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UK intelligence oversight in crisis amid budget cuts and rising threats, report finds

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The UK Parliament’s Intelligence and Security Committee (ISC) has published its comprehensive annual report, examining the country’s national security architecture and the activities of the intelligence community.

The document, the first report of its kind published since 2023, details the operational challenges and evolving threat perceptions faced by agencies such as MI5, MI6 (SIS), and GCHQ, while presenting striking data on serious shortcomings in oversight mechanisms.

The report stated that at a time when state-sponsored threats, the terror threat, and cyberattacks are simultaneously on the rise, the Committee responsible for overseeing these activities on behalf of Parliament has reached a point where it “cannot fulfill its statutory functions.”

Oversight mechanism in a resource crisis

One of the most notable sections of the report highlights that while the budget and staff numbers of the British Intelligence Community have rapidly increased, the Committee that oversees them has been forced to downsize.

According to the document, while the intelligence agencies’ budget has increased by £3 billion annually compared to 2014, the Committee’s budget has decreased by 23% in real terms over the same period.

Similarly, while MI5, GCHQ, and other security units have doubled their staff numbers, the Committee’s staff has been reduced by 40%.

Committee members emphasized that this is not merely an administrative issue but a direct blow to Parliament’s ability to scrutinize “activities conducted in secret and funded by the public purse.”

The report asserted that the Committee should have an independent office and that the Cabinet Office’s control over Committee staff is “unacceptable.”

The China threat and the “Whole-of-State” approach

The Committee described the threat posed by China to the UK’s national security as “comprehensive and complex.”

The report claimed that Chinese intelligence is “almost certainly the largest intelligence apparatus in the world” and that it targets UK interests in an “aggressive and prolific” manner.

Highlighting Beijing’s use of a “whole-of-state” approach, the report alleged that state-owned enterprises, academic institutions, and even ordinary citizens “can be co-opted into espionage and interference operations.”

The Committee found the British government’s strategy against this threat to be inadequate, stating that the pace of policy development is far too slow compared to the scale of the threat.

The report included the following statement regarding the government’s China policy:

“I welcome the Government’s attempt to respond to our Report. However, to imply, as the Government has, that our findings are out of date is misleading. We have monitored and noted all relevant developments throughout the Report, up to two months before publication. Given the glacial pace at which the Government’s China policy has evolved, this has not been difficult to do.”

The Committee criticized the government’s reluctance to include China in the “Enhanced Tier” of the Foreign Influence Registration Scheme (FIRS) under the new National Security Act.

Details on Russia and Iran

The document also claimed that threats from Russia and Iran remain at a high level, asserting that Russia has “embarked on sabotage campaigns across Europe to destabilize Western support for Ukraine.”

It was noted that in May 2024, the UK expelled the Russian military attaché and removed the diplomatic protection from several Russian-owned properties.

Iran, meanwhile, was alleged to be “continuing its plots to assassinate and kidnap dissidents on UK soil.”

Terror threat at a “serious” level

The terror threat level in the UK was stated to remain at “SUBSTANTIAL.” It was disclosed that MI5 and the police have thwarted 43 late-stage terrorist plots between March 2017 and March 2025.

According to the report, the primary threat in the country continues to be Islamist terrorism, while the threat from Extreme Right-Wing Terrorism (ERWT) also persists.

It was stated that the conflict between Israel and Hamas has had a “galvanizing effect” on extremist groups in the UK, and organizations like Al-Qaeda and ISIS are using the situation for their own propaganda.

The terror threat related to Northern Ireland has been downgraded to “SUBSTANTIAL,” but it was noted that groups like the New IRA maintain their intent to attack and that pressure from security forces must be sustained.

Crisis in meetings with the Prime Minister

The report also documented the breakdown in relations between the Committee and the Prime Minister. It was noted that from its establishment in 1994, the Committee held regular annual meetings with the Prime Minister for 20 years, but the last meeting took place in December 2014. This disconnection, lasting over a decade, was said to have weakened the oversight mechanism.

However, the report mentioned that the new Prime Minister, who took office after the July 2024 general election, has taken steps to change this situation and has requested a meeting with the Committee. The Committee described this initiative as “positive engagement.”

Legislative and authority debates

The Committee stated that it actively participated in the processes for the 2023 National Security Act and the 2024 Investigatory Powers (Amendment) Act. It was emphasized that during the changes to the “Triple Lock” mechanism, the Committee objected to the broad powers proposed by the government regarding the delegation of the Prime Minister’s authority, ensuring that stricter safeguards were added to the law.

Furthermore, it was criticized that the Memorandum of Understanding (MoU) signed under the 2013 Justice and Security Act is outdated.

It was noted that intelligence activities are increasingly being shifted to policy departments (such as the Investment Security Unit), but these units fall outside the Committee’s oversight jurisdiction.

The Committee called on the government to remain committed to its promise of “oversight of the full range of intelligence and security activities.”

“Artificial intelligence has increased the volume and impact of cyberattacks”

The report also touched upon the activities of GCHQ and the National Cyber Security Centre (NCSC), warning that artificial intelligence is being used to increase the volume and impact of cyberattacks.

It was predicted that state-sponsored actors and cybercriminals could use AI tools to launch more sophisticated attacks. Ransomware attacks, in particular, were identified as the most immediate threat to the UK’s critical national infrastructure.

The report also drew attention to the cyber-espionage activities of the China-based “APT31” group targeting British MPs and the Electoral Commission, as well as the “hack-and-leak” operations of the Russia-linked “Star Blizzard” group.

Financial data in the report indicated that the total budget for the British Intelligence Community (MI5, SIS, GCHQ) was approximately £4.9 billion in the 2023-24 fiscal year.

Europe

Serbia’s Vucic criticises KFOR commander over Ibar Bridge withdrawal

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Serbian President Aleksandar Vucic has reacted against the KFOR commander who decided to open the main bridge over the Ibar River in Kosovska Mitrovica.

Speaking to journalists during a visit to the new emergency department building of the health centre in Kursumlija, the President announced that he would write a letter to NATO Secretary General Mark Rutte to request that the main bridge over the river not be opened.

This step follows the decision by the Kosovo Force (KFOR) to withdraw from the main bridge dividing North and South Mitrovica after approximately 27 years.

The current commander of the NATO-led Kosovo Force (KFOR) is Major General Ozkan Ulutas.

Italian Carabinieri removed their tents on the northern side of the bridge, marking the start of a gradual withdrawal of the permanent presence of NATO-led international troops.

In a statement to German broadcaster Deutsche Welle, KFOR said that after the completion of the process, it would maintain a visible and strong presence in North Mitrovica and throughout northern Kosovo, and would “continue to contribute to maintaining a safe and secure environment for all communities.”

No statement was made regarding whether the Kosovo Police would take over the security of the bridge.

The newspaper Srpske novine had previously reported that Brussels had confirmed the necessary conditions for opening the Ibar Bridge.

Now, for the first time, a concrete written step is coming from Serbia’s highest official, addressed directly to the head of the Alliance.

“I will send a letter to Rutte this evening. So what can we do? We will fight as much as we can,” Vucic said.

Placing the Ibar Bridge issue within the broader context of relations with Pristina and the West, the President claimed that this was an attempt to exert pressure on Belgrade.

The Serbian leader continued:

“They thought everything was going in their favour; first they broke up Yugoslavia, then Serbia and Montenegro; now they want to separate Kosovo, which Serbia does not and will not accept, and they think they can use this to pressure us.”

Asked by a reporter about growing concerns among Serbs in Kosovo regarding the conduct of Albanian Prime Minister Albin Kurti, Vucic asserted that Serbs were being “harassed with unfounded accusations” and were subsequently not even allowed to prove their innocence.

“This is an act of terror; it stems not only from Albin Kurti, but also from his backers in the West,” Vucic said.

The President cited the case of Nenad Raskovic as an example. According to his claim, media outlets had reported for a month that this individual had been beaten over a gambling debt.

Vucic said hundreds of reports had been published claiming Raskovic had a gambling debt and was beaten by Serbs, but they later admitted to filing lawsuits against two police officers.

The President maintains that the admission that an investigation had been launched against two police officers over their conduct toward Raskovic refutes earlier claims that the beating stemmed from a gambling debt.

He also sharply criticised the KFOR command on this matter:

“What liars, what scoundrels. And the situation of those who support them and open the Ibar Bridge is even worse. Everyone is playing dumb, even the KFOR commander is playing dumb. Tonight I will send a letter to Rutte.”

It remains unclear whether the Serbian president’s letter will affect the timeline for transferring control of the bridge from international troops to the Kosovo Police. According to the Pristina administration’s interior minister, this process has already begun.

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German investment in the US drops to three-year low in first half

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German companies reduced their investments in the US in the first half of 2026 to their lowest level in three years.

According to Reuters, this resulted from firms limiting their exposure to Washington’s uncertain trade policies.

Calculations by the German Economic Institute (IW) show that direct investment in the first half dropped by roughly two-thirds year-on-year to 4.3 billion euros ($5 billion).

This marks the lowest level since 2023.

According to the report, which is based on Deutsche Bundesbank data, this figure represents a decline of approximately 80% compared with the same period in 2024.

“This is a continuation of the downward trend observed since the start of Donald Trump’s second term in January 2025,” IW researcher Samina Sultan told Reuters.

Since returning to office, Trump has threatened most of the US’s international trading partners with tariffs in an effort to extract concessions advantageous to Washington.

For instance, to avert steep tariffs on its exports to the US, the European Union signed an agreement last year that included an investment pledge of $600 billion.

Data show that during the five years preceding the COVID-19 pandemic, first-half investments by German companies in the US averaged 15.8 billion euros. That figure is nearly four times the 2026 level.

However, Sultan noted that the 2020–2023 period was shaped by the “extraordinary circumstances” of the pandemic, with net investment outflows recorded in certain years.

Researchers also examined the composition of investment flows throughout 2025 and found that both direct investment loans and reinvested earnings were exceptionally high, whereas equity capital in the narrower sense—the balance between new investments and liquidations—remained below average.

“Consequently, companies already operating in the US continue to reinvest the profits they generate there back into the country. This shows that the US remains an attractive market overall,” Sultan said.

On the other hand, Sultan added that companies are hesitant to commit fresh capital.

European governments are also growing increasingly cautious regarding American investments in the Old Continent.

According to an assessment by The Economist magazine, while US firms do not hold a large share of overall investment in Europe, they are concentrated in critical sectors.

Two-fifths of the business that American firms generate from foreign governments comes from the IT and defence sectors, where switching to new suppliers is costly and complex.

At an aggregate level, the magazine estimates that American companies account for a relatively small share of public spending abroad.

Of the $25 trillion in sales generated by listed American companies last year, roughly $500 billion (or 2%) came from foreign governments.

This corresponds to approximately 7% of public procurement across non-US OECD countries, which account for the vast majority of that spending.

Some countries are more dependent than others. In terms of the volume of government contracts won by American firms last year, figures from data provider TenderAlpha show that Australia (6% of contracts) and the UK (4%) are more reliant than France (2%) and Germany (1%).

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Iran weighs strikes on US bases in Europe if tensions escalate

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The Iranian leadership is weighing the option of striking American military facilities in Europe should US President Donald Trump escalate tensions.

According to a report by the Financial Times citing two sources close to Iranian officials, Tehran has worked on potential strike plans targeting American facilities in Southeastern Europe. In this context, Bezmer Air Base in Bulgaria, used by the US military for aircraft refuelling, alongside Cyprus, which hosts British military bases, were listed among potential targets. Iran was also reported to have evaluated the possibility of attacking undersea fibre-optic cables in the Strait of Hormuz.

The sources stated that in the event of a new conflict, Tehran could expand its strike range beyond the borders of the Middle East. One source said: “If the US goes too far, Iran will defend itself at all costs, go beyond the region’s borders, and strike Europe.”

The Tehran government has previously attempted strikes against long-range targets. The US announced in February that missiles were launched towards the Diego Garcia base in the Indian Ocean, while Türkiye stated in March that it intercepted Iranian-origin ballistic missiles in mid-air. The report noted that Tehran might find it more convenient to act through allied groups in Iraq, Lebanon, and Yemen rather than via direct action.

Iran accelerates preparations for potential major conflict

According to a report by The Wall Street Journal citing Iranian and Arab officials, Tehran has prepared a comprehensive plan against the possibility of conflict reigniting in the Middle East. Sources indicated that Tehran views the memorandum signed with the US in June as an attempt by Washington and Israel to buy time ahead of a new offensive.

Iran has been conducting preparations over the past two months against the prospect of an expanded conflict. The report noted that officials have increased Islamic Revolutionary Guard Corps oversight of the regular armed forces, appointed veterans of the Iran-Iraq War to key posts, expanded counterintelligence operations, and accelerated missile and drone production.

Data from Arab intelligence services indicates that Iran also maintains contact with armed groups in Yemen and Iraq. Tehran’s objective is reportedly to raise costs for the US and prevent a recurrence of the previous conflict.

The Wall Street Journal sources also reported that Tehran expects attempts to instigate domestic unrest. Commenting on the matter, Mehdi Mohammadi, an adviser to Iran’s chief negotiator, said: “Iran is ready for a major conflict.”

The war between the US and Iran began in February. The two countries signed a ceasefire memorandum in June, but the resulting agreement lasted only a few weeks. Following the resumption of hostilities, Iran maintained its naval blockade in the Strait of Hormuz, while the US continued its blockade of Iranian vessels and ports.

Negotiations for a new agreement are currently suspended. Trump stated that the US is maintaining negotiations and economic pressure on Tehran, adding that ending the Iranian nuclear programme remains one of the primary goals of the American operation. However, citing its own sources, Al Arabiya reported on 17 August that Washington and Tehran had extended the peace agreement.

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