America
Policymakers gather in Washington as Middle East tensions swell
The spring meetings of the World Bank (WB) and the International Monetary Fund (IMF) are taking place in Washington from 17-19 April.
Finance ministers and central bank governors from around the world are attending the spring meetings, and among the topics on the agenda are debt relief for countries in difficulty, the Ukraine issue and what to do with Russia’s confiscated assets.
Of course, the interest rate/inflation cycle and the fate of possible interest rate cuts by the US Federal Reserve are also on the agenda. Equity markets were thrown into a bit of turmoil this week when Fed Chairman Jay Powell signalled that the Fed was in no hurry to cut interest rates.
According to IMF President Kristalina Georgieva, the Fed is doing the right thing. “The Fed is not yet ready to cut, and rightly so,” Georgieva told Bloomberg on Thursday.
Noting that the key question at the Washington meetings is “how long the Fed will keep rates high”, the IMF chief said “all countries are talking about it and all eyes are on the US”.
Georgieva argued that the strengthening of the dollar was “of course worrying” and said that the economy was “somewhat overheating”, partly due to the US fiscal stance.
Georgieva added that she remains optimistic that conditions in the US will allow the Fed to start cutting interest rates later this year.
Georgieva calls for fiscal tightening
Georgieva also called on advanced economies, which have greatly increased their debt levels in recent years, to tighten their fiscal policies to deal with the pandemic crisis.
“Countries urgently need to build fiscal resilience for the next shock. It is important to rebuild fiscal buffers,” she said.
According to Georgieva, she argued that central banks struggling with inflation could also “get some help from the fiscal side”.
Georgieva’s comments before the start of the meetings were also relatively “pessimistic”. According to her, “a stagnant and disappointing decade” lies ahead. Without a course correction,” the IMF chief said, “we are heading for the tepid twenties”.
Georgieva’s comments echoed the findings of the IMF’s World Economic Outlook report. The report said: “Faced with a variety of headwinds, the outlook for future growth has also deteriorated. Looking ahead five years, global growth is projected to slow to just over 3 percent by 2029. Our analysis suggests that by the end of the decade, growth could be about one percentage point below the pre-pandemic (2000-19) average. This threatens to reverse improvements in living standards, while the imbalance of the slowdown between richer and poorer countries could limit prospects for global income convergence,” the report says.
The report stresses that a prolonged low-growth scenario, coupled with higher interest rates, could threaten debt sustainability and limit the ability of governments to tackle economic stagnation and invest in “social or environmental initiatives”.
Development of poor countries will have to wait for another spring
Half of the world’s 75 poorest countries have seen their income gap with the richest economies widen for the first time this century, marking a historic reversal in development, the World Bank said in a report published on Monday.
According to the report, the gap between per capita income growth in the poorest countries and per capita income growth in the richest countries has continued to widen over the past five years.
Ayhan Kose, deputy chief economist at the World Bank and one of the report’s authors, told Reuters: “For the first time we see that there is no convergence. They are getting poorer. We are seeing a very serious structural regression, a reversal in the world … so we are ringing alarm bells here,” Mr Köse told Reuters.
The report said 75 countries eligible for grants and interest-free loans from the World Bank’s International Development Association (IDA) risked a lost decade of development without ambitious policy changes and significant international support.
Köse said that growth in many IDA countries had already started to decline before the COVID-19 pandemic, but that 2020-2024 will see the weakest half-decade of growth (3.4 per cent) since the early 1990s.
More than half of the IDA countries are in sub-Saharan Africa, 14 in East Asia and eight in Latin America and the Caribbean. Thirty-one of these countries have a per capita income of less than $1,315 per year. These include the Democratic Republic of Congo, Afghanistan and Haiti.
Conversely, in addition to the ‘tactical’ considerations that the Fed must take into account when determining its interest rate policy, fluctuations in bond markets indicate that a significant rethink may be required regarding the eventuality of interest rates once the latest inflationary wave has passed.
The two-year US Treasury yield, which is highly sensitive to short-term Fed policy, has risen in recent months as might be expected. However, longer-term yields have followed the same pattern.The 10-year US Treasury bond, which stood at 3.87% at the beginning of February, was yielding 4.63% two days ago.With the exception of a few weeks last autumn, long-term yields have not been this high since 2007.
In 2009, when the economic crisis was devastating the global economy, long-term Treasuries offered higher yields than in 2016, when they were ‘reasonably healthy’. The consensus view at the Fed was that a policy of 5 per cent or higher interest rates would constrain economic activity and put inflation on a downward path.Inflation data and bond market behaviour undermine this view. There is a widespread view that high interest rates may not be as much of a drag on the economy as had been thought, but rather reflect a ‘new normal’.
America
Musk appointed co-director of Pentagon future warfare initiative
The world’s richest man, Elon Musk, has assumed the co-directorship of a Pentagon initiative focused on the future of warfare, known as “Project Meridian”.
Musk’s new role was announced by US Secretary of Defence Pete Hegseth.
Musk, who has long expressed his conviction that wars will ultimately be fought with autonomous unmanned aerial vehicles, will advise the project as co-director alongside Palmer Luckey, founder of defence start-up Anduril, and former Speaker of the House of Representatives Newt Gingrich.
In a memorandum issued at the Pentagon, Hegseth stated that the group would “examine the battlefields of the future” and “determine which weapons and technologies warfighters must employ to achieve dominance in these environments.”
During his “State of the Force” address at Marine Corps Base Quantico, Hegseth said:
“The best predictors of future conflict do not reside exclusively within the Pentagon. Obvious biases and risks arise when we task ourselves with both framing the questions and answering them.”
Hegseth stated that this initiative would commence immediately and that, following his address, he would convene with Musk, Luckey, and Gingrich at a secure location.
Project Meridian will have 120 days to “ruthlessly map the trajectory of wars, domains, and technologies”, a process that will culminate in the public disclosure of its findings alongside a classified annex.
Hegseth outlined an expansive mandate extending “from beneath the surface of the Earth to beyond the Moon.”
Rather than formulating new military strategies or policies, the panel will seek to identify “the domains we must seize and the capabilities we must master”, focusing on the effort to “discover, develop, and field” the weapons and systems that next-generation American troops may require.
The group is expected to submit a report containing recommendations to him by the end of January.
In 2024, Musk remarked: “Future wars will be entirely about drones and hypersonic missiles.” This was merely one of several similar statements he has made in recent years.
For Musk, whose oversight role at the Department of Government Efficiency (DOGE) ended in turmoil and escalated into a dispute with President Donald Trump over Trump’s spending bill, this appointment marks his formal return to government in an official capacity.
Musk and Trump ultimately reconciled, and Musk attended a meeting on artificial intelligence safety at the White House this week alongside other technology leaders.
Meridian forms part of a broader push announced by Hegseth to restructure the military around autonomous warfare and rapidly advancing technologies.
Hegseth announced the establishment of the Autonomous Warfare Command (AUTOWARCOM), a new four-star combatant command endowed with what he termed “service-like authorities” to scale autonomous and robotic capabilities across the joint force.
The Department of War will also begin phasing in new occupational frameworks across all military branches to establish specialised career tracks for what Hegseth described as “the next generation of autonomous warfighters.”
“We should have conceived an Autonomous Warfare Command a decade ago,” Hegseth said, explaining that Meridian aims to gaze far enough ahead to enable the military to anticipate the next technological shift rather than lag behind.
America
Pentagon breach exposes personal records of three million people
A cyberattack targeting the US Department of War’s personnel database has resulted in the leak of personal information belonging to approximately 3 million people.
Speaking to ABC News, a Pentagon official stated that the system accessed by unauthorised individuals contained the records of 2,760,000 living persons and 294,000 deceased individuals.
The Military Times portal, which first broke the news, had reported the number of affected individuals as approximately 4 million based on two sources. The Pentagon official subsequently conveyed different figures to ABC News.
The leak encompasses Social Security numbers and duty information belonging to military personnel and civilian employees. According to an official notification examined by Military Times, the compromised records may also include names, dates of birth, contact information, sex, race, and military occupational specialties.
The unauthorised access to the information system of the Defense Manpower Data Center (DMDC) lasted for approximately nine months, between October 2025 and 16 July 2026.
ABC News reported that the access in question was obtained by a small number of third-party users. The vulnerability was closed after it was identified.
The DMDC is considered one of the Pentagon’s primary personnel records centres. More than 60 million records belonging to active-duty personnel, reservists, civilian staff, contractors, retirees, veterans, and military family members are stored at the centre.
The Pentagon has not detected any evidence that the leaked data has been misused. Military Times reported that affected individuals were offered identity restoration and credit history monitoring services.
A similar data breach previously occurred on the Federal Bureau of Investigation’s (FBI) recruitment website, FBIJobs.gov. According to information obtained by ABC News from internal communications and sources, the FBI is considering the possibility that data belonging to its entire staff may have been stolen.
The New York Times (NYT) examined a portion of the stolen FBI records. Home addresses, telephone numbers, official email addresses, Social Security numbers, dates of birth, hiring dates, and emergency contact details for relatives were identified within these documents.
The database also contained unit designations, duty roles, and information regarding the supervisors of personnel. Some records revealed assignments within counterintelligence and counternarcotics units, as well as departments examining threats originating from Russia, China, and Iran.
Ciaran Martin, the former head of the UK National Cyber Security Centre, noted that this type of breach could directly affect the FBI’s operational capabilities.
The hacker group known as ShinyHunters had announced that it had seized medical data and security clearance records alongside files belonging to tens of thousands of active and former FBI employees.
Experts evaluating the matter for the NYT warned that this information could be used to track agents, threaten their families, or compile dossiers by foreign intelligence services.
The ShinyHunters group initially threatened to release the data unless the bureau withdrew an advisory it had published concerning the group’s attack methods.
The group later asserted that it had never intended to leak the information and characterised its action as an advertising campaign.
In a report published in May, Reuters noted that the personal data of US military personnel had been used in surveillance and attack preparations.
According to the agency, Washington’s adversaries gained the ability to pinpoint areas where troops were concentrated by exploiting commercially available location data. US lawmakers at the time criticised the Pentagon for failing to adequately protect the personal data of military personnel.
America
Canada diversifies oil and gas exports away from US
US President Donald Trump’s trade policy and the Washington administration’s push to increase Venezuelan oil imports are prompting Canada to diversify its energy exports.
According to a report by The Wall Street Journal, recent developments are accelerating Canada’s development of new oil and natural gas projects.
Steps taken by the Ottawa administration, which aspires to become an energy superpower, are seen as potentially strengthening the country’s position in global markets.
In Canada, the world’s fourth-largest oil producer and fifth-largest natural gas producer, the energy sector accounts for approximately one-fifth of total exports.
Almost all of the country’s natural gas exports and approximately 90% of its oil exports go to the US.
The newspaper writes that the trade war with Washington and the atmosphere of confrontation entered into with Iran have heightened Canada’s desire to turn to alternative markets outside the US.
Officials plan to increase shipments of oil and liquefied natural gas (LNG) to European and Asian markets.
Accelerating infrastructure investments in line with this target, Canada is also shortening approval processes. The government is prioritising the construction of an oil pipeline extending specifically to the west coast.
According to the newspaper’s estimate, if major pipeline projects are implemented, Canada’s daily oil transport capacity could rise to 6.8 million barrels by 2034.
Routes heading to the west coast will make up approximately 30% of this capacity.
The Canadian administration is simultaneously advancing LNG export projects. According to the report, these investments could allow approximately 55% of Canadian natural gas exports to be directed to markets outside the US by the early or mid-2030s.
While the government expands tax incentives for the oil and natural gas sector, the province of Alberta also plans to overhaul its royalty system.
However, the newspaper notes that implementing the new projects requires heavy investment, and the process depends on the final decisions taken by producers as well as the completion of regulatory approval processes.
The expansion of pipeline and LNG infrastructure could gradually reduce Canada’s dependence on the US market while raising its share in the global energy market.
The Canadian Prime Minister’s demand to reduce reliance on the US market had also come to the fore in July.
According to Carney’s statement, the province of Alberta submitted a plan for a pipeline spanning more than 1,000 kilometres to the west coast of British Columbia.
Targeted for completion by September 2027, the line will reach the Pacific coast by following an existing corridor through the mountainous terrain.
This shift in energy comes at a time of strained relations with the US. Donald Trump said that if Canada obtains associate member status in the European Union, he could halt trade with Europe in certain sectors and impose high tariffs.
As reported by the Associated Press, Trump characterised such a rapprochement as a “potentially hostile act”.
European Commission President Ursula von der Leyen had proposed opening the path for Canada to become the EU’s first associate member. The terms of this associate membership status, which is not defined in EU treaties, are not yet clear and require the approval of member states to enter into force.
Canada, which does not seek full membership, aims for maximum rapprochement with the EU.
Following Trump’s return to the White House, relations between Washington and Ottawa deteriorated. The Trump administration, which repeatedly called on Canada to become the “51st state” of the US, introduced additional tariffs.
In July, the US began imposing 50% tariffs on certain Canadian-origin goods.
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