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The UAE’s Bold Leap into the Global LLM Race

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Shamma Al Qutbah – Researcher at Trends Research & Advisory

Jointly released by Harici and Trends Research & Advisory

The UAE’s homegrown AI model, Falcon, is making waves across the global tech landscape, challenging industry giants like OpenAI’s ChatGPT and China’s DeepSeek. But Falcon isn’t just another competitor in the AI race; it’s a bold testament to the UAE’s ambition to lead the future of artificial intelligence with security, reliability, and innovation at its core.

First unveiled in March 2023, Falcon was developed in the heart of Abu Dhabi, within the cutting-edge labs of the city’s leading global scientific research center, known as the Technology Innovation Institute (TII), as one of the most advanced open-source large language models (LLMs) not bound by the limitations of others but one that proudly stands among the world’s greatest models.[1]

With a strategic goal and ambition, drawing on a highly skilled team of 25 computer scientists, researchers, and AI specialists from various parts of the world,[2] Falcon was designed to push the boundaries and propel the UAE to the forefront of global innovation.

Through long hours of rigorous development, relentless work, and dedicated research, these experts worked on turning the goal into reality. They trained the model on vast amounts of data, ensuring that it could speak not just in the language of algorithms but in the language of culture, diplomacy, and progress.[3]

With every line of code, parameter, and test, these experts combined their knowledge of machine learning, neural networks, and computational efficiency to craft something truly exceptional that would position the UAE as a leader in AI, not just a consumer of technology. By pushing the boundaries of what was thought feasible, they crafted Falcon to be smarter, quicker, and more adaptive than anything that came before.

Thankfully, their tireless efforts paid off.

When Falcon was first released, it was nothing short of groundbreaking. AI researchers, engineers, developers, and specialists worldwide were enthralled with Falcon the minute it was released.

With its sophisticated design and outstanding performance, Falcon not only entered the scene but also swiftly established itself as a significant contender, ascending to the forefront of Hugging Face’s Large language model leaderboard.[4] This benchmarking platform evaluates and ranks AI models based on their performance in natural language understanding, generation, and efficiency.

But beyond the technical mastery, what really sets Falcon apart from its peers in the realm of large language models (LLMs) attracting the attention of industry experts from San Francisco to Beijing? What makes it stand out in the ever-evolving landscape of AI? And why should the world pay attention to the UAE’s approach to AI development?

Well, what gives Falcon its distinct edge is pretty simple: it’s the revolutionary shift it represents in AI accessibility, efficiency, and cost-effectiveness, along with the UAE’s unique vision and ambition behind it. At a time when cutting-edge AI models are becoming increasingly expensive and exclusive, the UAE set Falcon to take a different approach, one that is open, adaptable, and well-positioned to challenge the dominance of AI giants.

Perhaps the most dominant and outstanding feature of Falcon, which sets it apart from its competitors, is its open-source nature. While DeepSeek has been celebrated for its cost efficiency and ChatGPT for its advanced conversational abilities, Falcon came to prominence for its open-source framework, reflecting the UAE’s strategic intent to foster global collaboration while asserting its own technological leadership.

Unlike most advanced LLMs, which are locked behind corporate walls and accessible only to a select few, Falcon challenged the norm by making its capabilities accessible to all. This is because it’s rooted in the UAE’s belief that AI should be a shared asset that drives global innovation and progress rather than a privileged resource controlled by a few.

Yet, being an open-source model is not Falcon’s only strength. The model is also known for its cost-effectiveness and efficiency. Operating and training AI models can often be an expensive endeavor, with some models demanding large sums of money and massive computing resources. However, that is not the case with Falcon.

Consisting of just 680 million parameters, the model is designed to do more with less, exhibiting exceptional performance while employing less resources at a fraction of the cost.[5] This in fact not only makes Falcon more reasonably priced but also helps the UAE to uphold its commitment to accessible and sustainable AI.

The model’s distinctiveness does not end here. Falcon’s multilingual capabilities especially its strong focus on Arabic natural language processing stands as another outstanding feature. Unlike its peers in the realm of LLMs, Falcon was developed with a profound comprehension of Arabic, understanding and generating Arabic text in different dialects, with high accuracy, making it one of the few AI systems capable of really bridging cultures.[6]

But perhaps the most compelling reason the world should pay attention to Falcon is because of the UAE’s forward-thinking vision and ambition put behind it. The UAE’s advancement in AI has illustrated that success in this domain relies not just on financial assets or technical legacy but on vision, strategy, and inclusivity.

However, the question that lingers in the minds of many is how a nation renowned for its oil reserves carved out a new identity and emerged as a powerhouse in cutting-edge AI technology, let alone surpassing AI giants in performance.

The answer lies not in coincidence but in the UAE’s forward-thinking leadership. Unlike many rich-resource economies, the UAE leaders recognized early on that a country’s future and true power would not be built on oil alone but on innovation, knowledge, intellectual capital, and technological advancement.

They understood that to remain competitive in a rapidly evolving world, they had to invest in the industries of tomorrow, and AI was at the heart of this future and transformation. With this vision in mind the country took bold steps to position itself as a leader in the global AI landscape rather than just adopting AI technologies.

In 2017, it made history by becoming the world’s first country to establish a Ministry of Artificial Intelligence and appoint its first AI minister.[7] This move was not symbolic but deeply strategic, signaling that AI would be central to its long-term vision.

Shortly after, the country unveiled its national AI strategy for 2031, a comprehensive roadmap which it designed to integrate AI across key sectors from healthcare and education to security and economic development.[8] Within this strategy, the UAE ensured that AI governance was incorporated into the highest levels of decision-making, providing a cohesive and strategic approach to implementing AI, unlike other countries where policies on the matter surface from several departments.

To further position the UAE as a global leader in AI applications, turn the vision into reality, and ensure that the AI adoption was not just a policy on paper, the country created the role of Chief Executive Officer for Artificial Intelligence in the ministers and federal entities, an uncommon yet highly effective approach.[9] This meant AI wouldn’t just be talked about or confined to the private sector; it would be integrated into the government, actively shaping how government services and policies are designed.

In order to stay ahead and harness the AI’s transformative potential the country also formed the UAE Council for Artificial Intelligence (AI) where its mandate includes developing AI policy, encouraging research, and establishing collaborations among public and commercial entities as well as foreign organizations.[10]

Unlocking the full potential of AI is no easy feat. Though many nations depend on outside specialists, the UAE went in a different direction. Recognizing that genuine leadership needs a strong foundation of native talent, the UAE has made strategic investments in AI education and research, something even AI powerhouses like the U.S. and China often struggle with, relying heavily on imported talent.

In 2019, the country established the world’s first university dedicated to AI and named it after His Highness Sheikh Mohamed bin Zayed Al Nahyan (MBZUAI), aiming to drive the development of transformative AI technologies, empower the next generation of AI leaders and position the UAE as a global center for AI research and thought leadership.[11]

Complementing this vision is G42, a homegrown AI development holding company based in Abu Dhabi. In 2018, the UAE founded G42 as part of its vision to lead in AI and turn AI research into real-world applications in healthcare, energy, and national security.[12] This public-private collaboration gave the UAE an edge, allowing it to rapidly develop and deploy AI solutions at a pace unmatched by many global counterparts.

The UAE’s efforts to enforce its AI leadership did not stop here. Over the years, the country hosted global AI summits, like the AI Everything Summit and the Global AI Summit, turning these platforms into hubs for knowledge exchange, international collaboration, and shaping global discussions.[13] It seized the opportunity to lead the conversations on ethics, policy, and responsibility, positioning itself as a key player in setting the global AI agenda. While other countries hesitated, the UAE moved forward not with fear of the unknown but with the belief that the future belonged to those who dared to create it,

Hence, the UAE’s ascent in AI is no coincidence; it is the result of a strategic vision, bold investments, and an unwavering commitment to technological leadership. While many countries debated how to integrate AI, the UAE made it a reality.

Today, the country stands at the forefront of the AI revolution. It is one of the leading nations that saw the potential of AI early on and took the necessary steps to turn the ambition into reality, proving that with the right strategy, any nation, regardless of its past, can reinvent itself and lead in the industries of tomorrow.

[1] Ben Wodecki. “Inside Falcon: The UAE’s Open Source Model Challenging AI Giants.” Capacity Media. February 5, 2025. https://www.capacitymedia.com/article/2ednrsm6eglrmfzs429ds/long-reads/article-inside-falcon-the-uaes-open-source-model-challenging-ai-giants.

[2] Billy Perrigo. “The UAE Is on a Mission to Become an AI Power.” Time, March 22, 2024. https://time.com/6958369/artificial-intelligence-united-arab-emirates/.

[3] Saha, Rohit, Angeline Yasodhara, Mariia Ponomarenko, and Kyryl Truskovskyi. 2023. “The Practical Guide to LLMs: Falcon.” Medium. August 31, 2023. https://medium.com/georgian-impact-blog/the-practical-guide-to-llms-falcon-d2d43ecf6d2d.

[4] “Falcon 3: UAE’s Technology Innovation Institute Launches World’s Most Powerful Small AI Models That Can Also Be Run on Light Infrastructures, Including Laptops.” 2024. Technology Innovation Institute. December 17, 2024. https://www.tii.ae/news/falcon-3-uaes-technology-innovation-institute-launches-worlds-most-powerful-small-ai-models.

[5] “Falcon LLM vs. Other Language Models: A Comparative Analysis.” BotPenguin. May 14, 2024. https://botpenguin.com/blogs/falcon-llm-vs-other-language-models.

[6] Hasan, Suha. 2024. “The Middle East Scores Big in Building Arabic AI Models despite Challenges—What’s Next?” Fast Company Middle East. https://fastcompanyme.com. August 8, 2024. https://doi.org/10c3369/b9b7d4cb412ec452dc997a75f

[7] “How Is AI Regulated in the UAE? What Lawyers Need to Know – TR – Legal Insight MENA.” 2024. Thomson Reuters . June 13, 2024. https://insight.thomsonreuters.com/mena/legal/posts/how-is-ai-regulated-in-the-uae-what-lawyers-need-to-know

[8] “The U.A.E.’S Big Bet on Artificial Intelligence.” 2024. U.S. – U.A.E Business Council. https://usuaebusiness.org/wp-content/uploads/2024/02/SectorUpdate_AIReport_Web.pdf

[9] Emirates News Agency WAM. “UAE Cabinet Approves National Youth Agenda 2031; Introduces ‘Blue Residency’ for Sustainability Experts,” May 15, 2024. https://www.wam.ae/en/article/b35yptd-uae-cabinet-approves-national-youth-agenda-2031

[10] “Artificial Intelligence in Government Policies | the Official Portal of the UAE Government.” n.d. The United Arab Emirates’ Government Portal U.AE. https://u.ae/en/about-the-uae/digital-uae/digital-technology/artificial-intelligence/artificial-intelligence-in-government-policies

[11] “Abu Dhabi Launches First Dedicated AI University (and Consultancy).” Consultancy-Me. October 18, 2019. https://www.consultancy-me.com/news/2413/abu-dhabi-launches-first-dedicated-ai-university-and-consultancy.

[12] Hart, Robert. 2024. “What to Know about G42—the Emirati AI Giant That Just Got a $1.5 Billion Investment from Microsoft.” Forbes, April 16, 2024. https://www.forbes.com/sites/roberthart/2024/04/16/what-to-know-about-g42-the-emirati-ai-giant-that-just-got-a-15-billion-investment-from-microsoft/.

[13] “Abu Dhabi to Host Ai Everything Global 2026.” 2025. The Emirates News Agency WAM. February 4, 2025. https://www.wam.ae/en/article/bi17ems-abu-dhabi-host-everything-global-2026.

“Abu Dhabi to Host Ai Everything Global 2026”. The Emirates News Agency WAM. February 4, 2025. https://www.wam.ae/en/article/bi17ems-abu-dhabi-host-everything-global-2026

Opinion

Macroeconomic consequences of asymmetric UAV attacks in Russia

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Today, the nature of asymmetric threats is undergoing a profound transformation, with their focus shifting increasingly toward economic centers. By mid-2026, the nature of asymmetric warfare within the borders of the Russian Federation entered a qualitatively new and critical phase.

An analysis of the Ukrainian unmanned aerial vehicle (UAV) strikes carried out in July 2026 reveals a deliberate shift in targeting. Moving beyond military installations and fuel-energy infrastructure, these attacks directly targeted civilian logistics networks and critical nodes of the macroeconomic infrastructure.

The primary objective of this strategic shift is to deplete the country’s internal resources, induce insurmountable disruptions in supply chains, and exert intense psychological pressure on the civilian population.

Large-scale, coordinated strikes on the distribution centers of Wildberries—Russia’s largest e-commerce platform and part of the RVB joint venture (formed by the 2024 merger of Wildberries and Russ)—became the symbol of this new phase of home-front vulnerability. The geographic scope of these attacks, spanning an unprecedented area from the Northwestern Federal District to Southern Russia and Crimea, exposed critical gaps in national industrial risk insurance mechanisms. Furthermore, this situation sparked severe legal disputes between platform economy giants and small businesses, compelling immediate intervention from both corporate executives and senior state officials.

Tracing the multi-layered consequences of the kinetic impacts resulting from these July attacks on the state’s digital and physical economy will shape the new architecture of civilian sector security.

The zenith of the logistical terror waged by Ukraine was recorded on the night of July 24, 2026, marking the most technically complex UAV attack inflicted on Russian Federation territory since the beginning of the year. According to data from the Ministry of Defense of the Russian Federation, domestic air defense systems detected and destroyed 571 fixed-wing Ukrainian UAVs that night.

Two points have become exceptionally critical here: saturating radar fields and the military “swarm” effect. In short, this event is the clearest indication that the enemy has transitioned to a tactic of overwhelming radar systems. At the same time, the “swarm” effect generated across a vast geographic expanse aims to rapidly deplete the ammunition of anti-aircraft missile systems and expose air defense positions deep behind the front lines.

The breadth of the targeted geography attests to the unprecedented scale of the operation. UAVs were neutralized over the Belgorod, Bryansk, Kaluga, Kursk, Leningrad, Novgorod, Oryol, Pskov, Ryazan, Smolensk, Tver, Tula, and Vladimir regions, as well as over Moscow, Krasnodar, the Republic of Crimea, and the waters of the Azov and Black Seas.

Such a dense dispersion of targets across a vast territory points to an attempt to paralyze transportation and logistics arteries within Russia’s European landmass.

In parallel with the mass deployment of UAVs, missile strikes were also conducted against civilian industrial enterprises. During the same period, a missile attack on a local enterprise in the Fileyka district of Kirov resulted in outright catastrophe, leaving 6 people dead and 32 employees injured with varying degrees of severity.

Following the incident, Regional Governor Aleksandr Sokolov stated that the situation required not only the evacuation of the wounded, but also large-scale interventions such as restoring water and power supplies and auditing the security of neighboring settlements. This combined approach—employing inexpensive kamikaze drones to degrade air defenses followed immediately by missile strikes on unprotected industrial zones—presents an entirely new threat paradigm for the civilian economy.

Systematic and sequential attacks directed at the facilities of a single commercial entity completely eliminate the possibility of coincidence. The strategic, macroeconomic, and psychological factors turning civilian commercial warehouses into critical vulnerabilities for an entire state rest upon four pillars:

  1. Role as the central circulatory system of domestic trade: Wildberries plays a critical role in the architecture of the modern Russian economy, connecting millions of consumers with tens of thousands of SMEs. Damage to distribution centers severe supply chains, triggering localized shortages of essential consumer goods and regional inflationary spikes. The primary goal is to destabilize the domestic market and create an artificial supply vacuum.
  2. Immense facility footprints and defense complexity: Spanning hundreds of thousands of square meters across the nation, these hangars constitute massive targets with high radar contrast. Unlike military bases, these commercial warehouses cannot possess their own air defense systems; placing every such facility under an air defense umbrella is physically impossible without compromising frontline systems.
  3. Social and psychological impact: In the eyes of the public, logistics centers symbolize daily economic stability. Black plumes of smoke visible from miles away, massive fires, and civilian casualties represent a hybrid terror tactic designed to transport an atmosphere of fear deep into peaceful cities and shake the internal socio-political climate.
  4. Magnified radius of economic impact: Inventory consumed by flames in these warehouses generally consists of stock purchased by merchants on credit. The destruction of commodity inventories holds the potential to cause mass vendor bankruptcies, bank loan defaults, and cascading layoffs across small businesses.

The events of July 2026 mark an irreversible shift in the threat landscape facing Russian commerce and macroeconomics. Attacks directed at Wildberries hubs in regions such as St. Petersburg, Moscow, and Tambov exposed the utter vulnerability of civilian logistics infrastructure.

Deploying relatively inexpensive unmanned aerial vehicles, the enemy is capable of inflicting tens of billions of rubles in direct damage, paralyzing the supply of essential goods, and triggering an acute social crisis in which hundreds of thousands of entrepreneurs face the threat of bankruptcy. According to Russian experts, the total cost of a single fire—similar to the Kotovsk incident on July 18—can range between 50 and 100 billion Rubles ($630 million – $1.2 billion USD).

Despite its massive capital reserves, corporate business was caught unprepared for military threats. The medium-term survival of the e-commerce economy depends on the state and the private sector uniting to engineer unprecedented systemic solutions. Establishing compensation funds and introducing mandatory risk-distribution mechanisms are critical steps that must be taken.

Logistics hubs will remain open targets unless a “state program for subsidized reinsurance of military risks” is established for the critical nodes of the civilian economy. In the future, it will not suffice for large enterprises merely to pour capital into the physical protection of infrastructure; they must also deeply decentralize their logistics networks to prevent the concentration of goods and capital at single points of failure.

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Egypt Under Fire: What Does the Damietta Strike Mean for Global Energy Markets?

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Dr. Ahmed Moustafa, Director & Founder, Asia Center for Studies & Translation, Egypt

For the first time since successive waves of escalation between Washington and Tehran began in recent months, an Egyptian liquefied natural gas (LNG) export facility has become a direct target.

In the early hours of Wednesday, 29 July 2026, at least one drone struck the floating storage unit Energos Winter, owned and operated by a U.S. company and sailing under the Marshall Islands flag, while it was moored at the Mediterranean port of Damietta. The impact ignited a fire that spread to a neighboring LNG carrier, GasLog Salem. Egyptian authorities confirmed that the blaze was brought under control without any reported casualties, while no group had claimed responsibility for the attack at the time of writing.

A Broader Context That Cannot Be Ignored

The incident did not occur in a vacuum. It came only hours after the United States Central Command (CENTCOM) announced that it had conducted joint strikes with Saudi forces targeting armed factions in Iraq accused of launching drone attacks against Saudi oil facilities. Tehran responded by warning against a “miscalculation,” at a time when the Middle East is still grappling with the repercussions of an earlier round of escalation that erupted on 8 July, when U.S. forces carried out strikes inside Iranian territory following an attack on a commercial vessel in the Strait of Hormuz. Iran retaliated with attacks targeting U.S. military bases in Bahrain, Jordan, Qatar, Kuwait, the United Arab Emirates, and the Sultanate of Oman.

Against this tense backdrop, Damietta appears to represent yet another link in the chain of regional escalation—but an exceptional one. For decades, Egypt has sought to keep itself removed from direct military polarization in the region, unlike several Gulf states that have increasingly become arenas of open confrontation.

At the same time, this interpretation does not entirely rule out the possibility of an indirect Israeli role, driven by hostility toward Egypt’s growing diplomatic influence in the Palestinian and Gaza files. Cairo has remained committed to advancing the two-state solution and to implementing the second and third phases of the peace roadmap agreed upon following the Sharm El-Sheikh Peace Summit last October. The Israeli government, led by Benjamin Netanyahu, has sought to obstruct these efforts. Netanyahu, who is the subject of arrest warrants issued by the International Criminal Court, is widely accused of bearing responsibility for committing genocide that, according to Palestinian authorities, have resulted in the deaths of approximately 73,000 Palestinian civilians since 7 October 2023.

Why Egypt?

Over the past two years, Egypt has steadily strengthened its position as a regional hub for liquefying and re-exporting natural gas. This growing role has been supported by its two LNG plants at Idku and Damietta, in addition to a network of pipelines linking the country with Israel and Cyprus.

This infrastructure—unmatched elsewhere in the Eastern Mediterranean in terms of combined liquefaction capacity and direct access to European and global markets—has transformed Damietta and Idku into critical gateways for Eastern Mediterranean gas, including increasing volumes of Israeli/Stolen Palestinian natural gas liquefied and re-exported through Egyptian facilities.

According to local reports, the Energos Winter alone was supplying approximately 450 million cubic feet of gas per day to Egypt’s national grid and was preparing to receive four additional cargoes during August.

This expanding role gives any attack on Egypt’s gas infrastructure significance far beyond the immediate incident itself. It threatens not only Egypt’s domestic energy supplies but also a supply chain upon which Europe has increasingly relied as part of its strategy to diversify away from Russian natural gas.

Who Was Behind the Attack? Open Scenarios

At the time of writing, no organization had officially claimed responsibility, leaving several possible interpretations.

The first scenario cautions against prematurely attributing responsibility to Iran or its regional allies. It argues that the ambiguity surrounding the incident—and the absence of any claim of responsibility—may itself be deliberate, allowing whichever actor carried out the attack to undermine Egyptian stability without incurring immediate political costs.

This possibility includes actors competing over Eastern Mediterranean energy routes, as well as local or transnational groups pursuing agendas unrelated to the U.S.-Iran confrontation. Egyptian officials themselves have adopted a notably cautious approach. Egypt’s Minister of Information warned against “rushing to accuse any party,” while a former official suggested that “certain actors are seeking to drag Egypt into the conflict,” implying that the attack may have been designed precisely to draw Cairo into a confrontation it has consistently sought to avoid.

A second scenario, Israeli Involvement or the Involvement of Israel’s Allies

This, in itself, remains a serious hypothesis that is reportedly being discussed in undisclosed investigative circles. The prevailing analyses, supported by pro-Israeli and pro-American narratives, have largely centered on suspicions directed at Iran or Iran-aligned actors within the context of the ongoing conflict, rather than at Tel Aviv. This is partly because Israel maintains an energy partnership with Egypt, making any attack on an Egyptian export terminal potentially detrimental to its own natural gas interests.

Nevertheless, this hypothesis—like all others—must ultimately be assessed in light of the findings of the official investigations, which are still underway. It is worth recalling, however, that repeated warnings have been voiced regarding the visits of Israeli Prime Minister Benjamin Netanyahu to Washington, as such visits have often been followed by heightened regional instability, as was argued after developments last December. According to this line of analysis, Netanyahu seeks to prolong the conflict with Iran in order to strengthen his domestic political position, secure his continuation in office, and advance Israel’s long-term strategic objective of neutralizing Iran and carrying out “Greater Israel.”

Within this framework, some analysts argue that there are broader efforts to weaken both Egypt and Türkey. They cite remarks attributed to a former Mossad operative during appearances on Israeli television, alleging that such a strategy would also serve to divert international attention away from the Gaza file and the question of Palestinian statehood—an issue on which Egypt has intensified its diplomatic efforts in recent days. According to this interpretation, creating indirect pressure on Egypt—the region’s most stable and secure state—could be viewed as a means of drawing Cairo into a wider regional confrontation.

A third scenario links the incident directly to the broader U.S.-Iran escalation. According to the article, The New York Times, citing two Iranian sources, reported that the attack may have been intended as a signal that global shipping and energy supplies could face deeper disruptions should Tehran or its allies choose to escalate further. The sources, however, did not identify the perpetrators or specify the launch point of the drone.

The Messages Behind the Attack

Regardless of who carried out the operation, the choice of target sends several important signals. An attack on what the article describes as the first American-owned energy asset on Egyptian soil would convey a message to Washington that not only its military installations in the Gulf, but also its economic footprint across the region, has become increasingly vulnerable.

For Egypt, which has consistently pursued a policy of strategic restraint and regional neutrality, the incident serves as a reminder that its geographic position—adjacent to some of the world’s most important energy and maritime corridors—no longer guarantees insulation from the conflicts unfolding around it.

For global markets, the attack suggests that the geographic scope of potential disruption is expanding beyond the Strait of Hormuz and the Arabian Gulf into the Eastern Mediterranean, increasing insurance premiums for shipping and critical energy infrastructure in a region long regarded as comparatively secure.

Egypt’s Official Response

The Egyptian government handled the incident with considerable caution and procedural professionalism, treating it primarily as a crisis-management operation rather than a political event.

The Cabinet confirmed that the fire had been caused by a drone attack without attributing responsibility to any specific party, emphasizing that investigations were continuing “to take all necessary measures to safeguard Egypt’s interests and national security.”

Prime Minister Mostafa Madbouly described the response as a test of the state’s crisis-management capabilities, praising emergency teams for successfully moving the burning vessels away from the port, thereby preventing what could have become a far larger disaster.

President Abdel Fattah El-Sisi addressed the incident publicly for the first time during a telephone conversation with Spanish Prime Minister Pedro Sánchez. During the call, he confirmed that the competent authorities were conducting a comprehensive investigation, warned of the dangers posed by the escalating regional situation, and stressed the importance of cooperation between Egypt and the international community to contain the crisis while adhering to peaceful solutions.

This measured diplomatic approach—avoiding direct accusations while emphasizing de-escalation—reflects Cairo’s determination not to be drawn into a broader regional confrontation despite having come under direct attack on its own territory.

Several Gulf states also expressed their full solidarity with Egypt and voiced support for its efforts to safeguard its national security and sovereignty.

The Impact on Global Energy Markets

The Damietta incident occurred at a time when global energy markets were already under considerable strain. Brent crude had been hovering around US$90 per barrel following the escalation of 8 July, while the European Title Transfer Facility (TTF) benchmark for natural gas had climbed above US$700 per 1,000 cubic meters for the first time since March.

Any additional disruption affecting an Egyptian LNG export terminal risks reinforcing this upward trend. Europe has increasingly relied on Egyptian liquefied natural gas as part of its broader strategy to diversify supplies away from Russian pipeline gas. Consequently, even a temporary interruption to Egypt’s export infrastructure could heighten market concerns over supply security.

The incident also adds to the geopolitical risk premium already factored into insurance costs for vessels operating in the Eastern Mediterranean. Higher perceived risks could translate into increased shipping and insurance costs for LNG carriers throughout the region, even if subsequent investigations conclude that the attack was an isolated event unlikely to be repeated.

What Should Be Done to Prevent Similar Incidents?

First, Egypt should further strengthen its short-range air defense capabilities and counter-drone systems around strategic energy installations along its Mediterranean coastline. This includes deploying advanced early-warning radar networks and cost-effective interception systems capable of neutralizing small unmanned aerial vehicles before they reach critical infrastructure.

Second, broader regional intelligence-sharing mechanisms should be expanded among Egypt and neighboring states—including Cyprus, Greece, and Türkiye—in recognition of the increasingly interconnected nature of Eastern Mediterranean gas infrastructure and the shared strategic importance of safeguarding regional energy corridors.

Third, given that the targeted floating storage unit is owned by a U.S. company, Washington should contribute to financing and modernizing the protection of such critical infrastructure rather than limiting its response to statements indicating that it is merely “monitoring the situation,” as the article characterizes the U.S. reaction.

Finally—and perhaps most importantly—reducing the broader cycle of regional escalation between Washington and Tehran remains the only sustainable guarantee against similar incidents in the future. Any purely technical or localized security measures can mitigate immediate risks but cannot eliminate them so long as the underlying geopolitical drivers of confrontation remain unresolved.

Conclusion

The Damietta incident serves as a stark reminder that geographic neutrality alone is no longer sufficient to shield a country that has become a pivotal node in the global energy network.

References:

1- https://www.bbc.com/news/articles/c39ez3klwmro

2- https://www.reuters.com/world/middle-east/egypt-confirms-drone-caused-fire-two-gas-vessels-damietta-2026-07-30/

3- https://www.reuters.com/world/middle-east/drone-hits-gas-storage-tanker-egypts-mediterranean-port-2026-07-29/

4- https://www.nytimes.com/2026/07/29/world/middleeast/ships-drone-strike-egypt.html

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Rising populist parties in Europe and liberalism

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Leon Trotsky, one of the foremost leaders of the October Revolution, defined fascism as the totalitarian organization of society by monopoly capital. Magnates of large-scale monopoly capital are acutely aware that their profits cannot be safeguarded in the absence of authoritarian political power. Thus, fascism finds its bedrock of support among capitalist forces, the grand bourgeoisie, monopoly capital circles, and major landowners. We are all too familiar with the calamities fascism wrought upon the world in the era preceding the Second World War.

The post–World War II era is often commemorated as the golden age of capitalism—a period characterized by robust growth rates and low unemployment. Real wages climbed, social rights expanded, demands for a welfare state remained vibrant, and the pursuit of a social state yielded tangible results. This era ultimately met its demise in the 1970s, undone by shifts in the regime of accumulation and structural economic crises.

Today, across Europe, political parties that could virtually be characterized as the direct successors to pre-WWII fascist movements are consolidating their electoral gains. Germany, France, and Italy serve as quintessential examples. These parties weaponize poverty, unemployment, and anti-foreigner, anti-immigrant, anti-Muslim, and anti-Middle Eastern sentiments, while capitalizing on the incompetence of traditional center-right and center-left parties and taking a deeply Eurosceptic, critical stance toward the European Union. They employ caustic rhetoric against the political elites who have dominated governance for decades. Receiving endorsement from both US President Trump and Russian leader Putin, they draw substantial support simultaneously from working-class constituencies—traditionally the bedrock of the left—and from grand capital circles. While monopoly capital quietly pats these populist movements on the back, it simultaneously winks at liberal-democratic and increasingly indistinguishable social-democratic parties that champion unbridled capitalism and aggressive liberalism. Beyond France and Germany, examples abound from Italy to the United Kingdom…

The interests of grand capital, which back populist regimes and advocate authoritarian governance, also champion localization. For the erosion of the national, the public, and the collective—alongside the attenuation of the central state and the elevation of the local—works decisively to the advantage of big capital.

Why?

Because of this:

Under liberalism, the state does not regulate the market; rather, the market regulates, directs, and subdues both the state and society. In a liberal order, the state is expected to act on behalf of capital and in favor of the market—intervening in politics, society, and the law, and enacting statutory frameworks strictly to this end. The state is tasked with engineering legal and institutional arrangements for the market’s account and benefit. Society is reduced to a market-society, wherein the citizen is reimagined as a consumer, a client, and an entrepreneur. Since competition is elevated as the supreme imperative, citizens themselves must become entrepreneurial and competitive—a posture the state actively promotes and incentivizes.

According to liberals, the state bears no obligation to shield its citizens from the pitiless mechanics of the market or the ferocity of unchecked capitalism. On the contrary, the state demands and encourages that citizens establish themselves as entrepreneurial actors within the market arena. Consequently, the state aligns itself with capital, operating at its beck and call. Hence, liberalism harbors an innate preference for unorganized, non-unionized, cheap labor. Wages are suppressed; agricultural subsidies are gutted to a minimum; and strikes are banned on the flimsiest of pretexts.

Because liberalism insists that the state be sculpted, organized, and driven according to market demands—allowing the market to command and direct the state—the liberal vision of the nexus between politics and economics, as well as politics and law, is deeply fractured. In their worldview, law must operate exclusively to the advantage of capital, acting as the vigilant sentinel for the inviolability of property rights. It must dismantle every obstacle standing in the way of free trade, unbridled competition, and the free market, while swiftly and severely penalizing any force that dares to impede them. To conform to the expectations and demands of capital: this is the primary imperative required of the law.

In sum, through its championing of identity politics, its reduction of the citizen to a mere client, and its liquidation of the state’s social character in order to place public power at the disposal of capital, liberalism stands fundamentally opposed to the social, the public, and the national. This is a truth that must be firmly impressed upon left-liberals, nationalist-liberals, and conservative-liberals alike.

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