Diplomacy
SpaceX IPO raises concerns over European capital outflows and telecom competition
SpaceX’s planned initial public offering could pose significant challenges for the German and broader European economies, with concerns mounting over potential capital outflows and growing competitive pressure on Europe’s telecommunications sector.
The record-breaking IPO, scheduled for June 12, is expected to raise $75 billion and value the company at $1.75 trillion.
Unlike most previous US listings, the offering has been structured to give German and European retail investors particularly attractive access, raising concerns about a potential drain of capital from Europe.
At the same time, SpaceX subsidiary Starlink is emerging as a potential threat to the traditional terrestrial mobile communications market due to its low-latency satellite network.
That development could affect companies such as Deutsche Telekom and its subsidiary T-Mobile.
Fears of an “inflated valuation”
The financial data underpinning the record valuation, however, provide numerous reasons for skepticism.
Of SpaceX’s three current business segments — its rocket division, the Starlink satellite business and artificial intelligence company xAI, which also includes social media platform X — only the satellite business is profitable.
While SpaceX’s revenues are rising, so are its losses. In 2025, the company generated approximately $18.7 billion in revenue, up by one-third from the previous year, but also recorded losses approaching $5 billion.
In the first quarter of 2026 alone, the company posted roughly $4.7 billion in revenue while losses reached approximately $4.3 billion.
xAI created a significant drag on results, recording an operating loss of $2.47 billion.
As a result, a Danish pension fund blacklisted SpaceX, arguing that the company’s valuation was “generously inflated” and that pricing was being driven more by “Musk’s narratives than economic realities.”
SpaceX is tying much of its growth outlook to artificial intelligence, and its revenue projections depend heavily on technologies that have yet to be developed, including solar-powered data centres in space.
According to Reuters, the company is targeting a potential $28.5 trillion market in artificial intelligence.
Berenberg warns of capital flowing to the US
In a departure from the norm for US public offerings, participation by retail investors from Germany and across Europe has been made easier.
Berlin-based fintech company Trade Republic announced that European customers would be able to subscribe directly to SpaceX shares through its app.
That development threatens to create challenges for the European economy. Holger Schmieding, chief economist at Berenberg Bank, warned that capital is increasingly being drawn toward the United States.
“These enormous IPOs absorb capital through valuations heavily influenced by speculation. That makes it more difficult to finance investments in Europe,” Schmieding said.
At the same time, investors from China, including Hong Kong, have reportedly been barred from participating in the IPO for security-related reasons.
Because the United States applies regulatory and compliance restrictions to the export of critical technologies, lead underwriters were instructed not to accept orders from Chinese investors.
Starlink puts pressure on German telecom giants
Meanwhile, SpaceX’s recent global expansion, particularly in Europe, is creating uncertainty within the traditional communications industry, especially at Deutsche Telekom.
Satellite communications existed long before SpaceX and Starlink, but they faced a fundamental limitation: satellites typically orbited Earth at altitudes of around 35,000 kilometres.
At those distances, signals took relatively long to return to Earth. Latency could reach half a second or more, making video streaming and seamless internet browsing impractical.
Starlink fundamentally changed that model by deploying more than 10,000 satellites into low Earth orbit at altitudes of between 340 and 550 kilometres, reducing signal transmission times to around 20 milliseconds.
By comparison, modern 5G networks in Germany operated by Deutsche Telekom, Vodafone and Telefónica typically achieve latency of between 15 and 25 milliseconds.
Starlink has also received approval from the US Federal Communications Commission (FCC) to deploy an additional 15,000 satellites.
That has led many observers to believe SpaceX ultimately intends to become a mobile network operator itself and displace established providers.
German telecom companies see cooperation as the only option
Deutsche Telekom Chief Executive Timotheus Höttges said he views the development as a challenge for his company.
“I can certainly confirm that Starlink is a first-class technology company. If you cannot fight the dragon, ride the dragon,” he said.
Höttges intends to continue Telekom’s existing cooperation with Starlink as a network operator. The partnership is one of 35 Starlink collaborations currently spanning six continents.
The Deutsche Telekom chief executive hopes Starlink will never be able to replace terrestrial networks. However, market figures suggest SpaceX may ultimately be capable of much more than its leading European rival.
SpaceX is valued at $1.75 trillion, compared with an estimated $150 billion valuation for Deutsche Telekom and $209 billion for T-Mobile.
T-Mobile shares have already fallen by around 10%, with the stock declining from approximately $210 per share a year ago to around $190 today.
Starlink has meanwhile already submitted a bid for mobile spectrum in the United States. If the company secures a lasting position in the sector, T-Mobile’s growth prospects in the US could come under pressure.
That would directly increase risks for Deutsche Telekom, which derives roughly three-quarters of its market value from US operations.
Momentum builds behind a German Starlink rival
Efforts to establish a European competitor to Starlink are gathering pace.
As SpaceX prepares for its IPO, Germany’s Federal Cartel Office approved a planned satellite joint venture between defence and technology companies Rheinmetall and OHB.
The two companies intend to bid for a multibillion-euro Bundeswehr contract to build a military communications satellite network comparable to Starlink.
OHB will be responsible for satellite manufacturing and ground station deployment, while Rheinmetall will build the networks and produce end-user devices.
The Franco-German Airbus Group, which had initially competed against the Rheinmetall-OHB venture, will also be included in the project.
Although the new three-way alliance effectively removes competition and creates a monopoly structure, it allows the Bundeswehr project to move forward quickly and helps avoid potential legal disputes that could arise if the contract were awarded to a single bidder.
Musk says orbital data centres are not a difficult challenge
As SpaceX prepared for its major IPO this week, Chief Executive Elon Musk said on Monday that building artificial intelligence data centres in orbit was not a particularly difficult engineering challenge.
The billionaire entrepreneur said much of the required technology already exists within the current Starlink network.
“One of the things we want to convey here is that there is no kind of magic required that does not actually exist,” Musk said in a video interview released by the company.
“Most of this consists of technologies we have already developed for Starlink V3 satellites. We do not think this is a very difficult problem compared with what we are already doing.”
The remarks came as investors scrutinised SpaceX’s plans for orbital AI data centres.
Those plans form a key component of the company’s long-term growth strategy ahead of an IPO expected to value the company at approximately $1.75 trillion.
Plans unveiled for AI satellites
Musk and SpaceX engineer Ian Dahl outlined plans for solar-powered AI satellites designed to function as computing nodes in orbit and cooled through the dissipation of heat into space.
The company argues that moving computing infrastructure into orbit could help overcome some of the power constraints increasingly faced by terrestrial AI data centres.
According to the presentation, the first proposed AI satellite would generate roughly 150 kilowatts of peak power and provide 120 kilowatts of continuous computing capacity.
Musk said that was broadly comparable to a single Nvidia GB300 AI server rack, which typically consumes around 140 kilowatts at peak load.
SpaceX said the satellites would rely heavily on technologies already being introduced with next-generation Starlink V3 satellites, including solar panels and thermal management systems.
Musk said he expects SpaceX’s AI satellite factory in Bastrop, Texas, to achieve meaningful production volumes by the end of next year.
The orbital computing initiative forms part of a broader strategy aimed at positioning SpaceX not only as a launch and satellite communications company, but also as a major provider of artificial intelligence infrastructure as it enters the public markets.
Diplomacy
Türkiye, Pakistan, Saudi Arabia defense agreement: An attack on one will be considered an attack on all
Türkiye, Pakistan and Saudi Arabia signed a joint defense agreement that deepens security cooperation at a time of rising military tensions and conflicts in the Middle East. The agreement stipulates that an armed attack against any one of the three states will be considered an attack against all of them.
Türkiye, Saudi Arabia and Pakistan signed a joint defense agreement at a trilateral summit held in Mecca on Friday, pledging to strengthen collective security, deepen defense cooperation and support peace and stability in the region and beyond.
The “Mecca Joint Defense Agreement” was signed at a summit held at Al-Safa Palace by Turkish President Recep Tayyip Erdoğan, Saudi Crown Prince Mohammed bin Salman and Pakistani Prime Minister Shehbaz Sharif.
According to a statement issued by Türkiye’s Directorate of Communications, the agreement reflects the three countries’ shared determination to strengthen their collective security on the basis of their longstanding historical ties, Islamic solidarity, common strategic interests and close defense cooperation.
The agreement aims to strengthen collective deterrence against any act of aggression and provides that an armed attack against any one of the three countries will be considered an attack against all of them.
The agreement also provides for the development of defense cooperation among the three countries in all fields.
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Makkah Al-Mukarramah Summit for Joint Defence
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Saudi King Salman bin Abdulaziz Al Saud hosted Erdoğan and Sharif in Saudi Arabia for the summit.
President Recep Tayyip Erdoğan traveled to Saudi Arabia on Friday and met with Saudi Crown Prince Mohammed bin Salman. Pakistani Prime Minister Shehbaz Sharif, meanwhile, arrived in Saudi Arabia a day earlier together with the country’s Chief of Army Staff Asim Munir and performed Umrah in Mecca.
Iran and its allies have been targeting Saudi Arabia and other Gulf countries and obstructing their energy shipments since the United States and Israel launched a war against Iran on February 28, escalating tensions in the region.
According to a joint statement by the three countries, the agreement aims to strengthen collective deterrence against any act of aggression and provides that an armed attack against any one of the three countries will be considered an attack against all of them.
The joint statement did not specify the details of the obligations undertaken by the parties under the “Mecca Joint Defense Agreement.” It noted, however, that the agreement aims to strengthen collective security and promote peace, security and stability in the region and beyond.
A Turkish official told Reuters, “The pact includes a collective defense clause. It is entirely defensive and commits the parties to mutual support solely for defensive purposes.”
The official also said the agreement was not directed against any specific actor, was open to the participation of other countries in the region, and did not invalidate or replace any existing bilateral or multilateral arrangement.
At the same time, the three countries are concerned both about Israel’s increasing aggression and Iran’s expanding influence at a time when their longstanding ally, the United States, is struggling to contain regional turmoil.
Strong political symbolism
Abdulaziz Sager, chairman of the Saudi-based Gulf Research Center, said, “The political symbolism of the summit is significant. Three of the most influential countries in the Muslim world are coming together at a time of growing uncertainty. This shows the increasing willingness of regional and middle powers to coordinate more closely on security issues.”
Sager added, “If the trilateral mechanism is institutionalized and translated into concrete cooperation, it could strengthen the combined diplomatic and defense weight of the three countries while also contributing to the emergence of a security architecture that is more strongly shaped by regional dynamics.”
Türkiye has NATO’s second-largest army. Saudi Arabia, the Gulf’s most powerful country, is one of the world’s largest oil exporters. Pakistan, meanwhile, is the only Muslim country with nuclear weapons.
The Iran factor
Since the war began on February 28, Saudi Arabia has been targeted by Iran as well as its Houthi allies in Yemen and Shiite militias in Iraq because it hosts U.S. military bases.
The conflict has also brought most shipping traffic through the Strait of Hormuz, which carried around one-fifth of global energy supplies before the war, to a halt.
For Saudi Arabia, the consequences of the conflicts in the Middle East over the past three years have been more severe. While the conflicts have endangered the country’s oil exports and ambitious development plans, they have also raised serious questions about the reliability of the U.S. security umbrella on which Riyadh has relied for many years.
A senior Saudi official told Reuters on Thursday that the country expects coordinated attacks in the near future from both Iraqi militias and the Houthis under Iranian direction. This raises questions about how the new alliance would respond to such attacks.
Iran-aligned Welayat News described the agreement as a Saudi request for assistance. The report included the following assessment: “Ansarullah’s Yemen-based equation of ‘blockade for blockade, escalation for escalation’ has put the Saudis under pressure. At Saudi Arabia’s initiative, a defense alliance between Türkiye, Saudi Arabia and Pakistan is expected to be signed today.”
Although Türkiye and Pakistan have avoided major direct attacks, both countries want the conflicts that threaten their own security and economic conditions to be de-escalated.
According to a Reuters report in May, Pakistan deployed around 8,000 troops, fighter aircraft, drones and an air defense system to Saudi Arabia and moved toward developing broader security ties across the Gulf.
Reuters reported in July that Pakistan had also begun negotiations with Kuwait on an expanded security agreement in exchange for energy cooperation and investment.
The AP news agency also noted that the agreement was announced at a time when Türkiye’s relations with Israel have become strained over the conflicts in Iran, Lebanon and Gaza.
Former Israeli official: Türkiye will not fight the Houthis simply because Saudi Arabia asks
Commenting on the defense agreement between Saudi Arabia, Türkiye and Pakistan, former head of Israel’s National Security Council Prof. Jacob Nagel said Saudi Arabia is not as powerful as it appears and described the country as a “paper tiger.”
Speaking to The Jerusalem Post, Nagel said, “You have to understand this: despite all its wealth and weapons, Saudi Arabia is to a large extent a paper tiger. It has a great deal of weaponry and a great deal of money, but militarily it cannot even manage to get through the day.”
On whether Türkiye would defend Saudi Arabia under the agreement, Nagel said, “I do not think the Turks will send their navy and attack the Houthis simply because the Houthis attacked the Saudis. That certainly does not align with my realistic view of the region.”
According to Nagel, Saudi Arabia is therefore looking for alternatives.
“Saudi Arabia understands that it is in serious trouble, both financially and in terms of security. Even before the recent wars, we saw them take the surprising step of signing an agreement with Iran. They did this because they were afraid and felt exposed to the concrete Iranian threat, as well as to Iran’s militias across the Middle East.”
Nagel continued:
“The Saudis’ problem is that despite having the most advanced equipment, aircraft and intelligence capabilities, they do not know how to use this power effectively on the ground. For that reason, all this talk of new alliances with Pakistan or Türkiye should be approached with considerable caution.”
Nagel also said, “This is more of a diplomatic maneuver aimed at putting pressure on the U.S. administration.”
“The Saudis are disappointed with the U.S. position. Particularly in light of the shortcomings they have identified in missile and interceptor ammunition stockpiles in the West, they are trying to send the message that they will not be left alone in the struggle against the Shiite axis.”
Diplomacy
US lawmakers seek terrorist designation for Polisario Front
US Representatives Josh Gottheimer and Ronny Jackson introduced the “Polisario Front Terrorist Designation Act” to Congress on July 30, calling on the State Department to designate the Polisario Front as a foreign terrorist organization.
The bill, drafted by Gottheimer of New Jersey and Jackson of Texas, alleges that the Polisario Front receives support from Iran and poses a threat to US national security.
Gottheimer said groups linked to the Iranian government were seeking to open a new front against the US and its allies and argued that the Polisario Front had become one of the instruments used for that purpose.
However, Gottheimer also acknowledged that such cooperation between Iran and the Polisario Front has not yet been verified.
“This bipartisan bill will ensure that, once such cooperation is confirmed, US counterterrorism sanctions are fully applied against the Polisario Front,” Gottheimer said.
The proposal follows similar legislation introduced in Congress in 2025, including an initiative by Republican Senator Ted Cruz.
Polisario Front backs Western Sahara independence
The Polisario Front advocates the creation of an independent state in Western Sahara, which is largely under Moroccan control. The movement was founded in May 1973 to fight Spanish colonial rule in the territory.
After Spain withdrew from the territory in 1976, the Polisario Front proclaimed the Sahrawi Arab Democratic Republic, whose government-in-exile is based in Algeria. Morocco soon took control of most of Western Sahara and maintains that the territory is part of its sovereign land.
The name Polisario is derived from the Spanish title “Popular Front for the Liberation of Saguia el-Hamra and Rio de Oro.”
US President Donald Trump recognized Morocco’s sovereignty claim over Western Sahara in 2020 in exchange for Rabat normalizing relations with Israel under the Abraham Accords.
France, the United Kingdom, Germany, the Netherlands and Spain later backed Morocco’s position on the territory.
Morocco, one of Washington’s major non-NATO allies, has continued expanding its military and political ties with both Washington and Tel Aviv. According to the Hudson Institute, designating the Polisario Front as a foreign terrorist organization could further strengthen the US-Morocco alliance.
Morocco sent troops to the Gaza international force
In July, Morocco became the first Arab and African country to commit troops to the International Stabilization Force that is expected to operate in Gaza under Trump’s “Peace Board” administration.
Rabat formally signed the agreement governing its participation in the force on July 15. The International Stabilization Force is expected to operate in coordination with the Israeli military.
A pro-Palestinian Moroccan activist criticized the country’s role in the force, saying: “I do not know what role Morocco will play other than disarming Hamas and perhaps even overseeing the recolonization of Gaza under the US-Israel axis.”
Morocco has continued strengthening military and security ties with Israel since signing the Abraham Accords.
Israeli troops openly participated in Morocco’s annual African Lion exercise in May 2025. The Israeli flag was displayed for the first time during the opening ceremony of the exercise, jointly organized by the Rabat government and US Africa Command and involving about 10,000 troops from more than 40 countries.
Ceuta and Melilla dispute also in focus
The Moroccan government was reported last week to have organized the movement of tens of thousands of Moroccan male migrants toward Ceuta, the Spanish territory on the North African coast.
A US congressional budget report adopted in July also described Ceuta and Melilla for the first time as Spanish-administered cities “located on Moroccan territory” and “long claimed by Morocco.”
Israeli Prime Minister Benjamin Netanyahu had called for Spain to be punished for attempting to block the delivery of US weapons to the Israeli military for use in operations in Gaza. The migrant influx toward Ceuta was welcomed by a significant portion of Israeli social media users.
Responsible Statecraft wrote that the Moroccan government may have resorted to “migration blackmail” to pressure European countries. The publication added: “This time, however, the primary beneficiaries appear to be Israel and the US.”
Diplomacy
Türkiye, Saudi Arabia and Pakistan set to sign defence pact
Türkiye, Saudi Arabia and Pakistan are expected to sign a joint defence agreement in Saudi Arabia on Friday.
Two regional sources with direct knowledge of the matter told Reuters that Türkiye, Saudi Arabia and Pakistan would sign a joint defence agreement in Saudi Arabia on Friday.
Saudi Crown Prince Mohammed bin Salman, President Recep Tayyip Erdogan and Pakistani Prime Minister Shehbaz Sharif will meet in the Saudi port city as regional powers seek to strengthen security ties during the war with Iran.
Regional powers are seeking to bolster security ties amid conditions created by the US-Israeli war against Iran, which has also drawn in Gulf states and disrupted maritime shipping through the Strait of Hormuz and the Red Sea.
Saudi Crown Prince Mohammed bin Salman is expected to meet President Recep Tayyip Erdogan and Pakistani Prime Minister Shehbaz Sharif in Jeddah on the Red Sea coast.
Pakistani Prime Minister Sharif and Pakistan’s Chief of Army Staff Asim Munir arrived in the country for a visit running from Thursday to Saturday, while Erdogan is expected to travel to Saudi Arabia on Friday, according to the Turkish presidency.
A senior Turkish intelligence source told CNN-News18 that all the core terms of the alliance had been fully prepared, communicated to the parties and accepted by the leaders of Pakistan, Saudi Arabia and Türkiye.
Since Pakistan and Saudi Arabia signed a mutual defence agreement last year, there has been discussion that the two countries wanted to bring other states in West Asia and South Asia into the defence bloc.
Alliance to draw on Saudi finance, Turkish tech, Pakistani nukes
According to CNN-News18, the Pakistan-Saudi Arabia-Türkiye agreement is a natural extension of the Saudi Arabia-Pakistan mutual defence agreement announced last year.
As with the Saudi Arabia-Pakistan agreement, the trilateral alliance will draw on the different strengths of each member state to create an integrated security network.
CNN-News18 said Saudi Arabia would contribute its financial power and regional influence; Türkiye would provide advanced military technology, particularly drones, along with a NATO-standard defence industry infrastructure; and Pakistan would contribute its nuclear capability and battle-experienced military.
The alliance will include joint military exercises, technology transfers, defence industry production and intelligence-sharing.
Under the Saudi Arabia-Pakistan mutual defence agreement, Pakistan had agreed to deploy about 25,000 troops to Saudi Arabia, backed by armoured units, artillery, infantry and rocket forces, as well as two air force squadrons and two naval squadrons. The deployment was said to be intended to contribute to the kingdom’s security, conduct joint operations and train Saudi forces in return for $10 billion in Saudi investment.
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