.

This approach accommodates the president’s instincts for engagement while aligning with US national security objectives. It recognizes that formal treaty negotiations and reductions in the numbers of deployed nuclear weapons are not realistic options at this time and might not be consistent with US plans for its nuclear force posture. But it could preserve the core benefits of arms control through ongoing communication and cooperation. Moreover, it would demonstrate that the United States remains committed to reducing nuclear dangers in an environment where it faces challenges from both Russia and China.

The high-level engagement addressing broad principles of nuclear stability would provide the United States, Russia, and China with the opportunity to replicate some of the discussions on the dangers of nuclear war that the United States and Soviet Union held during the Cold War. For example, in the 1971 Accident Measures Agreement, the United States and Soviet Union recognized “the devastating consequences that nuclear war would have for all mankind” and affirmed their role in exerting “every effort to avert the risk of outbreak of such a war.”¹¹ They expressed similar sentiments in the 1973 Agreement on the Prevention of Nuclear War.¹² Then, in 1985, Presidents Ronald Reagan and Mikhail Gorbachev issued their famous statement that “a nuclear war cannot be won and must never be fought.”¹³

These types of statements would do little to restrain the nuclear competition but could offer a low-cost, high-impact avenue for restoring cooperation in an era of renewed great-power rivalry. Where the absence of dialogue among nuclear powers can heighten the risk of miscommunication, agreement on even the most basic statements regarding nuclear dangers can set a baseline for more comprehensive negotiations in the future.

The expert working groups on the second track would likely revisit risk reduction concepts pursued by the United States and the Soviet Union during the Cold War such as enhanced communication networks, missile launch notification agreements, and rules of the road to avoid military accidents and escalation. The United States and China lack a similar history with these types of measures, but China has taken some steps in recent years to engage on these topics. Bringing these discussions into a three-party venue will give each nation the opportunity to air its concerns about the sources of risk and to work together to identify concrete measures to address those specific risks.

These two tracks will do little in the near term to address the growth in Russian and Chinese nuclear forces or to reduce the risks created by Russian and Chinese malign activities that have targeted US allies and partners. On the other hand, they likely will not impede the US nuclear modernization program or US efforts to support its allies and partners. They can, however, build a foundation for future talks on nuclear dangers, provide an opportunity for the three nations to find common ground on issues on which they can cooperate to manage their nuclear competition, and offer a venue for their leaders to demonstrate their commitment to reducing the risk of nuclear war.

Connections help, even without formal treaties

With the expiration of New START in 2026, the United States faces a future in which the familiar framework of nuclear arms control has broken down, but the need to manage nuclear competition remains as urgent as ever. Therefore, even if the nuclear powers cannot rely on formal treaties to set the framework for their nuclear cooperation, a decision to abandon arms control altogether would leave the United States without tools to influence the emerging complex security environment or to prevent crises from escalating into catastrophe.

Progress in reducing nuclear dangers requires ongoing dialogue, mutual understanding, and clear leadership, even if the endgame does not include formal treaties and high-profile signing ceremonies. Efforts to manage nuclear competition have always included less formal and more flexible tools that focus on political engagement, practical risk reduction, and shared responsibility among nuclear powers.

Thus, the two-track strategy described here provides tangible benefits for US national security. It aligns with the president’s expressed interest in engaging with both Moscow and Beijing and supports the US goal of maintaining flexibility to advance its own nuclear modernization programs. It shows leadership on critical nuclear security issues at a time when both allies and adversaries question the US commitment to stability and restraint. Most importantly, it strengthens the connections—political, diplomatic, and psychological—that prevent competition from turning into confrontation, reaffirming that both deterrence and arms control can help prevent the use of nuclear weapons in war.

This issue brief is part of the Scowcroft Center for Strategy and Security’s Great nuclear debate series, a curated anthology of perspectives on arms control, force sizing, and missile defense from leading experts.

Fellow

Amy Woolf

Nonresident Senior Fellow

Forward Defense Scowcroft Center for Strategy and Security

Defense Policy Missile Defense

Forward Defense leads the Atlantic Council’s US and global defense programming, developing actionable recommendations for the United States and its allies and partners to compete, innovate, and navigate the rapidly evolving character of warfare. Through its work on US defense policy and force design, the military applications of advanced technology, space security, strategic deterrence, and defense industrial revitalization, it informs the strategies, policies, and capabilities that the United States will need to deter, and, if necessary, prevail in major-power conflict.

Learn more

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Forward Defense is grateful to Airbus Americas, Inc. for its support of this report.

Airbus U.S. Space and Defense, Inc. (a subsidiary of Airbus Americas, Inc.) operates under a Special Security Agreement (SSA)—the subject of this report—with the US government. Other companies mentioned in this report in the context of their SSAs with the US government—American Rheinmetall Defense and Leonardo—are also donors to Forward Defense, but are not supporters of this report.

This report was written and published in accordance with the Atlantic Council’s Intellectual Independence Policy, which requires all donors to agree to the Council maintaining independent control of the content and conclusions of its work. The author is solely responsible for its analysis and recommendations.

The author thanks Abigail Rudolph for her writing and editing support.

Fellow

Rob Murray

Nonresident Senior Fellow

Forward Defense Scowcroft Center for Strategy and Security

Defense Industry Defense Policy

• Executive summary
• Introduction: SSAs and the US defense advantage
• Problem statement: US defense strategy—the five fault lines
• Advantages offered by SSAs
• Understanding SSA structures, proxy models, and national interest determinations
• SSAs under fire: Risks and critiques
• A risk-benefit analysis
• The SSA model and the future of defense technology
• Policy recommendations to maximize SSA benefits
• Streamlining SSA approval processes to encourage more investment
• Pathfinder projects for further SSA integration
• Conclusion

Executive summary

Special Security Agreements (SSAs) can help sustain a defense advantage for the free world amid rising global competition. These agreements allow foreign-owned, US-based defense companies to engage in sensitive US defense contracts under stringent government oversight, ensuring adherence to national security protocols.

SSAs strategically reconcile the use of foreign expertise with the protection of US interests, bolstering defense self-sufficiency by diversifying supply chains and augmenting domestic production capabilities. These companies can stimulate innovation and fortify the US industrial base. While it is predominantly European defense companies that utilize SSAs, Asian defense companies have long participated in US national security projects under SSAs—Japan, South Korea, and Singapore have maintained such arrangements for more than a decade. South Korea’s Hanwha Aerospace is the latest example, currently undergoing the SSA accreditation process to expand its role in the US defense industrial base.¹

Maintaining engagement with allied defense technology via SSAs can help the United States; it ensures interoperability and alliance resilience even as current geopolitical dynamics require a flexible and pragmatic approach. For Europe, SSAs prevent the division of transatlantic defense cooperation and helps to assure compatibility with NATO systems. Companies operating under an SSA are subject to stringent safeguards, including direct oversight by the US Department of Defense (DOD) via the Defense Counterintelligence and Security Agency (DCSA) and continuous internal monitoring by a Government Security Committee (GSC) composed of cleared US citizens. This dual structure mitigates foreign ownership, control, or influence (FOCI), while enabling the US government to safely access and operationalize allied technologies for critical national security needs.

To optimize the advantages of SSAs, this paper recommends streamlining export approvals for defense systems, utilizing SSA companies to broaden US access to allied defense markets, countering Chinese and Russian arms sales with SSA-backed defense agreements, expediting the SSA approval process, and establishing a dedicated SSA office within the US DOD.

This report also identifies four Pathfinder Projects—in intelligence, surveillance, and reconnaissance (ISR), counter-hypersonics, maritime autonomy, and cyber resilience—that demonstrate how SSA companies can be leveraged as strategic enablers to enhance allied defense integration, while addressing regulatory, operational, and policy barriers to collaboration.

In sum, SSAs are a strategic asset that can enhance US military strength, reinforce alliances, and secure the United States’ ongoing leadership in global defense innovation.

Introduction

The United States has long maintained the world’s most advanced and capable large-scale military, underpinned by technological superiority and a robust defense industrial base. Yet, as global threats evolve, China and Russia are rapidly modernizing their militaries and challenging US dominance. To sustain its edge, Washington must strengthen its defense sector while maintaining control over foreign investment in sensitive industries.

SSAs are a critical, yet often misunderstood, tool in this effort. First introduced in 1984 during the Cold War, these agreements emerged as a response to growing concerns about FOCI in the US defense industry. By the 1970s, policymakers had started formalizing security measures to regulate foreign investments in defense companies. Over time, these mechanisms evolved through the National Industrial Security Program (NISP) and were further strengthened as security concerns deepened after 9/11. Today, SSAs provide a structured framework that allows foreign-owned, US-based defense companies to contribute to national security while operating under strict US government oversight.²

The advantages are clear. SSAs enable the United States to harness foreign technology, investment, and competition while managing national security risks through security controls. They also strengthen transatlantic and broader allied defense cooperation.

The strategic logic behind SSAs is simple: They ensure that foreign companies contribute to US military strength while remaining fully compliant with US regulations. In a world where technological dominance defines military superiority, Washington must use every available tool to stay ahead. Properly managed, SSAs are one such tool, allowing the United States to leverage foreign defense investments for competitive advantage.

Problem statement: US defense strategy—the five fault lines

The US defense industrial base is at a crossroads. While the United States maintains the world’s most advanced large-scale military, its ability to sustain technological dominance is under pressure from several converging trends.

• First, industrial capacity constraints have become a national security concern. The war in Ukraine has underscored bottlenecks in US production lines, from ammunition stockpiles to shipbuilding delays. The Pentagon has struggled to ramp up manufacturing at the speed required for sustained military operations.
• Second, US defense research and development (R&D) investment is falling behind. Insufficient internal R&D funding has made it difficult for defense primes and mid-tier contractors to drive innovation at the pace of geopolitical relevance. While China rapidly scales military-technological advancements, the US defense sector remains overly reliant on government-funded programs with slow procurement cycles.
• Third, the rise of dual-use technology is reshaping military competition. Critical advancements in artificial intelligence (AI), space-based defense, and cybersecurity—among other sectors—are now driven by the commercial sector rather than government labs or traditional defense contractors. The United States must find ways to integrate advanced allied technologies while safeguarding national security interests, protecting classified information, and maintaining appropriate oversight of foreign investment in sensitive sectors.
• Fourth, allied interoperability is no longer optional. As NATO and Indo-Pacific alliances grow in strategic importance, the United States must ensure its defense sector remains deeply integrated with allied defense industries. However, driven by geopolitical concerns, European nations are increasingly prioritizing defense-industrial sovereignty, creating risks of fragmentation.
• Finally, US defense exports face growing competition from adversaries. China and Russia have expanded their arms sales across the Middle East, Africa, and Asia, offering cheaper alternatives to US defense systems. Without strategic measures to maintain US leadership in global arms markets, the influence of US defense technology could erode.

Given these structural challenges, the United States cannot afford an isolationist approach to defense industrial policy.

Advantages offered by SSAs

SSAs provide a powerful mechanism that can help expand US access to cutting-edge capabilities—enhancing domestic production where appropriate, strengthening R&D investment, integrating dual-use technologies, improving allied interoperability, and maintaining US export competitiveness—all while ensuring that foreign investment is subject to rigorous US government oversight. While SSAs can support the relocation of manufacturing to the United States, they do not require it; rather, their primary function is to permit secure integration of foreign-developed capabilities into the US defense ecosystem under tightly controlled conditions. This section will examine each of these strategic advantages in turn.

Strengthening US defense self-sufficiency by reducing dependence on adversarial supply chains

SSAs play a pivotal role in helping the United States diversify and secure its defense supply chains without retreating into full-scale onshoring. They enable US-based subsidiaries of trusted foreign defense firms to contribute to critical programs. These companies operate within a framework that includes cleared US citizen leadership, firewalls to prevent foreign parent interference, and strict compliance with US defense contracting and export-control regimes.

This structure achieves two objectives simultaneously.

• It allows the United States to safely access high-quality components and subsystems from allied supply chains in areas where domestic production might be insufficient or unavailable at scale.
• It encourages trusted foreign firms to invest directly in the United States—boosting local manufacturing capacity, injecting competition, and accelerating innovation.

One example of this dynamic can be seen in American Rheinmetall’s expansion into the US armored vehicle sector.³ As the US Army pursues its modernization agenda, Rheinmetall—a global defense prime operating a US subsidiary under an SSA—has invested in domestic production facilities, with vehicle components manufactured onshore and under US security protocols. Another example is Kongsberg Defense & Aerospace, Inc., which announced in September 2024 the opening of a new missile production facility in James City County, Virginia, investing more than $100 million in capital expenditure over the next few years and creating over 180 new jobs.⁴ This approach on-shores defense production with less reliance on potentially vulnerable foreign supply chains while still allowing the DOD to access allied technology.

While SSAs do not address commodity-level vulnerabilities—such as rare earth element (REE) dependencies—they are a critical part of the broader solution. The 2010 incident in which China restricted REE exports to Japan over a diplomatic dispute illustrates how adversaries can weaponize supply chains.⁵ SSAs help mitigate this risk at the system level by insulating the defense industrial base from undue foreign influence and expanding the set of trusted suppliers across allied nations.

Expanding US defense production capacity

Beyond securing supply chains, another key challenge facing the US defense sector is limited production capacity. The ongoing war in Ukraine has exposed severe bottlenecks in US ammunition and missile stockpiles, raising concerns about whether the United States can sustain high-intensity military operations over extended periods.⁶ Similarly, US shipbuilding faces significant delays, with the US Navy struggling to meet its long-term fleet expansion goals.⁷ These industrial constraints highlight the need for increased defense manufacturing capabilities—a challenge that SSA companies can help address.

SSA companies can contribute to US defense self-sufficiency by building and operating US-based manufacturing facilities, expanding domestic production capacity, and reducing strain on other US defense companies. Rather than replacing US companies, SSA companies serve as force multipliers that increase the United States’ ability to manufacture critical defense equipment. For example, Leonardo Electronics, an SSA firm specializing in military electronics and avionics, has established multiple production sites in the United States, providing technology to US military aircraft and battlefield systems while keeping production within US borders.⁸ Similarly, Elbit America has several US production sites. Its facility in Roanoke County, Virginia is set to undergo a $30 million expansion and add 288 new jobs.⁹

The benefits of this approach extend beyond immediate military needs. By increasing manufacturing output, SSA companies create US jobs, attract foreign investment, and strengthen local economies. These investments bolster US industrial capacity, ensuring that critical defense production remains resilient in times of crisis.

Foreign direct investment (FDI) in US transportation equipment manufacturing—the Bureau of Economic Analysis industry category that captures aerospace, land systems, and missiles—rose from $167 billion in 2020 to $229 billion in 2023, a 37-percent jump despite tighter screening rules.¹⁰ Europe drove almost 40 percent of that 2023 increase; German-owned assets alone grew by $58.9 billion.¹¹ By industry, affiliates in manufacturing increased the most, increasing $58.6 billion to a total investment position of $2.22 trillion.

Understanding SSA structures, proxy models, and national interest determination

While SSAs provide a powerful framework for integrating foreign-owned companies into the US defense industrial base, it is important to understand how SSA companies differ from proxy companies, as well as how certain regulatory requirements—particularly NIDs—impact their operational flexibility and ability to deliver capability to the warfighter. While the SSA model successfully allows the United States to leverage allied industrial capabilities under controlled conditions, the NID process introduces an additional layer of regulatory scrutiny. The experience of some SSA companies suggests that the average NID approval time can exceed twelve months for Top Secret programs and Special Access Programs (SAPs), underscoring the schedule risk these requirements introduce. To clarify the operational and regulatory distinctions between these structures, the table below summarizes the key differences between SSA companies, proxy companies, and the role of the NIDs process.