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Rand: AI, China, and the New Risks to U.S. Security - Q&A With Matan Chorev
SANTA MONICA, California, Aug. 14 -- Rand issued the following Q&A on Aug. 12, 2026, involving Matan Chorev, vice president and director of Global and Emerging Risks:
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AI, China, and the New Risks to U.S. Security: Q&A with Matan Chorev
As vice president and director of RAND Global and Emerging Risks, Matan Chorev oversees research on some of the most consequential challenges facing the United States and the world. That portfolio ranges from the rapid advance of artificial intelligence to growing biological threats to intensifying geopolitical competition.
Chorev has spent his career working ... Show Full Article SANTA MONICA, California, Aug. 14 -- Rand issued the following Q&A on Aug. 12, 2026, involving Matan Chorev, vice president and director of Global and Emerging Risks: * * * AI, China, and the New Risks to U.S. Security: Q&A with Matan Chorev As vice president and director of RAND Global and Emerging Risks, Matan Chorev oversees research on some of the most consequential challenges facing the United States and the world. That portfolio ranges from the rapid advance of artificial intelligence to growing biological threats to intensifying geopolitical competition. Chorev has spent his career workingon U.S. national security strategy and diplomacy, in government as well as at policy research organizations. He most recently served as Principal Deputy Director of the State Department's policy planning staff.
How do you define the mission and mandate of RAND Global and Emerging Risks?
We take a lot of inspiration from RAND's founding era, immediately after World War II. The contours of the post-war international order were uncertain, and the implications of nuclear weapons were still unclear. That required some foundational analysis and planning to develop the strategies, doctrines, and capabilities that would help policymakers navigate an international landscape they had not confronted before.
We're at a similar inflection point today. The world as we knew it in the post-Cold War era no longer exists. Many of the assumptions that animated U.S. foreign policy and national security no longer hold. The nature of the emerging order is at best hazy. Meanwhile, AI is reshaping every aspect of how we live, work, fight, and compete. And so our mission is to help decisionmakers understand, anticipate, and navigate a world that is again undergoing rapid transformation.
How do you see AI challenging some of those global assumptions?
We have to be careful here. There's a tendency to argue that everything we know about the world goes away overnight, and that's never the case.
But I think there will be some significant discontinuities. One widely held assumption is that we are moving into an era in which many states will have the power and capacity to pursue strategic autonomy. That means they will have more freedom of action, more diverse relationships, fewer strategic dependencies, and more influence.
My colleague Salman Ahmed and I asked whether and how the rapid advance of AI might challenge that assumption. By mapping the capabilities that states will need to leverage AI to enhance their national power and influence, we showed that AI is likely to frustrate ambitions for strategic autonomy.
Major powers like the United States and China will find it harder than they hoped to translate advantages in AI into geopolitical dominance. They'll still depend on external players for key resources, inputs, markets, and more. Emerging powers, meanwhile, will find that the gap between them and the great powers will grow, rather than shrink, since none of them possesses the combination of inputs--chips, compute, capital, talent, and energy--needed to develop frontier AI.
The implications of this will require states large and small to rethink their national security and diplomatic strategies.
What motivates you to focus on this intersection of AI, national security, and geopolitics?
I'm a strategic planner by training. The joke is that when planners see someone with a bouquet of flowers, we ask who died.
We're trained to always think about strategic surprises, second- and third-order consequences, and how to prepare for them. Governments are challenged to prepare for inconvenient realities. Nearly every national security strategy in the post-Cold War era had to be reimagined in light of events, some of which could have been foreseeable.
Now we're in a moment when it's evident that transformative change is coming--and potentially very soon. Failing to prepare for these transformations is preparing to fail. And the consequences of that failure could be catastrophic, not only for U.S. national security, but also for humanity itself. I can't think of anything more motivating than that.
What do you see as the biggest obstacle to that kind of anticipatory planning?
When it comes to the collision of AI and geopolitics, there are some factors that make this especially difficult. One is just that, unlike in the nuclear era, governments do not control this technology. Second, the trajectory of the technology, and the implications of it, are deeply uncertain, and governments always struggle with managing uncertainty.
AI is also not just a national security capability. It's touching every part of our lives--our labor market, our manufacturing, the social and political questions that are at the root of our democracy. One of the biggest obstacles is just us failing to muster the vision, the commitment, and the capacity to come together as a society and work through these incredibly hard challenges.
You have a conservatory degree alongside your training and career in international relations. How do you apply lessons from music in your policy work?
Fundamentally, the art of performance is interpretation. You have to study not only the score and the composer's markings and writings, but also the historic and cultural context, to understand the composer's intent--and then consider how to make it real and meaningful to audiences today.
It's how I learned about strategic empathy. In diplomacy, that means trying to see the world through the eyes of others so you can better understand what is motivating your friends and foes, how your actions may be seen and interpreted, and what it would take to achieve your desired outcome.
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Original text here: https://www.rand.org/pubs/commentary/2026/08/ai-china-and-the-new-risks-to-us-security-qa-with-matan.html
[Category: ThinkTank]
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AI, China, and the New Risks to U.S. Security: Q&A with Matan Chorev
As vice president and director of RAND Global and Emerging Risks, Matan Chorev oversees research on some of the most consequential challenges facing the United States and the world. That portfolio ranges from the rapid advance of artificial intelligence to growing biological threats to intensifying geopolitical competition.
Chorev has spent his career working ... Show Full Article SANTA MONICA, California, Aug. 14 -- Rand issued the following Q&A on Aug. 12, 2026, involving Matan Chorev, vice president and director of Global and Emerging Risks: * * * AI, China, and the New Risks to U.S. Security: Q&A with Matan Chorev As vice president and director of RAND Global and Emerging Risks, Matan Chorev oversees research on some of the most consequential challenges facing the United States and the world. That portfolio ranges from the rapid advance of artificial intelligence to growing biological threats to intensifying geopolitical competition. Chorev has spent his career workingon U.S. national security strategy and diplomacy, in government as well as at policy research organizations. He most recently served as Principal Deputy Director of the State Department's policy planning staff.
How do you define the mission and mandate of RAND Global and Emerging Risks?
We take a lot of inspiration from RAND's founding era, immediately after World War II. The contours of the post-war international order were uncertain, and the implications of nuclear weapons were still unclear. That required some foundational analysis and planning to develop the strategies, doctrines, and capabilities that would help policymakers navigate an international landscape they had not confronted before.
We're at a similar inflection point today. The world as we knew it in the post-Cold War era no longer exists. Many of the assumptions that animated U.S. foreign policy and national security no longer hold. The nature of the emerging order is at best hazy. Meanwhile, AI is reshaping every aspect of how we live, work, fight, and compete. And so our mission is to help decisionmakers understand, anticipate, and navigate a world that is again undergoing rapid transformation.
How do you see AI challenging some of those global assumptions?
We have to be careful here. There's a tendency to argue that everything we know about the world goes away overnight, and that's never the case.
But I think there will be some significant discontinuities. One widely held assumption is that we are moving into an era in which many states will have the power and capacity to pursue strategic autonomy. That means they will have more freedom of action, more diverse relationships, fewer strategic dependencies, and more influence.
My colleague Salman Ahmed and I asked whether and how the rapid advance of AI might challenge that assumption. By mapping the capabilities that states will need to leverage AI to enhance their national power and influence, we showed that AI is likely to frustrate ambitions for strategic autonomy.
Major powers like the United States and China will find it harder than they hoped to translate advantages in AI into geopolitical dominance. They'll still depend on external players for key resources, inputs, markets, and more. Emerging powers, meanwhile, will find that the gap between them and the great powers will grow, rather than shrink, since none of them possesses the combination of inputs--chips, compute, capital, talent, and energy--needed to develop frontier AI.
The implications of this will require states large and small to rethink their national security and diplomatic strategies.
What motivates you to focus on this intersection of AI, national security, and geopolitics?
I'm a strategic planner by training. The joke is that when planners see someone with a bouquet of flowers, we ask who died.
We're trained to always think about strategic surprises, second- and third-order consequences, and how to prepare for them. Governments are challenged to prepare for inconvenient realities. Nearly every national security strategy in the post-Cold War era had to be reimagined in light of events, some of which could have been foreseeable.
Now we're in a moment when it's evident that transformative change is coming--and potentially very soon. Failing to prepare for these transformations is preparing to fail. And the consequences of that failure could be catastrophic, not only for U.S. national security, but also for humanity itself. I can't think of anything more motivating than that.
What do you see as the biggest obstacle to that kind of anticipatory planning?
When it comes to the collision of AI and geopolitics, there are some factors that make this especially difficult. One is just that, unlike in the nuclear era, governments do not control this technology. Second, the trajectory of the technology, and the implications of it, are deeply uncertain, and governments always struggle with managing uncertainty.
AI is also not just a national security capability. It's touching every part of our lives--our labor market, our manufacturing, the social and political questions that are at the root of our democracy. One of the biggest obstacles is just us failing to muster the vision, the commitment, and the capacity to come together as a society and work through these incredibly hard challenges.
You have a conservatory degree alongside your training and career in international relations. How do you apply lessons from music in your policy work?
Fundamentally, the art of performance is interpretation. You have to study not only the score and the composer's markings and writings, but also the historic and cultural context, to understand the composer's intent--and then consider how to make it real and meaningful to audiences today.
It's how I learned about strategic empathy. In diplomacy, that means trying to see the world through the eyes of others so you can better understand what is motivating your friends and foes, how your actions may be seen and interpreted, and what it would take to achieve your desired outcome.
* * *
Original text here: https://www.rand.org/pubs/commentary/2026/08/ai-china-and-the-new-risks-to-us-security-qa-with-matan.html
[Category: ThinkTank]
Ifo Institute: Little Stimulus From Planned Income Tax Reform by German Government
MUNICH, Germany, Aug. 14 -- ifo Institute issued the following news release on Aug. 13, 2026:
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Little Stimulus From Planned Income Tax Reform by German Government
According to the ifo Institute, the German government's planned income tax reform for 2027 will do little to stimulate economic growth. "The German government's income tax reform is more about balancing the books than about breaking new ground," says ifo President Clemens Fuest. "Above all, it offsets fiscal drag, in other words, hidden tax increases due to inflation, and increases the top income tax rate. There is no real relief ... Show Full Article MUNICH, Germany, Aug. 14 -- ifo Institute issued the following news release on Aug. 13, 2026: * * * Little Stimulus From Planned Income Tax Reform by German Government According to the ifo Institute, the German government's planned income tax reform for 2027 will do little to stimulate economic growth. "The German government's income tax reform is more about balancing the books than about breaking new ground," says ifo President Clemens Fuest. "Above all, it offsets fiscal drag, in other words, hidden tax increases due to inflation, and increases the top income tax rate. There is no real reliefto boost employment and economic growth."
Overall, the impact on employment by the planned reform is rather modest: The labor supply is likely to increase by only a small amount. The reform will reduce tax revenue by EUR 10 billion. Calculations by the ifo Institute show that if the marital splitting were converted into real splitting, the solidarity surcharge were abolished, and the cuts to social benefits in the case of additional income were reformed, the labor supply could increase by 200,000 to 400,000 full-time jobs - without placing any additional burden on the government budget.
The researchers are critical about financing the reform through an expanded wealth tax. High-income earners with a taxable income starting at EUR 278,000 (previously: EUR 250,000) will be required to pay 45 percent in taxes in the future. For incomes over EUR 280,000, the tax rate is set to rise to 47 percent. Including the solidarity surcharge, this group will thus pay almost half of its income to the tax authorities for every additional euro it earns, making Germany a high-tax country for top earners. In many cases, the increase will affect partnerships, in other words, medium-sized enterprises in particular.
Instead, the ifo researchers propose greater income tax relief, for example, through a moderate increase in value-added tax, such as at least a partial elimination of the reduced tax rates. "Internationally, Germany ranks among the leaders in terms of the tax burden on labor, but tends to be in the middle of the pack when it comes to taxation of consumer goods such as goods and services," says Andreas Peichl, Director of the ifo Center for Public Economics. "Higher value-added tax would have less of a dampening effect on investment and work incentives than an additional tax on high incomes and corporate profits."
The article evaluates the German government's income tax reform package adopted by the coalition committee on July 1, 2026.
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2026 Article in Journal
Ausgleich statt Reform: Warum die Einkommensteuerreform 2027 die falsche Debatte auslost
Maximilian Joseph Blomer, Clemens Fuest, Florian Neumeier, Andreas Peichl
ifo Schnelldienst, 2026, 79, Nr. 8 04-08
Learn more (https://www.ifo.de/en/publications/2026/article-journal/Einkommensteuerreform-2027-falsche-Debatte)
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2026 Journal (Complete Issue)
ifo Schnelldienst 08/2026: Streitfall Einkommensteuer
Learn more (https://www.ifo.de/en/publications/2026/journal-complete-issue/ifo-schnelldienst-082026-streitfall-einkommensteuer)
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Original text here: https://www.ifo.de/en/press-release/2026-08-13/little-stimulus-planned-income-tax-reform-german-government
[Category: ThinkTank]
* * *
Little Stimulus From Planned Income Tax Reform by German Government
According to the ifo Institute, the German government's planned income tax reform for 2027 will do little to stimulate economic growth. "The German government's income tax reform is more about balancing the books than about breaking new ground," says ifo President Clemens Fuest. "Above all, it offsets fiscal drag, in other words, hidden tax increases due to inflation, and increases the top income tax rate. There is no real relief ... Show Full Article MUNICH, Germany, Aug. 14 -- ifo Institute issued the following news release on Aug. 13, 2026: * * * Little Stimulus From Planned Income Tax Reform by German Government According to the ifo Institute, the German government's planned income tax reform for 2027 will do little to stimulate economic growth. "The German government's income tax reform is more about balancing the books than about breaking new ground," says ifo President Clemens Fuest. "Above all, it offsets fiscal drag, in other words, hidden tax increases due to inflation, and increases the top income tax rate. There is no real reliefto boost employment and economic growth."
Overall, the impact on employment by the planned reform is rather modest: The labor supply is likely to increase by only a small amount. The reform will reduce tax revenue by EUR 10 billion. Calculations by the ifo Institute show that if the marital splitting were converted into real splitting, the solidarity surcharge were abolished, and the cuts to social benefits in the case of additional income were reformed, the labor supply could increase by 200,000 to 400,000 full-time jobs - without placing any additional burden on the government budget.
The researchers are critical about financing the reform through an expanded wealth tax. High-income earners with a taxable income starting at EUR 278,000 (previously: EUR 250,000) will be required to pay 45 percent in taxes in the future. For incomes over EUR 280,000, the tax rate is set to rise to 47 percent. Including the solidarity surcharge, this group will thus pay almost half of its income to the tax authorities for every additional euro it earns, making Germany a high-tax country for top earners. In many cases, the increase will affect partnerships, in other words, medium-sized enterprises in particular.
Instead, the ifo researchers propose greater income tax relief, for example, through a moderate increase in value-added tax, such as at least a partial elimination of the reduced tax rates. "Internationally, Germany ranks among the leaders in terms of the tax burden on labor, but tends to be in the middle of the pack when it comes to taxation of consumer goods such as goods and services," says Andreas Peichl, Director of the ifo Center for Public Economics. "Higher value-added tax would have less of a dampening effect on investment and work incentives than an additional tax on high incomes and corporate profits."
The article evaluates the German government's income tax reform package adopted by the coalition committee on July 1, 2026.
* * *
2026 Article in Journal
Ausgleich statt Reform: Warum die Einkommensteuerreform 2027 die falsche Debatte auslost
Maximilian Joseph Blomer, Clemens Fuest, Florian Neumeier, Andreas Peichl
ifo Schnelldienst, 2026, 79, Nr. 8 04-08
Learn more (https://www.ifo.de/en/publications/2026/article-journal/Einkommensteuerreform-2027-falsche-Debatte)
-
2026 Journal (Complete Issue)
ifo Schnelldienst 08/2026: Streitfall Einkommensteuer
Learn more (https://www.ifo.de/en/publications/2026/journal-complete-issue/ifo-schnelldienst-082026-streitfall-einkommensteuer)
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Original text here: https://www.ifo.de/en/press-release/2026-08-13/little-stimulus-planned-income-tax-reform-german-government
[Category: ThinkTank]
Hudson Institute Issues Commentary: Ukraine Military Situation Report on Aug. 12, 2026
WASHINGTON, Aug. 14 -- Hudson Institute, a research organization that says it promotes leadership for a secure, free and prosperous future, issued the following commentary on Aug. 12, 2026, by nonresident senior fellow Can Kasapoglu:
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Ukraine Military Situation Report | August 12
Executive Summary
* Battlefield assessment. Moscow sustained pressure on Ukraine through missile and drone warfare, while Kyiv expanded strikes on Russian logistics hubs.
* North Korean assistance. North Korea is preparing to deploy large troop contingents to Russia as the two countries deepen missile and logistics ... Show Full Article WASHINGTON, Aug. 14 -- Hudson Institute, a research organization that says it promotes leadership for a secure, free and prosperous future, issued the following commentary on Aug. 12, 2026, by nonresident senior fellow Can Kasapoglu: * * * Ukraine Military Situation Report | August 12 Executive Summary * Battlefield assessment. Moscow sustained pressure on Ukraine through missile and drone warfare, while Kyiv expanded strikes on Russian logistics hubs. * North Korean assistance. North Korea is preparing to deploy large troop contingents to Russia as the two countries deepen missile and logisticscooperation.
* Ukraine's air-defense challenges. Larger Russian missile salvos could overwhelm Ukraine's air defenses, which are already strained by depleted stocks of interceptors.
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1. Battlefield Assessment
Last week, long-range drone and missile warfare continued to shape the war's attritional character beyond the front lines.
Russian forces launched a mixed-strike package against Ukraine overnight on August 10-11. The attack included Zircon hypersonic anti-ship missiles targeting Kyiv and Zaporizhzhia. Russia also launched Iskander-M and North Korean KN-23 tactical ballistic missiles from Kursk, Rostov, and Voronezh regions.
Moscow's strike package also involved 120 unmanned aerial vehicles (UAVs), including Gerbera attack drones, Parodiya decoys, and Shahed one-way attack drones, some of which were reportedly jet-powered. Russian forces launched UAVs from Kursk, Millerovo, Oryol, and Primorsko-Akhtarsk, as well as from occupied Donetsk and occupied Crimea. Ukrainian air defenses reportedly intercepted, electronically suppressed, or otherwise neutralized 98 of the 120 drones launched by Russia.
That same night, Ukrainian drones struck logistics infrastructure operated by Wildberries, Russia's largest e-commerce platform, in Voronezh Oblast. The attack triggered fires across a large area. Wildberries confirmed that it had evacuated its personnel from an affected facility.
In this strike, Ukrainian forces targeted a major distribution hub in Aleksandrovka, Novousmansky District, Voronezh Oblast. Since July 18, Ukrainian forces have reportedly targeted around 20 Wildberries facilities across Russia, including warehouses in Elektrostal, Krasnodar, Nevinnomyssk, Yekaterinburg, and St. Petersburg. Ukrainian strikes have reportedly burned at least 14 Wildberries warehouses, damaging approximately 27 percent of the company's nationwide warehousing capacity.
Last week brought no significant changes in the ground war, except on the Sloviansk front. Visuals from the battleground showcased an increase in Russian first-person view (FPV) drone strikes. Some attacks took the form of "human safaris," in which Russia forces deliberately target civilians.
The recent increase in FPV drone activity in urban areas suggests that Russia is mounting a push deeper into Ukraine's defenses. Apart from the Sloviansk sector, increased combat activity and a heightened operational tempo characterized the overall battlespace. Pokrovsk and the Kostiantynivka sector remained the conflict's most active flashpoints.
New trends in drone warfare continued to emerge. Visuals from tactical engagements between Russia and Ukraine increasingly show UAVs operating from naval drones, highlighting the cross-domain character of robotic warfare. This report will continue to detail important innovations in drone warfare concepts of employment (CONEMP).
2. North Korea Prepares for Large-Scale Intervention in Ukraine and Deeper Integration with Russia
North Korea's contribution to Russia's war effort is evolving from arms transfers and geographically contained combat deployments into direct force integration. Open-source intelligence and Ukrainian military-intelligence reporting indicate that Russia began preparations in June to absorb an additional North Korean contingent in Voronezh Oblast. The region in western Russia is emerging as a principal Russian reception and integration node for the next phase of North Korean deployments.
Initially, Kyiv estimated that Moscow was seeking 30,000 additional personnel from Pyongyang but revised this assessment to a range between 30,000 and 50,000 troops. In parallel, North Korea is deploying a missile detachment comprising roughly 90 personnel to the region for attachment to the Russian 112th Missile Brigade. This formation may operate six launchers supported by as many as 120 KN-23 and KN-24 ballistic missiles.
Russia has likely received combat-deployable missiles assigned to the 112th Missile Brigade, two of which it has already employed against Ukrainian targets. This deployment would place North Korean personnel directly inside Russia's operational command-and-strike architecture. Such a dynamic could allow Pyongyang's troops to gain combat experience while supporting sustained missile pressure on Ukraine.
A North Korean deployment on the scale now under consideration could allow the Kremlin to free Russian formations for frontline service while using North Korean troops in more demanding roles. Such a deployment would mark a fuller and more integrated phase of Pyongyang's participation in the war, which could soon extend beyond Kursk Oblast into occupied Ukrainian territory, and potentially include offensive operations at critical flashpoints across the line of contact. Amid mounting Russian losses and Russian President Vladimir Putin's determination to sustain high-tempo combat operations, a large North Korean contingent could impose additional attrition on an already strained Ukrainian military across an overstretched battlefield. Pyongyang's tolerance for heavy casualties could further intensify pressure on Ukraine's forces.
North Korea already transferred thousands of troops to Russia's invasion forces in 2024. These soldiers helped Russian units repel the strategic Ukrainian salient in Kursk Oblast. A North Korean contingent roughly the size of one division may have remained in Kursk, although experts do not believe these troops are currently participating directly in combat operations. North Korea assigned a separate contingent of sappers and other military laborers to mine-clearance and reconstruction work in Kursk.
These personnel deployments rely on extensive logistical connections between Moscow and Pyongyang. North Korea has transferred millions of artillery and mortar rounds to Russia, along with 170mm-class Koksan heavy artillery, KN-23 and KN-24 tactical ballistic missiles, and multiple-launch rocket systems (MLRS). Additionally, four Russian cargo vessels conducted 64 voyages to North Korean ports between September 2023 and March 2025, moving nearly 16,000 ammunition containers to Russia.
Officials assess that North Korean deliveries provide roughly half of the ammunition Russian forces consume along some segments of the front lines in Ukraine. The supply lines connecting Moscow and Pyongyang have become a key structural enabler of Russia's attritional war. For the Kremlin, North Korean assistance is increasingly more than a temporary expedient to cover isolated shortages.
North Korea's emerging missile deployment to Russia represents a further escalation of this relationship. Russia first launched a North Korean ballistic missile against the Ukrainian city of Kharkiv in early 2024. Embedding a North Korean missile unit in Russia now would allow Pyongyang to observe launch operations, assess battlefield performance, refine targeting procedures, and use combat data to modify its weapons. Additional KN-23 and KN-24 salvos would increase pressure on Ukraine's limited inventory of Patriot surface-to-air missile (SAM) interceptors and strengthen Russia's capacity for sustained ballistic missile attacks against Ukrainian cities and critical infrastructure.
Analysis of open-source imagery further suggests that the Kremlin has accelerated road and customs infrastructure construction for the new bridge between Russia and North Korea. Open-source satellite imagery shows extensive concrete paving around the entrance to a new customs facility as well as roadwork advancing along the pavement between the customs complex and the bridge. The North Korean customs facility had appeared largely complete ahead of its originally scheduled June opening, but delays on the Russian side pushed the projected opening to September. Large stores of construction material and unfinished sections of the facility indicate that significant work remains.
The bridge carries strategic and symbolic significance. Once operational, the road connection between the two allies will add a more flexible overland channel to their existing rail and maritime network and facilitate the movement of personnel, military equipment, and ammunition.
The hostile nexus connecting Russia and North Korea also implicates the European and Indo-Pacific security theaters. Every North Korean weapon tested over Ukraine can provide Pyongyang with lessons applicable to future contingencies involving South Korea, Japan, the Philippines, or the United States. Pyongyang, therefore, is no longer merely replenishing Russian stocks but also using the war in Ukraine as a combat laboratory. At the same time, Moscow is using its North Korean connection as an increasingly important source of ammunition, missiles, specialist personnel, and potentially massed ground forces.
3. What to Look for in the Coming Weeks
As Ukraine confronts a critical shortage of air-defense interceptors, it will be important to track the size and composition of Russia's missile salvos. Robert "Magyar" Brovdi, the commander of Ukraine's Unmanned Systems Forces, assesses that Russia can now launch simultaneous salvos of up to 77 ballistic and cruise missiles and is seeking to increase the capacity to 200. Even partial progress toward that objective would significantly increase Russia's ability to saturate Ukrainian air defenses, deplete Kyiv's already limited interceptor stocks, and expose major Ukrainian cities to increasingly destructive ballistic missile attacks.
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At A Glance:
Can Kasapoglu is a nonresident senior fellow at Hudson Institute. His work at Hudson focuses on political-military affairs in the Middle East, North Africa, and former Soviet regions.
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Original text here: https://www.hudson.org/defense-strategy/ukraine-military-situation-report-august-12-can-kasapoglu
[Category: ThinkTank]
* * *
Ukraine Military Situation Report | August 12
Executive Summary
* Battlefield assessment. Moscow sustained pressure on Ukraine through missile and drone warfare, while Kyiv expanded strikes on Russian logistics hubs.
* North Korean assistance. North Korea is preparing to deploy large troop contingents to Russia as the two countries deepen missile and logistics ... Show Full Article WASHINGTON, Aug. 14 -- Hudson Institute, a research organization that says it promotes leadership for a secure, free and prosperous future, issued the following commentary on Aug. 12, 2026, by nonresident senior fellow Can Kasapoglu: * * * Ukraine Military Situation Report | August 12 Executive Summary * Battlefield assessment. Moscow sustained pressure on Ukraine through missile and drone warfare, while Kyiv expanded strikes on Russian logistics hubs. * North Korean assistance. North Korea is preparing to deploy large troop contingents to Russia as the two countries deepen missile and logisticscooperation.
* Ukraine's air-defense challenges. Larger Russian missile salvos could overwhelm Ukraine's air defenses, which are already strained by depleted stocks of interceptors.
-
1. Battlefield Assessment
Last week, long-range drone and missile warfare continued to shape the war's attritional character beyond the front lines.
Russian forces launched a mixed-strike package against Ukraine overnight on August 10-11. The attack included Zircon hypersonic anti-ship missiles targeting Kyiv and Zaporizhzhia. Russia also launched Iskander-M and North Korean KN-23 tactical ballistic missiles from Kursk, Rostov, and Voronezh regions.
Moscow's strike package also involved 120 unmanned aerial vehicles (UAVs), including Gerbera attack drones, Parodiya decoys, and Shahed one-way attack drones, some of which were reportedly jet-powered. Russian forces launched UAVs from Kursk, Millerovo, Oryol, and Primorsko-Akhtarsk, as well as from occupied Donetsk and occupied Crimea. Ukrainian air defenses reportedly intercepted, electronically suppressed, or otherwise neutralized 98 of the 120 drones launched by Russia.
That same night, Ukrainian drones struck logistics infrastructure operated by Wildberries, Russia's largest e-commerce platform, in Voronezh Oblast. The attack triggered fires across a large area. Wildberries confirmed that it had evacuated its personnel from an affected facility.
In this strike, Ukrainian forces targeted a major distribution hub in Aleksandrovka, Novousmansky District, Voronezh Oblast. Since July 18, Ukrainian forces have reportedly targeted around 20 Wildberries facilities across Russia, including warehouses in Elektrostal, Krasnodar, Nevinnomyssk, Yekaterinburg, and St. Petersburg. Ukrainian strikes have reportedly burned at least 14 Wildberries warehouses, damaging approximately 27 percent of the company's nationwide warehousing capacity.
Last week brought no significant changes in the ground war, except on the Sloviansk front. Visuals from the battleground showcased an increase in Russian first-person view (FPV) drone strikes. Some attacks took the form of "human safaris," in which Russia forces deliberately target civilians.
The recent increase in FPV drone activity in urban areas suggests that Russia is mounting a push deeper into Ukraine's defenses. Apart from the Sloviansk sector, increased combat activity and a heightened operational tempo characterized the overall battlespace. Pokrovsk and the Kostiantynivka sector remained the conflict's most active flashpoints.
New trends in drone warfare continued to emerge. Visuals from tactical engagements between Russia and Ukraine increasingly show UAVs operating from naval drones, highlighting the cross-domain character of robotic warfare. This report will continue to detail important innovations in drone warfare concepts of employment (CONEMP).
2. North Korea Prepares for Large-Scale Intervention in Ukraine and Deeper Integration with Russia
North Korea's contribution to Russia's war effort is evolving from arms transfers and geographically contained combat deployments into direct force integration. Open-source intelligence and Ukrainian military-intelligence reporting indicate that Russia began preparations in June to absorb an additional North Korean contingent in Voronezh Oblast. The region in western Russia is emerging as a principal Russian reception and integration node for the next phase of North Korean deployments.
Initially, Kyiv estimated that Moscow was seeking 30,000 additional personnel from Pyongyang but revised this assessment to a range between 30,000 and 50,000 troops. In parallel, North Korea is deploying a missile detachment comprising roughly 90 personnel to the region for attachment to the Russian 112th Missile Brigade. This formation may operate six launchers supported by as many as 120 KN-23 and KN-24 ballistic missiles.
Russia has likely received combat-deployable missiles assigned to the 112th Missile Brigade, two of which it has already employed against Ukrainian targets. This deployment would place North Korean personnel directly inside Russia's operational command-and-strike architecture. Such a dynamic could allow Pyongyang's troops to gain combat experience while supporting sustained missile pressure on Ukraine.
A North Korean deployment on the scale now under consideration could allow the Kremlin to free Russian formations for frontline service while using North Korean troops in more demanding roles. Such a deployment would mark a fuller and more integrated phase of Pyongyang's participation in the war, which could soon extend beyond Kursk Oblast into occupied Ukrainian territory, and potentially include offensive operations at critical flashpoints across the line of contact. Amid mounting Russian losses and Russian President Vladimir Putin's determination to sustain high-tempo combat operations, a large North Korean contingent could impose additional attrition on an already strained Ukrainian military across an overstretched battlefield. Pyongyang's tolerance for heavy casualties could further intensify pressure on Ukraine's forces.
North Korea already transferred thousands of troops to Russia's invasion forces in 2024. These soldiers helped Russian units repel the strategic Ukrainian salient in Kursk Oblast. A North Korean contingent roughly the size of one division may have remained in Kursk, although experts do not believe these troops are currently participating directly in combat operations. North Korea assigned a separate contingent of sappers and other military laborers to mine-clearance and reconstruction work in Kursk.
These personnel deployments rely on extensive logistical connections between Moscow and Pyongyang. North Korea has transferred millions of artillery and mortar rounds to Russia, along with 170mm-class Koksan heavy artillery, KN-23 and KN-24 tactical ballistic missiles, and multiple-launch rocket systems (MLRS). Additionally, four Russian cargo vessels conducted 64 voyages to North Korean ports between September 2023 and March 2025, moving nearly 16,000 ammunition containers to Russia.
Officials assess that North Korean deliveries provide roughly half of the ammunition Russian forces consume along some segments of the front lines in Ukraine. The supply lines connecting Moscow and Pyongyang have become a key structural enabler of Russia's attritional war. For the Kremlin, North Korean assistance is increasingly more than a temporary expedient to cover isolated shortages.
North Korea's emerging missile deployment to Russia represents a further escalation of this relationship. Russia first launched a North Korean ballistic missile against the Ukrainian city of Kharkiv in early 2024. Embedding a North Korean missile unit in Russia now would allow Pyongyang to observe launch operations, assess battlefield performance, refine targeting procedures, and use combat data to modify its weapons. Additional KN-23 and KN-24 salvos would increase pressure on Ukraine's limited inventory of Patriot surface-to-air missile (SAM) interceptors and strengthen Russia's capacity for sustained ballistic missile attacks against Ukrainian cities and critical infrastructure.
Analysis of open-source imagery further suggests that the Kremlin has accelerated road and customs infrastructure construction for the new bridge between Russia and North Korea. Open-source satellite imagery shows extensive concrete paving around the entrance to a new customs facility as well as roadwork advancing along the pavement between the customs complex and the bridge. The North Korean customs facility had appeared largely complete ahead of its originally scheduled June opening, but delays on the Russian side pushed the projected opening to September. Large stores of construction material and unfinished sections of the facility indicate that significant work remains.
The bridge carries strategic and symbolic significance. Once operational, the road connection between the two allies will add a more flexible overland channel to their existing rail and maritime network and facilitate the movement of personnel, military equipment, and ammunition.
The hostile nexus connecting Russia and North Korea also implicates the European and Indo-Pacific security theaters. Every North Korean weapon tested over Ukraine can provide Pyongyang with lessons applicable to future contingencies involving South Korea, Japan, the Philippines, or the United States. Pyongyang, therefore, is no longer merely replenishing Russian stocks but also using the war in Ukraine as a combat laboratory. At the same time, Moscow is using its North Korean connection as an increasingly important source of ammunition, missiles, specialist personnel, and potentially massed ground forces.
3. What to Look for in the Coming Weeks
As Ukraine confronts a critical shortage of air-defense interceptors, it will be important to track the size and composition of Russia's missile salvos. Robert "Magyar" Brovdi, the commander of Ukraine's Unmanned Systems Forces, assesses that Russia can now launch simultaneous salvos of up to 77 ballistic and cruise missiles and is seeking to increase the capacity to 200. Even partial progress toward that objective would significantly increase Russia's ability to saturate Ukrainian air defenses, deplete Kyiv's already limited interceptor stocks, and expose major Ukrainian cities to increasingly destructive ballistic missile attacks.
* * *
At A Glance:
Can Kasapoglu is a nonresident senior fellow at Hudson Institute. His work at Hudson focuses on political-military affairs in the Middle East, North Africa, and former Soviet regions.
* * *
Original text here: https://www.hudson.org/defense-strategy/ukraine-military-situation-report-august-12-can-kasapoglu
[Category: ThinkTank]
Center of the American Experiment Issues Commentary: How the 2023 Trifecta Blew So Much Money So Fast the State Government Couldn't Keep Track
MINNETONKA, Minnesota, Aug. 14 -- The Center of the American Experiment, a civic and educational organization that says it creates and advocates policies, issued the following commentary by economist John Phelan:
* * *
How the 2023 trifecta blew so much money so fast the state government couldn't keep track
On Tuesday, based on reporting from KSTP, I wrote about how, in 2023, the state government voted to give $1.5 million of Minnesota taxpayers' money in grants to a company which wasn't even registered with the Secretary of State. The company has since received hundreds of thousands of dollars ... Show Full Article MINNETONKA, Minnesota, Aug. 14 -- The Center of the American Experiment, a civic and educational organization that says it creates and advocates policies, issued the following commentary by economist John Phelan: * * * How the 2023 trifecta blew so much money so fast the state government couldn't keep track On Tuesday, based on reporting from KSTP, I wrote about how, in 2023, the state government voted to give $1.5 million of Minnesota taxpayers' money in grants to a company which wasn't even registered with the Secretary of State. The company has since received hundreds of thousands of dollarsdespite not meeting reporting requirements.
* * *
Among several, one aspect of the story in particular caught my eye. KSTP reports that the:
"[Minnesota Department of Employment and Economic Development] DEED acknowledged it was responsible for a "historic" amount of funding that year - $1.8 billion in total, roughly 10 times more than normal. Officials said the funding surge required hiring and training additional staff, but maintained they are proud of the agency's overall response."
* * *
So part of this latest fiasco involving Minnesota taxpayers' money was the result of the sheer scale of spending undertaken by that "historic" trifecta in 2023; it simply overwhelmed the capacity of the state government to maintain appropriate safeguards.
* * *
This won't be a surprise to anyone who was up at the Capitol during that orgy of spending. Here is something I wrote at the time:
"This morning, HF2, the proposal for paid family and medical leave, sailed through its fifth House committee hearing. Perhaps one reason for its speedy passage is that it isn't weighted down by a fiscal note.
"Fiscal notes, according to the House Fiscal Analysis Department:
""...put a price tag on proposed legislation, and are very important in the legislative process. A fiscal note should be an objective opinion on the change in expenditures and revenues that will result from a bill. Legislators need this information to make informed decisions on proposed legislation. A fiscal note may influence if a bill passes, if it fails, or if changes need to be made to the bill to adjust the cost or revenue."
"And, today, without this vital information, HF2 passed the State and Local Government Finance and Policy committee, the very committee tasked with overseeing -- as the name indicates -- state and local government finance.
"HF2, remember, is a bill under which "as many as 400 new bureaucrats will be hired using an entirely new computer system: think MNLARS, or MNsure." How can the committee charged with overseeing state and local government finance possibly vote on this bill without knowing what the financial consequences will be?
"I would be tempted to call this the "Brewster's Millions" style of government, but that would be unfair to Monty Brewster: he knew how much money he was spending.
"Rep. Jim Nash (R) made the point that it was impossible for the State and Local Government Finance and Policy committee to make an informed vote on measures pertaining to state and local government finance without knowing what the financial costs of that measure would be. The committee chair, Rep. Ginny Klevorn (DFL), replied that with 1,500 bills introduced, the legislature is "overwhelmed" and so has no choice but to vote on them without fiscal notes: in other words, they are trying to do so much so quickly that they have no choice but to make uninformed decisions."
* * *
The 2023 session is often called "historic." Many things have been historic -- disco, the Black Death, that time Geraldo opened Al Capone's vault on live TV -- without being good. The sad truth is that the 2023 session was a badly managed bungle of epic proportions the consequences of which Minnesotans will be saddled with for years.
How bungled and epic? The session opened with a forecast budget surplus of $17 billion for the 2024-2025 biennium. As my colleague Martha Njolomole noted recently, it "raised general fund spending from $27 billion in 2023 to $35 billion in 2024 -- a staggering 26 percent increase after adjusting for inflation," and this, remember, without the proper safeguards either in legislative committees or at agencies like DEED. "In 2024," Martha continues, "Minnesota spent $4.7 billion more than it collected in revenue. The gap has shrunk, but the trend remains the same. Over the current forecast period, spanning 2026 to 2029, spending continues to outpace revenue by an average of $1.6 billion a year."
That is how the trifecta blew up Minnesota's budget.
* * *
Original text here: https://www.americanexperiment.org/how-the-2023-trifecta-blew-so-much-money-so-fast-the-state-government-couldnt-keep-track/
[Category: ThinkTank]
* * *
How the 2023 trifecta blew so much money so fast the state government couldn't keep track
On Tuesday, based on reporting from KSTP, I wrote about how, in 2023, the state government voted to give $1.5 million of Minnesota taxpayers' money in grants to a company which wasn't even registered with the Secretary of State. The company has since received hundreds of thousands of dollars ... Show Full Article MINNETONKA, Minnesota, Aug. 14 -- The Center of the American Experiment, a civic and educational organization that says it creates and advocates policies, issued the following commentary by economist John Phelan: * * * How the 2023 trifecta blew so much money so fast the state government couldn't keep track On Tuesday, based on reporting from KSTP, I wrote about how, in 2023, the state government voted to give $1.5 million of Minnesota taxpayers' money in grants to a company which wasn't even registered with the Secretary of State. The company has since received hundreds of thousands of dollarsdespite not meeting reporting requirements.
* * *
Among several, one aspect of the story in particular caught my eye. KSTP reports that the:
"[Minnesota Department of Employment and Economic Development] DEED acknowledged it was responsible for a "historic" amount of funding that year - $1.8 billion in total, roughly 10 times more than normal. Officials said the funding surge required hiring and training additional staff, but maintained they are proud of the agency's overall response."
* * *
So part of this latest fiasco involving Minnesota taxpayers' money was the result of the sheer scale of spending undertaken by that "historic" trifecta in 2023; it simply overwhelmed the capacity of the state government to maintain appropriate safeguards.
* * *
This won't be a surprise to anyone who was up at the Capitol during that orgy of spending. Here is something I wrote at the time:
"This morning, HF2, the proposal for paid family and medical leave, sailed through its fifth House committee hearing. Perhaps one reason for its speedy passage is that it isn't weighted down by a fiscal note.
"Fiscal notes, according to the House Fiscal Analysis Department:
""...put a price tag on proposed legislation, and are very important in the legislative process. A fiscal note should be an objective opinion on the change in expenditures and revenues that will result from a bill. Legislators need this information to make informed decisions on proposed legislation. A fiscal note may influence if a bill passes, if it fails, or if changes need to be made to the bill to adjust the cost or revenue."
"And, today, without this vital information, HF2 passed the State and Local Government Finance and Policy committee, the very committee tasked with overseeing -- as the name indicates -- state and local government finance.
"HF2, remember, is a bill under which "as many as 400 new bureaucrats will be hired using an entirely new computer system: think MNLARS, or MNsure." How can the committee charged with overseeing state and local government finance possibly vote on this bill without knowing what the financial consequences will be?
"I would be tempted to call this the "Brewster's Millions" style of government, but that would be unfair to Monty Brewster: he knew how much money he was spending.
"Rep. Jim Nash (R) made the point that it was impossible for the State and Local Government Finance and Policy committee to make an informed vote on measures pertaining to state and local government finance without knowing what the financial costs of that measure would be. The committee chair, Rep. Ginny Klevorn (DFL), replied that with 1,500 bills introduced, the legislature is "overwhelmed" and so has no choice but to vote on them without fiscal notes: in other words, they are trying to do so much so quickly that they have no choice but to make uninformed decisions."
* * *
The 2023 session is often called "historic." Many things have been historic -- disco, the Black Death, that time Geraldo opened Al Capone's vault on live TV -- without being good. The sad truth is that the 2023 session was a badly managed bungle of epic proportions the consequences of which Minnesotans will be saddled with for years.
How bungled and epic? The session opened with a forecast budget surplus of $17 billion for the 2024-2025 biennium. As my colleague Martha Njolomole noted recently, it "raised general fund spending from $27 billion in 2023 to $35 billion in 2024 -- a staggering 26 percent increase after adjusting for inflation," and this, remember, without the proper safeguards either in legislative committees or at agencies like DEED. "In 2024," Martha continues, "Minnesota spent $4.7 billion more than it collected in revenue. The gap has shrunk, but the trend remains the same. Over the current forecast period, spanning 2026 to 2029, spending continues to outpace revenue by an average of $1.6 billion a year."
That is how the trifecta blew up Minnesota's budget.
* * *
Original text here: https://www.americanexperiment.org/how-the-2023-trifecta-blew-so-much-money-so-fast-the-state-government-couldnt-keep-track/
[Category: ThinkTank]
Capital Research Center Issues InfluenceWatch Wrapup on Aug. 14, 2026
WASHINGTON, Aug. 14 -- The Capital Research Center issued the following InfluenceWatch wrapup on Aug. 14, 2026:
* * *
InfluenceWatch, a project of Capital Research Center, is a comprehensive and ever-evolving compilation of our research into the numerous advocacy groups, foundations, and donors working to influence the public policy process. The website offers transparency into these influencers' funding, motives, and connections while providing insight often neglected by other watchdog groups.
The information compiled in InfluenceWatch gives news outlets and other interested parties research ... Show Full Article WASHINGTON, Aug. 14 -- The Capital Research Center issued the following InfluenceWatch wrapup on Aug. 14, 2026: * * * InfluenceWatch, a project of Capital Research Center, is a comprehensive and ever-evolving compilation of our research into the numerous advocacy groups, foundations, and donors working to influence the public policy process. The website offers transparency into these influencers' funding, motives, and connections while providing insight often neglected by other watchdog groups. The information compiled in InfluenceWatch gives news outlets and other interested parties researchto use in reporting on significant topics that are often overlooked by the American public.
CRC is pleased to present some of the most significant additions to InfluenceWatch in the past week:
* Tropical Audubon Society (TAS) is a nonprofit advocacy group that promotes environmentalist policies with the goal of preserving ecosystems in South Florida. It is a chapter of the National Audubon Society, and its listed partner organizations include the Everglades Foundation, the Miami Foundation, and the Everglades Law Center. The TAS has also worked with left-of-center groups such as the Center for Biological Diversity and the South Florida Wildlands Association.
* Freedom BLOC (Black Led Organizing Collective) is the 501(c)(4) lobbying arm of the 501(c)(3) nonprofit Freedom ROC. Freedom BLOC works to develop "political infrastructure within Black communities" through civic engagement. It was listed as one of the endorsing organizations of the January 2024 March on Washington for Gaza, advocating for an end to the Israel-Hamas War. Freedom BLOC has previously received funding from the Black Voters Matter Fund, the Grove Action Fund, and America Votes.
* Georgia Alliance is a network of organizations that focus on developing civic-engagement projects to create what the group calls a "racially just democracy" within the state. Member groups of the Alliance's network include the Georgia Alliance Education Fund, Georgia Engaged (which later became America Votes Georgia), Represent Georgia, Collective Renaissance Georgia, and Collective Renaissance Action. The Georgia Alliance's executive director Quentin Mays previously worked for the National Democratic Training Committee, the Analyst Institute, State Voices Florida, and UNITE HERE.
* Project Legacy Minnesota (PLMN) is a nonprofit which provides financial, educational, and career assistance to minority groups within the state. According to its 2024 tax filings, it received $251,494 in government grants, amounting to 51 percent of its total revenue that year. PLMN has also received funding from Otto Bremer Trust, the Fidelity Investments Charitable Gift Fund, the Saint Paul & Minnesota Foundation, and the National Philanthropic Trust.
* Courage+, previously known as Courage MKE, is a Wisconsin-based advocacy group that provides housing, educational, and other services for members of the LGBT community within the state. In recent years, Courage+ has received grants from groups including the Greater Milwaukee Foundation, the LGBT Center of SE Wisconsin, the American Endowment Foundation, the American Online Giving Foundation, Network for Good, and the Raymond James Charitable Endowment Fund.
* * *
[Category: ThinkTank]
* * *
InfluenceWatch, a project of Capital Research Center, is a comprehensive and ever-evolving compilation of our research into the numerous advocacy groups, foundations, and donors working to influence the public policy process. The website offers transparency into these influencers' funding, motives, and connections while providing insight often neglected by other watchdog groups.
The information compiled in InfluenceWatch gives news outlets and other interested parties research ... Show Full Article WASHINGTON, Aug. 14 -- The Capital Research Center issued the following InfluenceWatch wrapup on Aug. 14, 2026: * * * InfluenceWatch, a project of Capital Research Center, is a comprehensive and ever-evolving compilation of our research into the numerous advocacy groups, foundations, and donors working to influence the public policy process. The website offers transparency into these influencers' funding, motives, and connections while providing insight often neglected by other watchdog groups. The information compiled in InfluenceWatch gives news outlets and other interested parties researchto use in reporting on significant topics that are often overlooked by the American public.
CRC is pleased to present some of the most significant additions to InfluenceWatch in the past week:
* Tropical Audubon Society (TAS) is a nonprofit advocacy group that promotes environmentalist policies with the goal of preserving ecosystems in South Florida. It is a chapter of the National Audubon Society, and its listed partner organizations include the Everglades Foundation, the Miami Foundation, and the Everglades Law Center. The TAS has also worked with left-of-center groups such as the Center for Biological Diversity and the South Florida Wildlands Association.
* Freedom BLOC (Black Led Organizing Collective) is the 501(c)(4) lobbying arm of the 501(c)(3) nonprofit Freedom ROC. Freedom BLOC works to develop "political infrastructure within Black communities" through civic engagement. It was listed as one of the endorsing organizations of the January 2024 March on Washington for Gaza, advocating for an end to the Israel-Hamas War. Freedom BLOC has previously received funding from the Black Voters Matter Fund, the Grove Action Fund, and America Votes.
* Georgia Alliance is a network of organizations that focus on developing civic-engagement projects to create what the group calls a "racially just democracy" within the state. Member groups of the Alliance's network include the Georgia Alliance Education Fund, Georgia Engaged (which later became America Votes Georgia), Represent Georgia, Collective Renaissance Georgia, and Collective Renaissance Action. The Georgia Alliance's executive director Quentin Mays previously worked for the National Democratic Training Committee, the Analyst Institute, State Voices Florida, and UNITE HERE.
* Project Legacy Minnesota (PLMN) is a nonprofit which provides financial, educational, and career assistance to minority groups within the state. According to its 2024 tax filings, it received $251,494 in government grants, amounting to 51 percent of its total revenue that year. PLMN has also received funding from Otto Bremer Trust, the Fidelity Investments Charitable Gift Fund, the Saint Paul & Minnesota Foundation, and the National Philanthropic Trust.
* Courage+, previously known as Courage MKE, is a Wisconsin-based advocacy group that provides housing, educational, and other services for members of the LGBT community within the state. In recent years, Courage+ has received grants from groups including the Greater Milwaukee Foundation, the LGBT Center of SE Wisconsin, the American Endowment Foundation, the American Online Giving Foundation, Network for Good, and the Raymond James Charitable Endowment Fund.
* * *
[Category: ThinkTank]
CSIS Issues Commentary: Government Lending 2.0 - Putting a Price on Policy Risk
WASHINGTON, Aug. 14 -- The Center for Strategic and International Studies issued the following commentary on Aug. 12, 2026, by Adam Frost, senior associate (non-resident) in the Economic Security and Technology Department, and former intern Jack Whitney:
* * *
Government Lending 2.0: Putting a Price on Policy Risk
The United States is increasingly using federal credit--direct loans, loan guarantees, and insurance--as a tool of industrial strategy. With grant funding constrained and bipartisan interest in financing strategic industries rising, federal agencies are relying more heavily on repayable ... Show Full Article WASHINGTON, Aug. 14 -- The Center for Strategic and International Studies issued the following commentary on Aug. 12, 2026, by Adam Frost, senior associate (non-resident) in the Economic Security and Technology Department, and former intern Jack Whitney: * * * Government Lending 2.0: Putting a Price on Policy Risk The United States is increasingly using federal credit--direct loans, loan guarantees, and insurance--as a tool of industrial strategy. With grant funding constrained and bipartisan interest in financing strategic industries rising, federal agencies are relying more heavily on repayablepublic capital to support projects tied to national security and economic competitiveness.
This shift is visible across agencies. The Export-Import Bank of the United States, (EXIM), U.S. International Development Finance Corporation, Department of Commerce, Department of Energy, and the Department of Defense have applied or launched financing tools for critical minerals, semiconductors, energy infrastructure, advanced manufacturing, and other industries. The goals are to (1) reduce dependence on adversaries, (2) strengthen supply chains, (3) create opportunities for U.S. firms, (4) crowd in private capital, and (5) build economic partnerships abroad.
* * *
Figure 1: The Growing Scale of U.S. Strategic Government Lending
* * *
But greater scale does not solve the harder question: Which risks are worth taking with taxpayer exposure? The projects that policymakers view as most urgent are often the hardest to finance--projects with long timelines, uncertain revenues, and execution risk.
The government's problem is not only funding or political will, but also a coordination failure rooted in the absence of a consistent framework for comparing financial risk against policy value. As strategic lending moves from announcement to execution, agencies need a clearer way to price risk, allocate it across government, and explain why some risky projects merit public support while others do not.
The Coordination Gap: No Shared Language for Risk
U.S. government lenders that finance domestic and overseas projects face a structural constraint. By design, they step in where private capital is reluctant to go: projects with upfront capital intensity, uncertain revenues, country exposure, and execution risk--the same features that make the projects strategically important.
Under the Federal Credit Reform Act (FCRA), agencies must budget for the expected unreimbursed cost of a direct loan or guarantee, based on projected cash flows, default risk, recoveries, fees, and other deal terms. This framework helps ensure discipline. But it only measures expected credit losses, not strategic value such as supply chain resilience, geopolitical influence, and development impact.
This creates an allocation problem. The policy benefits of a transaction may accrue across government, but the credit exposure, budget cost, and default scrutiny sit with the lending agency. And lender caution is not irrational: High-profile setbacks, such as Solyndra during the Obama administration and EXIM loans to Enron-led projects in the 1990s, have reinforced scrutiny around public support for complex strategic projects.
Consider an illustrative $100 million U.S.-backed loan to a rare earths project in Namibia. A policy office may value the project because it diversifies supply away from China and supports a partner country's development. A lending program, meanwhile, will see a greenfield asset with execution risk, limited offtake, volatile commodity exposure, and residual sovereign or permitting risk--factors that reduce confidence in repayment and increase expected risks to taxpayer funds.
Neither perspective is wrong. And without a common risk-pricing vocabulary, agencies end up talking past one another: Policy offices emphasize strategic impact, while lenders emphasize repayment risk. The result is that high-impact projects may be delayed or dropped because the government lacks a disciplined way to compare policy value against credit risk. It also leaves agencies without a clear public rationale for how taxpayer exposure is being allocated across increasingly risky strategic projects, heightening the risk of public backlash if one fails.
So even as federal credit expands, the underlying allocation problem remains: How to direct scarce public risk capacity toward strategically important projects in a disciplined, transparent, and repeatable way.
A Market-Informed Fix: Putting a Price Tag on Risk
The underlying credit risks that make strategic sectors unattractive to private capital are real, and in many cases the right long-term fix involves macro policy adjustments--offtake guarantees, concessional capital structures, or the kind of de-risking architecture that multilateral development banks are positioned to provide. This paper is not about those solutions. It is about something narrower and more immediate: Policy offices that emphasize impact and lending agencies that talk credit risk will continue to talk past each other until they have a consistent framework for comparing financial risk against policy value.
One near-term component of such a framework is available without new legislation. Used carefully, market-informed risk metrics such as credit default swaps (CDS) can complement existing underwriting, development impact, and national security analysis, making strategic lending more disciplined, defensible, and effective.
A CDS is a financial instrument that pays the buyer if a borrower defaults on a loan, transferring default risk in exchange for a periodic premium, or spread. Where a liquid market exists, that spread gives a market-implied price for insuring against default: Widening spreads suggest rising risk, while tightening spreads suggest improving credit conditions. Applied to strategic lending, CDS pricing can do something that interagency memos often cannot: translate qualitative risk judgments into a concrete, dollar-denominated figure that policy agencies and lenders can evaluate together. In this way, market-based reference points could help agencies express risk in common units and ask whether the policy benefit is worth the implied cost.
To be clear, CDS are not a magic answer to interagency disagreements. In many strategic sectors, such as junior mining and emerging market infrastructure, there will be no liquid single-name CDS market. Thin trading, liquidity stress, or speculative activity can also distort spreads, creating the risk of misleading market signals. But a CDS is a useful example to demonstrate how explicit, market-informed risk pricing could lead to smarter interagency coordination around risk between lenders and policy agencies.
Return to the hypothetical Namibia example: If the market-implied CDS spread on the loan is 500 basis points (5 percent annually), the cost of insuring against default is approximately $5 million per year. That figure becomes a policy question: Is securing non-Chinese rare earth supply from Namibia worth an additional $5 million a year? That is a conversation that policy offices can engage in. It also forces genuine prioritization.
In some cases, an agency championing the policy objective could use appropriated funds, consistent with its authorities, to cover part of the incremental risk cost, purchase insurance, support a guarantee, or otherwise contribute to the transaction's credit subsidy. Requiring the policy sponsor to put budget resources behind its judgment gives it skin in the game and shifts the conversation from advocacy to co-investment.
What Implementation Looks Like
Implementation should be practical and use existing oversight mechanisms. Policy agencies should add a short risk-pricing annex to interagency memos that identifies country, sector, and project risks; shows which risks are mitigated through insurance, guarantees, offtake, collateral, or other tools; estimates the residual exposure using market signals where available; and makes clear which agency is bearing or funding that exposure. And these risk-pricing annexes should be reviewed by the Office of Management and Budget (OMB) before any agency action to ensure compliance with FCRA and the appropriate OMB Circulars.
The point is not to turn policy agencies into hedge funds, but to give the government a shared, transparent way to compare risk cost against policy value before taxpayer capital is committed.
* * *
Original text here: https://www.csis.org/analysis/government-lending-20-putting-price-policy-risk
[Category: ThinkTank]
* * *
Government Lending 2.0: Putting a Price on Policy Risk
The United States is increasingly using federal credit--direct loans, loan guarantees, and insurance--as a tool of industrial strategy. With grant funding constrained and bipartisan interest in financing strategic industries rising, federal agencies are relying more heavily on repayable ... Show Full Article WASHINGTON, Aug. 14 -- The Center for Strategic and International Studies issued the following commentary on Aug. 12, 2026, by Adam Frost, senior associate (non-resident) in the Economic Security and Technology Department, and former intern Jack Whitney: * * * Government Lending 2.0: Putting a Price on Policy Risk The United States is increasingly using federal credit--direct loans, loan guarantees, and insurance--as a tool of industrial strategy. With grant funding constrained and bipartisan interest in financing strategic industries rising, federal agencies are relying more heavily on repayablepublic capital to support projects tied to national security and economic competitiveness.
This shift is visible across agencies. The Export-Import Bank of the United States, (EXIM), U.S. International Development Finance Corporation, Department of Commerce, Department of Energy, and the Department of Defense have applied or launched financing tools for critical minerals, semiconductors, energy infrastructure, advanced manufacturing, and other industries. The goals are to (1) reduce dependence on adversaries, (2) strengthen supply chains, (3) create opportunities for U.S. firms, (4) crowd in private capital, and (5) build economic partnerships abroad.
* * *
Figure 1: The Growing Scale of U.S. Strategic Government Lending
* * *
But greater scale does not solve the harder question: Which risks are worth taking with taxpayer exposure? The projects that policymakers view as most urgent are often the hardest to finance--projects with long timelines, uncertain revenues, and execution risk.
The government's problem is not only funding or political will, but also a coordination failure rooted in the absence of a consistent framework for comparing financial risk against policy value. As strategic lending moves from announcement to execution, agencies need a clearer way to price risk, allocate it across government, and explain why some risky projects merit public support while others do not.
The Coordination Gap: No Shared Language for Risk
U.S. government lenders that finance domestic and overseas projects face a structural constraint. By design, they step in where private capital is reluctant to go: projects with upfront capital intensity, uncertain revenues, country exposure, and execution risk--the same features that make the projects strategically important.
Under the Federal Credit Reform Act (FCRA), agencies must budget for the expected unreimbursed cost of a direct loan or guarantee, based on projected cash flows, default risk, recoveries, fees, and other deal terms. This framework helps ensure discipline. But it only measures expected credit losses, not strategic value such as supply chain resilience, geopolitical influence, and development impact.
This creates an allocation problem. The policy benefits of a transaction may accrue across government, but the credit exposure, budget cost, and default scrutiny sit with the lending agency. And lender caution is not irrational: High-profile setbacks, such as Solyndra during the Obama administration and EXIM loans to Enron-led projects in the 1990s, have reinforced scrutiny around public support for complex strategic projects.
Consider an illustrative $100 million U.S.-backed loan to a rare earths project in Namibia. A policy office may value the project because it diversifies supply away from China and supports a partner country's development. A lending program, meanwhile, will see a greenfield asset with execution risk, limited offtake, volatile commodity exposure, and residual sovereign or permitting risk--factors that reduce confidence in repayment and increase expected risks to taxpayer funds.
Neither perspective is wrong. And without a common risk-pricing vocabulary, agencies end up talking past one another: Policy offices emphasize strategic impact, while lenders emphasize repayment risk. The result is that high-impact projects may be delayed or dropped because the government lacks a disciplined way to compare policy value against credit risk. It also leaves agencies without a clear public rationale for how taxpayer exposure is being allocated across increasingly risky strategic projects, heightening the risk of public backlash if one fails.
So even as federal credit expands, the underlying allocation problem remains: How to direct scarce public risk capacity toward strategically important projects in a disciplined, transparent, and repeatable way.
A Market-Informed Fix: Putting a Price Tag on Risk
The underlying credit risks that make strategic sectors unattractive to private capital are real, and in many cases the right long-term fix involves macro policy adjustments--offtake guarantees, concessional capital structures, or the kind of de-risking architecture that multilateral development banks are positioned to provide. This paper is not about those solutions. It is about something narrower and more immediate: Policy offices that emphasize impact and lending agencies that talk credit risk will continue to talk past each other until they have a consistent framework for comparing financial risk against policy value.
One near-term component of such a framework is available without new legislation. Used carefully, market-informed risk metrics such as credit default swaps (CDS) can complement existing underwriting, development impact, and national security analysis, making strategic lending more disciplined, defensible, and effective.
A CDS is a financial instrument that pays the buyer if a borrower defaults on a loan, transferring default risk in exchange for a periodic premium, or spread. Where a liquid market exists, that spread gives a market-implied price for insuring against default: Widening spreads suggest rising risk, while tightening spreads suggest improving credit conditions. Applied to strategic lending, CDS pricing can do something that interagency memos often cannot: translate qualitative risk judgments into a concrete, dollar-denominated figure that policy agencies and lenders can evaluate together. In this way, market-based reference points could help agencies express risk in common units and ask whether the policy benefit is worth the implied cost.
To be clear, CDS are not a magic answer to interagency disagreements. In many strategic sectors, such as junior mining and emerging market infrastructure, there will be no liquid single-name CDS market. Thin trading, liquidity stress, or speculative activity can also distort spreads, creating the risk of misleading market signals. But a CDS is a useful example to demonstrate how explicit, market-informed risk pricing could lead to smarter interagency coordination around risk between lenders and policy agencies.
Return to the hypothetical Namibia example: If the market-implied CDS spread on the loan is 500 basis points (5 percent annually), the cost of insuring against default is approximately $5 million per year. That figure becomes a policy question: Is securing non-Chinese rare earth supply from Namibia worth an additional $5 million a year? That is a conversation that policy offices can engage in. It also forces genuine prioritization.
In some cases, an agency championing the policy objective could use appropriated funds, consistent with its authorities, to cover part of the incremental risk cost, purchase insurance, support a guarantee, or otherwise contribute to the transaction's credit subsidy. Requiring the policy sponsor to put budget resources behind its judgment gives it skin in the game and shifts the conversation from advocacy to co-investment.
What Implementation Looks Like
Implementation should be practical and use existing oversight mechanisms. Policy agencies should add a short risk-pricing annex to interagency memos that identifies country, sector, and project risks; shows which risks are mitigated through insurance, guarantees, offtake, collateral, or other tools; estimates the residual exposure using market signals where available; and makes clear which agency is bearing or funding that exposure. And these risk-pricing annexes should be reviewed by the Office of Management and Budget (OMB) before any agency action to ensure compliance with FCRA and the appropriate OMB Circulars.
The point is not to turn policy agencies into hedge funds, but to give the government a shared, transparent way to compare risk cost against policy value before taxpayer capital is committed.
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Original text here: https://www.csis.org/analysis/government-lending-20-putting-price-policy-risk
[Category: ThinkTank]
AFPI Launches Investigation Into PG&E's Potter Valley Hydroelectric Project Decommissioning
WASHINGTON, Aug. 14 -- The America First Policy Institute issued the following news release:
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AFPI Launches Investigation into PG&E's Potter Valley Hydroelectric Project Decommissioning
The America First Policy Institute (AFPI) today announced that it has launched an investigation into Pacific Gas & Electric Company's (PG&E) decision to decommission the Potter Valley Hydroelectric Project, a move that could have significant consequences for the water supply, agricultural economy, energy reliability, and wildfire preparedness in one of America's most productive agricultural regions.
The ... Show Full Article WASHINGTON, Aug. 14 -- The America First Policy Institute issued the following news release: * * * AFPI Launches Investigation into PG&E's Potter Valley Hydroelectric Project Decommissioning The America First Policy Institute (AFPI) today announced that it has launched an investigation into Pacific Gas & Electric Company's (PG&E) decision to decommission the Potter Valley Hydroelectric Project, a move that could have significant consequences for the water supply, agricultural economy, energy reliability, and wildfire preparedness in one of America's most productive agricultural regions. ThePotter Valley Project has long supplied water to communities and hundreds of family farms across Mendocino, Sonoma, and Lake counties while generating hydroelectric power.
Although PG&E previously highlighted the project's importance to the region, the company later sought approval from the Federal Energy Regulatory Commission (FERC) to surrender its license and decommission the facility. AFPI's investigation will examine the motivations behind that decision and its potential impact on California farmers, workers, and rural communities.
As part of the investigation, AFPI has submitted a combined 14 Freedom of Information Act (FOIA) and California Public Records Act requests and filed comments with FERC outlining concerns over the project's decommissioning.
"The family farms and communities who have depended on the PotterValley Project for over 100 years deserve transparency and accountability," said Leigh Ann O'Neill, AFPI's chief legal affairs officer. "Our Lawfare Council will follow the facts wherever they lead to ensure the interests of California's farmers, rural communities, and hardworking Americans are not overlooked in decisions with far-reaching consequences."
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Original text here: https://www.americafirstpolicy.com/issues/afpi-launches-investigation-into-pges-potter-valley-hydroelectric-project-decommissioning
[Category: ThinkTank]
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AFPI Launches Investigation into PG&E's Potter Valley Hydroelectric Project Decommissioning
The America First Policy Institute (AFPI) today announced that it has launched an investigation into Pacific Gas & Electric Company's (PG&E) decision to decommission the Potter Valley Hydroelectric Project, a move that could have significant consequences for the water supply, agricultural economy, energy reliability, and wildfire preparedness in one of America's most productive agricultural regions.
The ... Show Full Article WASHINGTON, Aug. 14 -- The America First Policy Institute issued the following news release: * * * AFPI Launches Investigation into PG&E's Potter Valley Hydroelectric Project Decommissioning The America First Policy Institute (AFPI) today announced that it has launched an investigation into Pacific Gas & Electric Company's (PG&E) decision to decommission the Potter Valley Hydroelectric Project, a move that could have significant consequences for the water supply, agricultural economy, energy reliability, and wildfire preparedness in one of America's most productive agricultural regions. ThePotter Valley Project has long supplied water to communities and hundreds of family farms across Mendocino, Sonoma, and Lake counties while generating hydroelectric power.
Although PG&E previously highlighted the project's importance to the region, the company later sought approval from the Federal Energy Regulatory Commission (FERC) to surrender its license and decommission the facility. AFPI's investigation will examine the motivations behind that decision and its potential impact on California farmers, workers, and rural communities.
As part of the investigation, AFPI has submitted a combined 14 Freedom of Information Act (FOIA) and California Public Records Act requests and filed comments with FERC outlining concerns over the project's decommissioning.
"The family farms and communities who have depended on the PotterValley Project for over 100 years deserve transparency and accountability," said Leigh Ann O'Neill, AFPI's chief legal affairs officer. "Our Lawfare Council will follow the facts wherever they lead to ensure the interests of California's farmers, rural communities, and hardworking Americans are not overlooked in decisions with far-reaching consequences."
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Original text here: https://www.americafirstpolicy.com/issues/afpi-launches-investigation-into-pges-potter-valley-hydroelectric-project-decommissioning
[Category: ThinkTank]