Flagship

Trump threatens Iran

US President Donald Trump issued fresh threats toward Iran, undermining the fragile ceasefire with Tehran. Separately, a drone strike caused a fire near a UAE nuclear facility, while Saudi Arabia reported intercepting drones apparently entering its airspace from Iraq, perhaps launched by Iranian proxies. The war is also stifling Qatar’s previously buoyant, LNG-export-driven economy. The Strait of Hormuz remains largely closed, cutting off 20% of the world’s oil exports, though some countries have negotiated for vessels to traverse the waterway. Iran holds a “vulture’s advantage,” a foreign policy analyst wrote in The Atlantic: It is content to suffer, betting that it can withstand the pain longer than its neighbors.

Bond sell-off drives borrowing costs

G7 bond yields are hitting multi-decade highs because of the Iran war. European, Japanese, UK, and US government borrowing costs all rose after US President Donald Trump’s threats toward Iran pushed oil prices above $111 a barrel. The sell-off also hit developing economies and stock markets slipped. The inflationary pressure of the conflict, along with large government deficits, mean yields will remain high for the foreseeable future, Apollo’s chief economist warned. Central banks are yet to raise interest rates for fear of stifling growth, but consumers are already being hit as lenders bet that hikes are on the way: Mortgage costs have risen sharply across Europe and North America.

Iran war bites China’s economy

New data suggested China was struggling to contain the fallout from the Iran war. Growth in industrial output and retail sales slowed as producers and buyers grappled with higher energy prices stemming from the closure of the Strait of Hormuz. Investment contracted too, prompting analysts at several banks to urge Beijing to take bolder measures to kickstart growth. The poor economic figures come just days after a US-China summit, where the countries’ leaders failed to agree to any major economic breakthroughs. China has limited capacity to support its economy, with national debt as a share of GDP jumping in recent years. “Beijing has no room for complacency,” analysts at Japanese bank Nomura said.

US youth push back on AI

AI backlash is growing in the US, especially among young people. Former Google CEO Eric Schmidt was booed as he gave a university commencement speech in Arizona, as was a real estate executive in Florida, after both mentioned AI. Polls show that 70% of Americans think AI is moving too fast, over 50% have negative views of it, and just 18% of young people say they feel hopeful about it. Partly, they are turned off by AI’s upending of the job market. “Every other day, a new AI agent is being released in the market,” said Vaishali Hireraddi, 23, a University of California, Davis, graduate student who’s applied to 500 jobs so far. “What am I doing with my life?”

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The college degree debate

A UK government adviser said too many young people were being pushed toward university, part of a wider global backlash against the turn-of-the-millennium drive to expand college education. Britain set, and met, a target of 50% of school graduates attending university. But Alan Milburn said thousands are not finding work, and that the economy needed more young people with technical skills, especially in construction. The US and Australia are undergoing similar sea changes, having boosted university education in the early 2000s and now worrying that doing so has devalued degrees and created a shortage of skilled tradespeople. Some US states are moving away from degree requirements and towards skills-based hiring, and the federal government has expanded grants for apprenticeships.

UK PM hopeful eyes EU

A leading candidate to be Britain’s next prime minister called for the country to rejoin the EU. Wes Streeting, who resigned as health secretary last week to challenge Keir Starmer after disastrous election results this month, said Brexit had been a “catastrophic mistake.” The UK is facing systemic challenges; inflation and taxes are high and growth is low. The public is angry: Protests roiled the capital at the weekend. “Britain used to be the international gold standard of good governance: now it risks being the laughing stock,” a leading historian warned. But the country is not ungovernable, the Financial Times’ chief UK political commentator wrote: Instead, it is simply very badly governed, and in need of clear leadership.

Maduro loyalist extradited to US

Venezuela extradited a financial adviser of former President Nicolás Maduro to the US, a major escalation in Caracas’ purge of Maduro loyalists. Colombia-born Alex Saab is accused of overseeing efforts to pilfer and launder billions of dollars on behalf of Maduro, whom the US arrested in a January military operation, replacing him with an interim leader who is more amenable to Washington’s demands. US prosecutors hope Saab’s deportation will strengthen the criminal case against the former president, who Washington alleges led a cartel responsible for trafficking drugs into the US. Saab’s detention also points to the White House’s expanding custodianship of Venezuela, which US President Donald Trump has in recent weeks touted as his country’s 51st state.

Nigeria, US strike IS militants

US and Nigerian forces carried out strikes against Islamic State fighters a day after saying they had killed the group’s second-in-command. The US deployed troops to Africa’s most populous nation following President Donald Trump’s allegations that Nigeria was doing little to stop violence against Christians in the country, accusations rejected by Abuja. Islamist violence has spread across much of West Africa in recent years, aided in part, experts say, by countries in the region cutting defense ties with Western nations and replacing them with partnerships with Russia. The pivot has turned West Africa into the world’s terrorism hotspot; thousands of people have been killed there so far this year.

Controversy hits Eurovision, Biennale

Cultural events across Europe were roiled by political protests, with global conflict taking center stage over artistic performances. Bulgarian pop star Dara won the Eurovision song contest, narrowly edging the entry from Israel, whose presence critics said was an attempt to whitewash the country’s war in Gaza. Five European countries boycotted the event over Israel’s participation. Meanwhile, protestors at the Venice Biennale hit out at the competition over the presence of Russian artists, who were allowed to participate for the first time since Moscow launched its full-scale invasion of Ukraine in 2022. Despite organizers’ best efforts at both contests, “war is a participant no one can exclude,” Haaretz reported.