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Pentagon’s 2026 strategy pivots to flexible realism and warrior spirit to counter China

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The US Department of Defense has released its 2026 National Defense Strategy (NDS), outlining a pivotal shift toward “flexible realism”—a doctrine that prioritizes the protection of American interests over global “nation-building” projects.

According to the NDS, this approach is anchored by a “Trump Addendum to the Monroe Doctrine,” which prioritizes the security of the US homeland and maintains dominance over the Western Hemisphere. This document follows and reinforces the broader US National Security Strategy (NSS).

The strategy identifies China as the “primary rival” and issues a blunt demand to allies and partners: they must significantly increase their financial contributions, targeting a new spending standard of 5% of their Gross Domestic Product (GDP).

Through a “national industrial mobilization” and the “revival of the warrior spirit,” the NDS aims to deter adversaries such as Russia, Iran, and North Korea. Ultimately, the strategy seeks to achieve global stability by rebalancing military responsibilities and focusing on pragmatic security rather than idealistic foreign interventions.

America First: Rejection of “utopian idealism”

The 2026 National Defense Strategy defines “flexible realism” as a clear-eyed, common-sense approach to national security that prioritizes American interests over abstract global ideals.

Flexible realism rejects the “grand strategies” of previous administrations that conflated American interests with those of the entire world or sought to “solve all the world’s problems.” Instead, it focuses on “real, credible threats to the safety, liberty, and prosperity of Americans,” acknowledging that threats to the US homeland are more visceral and significant than those in distant regions.

The NDS explicitly contrasts flexible realism with “castles in the clouds” abstractions like “utopian idealism” and the “rules-based international order.” It declares an end to goals such as regime change, “endless wars,” and “grand nation-building projects,” replacing them with a “hard-headed realism” designed to achieve a “noble and proud peace.”

According to the Pentagon, this approach requires a pragmatic correlation between resources and objectives. The NDS acknowledges that the US “cannot act everywhere alone” and cannot solve every global problem; it calls for the military to “evaluate, rank, and prioritize” threats based on their severity.

In practice, flexible realism aims for a “resilient and sustainable balance of power” rather than total global hegemony. Regarding China, for instance, the strategy seeks a “reasonable peace” and a balance of power that prevents Chinese dominance over the US, explicitly stating that this goal does not require “regime change or another existential struggle.”

The document contends that this approach “does not mean isolationism.” On the contrary, it envisions a “focused and truly strategic approach” where the US acts globally to advance its practical interests—particularly alongside allies—while insisting that those allies shoulder the primary burden of their own regional defense.

Burden sharing and defense spending

The NDS fundamentally redefines global burden-sharing, shifting alliances from a model subsidized by the US to one of “clear accountability” and self-sufficiency. It argues that allies must cease acting as “dependents” and instead function as true partners.

This “America First” approach asserts that by prioritizing US interests and demanding that allies take primary responsibility for their own security in most theaters, the US can concentrate its resources on defending the homeland and deterring China.

In this context, the strategy redefines requirements through specific financial targets, operational changes, and strategic ultimatums. These include a new global financial standard, “primary responsibility” for allies where the US acts as a supporter rather than a lead, and the prioritization of “model allies.”

For example, the US will now look to delegate the Ukraine issue to Europe, the tensions on the Korean Peninsula to South Korea, and the management of Iranian aggression in the Middle East to Israel and Gulf allies.

By compelling allies to act, the Pentagon aims to focus the US military on its two highest priorities: defending the US and deterring China in the Indo-Pacific.

The primary strategic rival: China

The NDS describes one of the “most dangerous” security environments in the nation’s history, where adversaries have grown increasingly powerful because the US failed to maintain its advantages.

Major geopolitical threats are categorized not only by state actors but also by their geographical proximity to the American homeland and the systemic risk of simultaneous conflicts.

The strategy identifies the People’s Republic of China (PRC) as the primary strategic rival. The NDS describes the PRC as “the most powerful state we have faced since the 19th century,” asserting it ranks second only to the US on a global scale.

The threat from China is defined by the “pace, scale, and quality” of its military forces, which include capabilities capable of striking targets far beyond the Western Pacific.

The Pentagon points out that the fundamental danger is not merely military, but China’s potential to dominate the Indo-Pacific region. There is significant concern that such dominance would effectively control American access to the “world’s economic center of gravity.”

Accordingly, the US goal is to maintain a balance of power to prevent China from dominating the US or its allies, seeking a “reasonable peace” rather than pursuing regime change.

The NDS approach to China is summarized as “deterring China in the Indo-Pacific through strength, not conflict.” Rather than seeking confrontation or isolation, the strategy envisions a dual approach: building robust military deterrence (“strength”) as a prerequisite for effective diplomatic and military engagement.

The document explicitly states that the US goal is not to “dominate China” or to “strangle or humiliate” it. Instead, the US will seek a “reasonable peace” characterized by a balance of power where no country can dominate another.

A message to Europe: Provide your own security

The 2026 National Defense Strategy fundamentally redefines Europe’s role from a region dependent on American security guarantees to one that assumes “primary responsibility” for its own conventional defense.

The strategy makes it clear that NATO allies must transition to taking the lead in defending the continent, while the United States provides “critical but more limited support.”

This shift is based on the assessment that Russia is a “persistent but manageable threat” and that the collective economic and military power of NATO members in Europe “dwarfs” that of Russia. The document notes that the German economy alone far outstrips Russia’s.

Consequently, the NDS argues that Russia is “not in a position to attempt European hegemony,” meaning Europe is capable of managing the threat without US dominance.

Europe serves as the testing ground for the White House’s new “global standard” for burden-sharing. The strategy references a “Hague Summit” where NATO allies are expected to set a total defense spending target of 5% of GDP. While the Pentagon emphasizes it will “provide incentives and opportunities” for allies to meet these targets, it insists these commitments must be fulfilled.

While stating that the war in Ukraine “must end,” the document places the responsibility for supporting Ukraine’s defense and maintaining the subsequent peace directly on European allies.

Declaring this to be “primarily Europe’s responsibility,” the document rejects the previous administration’s approach, which it claims allowed allies to engage in “free-riding.”

To help NATO allies generate the forces necessary for their own defense, the strategy envisions expanding transatlantic defense industrial cooperation and reducing trade barriers.

The “Model Ally”: A primary role for Israel in the region

Under the 2026 National Defense Strategy, Israel is identified as the “model ally” and serves as the primary example of the “America First” approach to burden-sharing.

The strategy redefines the US relationship with Israel based on the principle that allies must have the will and capability to defend themselves, with the US providing “critical but limited support.”

According to the Pentagon, Israel fits the definition of a “model ally” because, particularly following the October 7 attacks, it has proven it possesses the “capability and willingness to defend itself.”

Unlike allies criticized as “dependents,” the document praises Israel for taking action for its own survival. Consequently, the strategy states that the US should “empower” Israel rather than “tie its hands.”

Consistent with the strategy’s broader push for regional burden-sharing, Israel is expected to assume “primary responsibility for deterring and defending against Iran and its proxies.”

The document contends that Israel’s operations have “severely weakened” Iranian proxies, specifically Hezbollah and Hamas.

Israel’s role extends to stabilizing the regional security architecture. Building explicitly on the Abraham Accords, the Pentagon intends to “achieve integration between Israel and our Arab Gulf partners.” This effort aims to create a coalition where regional partners collectively exert more effort to defend themselves, allowing the US to focus its primary attention on the Indo-Pacific and its own borders.

While Israel leads the fight, the US commits to “strongly supporting Israel’s self-defense efforts.” This support is characterized as “critical but limited”: the US will provide the tools and support necessary for Israel to succeed (such as arms sales and intelligence sharing) but will not assume the primary combat role on the ground.

Instructions to the Gulf: “Integration with Israel”

According to the 2026 National Defense Strategy, a successful transformation of the region is defined by the establishment of a “more peaceful and prosperous Middle East” achieved through local ownership rather than American intervention.

The Pentagon argues that this transformation cannot be imposed from the outside. According to the US, it can only be realized by “those with the greatest stake in the region’s future”—the regional nations themselves.

Success is defined by regional allies and partners assuming “primary responsibility for deterring and defending against Iran and its proxies.” The US role shifts from leading the struggle to a supportive one.

According to the NDS, a successful transformation requires “deepening cooperation and integration” between Israel and Arab American partners, explicitly based on the framework of the Abraham Accords.

Defense industry linked to Trumpist economic policies

The NDS describes its industrial mobilization plan as a “national mobilization” and an “industrial call to arms,” likening it to the industrial revivals of the World Wars and the Cold War.

The plan aims to “strengthen the US Defense Industrial Base (DIB)” to support the President’s claim of a “once-in-a-century revival of American industry.”

This includes the re-establishment of a “world-class arsenal”; modernization and deregulation; the adoption of AI and innovation; internal reform of the Pentagon to increase production capacity; the expansion of the supplier base; and deepening integration with allies.

Preparing the military for war

The document defines the “warrior spirit” as the “heart of the US military”—a set of values exemplified by American heroes such as World War II veterans.

According to the document, the “warrior spirit” is inextricably linked to the military’s “fundamental, irreplaceable role.” Reviving this spirit is presented as necessary for the American military to refocus on “decisively winning the nation’s wars.”

This entails moving away from what the document describes as distractions, such as “social engineering” or “nation-building.”

The core premise of the strategy is the claim that previous administrations neglected and often “actively undermined” this spirit.

The document argues that true deterrence is a byproduct of a military focused on lethal force and victory, rather than abstract concepts like “grand nation-building projects” or the “rules-based international order.”

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US Senate panel seeks records in Trump-linked crypto investigation

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Richard Blumenthal, the ranking Democrat on the US Senate Permanent Subcommittee on Investigations (PSI), has requested documents from cryptocurrency exchange Binance, Tether, and crypto projects linked to President Donald Trump as part of inquiries into potential financial irregularities and conflicts of interest.

The documents were requested to be submitted by 4 January 2027.

Senators warned that they would resort to compulsory measures if the request was refused.

Entities sent document requests include World Liberty Financial and Fight Fight Fight LLC, both linked to President Trump’s family.

Blumenthal began examining the activities of these entities in May 2025 following reports that they may have engaged in transactions with foreigners under federal criminal investigation, attracted investments from foreign governments, and violated public ethics rules.

Notably, in 2026, it emerged that individuals close to the Abu Dhabi royal family had signed an agreement with the Trump family to purchase 49% of the shares in World Liberty Financial for $500 million.

The company, founded in September 2024 by the US President and his sons, launched a token called WLFI.

According to official disclosures, Trump made $800 million from this token alone.

Conversely, crypto analytics firm Nansen calculated, by tracking 1.48 million crypto wallets, that approximately two-thirds of those who invested in the token after its launch in January 2025 incurred losses.

While many retail investors spent several thousand dollars on purchases, the largest investors poured in millions of dollars.

Trump also launched his own memecoin, TRUMP, on 17 January 2025, prior to his inauguration.

Rising 10.6-fold in value within three days, the cryptocurrency’s market capitalisation reached $15 billion at its peak.

However, after those three days, the price entered a downturn, plunging by 97%.

Trump reported in his financial disclosure that he earned $635 million in income from sales of these memecoins.

In July 2026, Blumenthal held public hearings on the family crypto projects from which the President made $1.4 billion.

The losses suffered by TRUMP memecoin investors were also addressed during these hearings.

Cryptocurrency exchange Binance and Tether, which issues the largest stablecoin, USDT, are under scrutiny over their dealings with the Trump administration.

Lawmakers suspected conflicts of interest stemming from the exchange’s collaboration with World Liberty Financial.

Previously, a group of senators had demanded an inquiry into the terms of the presidential pardon granted to Binance founder Changpeng Zhao.

Separately, The New York Times reported that the United Arab Emirates (UAE) gaining access to American artificial intelligence chips coincided with a $2 billion investment by a UAE entity into Binance using USD1, a stablecoin issued by World Liberty Financial.

While this deal rapidly expanded the volume of tokens in circulation, it enabled Trump’s company to generate revenue from interest on government bonds where USD1 reserves were held.

Trump, for his part, described the report as slander.

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US credit card debt hits record $1.29 trillion, New York Fed reports

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Americans’ credit card debt reached a record $1.29 trillion in the third quarter, according to a new report published by the New York Fed.

Falling behind on credit card payments can trap struggling households in a cycle of fees, credit score downgrades, and increasingly expensive borrowing.

Although delinquency rates across the country have shown improvement, the latest figures indicate that financial distress is concentrated in lower-income communities.

Consumer credit card balances rose by $22 billion in the third quarter, representing an increase of 1.7%. This figure is $52 billion higher than it was a year earlier.

The figures are not adjusted for inflation, which may mean that part of the increase reflects rising prices rather than more borrowing in real terms.

Total household debt, which includes mortgages, student loans, and auto loans, rose by $334 billion in the third quarter to reach a record $19.1 trillion.

This total represents an increase of $5 trillion compared to 2019, just before the pandemic.

The volume of credit card balances falling into serious delinquency is declining, indicating some improvement in Americans’ ability to make their payments on time.

The rate of credit card debt transitioning into serious delinquency fell to 6.9% in the third quarter. However, this rate remains distinctly higher than the 5.2% recorded prior to the pandemic.

Americans living in lower-income neighbourhoods are facing greater difficulty in keeping up with their credit card payments compared to more affluent groups, according to a separate report published by the New York Fed on Tuesday.

Delinquency rates across all neighbourhood income tiers remain above pre-pandemic levels, while the gap between the wealthiest and poorest areas has widened since 2022.

In the lowest-income neighbourhoods, 10.3% of credit card balances transitioned into serious delinquency over the past year.

This is more than double the 4.4% rate observed in the wealthiest neighbourhoods.

The average credit card balance per borrower now stands at $6,678, according to TransUnion’s third-quarter analysis report.

Among borrowers under the age of 30, the rate of credit card debt falling at least 90 days delinquent reached the highest level, according to the Fed’s report.

Democrats won the midterm elections promising to bring down prices, but delivering relief that voters can genuinely feel in their household budgets will be a difficult target to achieve.

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Mamdani quietly asks Trump to release detained immigrants

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New York City Mayor Zohran Mamdani is using his rapport with US President Donald Trump to secure the release of selected detained immigrants.

According to reporting by Politico, Mamdani persuaded Trump during their second White House meeting in February to free a university student who had been detained that day by ICE.

The outcome served as validation for Mamdani, who pointed to the release of the Columbia University senior as proof that his surprisingly cordial relationship with Trump could produce tangible results for New Yorkers.

Mamdani subsequently continued to seek similar immigration-related interventions from the Republican president.

Since that February meeting, Mamdani and his aides have quietly forwarded the names of approximately two dozen immigrant New Yorkers held in ICE custody to Trump’s team, asking the president to order their release.

Two sources familiar with the matter said Mamdani most recently shared names of detained immigrants during a September meeting with Trump at Gracie Mansion.

The sources said the individuals in question had no serious criminal records, though they declined to disclose their identities, citing safety concerns.

According to Politico, these ongoing efforts regarding detained immigrants indicate Mamdani’s belief that he can leverage his rapport with Trump to advance causes the mercurial president might not ordinarily support.

Mamdani’s decision not to disclose these continued appeals publicly suggests an inclination to keep his interventions private to improve their chances of success.

Yet it remains unclear whether any immigrant besides Columbia University student Elmina Aghayeva has actually been released as a result of these efforts, and concern is mounting within City Hall that the window for securing such releases may be closing.

Mamdani’s aides working on the releases, including his Chief of Staff Elle Bisgaard-Church, communicated primarily with Trump’s White House Chief of Staff Susie Wiles, according to people familiar with the matter.

Last week, Trump replaced Wiles with Stephen Miller, the architect of the administration’s most hardline immigration proposals and one of the loudest internal voices urging the president to pursue a mass deportation agenda in his second term.

A person familiar with the Mamdani administration’s thinking said the mayor’s team views it as unlikely that Miller will continue cooperating in the manner Wiles did, given his stance on immigration.

Mamdani spokesperson Dora Pekec declined to comment on internal concerns regarding Miller and did not provide details about the immigrants whose release the mayor had requested.

Pekec noted, however, that Mamdani has “consistently advocated directly on behalf of New Yorkers in his calls and meetings with the president.”

Murad Awawdeh, a close Mamdani ally and president and CEO of the New York Immigration Coalition, said the mayor’s team should not halt engagement with the Trump administration on immigration matters because of Miller’s promotion:

“Stephen Miller is a cruel individual who has spent his career attacking immigrants, but he is not the president; Donald Trump is, and this is his deportation agenda. New York expects the president to work with the mayor to serve this city and end the terror in our communities. Miller’s promotion changes none of that.”

Mamdani’s warm dynamic with Trump has confounded both allies and critics.

During last year’s New York mayoral election, Trump referred to Mamdani as a “communist lunatic” and threatened to have him arrested.

In turn, the 35-year-old democratic socialist branded the president a “fascist” and pledged to fight him relentlessly if elected mayor.

Yet that animosity fell away late last year during their first White House meeting, where an amicable tone prevailed.

The thaw culminated in September at Gracie Mansion, where Trump said Mamdani had “great potential” to be a “terrific mayor.”

Mamdani returned the compliment by noting that the president had “built quite a bit of housing in our city.”

Despite the polite exchange, questions remain over how much substantive progress Mamdani can genuinely secure through Trump, including on immigration.

To date, Aghayeva’s release stands as one of the few concrete concessions Mamdani has obtained from Trump.

Aides on both sides are also discussing a multi-billion-dollar federally backed housing initiative in Queens, and last month Mamdani used his channel to Trump to help secure a temporary visa for a Ghanaian woman whose son was shot and killed in the Bronx.

Beyond those instances, few tangible results have emerged, though Trump’s decision not to enact punitive measures against New York is viewed by Mamdani’s allies as a win for the city.

Trump’s political standing is widely seen as weakened following the Republican Party’s loss of both houses of Congress in elections last Tuesday.

How this political shift will affect Trump’s willingness to engage with ideological adversaries such as Mamdani remains uncertain.

Miller’s appointment as chief of staff appears to signal little presidential interest in moderation, particularly on immigration policy.

Even so, the mayor said last week that he does not intend to stop seeking Trump’s assistance, despite “fierce” policy disagreements.

“We have found an area of common interest in the well-being of New York City, and as long as that can deliver for our city, I’m going to keep that door open,” Mamdani told Politico on Friday in Puerto Rico.

Mamdani and other elected officials from New York had gathered in Puerto Rico for the annual Somos political conference.

Two days later, in an interview on Fox News, a network Trump is known to watch regularly, Mamdani described a “productive relationship” with the president, saying the two text and speak by phone frequently:

“Through those conversations, we were able to get a New Yorker out of ICE detention. We were able to secure a visa for a grieving mother who would have otherwise had to watch her son’s funeral from thousands of miles away. What that tells me is: My job is to deliver for New Yorkers, and I have to work with whoever has the power to do that, wherever they may be.”

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