This renewal of the arms race, amid heightened tensions over Ukraine, involves not only the US and Russia but also China. This arms race could credibly lead to further military confrontations and complicate global security dynamics as historical examples strongly indicate this. In addition, making new arms control deals is extremely unlikely over the medium term because they would have to be trilateral in nature between the US, Russia, and China. Considering the major security issues in Europe and Asia, all great powers will seek greater offensive capabilities, which in turn will make conflict more likely between them.

Japan Likely to Let Businesses Fail to Improve Economy

Years of sluggish growth and population decline have left many of Japan's small and medium-sized firms reliant on state aid and low-interest funding. These businesses, which provide around 70% of jobs, are now facing challenges as pandemic support wanes and interest rates rise for the first time in 17 years. The Japanese government is shifting its approach, willing to let more underperforming companies fail to promote growth through mergers and acquisitions (M&A) rather than avoiding bankruptcies at the expense of productivity. This strategy aims to channel workers and investment into more productive companies, thereby boosting wages. However, this change faces obstacles, including the entrenched postwar social contract and the limited M&A skills among current small business owners. If Japan is able to implement these more capitalist policies, then it could turn their economy around over the medium term. The fundamental structural problems in Japan mean that the government cannot use the same policies as in the past, and the cultural dedication to stability over reform in the economy will have to change as well. Abe’s government previously attempted reforms, but Kishida’s government might be successful where Abe was not. Improved economic performance in Japan would help Western corporations in strategically important sectors as well.

Rwanda Reelects Kagame to Fourth Term

Rwandan President Paul Kagame has won a fourth term with 99% of the votes in a largely uncontested election. Importantly, with the constitutional changes Kagame could stay in power for another decade. Kagame, in power since 1994 after leading the Rwandan Patriotic Front to end the genocide, has consistently won elections with high margins amid criticisms of lacking real competition and disqualifying opponents. Despite significant economic progress under his rule, Kagame is seen as both a visionary leader and an authoritarian, with accusations of suppressing opposition and a lack of free press. Rwanda's involvement in regional conflicts, particularly in Congo, and allegations of supporting rebel groups add to the complexity of Kagame's leadership. Kagame’s reelection will likely provide internal stability in Rwanda as he remains popular for his infrastructure development, economic reforms, and reducing ethnic divisions. However, it threatens regional instability as his foreign policy continues to create consternation with neighbors, such as the DRC. What this means for regional politics is likely continuity, and corporations should not expect any major changes in policy.

UK Government Announces Policy Agenda

Britain's King Charles presented Prime Minister Keir Starmer's legislative agenda, emphasizing a government focused on reviving the economy, addressing the housing shortage, and tackling the cost of living crisis. The agenda includes over 35 bills aimed at economic growth, planning law reforms for easier home construction, and speeding up major infrastructure projects. Starmer, who won a significant parliamentary majority, acknowledges the challenges ahead, emphasizing patient, serious solutions. Key legislative points include streamlining planning processes, renationalizing the rail network, and resetting relations with the EU through a new security pact. Essentially, Labour seeks to undo many Conservative policies over the past forty years, bringing back socialism as the policy preference. When it comes to foreign policy, Starmer has promised to increase defense spending to 2.5% of GDP, but he has not established a timeline to do so. Prime Minister Starmer stated, “My government will forge a new clear-eyed approach to our national defenses, equipping us to tackle international threats head-on while keeping the British people safe and secure.” If Starmer is successful at increasing defense spending, then this will likely help bring stability to geopolitics as Britian will be able to support the US and NATO more effectively. Yet many European countries have failed to deliver on such promises. Significant tax increases would be needed, and Starmer would be less likely to implement expanded domestic programs.

Attempted Assassinations Highlight Threats to Public Figures

The attempted assassination of former President Trump on July 13 has highlighted the increasing problem of threats and violence against public figures. Only shortly before that assassination attempt the US and Germany thwarted an attempted assassination by Russia against the CEO of an arms manufacturer that supported Ukraine. Recent research by the Combatting Terrorism Center at West Point will help analysts contextualize this problem for their clients. The abstract of the research reads: “A review of federal charges for the past decade highlights that the number of threats to public officials is growing. While 2013-2016 had an average of 38 federal charges per year, that number sharply increased to an average of 62 charges per year between 2017-2022. Across the time series, ideologically motivated threats, on average, accounted for almost half of the cases, and the portion steadily increased year over year. A preliminary review of cases from 2023 and 2024 shows that the number of federal prosecutions is on pace to hit new record highs. The rising threat level may produce significant consequences for the U.S. democratic system of governance.”