Some lawmakers from both parties are warning that a newly signed US nuclear cooperation agreement with Saudi Arabia could trigger a regional arms race in the Middle East.

Although the agreement stems from negotiations that began before the outbreak of the war with Iran, Democratic Senator Chris Murphy, a member of the Senate Foreign Relations Committee and a longtime critic of Saudi Arabia, argued that announcing the deal now would have an immediate impact on the conflict.

“Everything that happens in Riyadh echoes in Tehran,” Murphy said. “One reason the United States was reluctant to offer Saudi Arabia this agreement was that we knew it would move Iran one step closer to a nuclear weapon, and that remains true today.”

Republican Senator John Kennedy said even the possibility that Saudi Arabia could one day enrich uranium would have the potential to rapidly alter the strategic balance in the region and beyond.

“I worry about nuclear proliferation in the Middle East, Japan and South Korea,” Kennedy said.

With the Trump administration having already committed to the agreement with Saudi Arabia, the authority to reject it now rests with Congress.

Blocking the agreement, however, will be difficult, as opponents would need to secure a veto-proof two-thirds majority in both chambers.

The 30-year agreement announced on Wednesday allows private US nuclear companies to export to the Saudi market and establishes a framework for US security safeguards.

While the agreement does not guarantee that Saudi Arabia will enrich uranium, and any such capability would likely take at least a decade to develop, members of Congress argue that even this initial commitment could create a domino effect.

Republican Senator John Barrasso, also a member of the Senate Foreign Relations Committee, said he was concerned the agreement could further complicate US efforts to persuade Iran to abandon uranium enrichment entirely.

“I am deeply concerned about nuclear proliferation in the Middle East because of the consequences it could produce,” Barrasso said.

The United States and Saudi Arabia have spent nearly two decades negotiating an agreement under which Washington would assist Riyadh in developing a civilian nuclear program.

According to two sources familiar with the matter, both the Biden and Trump administrations initially presented the proposal as an incentive for Saudi Arabia to normalize relations with Israel.

After the Oct. 7, 2023 attacks on Israel made normalization significantly more complicated, however, the Trump administration decided to separate the two issues.

Asked about the agreement while traveling in the Philippines on Wednesday, Secretary of State Marco Rubio dismissed concerns that the arrangement could contribute to nuclear proliferation.

“The United States will not enter into any agreement with any country that creates a risk of nuclear weapons proliferation,” Rubio said.

In announcing the agreement, Energy Secretary Chris Wright said, “Rest assured, these agreements uphold the highest standards of nuclear security and nuclear nonproliferation.”

Saudi Arabia said in its own statement that the agreement is intended to strengthen cooperation in the peaceful use of nuclear energy “in accordance with the highest international standards for nuclear security, nuclear safety and nuclear nonproliferation.”

For decades, the United States has generally avoided allowing new nuclear cooperation partners to enrich uranium domestically, instead insisting on a no-enrichment commitment known as the “gold standard,” most notably in its 2009 agreement with the United Arab Emirates.

Concerns in Washington have also focused on Saudi Arabia’s refusal to sign the document known as the Additional Protocol.

The protocol is an agreement with the UN’s nuclear watchdog that grants inspectors broader access beyond declared facilities to detect undeclared nuclear activities.

That refusal, combined with Saudi Arabia’s potential enrichment capability, leaves the new agreement well short of the “gold standard” established by the 2009 UAE agreement.

Under that agreement, Abu Dhabi accepted such inspections and renounced the right to enrich uranium or reprocess plutonium on its own territory.

Critics argue that abandoning both commitments marks a departure from the template Washington has relied on for decades to prevent nuclear proliferation.

The United States announced on Wednesday that it had also reached a bilateral safeguards agreement with Saudi Arabia but did not provide further details.

Republican Senator Ron Johnson of Wisconsin said he was surprised the administration had negotiated an agreement that could permit Riyadh to enrich uranium, unlike previous US nuclear cooperation agreements.

“What concerns me is the enrichment potential of Iran or Saudi Arabia. But I can also envision a scenario in which it is kept completely under control,” Johnson said.

Victoria Coates, who examined whether the United States could sell nuclear technology to Riyadh while serving as a senior official during the first Trump administration, said the agreement carries risks but that “those risks can be mitigated.”

Now serving at the conservative Heritage Foundation, Coates said, “As long as we monitor the situation closely and have clear visibility into what is happening, I think it is a risk worth taking.”

Republican Senator Mike Rounds said he would not object to Saudi Arabia enriching uranium on its own territory depending on the extent of the enrichment permitted under the agreement.

“It depends on how much they enrich the uranium. If it is 60% or less, that is far above what is needed for civilian purposes. But if we are talking only about enrichment to levels that can be used in nuclear power plants, I have no problem with that. Somebody is going to do it, and it is better that we do it than someone else,” Rounds said.

Under the agreement, the United States and Saudi Arabia will jointly study the feasibility of uranium enrichment within the kingdom.

According to two sources familiar with the agreement, if both sides determine such enrichment is acceptable, it would take place under a “black box” arrangement designed to prevent the transfer of sensitive technology to Saudi Arabia.

Saudi Arabia has long sought to establish its own civilian nuclear program. Some analysts argue that cooperation with the United States would be preferable to Riyadh turning to Moscow or Beijing.

Jonathan Panikoff, a former intelligence official now at the Atlantic Council, said, “Without an agreement with the United States, Riyadh would almost certainly have turned to China or Russia, whose agreements would likely not include the restrictions contained in the US deal. But that does not mean the risks associated with this type of agreement are zero.”

Escalating tensions between the US and Iran could reignite inflation, drive interest rates higher, and drag global economic growth down to 1.3% from last year’s 2.9%, World Bank Chief Economist Indermit Gill stated.

Gill, who is set to retire at the end of August, noted that due to high uncertainty surrounding the war in the Middle East, the bank had modeled three different scenarios in its June economic forecast. However, the worst-case scenario—defined by the conflict lasting six months or longer—is already close to materializing, he said.

Under this scenario, global headline inflation is projected to reach 4.5%.

Gill stated that prolonged conflict and damage to regional oil infrastructure would further deepen food insecurity by disrupting shipments of fertilizer, helium, and sulfur required for agriculture, triggering a series of secondary effects that could include rising interest rates.

This represents the first statement by a senior World Bank official since tensions between Washington and Tehran escalated sharply following the collapse of an April ceasefire agreement, which had previously fueled hopes that the impact of the conflict would be less severe.

Gill noted that poorer nations, which have yet to fully recover from the COVID-19 pandemic, could face greater food insecurity. Meanwhile, countries with high debt levels will be hit by rising borrowing costs as interest rates climb, restricting spending on education, health, and other vital services.

“My personal view is that we may be perhaps a few months away from this, because we do not yet see policy interest rates beginning to rise,” the economist said.

“Once inflation accelerates, heavily indebted countries could be just months away from facing severe difficulties in meeting their debt service payments,” Gill added.

Signs of strain have already begun to emerge. According to a source briefed on the matter, some cash-strapped nations have requested increases to existing loans from the International Monetary Fund (IMF), while Pakistan requested a $10 billion foreign exchange stabilization fund from the US this week.

The World Bank’s June forecasts revealed that 40% of low- and middle-income countries are either already in debt distress or at high risk of falling into it.

Gill noted that this percentage corresponds to 32 countries but warned that this number could rise rapidly if interest rates climb. He added that even if other countries do not default on their debts, their long-term growth prospects could still decline.

“This is like a slow-moving train wreck,” Gill said, pointing out that countries that do pay their debts will be forced to deplete resources from education, healthcare, and other areas necessary to support future growth.

According to World Bank data, the average debt-to-GDP ratio for emerging and developing countries stood at approximately 74% in 2025. This is significantly higher than the pre-pandemic levels of around 50-55% recorded in late 2019. For low-income countries, this ratio rose from approximately 40% to 67%.

Gill stated that some countries will require debt relief on a case-by-case basis.

He said that the world’s largest economies—the US, China, and India—have remained relatively insulated from the impact of the war, with each drawing on different sources of resilience. However, developing nations have faced far greater challenges.

As debt vulnerabilities have mounted, the G-20 major economies have made some progress on reforms to the debt restructuring process, though improvements have been slow to materialize.

Nevertheless, Gill noted that there is some good news for developing nations. A new World Bank analysis on artificial intelligence readiness shows that these countries could benefit from the emerging technology and the productivity gains it promises. Gill pointed out that while approximately 10% of people in poor countries are likely to be negatively affected by AI, that figure stands at about 30-40% in rich nations.

Gill continued:

“Therefore, for these countries, AI could be a major gain. Developing countries should be much more optimistic about the impact of AI compared to developed nations.”

Gill added that AI could potentially help return growth to levels not seen in decades, though this is unlikely to happen within the current decade.

Quebec and Europe are set to deepen their economic ties and reinforce the resilience of their shared supply chains in response to mounting geopolitical tensions with the US and China.

Christopher Skeete, Quebec’s Minister of International Relations and La Francophonie, told Euractiv that US tariffs and Chinese export restrictions on strategically important minerals have driven Canada’s mineral-rich province to further develop its relations with Europe, a continent with which it shares deep historical, social, and cultural ties.

As the only French-speaking majority region in North America, Quebec shares “common values, a common world view [and] a common destiny” with Europe, Skeete said.

“Right now, we are putting more weight into this space, and we hope to go further, to achieve more,” Skeete added. “We believe in building a deeper relationship with Europe as a way of mitigating some of the risk of being dependent on our historically single customer, which is the United States.”

The comments come amid a warming of relations between Canada and Europe over the past year.

US tariffs hit provincial economy

Sweeping tariffs proposed by US President Donald Trump, his ambivalent stance toward NATO, and threats to annex Canada and Greenland have accelerated efforts to strengthen economic and defence cooperation.

With an economy heavily focused on manufacturing, Quebec has been hit particularly hard by this geopolitical volatility.

Trump’s tariffs have severely impacted the province’s export-dependent industries, especially its aluminium smelters. More than 70% of Quebec’s exports are destined for the US.

The province, which shares jurisdiction over economic matters with the Canadian federal government, is also highly vulnerable to supply disruptions in critical minerals used in numerous modern technologies, the production of which is dominated by China.

Mineral-rich Quebec crucial for “de-risking”

However, this mineral-rich region increasingly produces lithium, graphite, and various other elements considered strategically critical by Brussels.

“We can help Europe be more sovereign, while also helping them de-risk their dependency on Asian supply chains,” Skeete said, adding that the province aims to increase both its mining and refining capacity.

Asked whether breaking Beijing’s dominance over the global supply of critical minerals would be difficult, Skeete replied:

“It’s not a question of whether it’s hard. I think it’s a moral imperative. I think we have no choice.”

Skeete also highlighted Quebec’s capacity to strengthen Europe’s defence sector, noting that a Montreal-based company is the only Canadian firm to have signed a contract under the EU’s €150 billion ‘SAFE’ credit programme so far.

“We definitely want a second SAFE programme,” he said. “If we don’t seize this moment of a changing world to deeply integrate our economies, I think we will have missed a huge opportunity.”

Quebec to prioritise transatlantic relations

On 16 June 2026, the Government of Quebec announced its new international policy, titled “A reliable Québec in a world in transformation”.

Presented by Quebec Premier Christine Fréchette and Skeete, the policy represents the first major update since 2017 and marks a significant shift in Quebec’s approach to international relations.

Amid global uncertainties such as trade tensions with the US, the war in Ukraine, and the rapid development of artificial intelligence (AI), Quebec is redefining its international strategy and priorities through the lens of “national interest”.

This has major implications for businesses and investors. According to 2025 figures, the Quebec economy generates an annual GDP of over 600 billion Canadian dollars (approximately 427.6 billion US dollars) and exports worth approximately 180 billion Canadian dollars (approximately 128.3 billion US dollars).

To reshape its international relations, Quebec has identified three key areas of focus: diversifying trade relations, renewing diplomatic efforts in line with Quebec’s interests, and asserting Quebec’s identity more strongly abroad.

Through these priorities, the newly released policy document sets out the government’s core directions and outlines six key areas for businesses and investors:

• National interest as a cornerstone
• Diversification of business operations
• Natural resources and critical minerals: A strategic asset
• Europe as a strategic partner
• Economic Francophonie and scientific diplomacy
• Emerging markets

In this context, the new policy envisages further diversification of trade and investment relations, focusing particularly on Europe (including the Comprehensive Economic and Trade Agreement – CETA markets), the Indo-Pacific region, Africa, the Middle East, and Latin America.

For the business community, this strategic direction delivers a clear message: markets outside the US will benefit from increased state support, including trade missions, international partnerships, and targeted economic initiatives.

Quebec identifies emerging markets as a fundamental pillar of its trade diversification strategy.

The Indo-Pacific region alone represents two-thirds of global economic opportunities and is increasingly viewed as a key centre of economic and geopolitical influence.

While Quebec places special emphasis on Japan and South Korea as strategic partners in areas such as energy, defence, decarbonisation, and innovation, it adopts a pragmatic approach in its relations with India and China on areas of mutual interest.

Against this background, Canada and China announced a strategic partnership in January 2026.

Critical minerals agreement with the United Kingdom

In December last year, Quebec signed an agreement with the United Kingdom to secure critical and strategic minerals for the defence industry.

The agreement aims to position Quebec as a reliable partner in the current geopolitical environment.

Western countries are seeking partners to reduce their dependence on China, which controls a large share of the global market for critical and strategic minerals.

The European Union and the United Kingdom have announced that they will increase defence spending in response to the Russian threat, a sector that requires large quantities of critical minerals.

Skeete noted in an interview with The Canadian Press at the time that at least 10 of the 40 critical minerals deemed necessary by the EU are found on Quebec territory.

In 2024, the UK was Quebec’s fourth-largest European trading partner, with a bilateral trade volume exceeding 5 billion dollars.

Quebec’s exports to the UK have increased by 41% over the past five years, making the country the province’s second-largest customer in Europe and its sixth-largest globally.