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
Climate litigants target rapid expansion of artificial intelligence data centers
The rapid expansion of data centers powering artificial intelligence systems is increasingly triggering legal battles over environmental concerns.
According to a report by the London School of Economics (LSE) cited by The Guardian in its annual climate litigation review, non-governmental organizations, local communities, and environmental activists from Chile to Ireland and the US are seeking to block the construction and operation of data centers through the courts, citing high energy consumption, water usage, and associated climate risks.
Researchers analyzed approximately 3,600 climate lawsuits filed globally since 2015, detecting a rise in cases linked to data centers.
The legal proceedings focus on energy supply sources, the volume of water used to cool servers, and environmental pollution.
One of the earliest cases in this field was filed against a Google project in the Chilean capital, Santiago.
In 2020, local residents and municipal officials challenged a construction permit granted for a massive data center in the Cerrillos area, arguing that it threatened the water resources of a city already struggling with drought.
The court ruled that the project’s climate impacts had been inadequately assessed and ordered a review of the decision.
Environmental impacts of projects in Chile and Ireland taken to court
In Ireland, which the report’s authors describe as one of the global flashpoints of conflicts over data centers, the situation is even more acute.
According to data shared in the report, more than 20% of the country’s total electricity consumption is allocated to this sector.
Despite government plans to further expand the sector, environmental organizations are pursuing legal action against official decisions that allow new facilities to use fossil fuels for several more years before transitioning to renewable sources.
Lawsuits in the US and UK force companies to make commitments
Environmental requirements for data centers are also tightening in the US. Officials in the city of Pittsburg, California, imposed obligations on a new data center to use renewable energy and opt for recycled water for equipment cooling.
At the same time, lawsuits in several states are challenging regulatory bodies that have approved the construction of fossil-fuel-based energy infrastructure to meet growing computing capacity demands.
A project belonging to Elon Musk’s xAI company in the state of Mississippi has also faced legal pressure.
Plaintiffs argue that the company used methane generators without obtaining the necessary environmental permits, thereby violating the Clean Air Act. The US Department of Justice, meanwhile, defended the project, highlighting its economic significance.
Similar disputes are occurring across Europe.
In the United Kingdom, activists successfully secured a review of the environmental assessment report for a planned mega-scale data center project in Buckinghamshire.
Following the judicial process, official authorities acknowledged deficiencies in the approval process, while the contractor agreed to undertake additional environmental commitments.
According to the experts who prepared the study, these lawsuits demonstrate that judicial processes have become a new tool for regulating rapidly expanding digital infrastructure.
Even if projects are not halted entirely, the lawsuits force companies and official bodies to account for climate risks, transparently disclose resource consumption data, and re-evaluate their energy strategies.
As reported by The Guardian, study co-author Associate Professor Joana Setzer of the London School of Economics commented on the issue: “The issue here is not necessarily to stop development, but to prevent the lock-in of fossil fuel dependency.”
“This is an opportunity to direct highly energy-intensive projects toward renewable energy sources while we still have the chance,” Setzer added.
Diplomacy
Joint RIAC-CEBRI report exposes deep structural imbalances in Russia-Brazil relations
A joint report by the Russian International Affairs Council (RIAC) and the Brazilian Center for International Relations (CEBRI), titled “Brazil and Russia Relations: Political Convergence and Economic Development,” states that relations between the two countries are characterized by a structural imbalance and a paradoxical gap between major political ambitions and weak commercial-economic results.
Experts from both nations approached the current economic relations through differing lenses. Russian analysts emphasized the depth and resilience of ties in certain sectors despite mounting external pressures.
Meanwhile, CEBRI experts defined the relationship as a model of “incomplete cooperation,” shaped by periodic diplomatic alignments driven by advocacy for a multipolar world order on the international stage, paired with economic ties that remain highly vulnerable to external challenges.
Brazilian experts outline structural barriers to relations
CEBRI analysts identified the collapse of the Soviet Union, the establishment of BRICS, and the conflict in Ukraine as the primary drivers of modern Russian-Brazilian relations. According to their assessment, none of these factors have enabled the parties to fully realize their cooperation potential.
Domestic instability in Russia during the post-Soviet period, combined with economic reforms in Brazil, led to a prolonged mutual distance between the two nations.
While acknowledging that the creation of BRICS offered an opportunity to deepen cooperation, the Brazilian experts stated that expectations ultimately outpaced concrete results.
Structural constraints and political shifts within Brazil prevented political consensus from translating into sustainable cooperation.
Luiz Inacio Lula da Silva’s victory in the 2022 presidential election influenced the nature of the rapprochement with Russia.
Although analyses of United Nations voting records show both countries taking similar positions—thereby reinforcing their image as advocates for a multipolar world order—the report noted that this alignment is cyclical rather than structural in nature.
The experts noted that while military operations in Ukraine have prompted Russia to seek new partners and have reinforced Brazil’s role as a pragmatic mediator in a fragmented international system, opportunities to deepen bilateral economic cooperation remain limited.
Major Brazilian corporations are unable to operate fully in the Russian market due to the risk of secondary sanctions that could be imposed by their US and European partners.
The majority of trade routes between the two countries have been disrupted by sanctions. The world’s largest maritime shipping companies, including the Swiss-Italian joint venture MSC, Denmark’s Maersk, France’s CMA CGM Group, and Germany’s Hapag-Lloyd, have refused to transport Russian cargo.
Despite an increase in trade volume, the structure of bilateral trade remains highly asymmetric. Brazilian partners noted that this situation reflects mutual economic complementarity rather than a genuine diversification of trade ties. Brazil’s exports to Russia consist predominantly of agricultural products. In recent years, soybeans accounted for 33%, meat for 28%, and coffee for 18% of these exports. Conversely, Russia’s exports to Brazil rely on a narrow group of strategic commodities, primarily diesel fuel, fertilizers, and industrial raw materials. Fertilizers constitute approximately 75% of Russian shipments to Brazil, underscoring the concentration of trade in a single sector. Brazil’s National Fertilizer Plan, adopted in 2025, aims to reduce import dependency over the next decade, which is identified as a factor that could weaken future bilateral trade flows.
According to data from Brazilian analysts, Russia was not among Brazil’s primary arms suppliers during the 2021–2025 period. Despite Brazil’s refusal to participate in anti-Russian sanctions and its decision not to send weapons to Kyiv, defense relations between the two countries have assumed a largely symbolic character since the outbreak of the conflict in Ukraine.
Foreign direct investment (FDI) between the two economies also remains marginal, according to Central Bank of Brazil data. In 2024, Russia’s cumulative FDI in Brazil was recorded at $38.73 million, representing just 0.0044% of the country’s total inbound foreign investment. During the same period, Brazil’s investments in Russia stood at $1.69 million, accounting for a mere 0.00038% of total foreign investments.
CEBRI analysts concluded that Russia-Brazil relations present a model of selective and irregular engagement, characterized by a persistent gap between political ambitions and economic outcomes. The most prominent convergence is observed in periodic diplomatic contacts, while cooperation remains limited in areas requiring institutionalization and long-term coordination. This asymmetric economic structure leads to an unequal distribution of benefits.
Divergent proposals presented to advance cooperation
Brazilian experts noted that the fundamental challenge in advancing relations lies in restructuring the pattern of economic and technological interdependence. The report stated: “The countries must move away from a model of relations predominantly based on the trade of natural resources and low-value-added goods.”
CEBRI analysts proposed the following conditions to establish a balanced and sustainable partnership:
- Diversifying bilateral trade,
- Increasing mutual investments,
- Developing cooperation in high-technology sectors,
- Strengthening engagement in the service sector,
- Expanding cooperation in more complex branches of the manufacturing industry.
This process envisions the gradual opening of the Russian economy to foreign investment, including Brazilian capital, alongside measures to facilitate the access of Brazilian products to the Russian market. Furthermore, according to CEBRI experts, increased Russian investment in Brazil’s technology sectors could strengthen Brazil’s productive potential.
In contrast, Russian analysts argue that deepening cooperation is possible by expanding commercial interaction in traditional sectors where Russia holds distinct competitive advantages. Projections indicate that Brazil’s demand for fertilizers will increase by 20% by 2030, and the role of its agro-industrial complex, which accounts for 25% of the country’s GDP, will become even more critical. Increasing the market share of Russian companies in fertilizer production and establishing full-cycle production-logistics chains could turn Brazil into a hub for expanding shipments to other Latin American countries.
Russian experts link the diversification of the export structure to the implementation of joint investment projects and the deepening of high-tech cooperation. The utilization of online e-commerce platforms to promote consumer goods by Russian small and medium-sized enterprises is also highlighting itself as a new and rapidly growing area of interaction.
Russian experts listed the most promising areas of cooperation as follows:
- Oil and gas exploration and production,
- Exploitation of uranium and lithium deposits,
- Fertilizer production and modernization of oil refining facilities,
- Agricultural trade,
- Renewable energy sources and the green economy,
- Aerospace industry and nuclear energy,
- Transportation and logistics,
- Information technologies,
- Defense industry.
Regarding the joint production of uranium and lithium in Brazil, the Brazilian government is currently conducting negotiations with the Russian company Tenex, a subsidiary of Rosatom. The report noted that Russia is prepared to share its experience in developing peaceful nuclear technology and to support the implementation of artificial intelligence, digital government services, and automation solutions across various fields. Significant potential was also identified in municipal-level interactions, including smart city technologies, as demonstrated by ongoing contacts between the municipalities of Moscow and Rio de Janeiro.
Russian analysts also pointed to the necessity of establishing alternative payment mechanisms to bypass Western sanctions. Potential options include processing payments through third countries, using national currencies in bilateral trade, and partially transitioning to the Chinese yuan for settlements on Russian exports.
Ultimately, the authors of the report concluded that the complementary nature of the two economies and their shared interest in strategic autonomy demonstrate that, despite the irregular structure of their relations, significant untapped potential remains to be realized.
Diplomacy
NATO draft declaration pledges €70 billion to Ukraine ahead of Ankara summit
NATO member states are preparing to approve the allocation of €70 billion in military aid to Ukraine at the annual leaders’ summit to be held in Ankara, Türkiye, on June 7-8.
If these resources are secured, Ukraine’s total defense spending—combining its own domestic resources and foreign aid—will approximately match Russia’s budgeted defense expenditure for this year.
Although the Russian Federation continues to spend its budgeted amounts at a faster pace, a budgetary balance will have been established on paper.
Speaking to Politico, five diplomats from alliance member states said that NATO ambassadors have largely agreed on the text of the leaders’ joint declaration, though details may still change.
According to the diplomats, the draft declaration commits NATO countries to providing €70 billion (approximately $80 billion) in military support to Ukraine.
The US, however, is not participating in this specific support program.
When this amount is added to Ukraine’s own defense and security expenditures, the total budget will reach approximately $178 billion. Three days ago, Ukrainian President Volodymyr Zelenskyy signed a law approving a 4.4 trillion hryvnia (approximately $98 billion) budget, which includes a loan from the European Union and drives defense spending to record levels.
By comparison, Russia’s official budget allocates 12.93 trillion rubles for defense.
While this amount equates to approximately $170 billion at current exchange rates, the ruble’s recent depreciation plays a role in this balance; indeed, just a month ago, the dollar equivalent of this sum exceeded $180 billion.
In contrast, according to calculations by Janis Kluge, a researcher at the Germany-based Institute for International and Security Affairs, Russia’s military spending in the first quarter of 2026 alone reached a record 5.908 trillion rubles (approximately $78 billion at the current exchange rate).
Ukraine, meanwhile, has managed to significantly increase its budget expenditures thanks to a €90 billion loan provided by the European Union. Kyiv is scheduled to receive half of this loan this year, with €31.8 billion of that portion planned to be used directly for defense spending.
European Commission President Ursula von der Leyen, speaking on Thursday at the Ukraine Reconstruction Conference in Gdansk, Poland, announced that the first tranche of €3.2 billion was transferred today.
According to an earlier Politico report citing Ukrainian Ministry of Defense data, NATO countries had already committed $38 billion in military aid to Ukraine for this year.
In addition, Kyiv planned to request an additional $20 billion from the alliance. The Ukrainian side aims to maintain the initiative it has gained in recent months by effectively utilizing unmanned aerial vehicles across all areas, from the front line to occupied territories.
These vehicles, while cutting off Russian supply lines, also cause explosions and fires at oil refineries and defense industry facilities deep inside Russia.
Consequently, according to the draft declaration of the NATO leaders, Ukraine will receive more support than expected, potentially reaching a total of €70 billion.
According to information provided to Politico by the diplomats, the alliance will also commit to allocating at least an equivalent amount for next year.
If these plans are implemented, and with the addition of €45 billion allocated from the EU loan for the year 2027, Ukraine’s defense financing will continue to be strongly supported next year as well.
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