Wednesday, April 29, 2026

The Fractures Of The World Order: Between The Civilizational Paradigm And Structural Analysis – Analysis

April 29, 2026 
IFIMES
By General (Rtd) Corneliu


At the beginning of the third decade of the 21st century, the world order can no longer be described through stable balances or one-dimensional paradigms, but rather through an accumulation of structural tensions that intersect and amplify one another.

In an effort to understand the profound transformations of the contemporary international system, the specialized literature has, in recent decades, provided two major interpretative frameworks: the civilizational paradigm, established by Samuel P. Huntington[2], and the structural-anthropological analysis recently developed by Emmanuel Todd.[3]

Although different in methodology and level of analysis, both models capture real dimensions of global dynamics; however, neither is sufficient, taken in isolation, to explain the complexity of the current world order. This requires an integrative approach, capable of capturing the simultaneous interaction of multiple types of tensions and discontinuities – which, within the present material, is conceptualized in the form of “fractures of the world order.”[4] The concept of “fractures” does not describe only lines of tension, but also mechanisms of interaction between them, within a dynamic logic in which vulnerabilities and strategic advantages are generated and amplified reciprocally.

Under the conditions of the transformations of the contemporary international system, neither the civilizational paradigm nor the structural analysis are sufficient, taken separately, to explain global dynamics; these can be adequately understood only through an integrative approach, based on the interaction between multiple fractures of the world order.


The model proposed by Huntington, formulated in the post–Cold War context, is based on the premise that the main lines of conflict in the world will no longer be ideological or economic, but civilizational. In this logic, cultural and religious identity becomes the fundamental determinant of state behavior and international alliances. The fault lines between civilizations – especially between the West and the Islamic world or between the West and the Sinic space – are considered the most likely zones of conflict. This paradigm had the merit of anticipating the revaluation of identity in international relations and of highlighting the limits of Western universalism. However, it tends to oversimplify reality, treating civilizations as relatively homogeneous blocs and underestimating the internal dynamics of states, as well as the economic and technological interdependencies that cross these cultural boundaries.[5] In reality, internal fractures within civilizations often become more relevant than those between them, affecting the strategic coherence of state actors.

In contrast, Emmanuel Todd proposes a radically different interpretation, centered on the internal structures of societies. His analysis is based on variables such as demography, level of education, family structure, and the evolution of religious or post-religious values. From this perspective, the decline of the West is not the result of an external conflict, but of a progressive internal erosion, manifested through declining birth rates, social fragmentation, loss of industrial capabilities, and the weakening of cultural cohesion. In his reading, the war in Ukraine is not the cause of this weakness, but merely a revealer of it. At the same time, Todd suggests that states such as Russia or China still benefit from more coherent social structures, capable of sustaining long-term strategic efforts.[6] The apparent stability of these actors may, however, mask latent structural vulnerabilities, which become visible under conditions of major systemic stress.


Nevertheless, Todd’s approach, although profound and innovative, presents its own limitations. It tends to minimize the role of classical geopolitical factors, such as military alliances, technological capacity, or control of strategic resources, and, in certain cases, to overestimate the stability of some non-Western actors. In addition, his analysis does not sufficiently integrate the informational dimension and narrative competition, which have become essential in the current era.
The Fractures of the World Order

In this context, a conceptual synthesis becomes necessary, one that can overcome the limitations of these two paradigms and provide an analytical framework appropriate to contemporary complexity. The concept of “fractures of the world order” responds to this need, proposing a systemic vision in which global conflict is no longer reduced to a single explanatory dimension, but is understood as the result of the interaction between multiple lines of tension, constantly evolving. In analytical terms, these dynamics can be synthesized into a model of the seven fractures of the world order: geopolitical, economic, energy-related, technological, informational, socio-internal, and civilizational.

Thus, the current world order is characterized by the overlapping of multiple types of fractures. In geopolitical terms, the rivalry among major powers – especially between the United States, China, and Russia – shapes a long-term strategic competition, without, however, leading to a classical bipolarity.[7] In economic terms, an increasingly pronounced divide is emerging between economies dominated by financial capital and those oriented toward production, as well as between the Global North and the emerging South.[8] The energy dimension, in turn, introduces a critical fracture, in the context of the energy transition and competition for resources.[9]


In addition, the technological revolution generates a distinct fracture, between states capable of developing and controlling advanced technologies – artificial intelligence, autonomous systems, digital infrastructures – and those dependent on them.[10] Control over semiconductor production chains or access to strategic digital infrastructures becomes an instrument of power comparable to control over maritime routes in previous eras. In parallel, the informational dimension becomes an autonomous field of confrontation, in which states and non-state actors compete for control of narratives and the shaping of collective perceptions,[11] in many cases the perception of the outcome of a conflict becoming more important than the military outcome itself.

Finally, at the internal level, numerous states face their own fractures of cohesion, generated by political polarization, economic inequalities, and identity crises, internal fragmentation often reducing the capacity for external projection more than pressure from adversaries.[12] To these is added a fracture of a civilizational nature, reflecting persistent differences in values, identity, and models of political organization among major cultural spaces.

What fundamentally differentiates this approach from previous models is its integrative character. The fractures do not act in isolation, but generate chain amplification effects, in which vulnerabilities in one domain can produce disproportionate consequences in others. For example, an economic vulnerability may generate social instability, which in turn affects the strategic capacity of the state and makes it more vulnerable in geopolitical competition. Similarly, a technological dependency can be exploited informationally, generating effects on national security.

Within this framework, power can no longer be defined exclusively through classical indicators, such as military strength or economic size. It becomes the result of a complex combination of factors, in which internal cohesion, adaptive capacity, control of resources, and technological superiority are as important as the projection of force. In this context, power can be defined as the capacity of an actor to manage multiple systemic fractures simultaneously, maintaining internal cohesion and adaptive advantage in relation to adversaries. Moreover, strategic advantage does not necessarily belong to the most powerful actor in absolute terms, but to the most coherent and most capable of managing these multiple fractures simultaneously.

Therefore, if Huntington’s paradigm provided a map of global cultural differences, and Todd’s analysis highlighted the internal vulnerabilities of the West, the concept of “fractures of the world order” proposes a synthesis adapted to the realities of the 21st century. This allows not only a better understanding of international dynamics, but also the formulation of more nuanced strategies, capable of responding to the complexity of the current global environment.
Romania in the Logic of the Fractures of the World Order (application of the model of the seven fractures)

In the current context of transformations within the international system, Romania’s positioning can no longer be assessed exclusively through classical indicators of security or economic development, but must be analyzed through the lens of its capacity to simultaneously manage the fractures that traverse the world order. From this perspective, Romania is not merely a peripheral actor of the system, but a state situated at the intersection of multiple lines of tension, which confers upon it both significant vulnerabilities and strategic opportunities.


In geopolitical terms, Romania is positioned on the frontier of the Euro-Atlantic space, in direct contact with the conflict zone generated by the confrontation between Russia and the West. Membership in NATO and the European Union provides security guarantees and access to mechanisms of strategic coordination; however, this integration is accompanied by a limited capacity for autonomous initiative in defining foreign policy.

In practice, Romania’s external profile is characterized more by alignment with positions formulated at the level of Euro-Atlantic structures than by the articulation of autonomous strategic objectives adapted to specific national interests. This tendency reduces diplomatic flexibility and the ability to capitalize on regional opportunities, particularly in areas of direct interest such as the Black Sea or relations with the eastern neighborhood.

At the same time, proximity to the conflict in Ukraine and the role of a frontline state confer increased strategic relevance upon Romania, but also exposure to security risks and external pressures. In the absence of a more proactive and coherent foreign policy, this positioning risks transforming geostrategic advantage into a peripheral-type vulnerability, characterized by a predominantly transit and implementation role, rather than that of an actor with influence capacity.

From an economic perspective, Romania reflects the characteristics of an integrated, yet structurally dependent economy, situated between the logic of industrial production and that of consumption sustained through external capital. Although it records economic growth and attracts investment, this evolution is accompanied by persistent imbalances, particularly a high trade deficit and dependence on external financing.

The structure of the economy indicates a predominantly peripheral integration into European value chains, with specialization in relatively low value-added activities and a limited capacity to control strategic sectors. At the same time, a growth model largely based on consumption, supported through budget deficits and imports, accentuates vulnerability to external shocks and reduces the room for maneuver of economic policies.

In the context of global economic fragmentation and tendencies toward production relocation, this positioning exposes Romania to the risk of remaining trapped in an intermediate zone, without the capacity to significantly advance within value chains, but also without consolidating its economic autonomy. In the absence of a coherent industrial policy and firmer control over strategic resources, this configuration tends to transform economic integration from an advantage into a source of vulnerability.

The energy fracture, in Romania’s case, reveals a structural contradiction between potential and the effective capacity to capitalize on it.[13] Although Romania possesses significant natural gas resources, including offshore developments in the Black Sea, as well as a diversified energy mix (nuclear, hydro, renewables), these advantages are partially neutralized by increasingly evident internal vulnerabilities.

On the one hand, the natural gas sector indicates the premises for consolidating relative autonomy and even a growing regional role, in the context of future exploitation. On the other hand, in the field of electricity, a structural deficit is already taking shape, driven by the decline of available production capacities, delays in the completion of strategic projects, and pressures generated by energy transition policies.


This dysfunction is amplified by a strategic incoherence in the management of resources, under conditions in which Romania finds itself simultaneously importing electricity during critical periods while supporting exports or deliveries to sensitive external spaces, such as the Republic of Moldova and Ukraine. In the absence of a clear prioritization of internal energy security, this dynamic gradually transforms the energy domain from a potential strategic advantage into a systemic vulnerability, with direct implications for economic stability and the state’s resilience capacity.

In technological terms, Romania faces a clear fracture between its capacity to adapt and the lack of real control over critical technologies. Although it has a dynamic IT sector and well-trained human resources, dependence on infrastructures, platforms, and technologies developed outside the national space limits strategic autonomy. In a world where technological control becomes a determinant of power, this dependence may generate significant vulnerabilities, especially in areas such as cybersecurity or critical infrastructures.

The informational dimension highlights a growing structural vulnerability, determined by the inability to generate, sustain, and protect coherent strategic narratives within the public space. In the current context, international competition is no longer conducted solely in the military or economic domains, but also at the level of perceptions, where control of narratives becomes an essential instrument of power.

In Romania’s case, the informational space is characterized by a high degree of fragmentation and polarization, as well as by a significant dependence on external sources for the interpretation and validation of reality. In the absence of an institutional capacity consolidated around the “strategic shaping of narratives,” the state fails to coherently articulate and sustain its own positions, becoming rather a receiver and multiplier of externally generated discourses.

This situation is aggravated by exposure to disinformation and influence campaigns, but also by the emergence of an increasingly visible tension between the necessity of countering these phenomena and the risk of expanding mechanisms of control over information flows. In the absence of solid institutional safeguards, such tendencies may lead to the limitation of pluralism and the erosion of public trust, generating effects contrary to those intended.

Under these conditions, the perception of reality becomes a field of confrontation in which external actors can influence internal cohesion, strategic orientation, and even the legitimacy of political decision-making. In analytical terms, the informational fracture does not represent merely a sectoral vulnerability, but a multiplier of the other fractures, as it affects the state’s capacity to correctly interpret the strategic environment and to build internal consensus around fundamental objectives.

The socio-internal fracture represents one of the most sensitive dimensions of the vulnerability of the Romanian state, being the cumulative result of negative demographic, economic, and institutional developments. Beyond these trends, a determining factor is the degradation of the quality of the political class and the weakening of the functioning of representative institutions.

The political space is predominantly characterized by competition for access to resources and power, to the detriment of the coherent articulation of the national interest and the formulation of long-term strategies. Under these conditions, political decision-making often becomes fragmented, reactive, and dependent on electoral cycles, which reduces the state’s capacity to manage complex structural processes.


At the same time, the fundamental institutions of representative democracy show an erosion of their functional role. Parliament, although formally retaining its constitutional prerogatives, tends to be increasingly perceived as an actor with limited influence in the real decision-making process, while the transfer of power toward executive or informal areas reduces transparency and public accountability.

These developments are also reflected in international evaluations, where Romania is classified, in certain comparative analyses, as belonging to the category of hybrid regimes[14], which indicates a discontinuity between the formal institutional framework and the effective functioning of democracy.

Overall, this fracture affects not only social cohesion, but also the capacity of the state to formulate and implement coherent policies, transforming internal vulnerabilities into a multiplier factor of the other fractures – economic, energy, and geopolitical.

In civilizational terms, Romania is situated within the Western space, but with historical and cultural particularities that place it at an intersection of value systems. This positioning may generate ambivalences in relation to themes such as sovereignty, identity, or the relationship between the state and the individual. At the same time, it offers the possibility of serving as a bridge between different cultural spaces, if strategically leveraged.

Analyzed as a whole, these fractures do not act independently, but interconnect and amplify one another. Economic vulnerabilities may fuel social tensions, which in turn can be exploited informationally, affecting the strategic coherence of the state. Technological dependencies may generate security risks, while energy incoherence may have significant economic and geopolitical effects. In this sense, the main challenge for Romania is not the existence of these fractures, but the capacity to manage them in a coherent and integrated manner.

Within this framework, Romania’s position in the international system is not determined exclusively by its economic or military size, but by the level of internal coherence and its capacity for strategic adaptation. Romania is not condemned to the status of a vulnerable state, but neither can it become a relevant actor without a strategy that integrates these multiple dimensions.

Therefore, within the logic of the fractures of the world order, Romania may evolve in two distinct directions: either as a dependent state, affected by the intersection of vulnerabilities, or as a regional pivot state, capable of transforming its geographical position and available resources into a strategic advantage. The difference between these two trajectories will not be determined by the international context, but by internal decision-making capacity.

In a world in which power is defined by the management of fractures, Romania cannot afford the luxury of a reactive approach. Without a clear understanding of its own vulnerabilities and their interdependence, any strategy will remain fragmented. By contrast, an integrated approach, correlating geopolitical, economic, energy, technological, and social dimensions, can transform these fractures from sources of risk into instruments of strategic consolidation.

In this logic, Romania’s strategic vulnerability does not result from the intensity of a single fracture, but from their convergence and synchronization, within a cumulative model that reduces the capacity for autonomous decision-making and strategic projection.


The detailed analysis of these vulnerabilities, including economic, energy, demographic, and institutional dimensions, is already developed in another material dedicated to the multisectoral “assassination” of Romania, which will appear in a book currently in preparation, where these fractures are empirically highlighted. In this sense, the present analytical framework does not represent an exhaustive description, but a key for interpreting processes already manifested in concrete terms.


Conclusion

Therefore, if Huntington’s paradigm provided a map of global cultural differences, and Todd’s analysis highlighted the internal vulnerabilities of the West, the concept of “fractures of the world order” proposes a synthesis adapted to the realities of the 21st century. The current dynamics of the international system can no longer be understood through a single explanatory key, but only through the interdependent analysis of the tensions that simultaneously traverse the geopolitical, economic, energy, technological, informational, and social domains.

Within this framework, stability is no longer the result of a balance between comparable powers, but of the capacity of actors to manage complexity and to integrate these fractures into a coherent strategy. Power no longer belongs exclusively to the largest or the strongest, but to those who are the most coherent and most capable of defining and consistently pursuing their strategic objectives.

In a world defined not by equilibrium, but by the permanent intersection of fractures, international order will no longer be determined by dominance, but by the capacity to manage instability. Consequently, states that do not understand their own fractures will inevitably become the object of others’ strategies, while those that are able to integrate and control them will, in fact, define the architecture of the future world order.

Partea inferioară a formularului



About the author: 

Corneliu Pivariu is a highly decorated two-star general of the Romanian army (Rtd). He has founded and led one of the most influential magazines on geopolitics and international relations in Eastern Europe, the bilingual journal Geostrategic Pulse, for two decades. General Pivariu is a member of IFIMES Advisory Board.


The article presents the stance of the author and does not necessarily reflect the stance of IFIMES.

[1] IFIMES – International Institute for Middle East and Balkan Studies, based in Ljubljana, Slovenia, has a special consultative status with the United Nations Economic and Social Council ECOSOC/UN in New York since 2018, and it is the publisher of the international scientific journal “European Perspectives.” Available at: https://www.europeanperspectives.org/en

[2] Samuel P. Huntington, The Clash of Civilizations and the Remaking of World Order, Simon & Schuster, New York, 1996. See also the original article: “The Clash of Civilizations?”, Foreign Affairs, vol. 72, no. 3, 1993.

[3] Emmanuel Todd, Après l’Empire. Essai sur la décomposition du système américain, Gallimard, Paris, 2002; for recent developments regarding the decline of the West and the dynamics of the conflict in Ukraine, see his public interventions and analyses from the period 2022–2024.


[4] The concept of “fractures of the world order” is used in this study to describe the set of structural lines of tension that traverse the contemporary international system and which, through their interaction, determine the dynamics of power, stability, and the evolution of conflicts. Unlike one-dimensional explanatory models, this approach proposes an integrative perspective, in which geopolitical, economic, energy, technological, informational, social, and civilizational dimensions are analyzed in an interdependent manner.

[5] Although useful for understanding identity-based conflicts, the civilizational paradigm is partially contradicted by realities such as the intense economic cooperation between states belonging to different civilizations (for example, U.S.–China trade relations or interdependencies between the EU and states in the Middle East).

[6] The conflict in Ukraine (beginning in 2022) has demonstrated both Russia’s capacity for economic adaptation under sanctions and the West’s difficulties in achieving rapid and decisive results, highlighting the limits of classical instruments of pressure.

[7] The strategic rivalry between the United States and China manifests itself in the Indo-Pacific, while the confrontation between Russia and the West is concentrated in Eastern Europe, including the Black Sea region, with direct implications for regional security.

[8] The emergence of alternative mechanisms to the Western financial system (for example, BRICS initiatives regarding payment systems independent of SWIFT) reflects this emerging economic fracture.

[9] The energy crises generated by the conflict in Ukraine and tensions in the Middle East, including risks associated with the Strait of Hormuz, demonstrate the critical role of energy resources in global competition.

[10] Technological restrictions imposed on China by the United States (especially in the field of semiconductors) highlight the emergence of a global “technological curtain.”

[11] The informational warfare associated with the conflict in Ukraine and the narrative confrontations in the Middle East illustrate the importance of controlling perceptions in defining strategic outcomes.

[12] Political polarization in Western states and institutional fragilities in various regions highlight the fact that internal fractures can become decisive factors in the capacity for external projection of power.

[13] The concept of “secondary energy fracture” describes a situation in which a state’s vulnerability does not derive from the absence of energy resources, but from the mismatch between their availability, internal production capacity, and the infrastructure for their valorization, on the one hand, and the coherence of public policies and strategic prioritization, on the other.

In Romania’s case, this fracture becomes particularly visible in the electricity sector. If in 1989 the total installed capacity exceeded 22,000 MW, at present the effectively available capacity is significantly reduced, estimates indicating a decrease of at least 6,000–7,000 MW, as a result of the closure of certain energy units and delays in investments in new capacities. Consequently, Romania has become, in certain periods of high consumption, a net importer of electricity.


This evolution contrasts with the existing potential in the natural gas sector, especially through offshore projects in the Black Sea (Neptun Deep), which can consolidate Romania’s position as a regional supplier. However, the lack of correlation between the development of primary resources and the expansion of electricity production capacities generates a structural imbalance in the energy chain.

In analytical terms, this fracture reflects a discontinuity between resources, capacities, and strategic decision-making, constituting a specific form of systemic vulnerability within the model of the fractures of the world order.

[14] According to the Democracy Index 2024, published by the Economist Intelligence Unit, Romania is classified in the category of “hybrid regimes,” occupying positions around 70th place globally. This classification reflects the existence of a formal democratic institutional framework, but with significant dysfunctions regarding the quality of governance, the functioning of institutions, political culture, and the level of civic participation.
How U.S. Electric Vehicle Industrial Policy Created A New ‘Rust Belt’ – Analysis


April 29, 2026 
By 
Chen Li 


The United States once viewed the electric vehicle (EV) industry as a pivotal lever for both a manufacturing renaissance and a green transition. The Biden administration promoted it, where an intensive series of policies centered on the Inflation Reduction Act (IRA) were rolled out in an attempt to fulfill the dual political promises of energy transformation and industrial reshoring within a condensed timeframe. However, since the beginning of 2025, this highly anticipated industry has shown clear signs of cooling or even stagnation across multiple regions. Progress on several projects has been obstructed, the pace of investment has decelerated, and employment expectations have fallen short, effectively creating an “EV Rust Belt.”

According to reporting from Reuters, on March 30, 2026, General Motors’ Detroit-based electric vehicle plant Factory Zero announced an extension of its production halt until April 13, with the plant manager citing aligning with “market dynamics” and initiating temporary layoffs for approximately 1,300 workers. Furthermore, in December 2025, Ford Motor Company announced a USD 19.5 billion capital impairment charge related to its electric vehicle operations and cut roughly 1,600 jobs at its BlueOval SK battery plant in Kentucky. Ford simultaneously announced it would cease production of the all-electric F-150 Lightning and abandon its production plans for the next-generation T3 electric pickup and electric vans. Media reports also indicate that Magna’s factory in St. Clair, Michigan, a supplier of EV components to General Motors, now sits nearly vacant; as the automotive industry recalibrates its electric vehicle investments, the plant has suffered a significant blow and is essentially in a state of shutdown or large-scale dormancy.

What once was heralded as the “hope for revival” of the American automotive industry is now facing a rapid decline. This phenomenon of “high expectations followed by a low trajectory” raises a question worthy of deeper analysis: even with aggressive policy promotion and rapid capital deployment, how did the U.S. electric vehicle industry reach this state?

The American EV industrial policy originated under the Biden administration, and it was one of the most ambitious initiatives of the Democratic Party’s political goals. The administration sought to combine green transition, blue-collar employment, and manufacturing reshoring through framing the EV policy model as being capable of simultaneously reducing emissions, building new factories, and creating unionized jobs. To achieve this, the Biden administration constructed a comprehensive policy toolkit.

First of all, there are demand-side incentives, with the primary mechanism being the Clean Vehicle Credit under IRA. This provides a tax credit of up to USD 7,500 for qualifying new EVs and USD 4,000 for used EVs, alongside specific incentives for leased and commercial vehicles. The objective was to bolster end-user demand during a transitional phase where EV prices remain higher than those of internal combustion engine vehicles. Then, there are supply-side incentives. The Advanced Manufacturing Production Credit (Section 45X) within the IRA provides direct subsidies based on output, significantly lowering the domestic production costs for EVs and their components. Simultaneously, the U.S. Department of Energy, through its Loan Programs Office, has provided low-cost financing for large-scale projects. Notably, the BlueOval SK venture, a partnership between Ford and the South Korean battery giant SK On, secured approximately USD 9.63 billion in loan support to construct three battery plants in Tennessee and Kentucky, with a combined design capacity exceeding 120 GWh. Finally, the strategy includes infrastructure support. Through the 2021 Bipartisan Infrastructure Law (IIJA), the National Electric Vehicle Infrastructure (NEVI) Formula Program was established. This program plans to allocate approximately USD 7.5 billion to states by 2026 to build a public fast-charging network along highway corridors and within communities, aiming to resolve the “range anxiety” stemming from a lack of charging stations.


This multifaceted policy suite had an immediate and profound stimulatory effect on both the private sector and local governments. Between 2021 and 2024, cumulative announced investments in the North American battery and electric vehicle supply chain surpassed USD 250 billion. According to data from Atlas Public Policy, as of September 2024, announced investments specifically related to EV and battery manufacturing reached approximately USD 208.8 billion, tied to commitments for roughly 240,000 manufacturing jobs. Under these policy signals, nearly all legacy automakers recalibrated their capital expenditure strategies. General Motors initially pledged USD 35.0 billion toward electric vehicles and autonomous driving through 2025, a figure it later revised upward. Similarly, Ford announced plans to invest over USD 50.0 billion in EVs by 2026, restructuring its product roadmap around the F-150 Lightning, Mustang Mach-E, and next-generation electric platforms. Meanwhile, battery and material companies rapidly established footprints across Michigan, Ohio, Tennessee, Kentucky, and Georgia, forming what has become known as the “Battery Belt”. State and local governments responded with equal urgency. Competing to secure these projects, states offered aggressive packages including land grants, tax abatements, infrastructure support, and direct subsidies. Their objective was to leverage the EV industry to replicate the historical success of the traditional automotive sector in driving local employment and expanding the tax base.


However, this policy-driven path of industrial expansion is increasingly at odds with the market-oriented economic model of the United States. Consequently, the Biden administration’s EV industrial policy quickly encountered multiple structural constraints in practice, the most immediate of which stemmed from the demand side.

The actual penetration rate of EVs in the U.S. market has fallen significantly short of policy and capital expectations, with pricing emerging as a primary constraint. Because battery costs have not declined as rapidly as early projections suggested, compounded by fluctuations in raw material prices, it has been difficult for vehicle costs to reduce. A case in point is the Ford F-150 Lightning; the manufacturer’s suggested retail price (MSRP) for the entry-level “Pro” model rose from approximately USD 40,000 at its 2022 launch to USD 54,995 by early 2024. The mid-range XLT model saw an even steeper increase of USD 10,000, bringing its starting price to USD 64,995. With high interest rates and volatile consumer confidence, American EV adoption has become heavily dependent on subsidies. Any perceived policy uncertainty or marginal weakening of incentives triggers immediate and significant demand volatility. Data indicates that while U.S. EV sales reached between 1.3 million and 1.7 million units in 2024, the growth rate plummeted from approximately 40%–50% in 2023 to just 7%–10%. By 2025, this growth turned negative, with sales contracting 2%–4% year-over-year.

The lagging development of charging infrastructure has further suppressed consumer demand for electric vehicles. Although the Biden administration prioritized the expansion of the charging network, actual progress has fallen significantly behind schedule. Public records indicate that by the end of 2024, the number of charging stations effectively operational under the federal program remained remarkably low. Some assessments even suggest that the number of stations fully completed and opened to the public was only in the single or double digits, a fraction of the original targets. This structural misalignment where vehicle production outpaces infrastructure deployment has left consumers facing significant inconveniences, thereby undermining the overall user experience and weakening the incentive to purchase.


While weak demand initially constrained the growth of the American EV sector, the 180-degree turn in policy following Trump’s inauguration has proven to be the final straw for the industry’s development. Upon taking office, Trump pursued an America First energy agenda, utilizing executive orders and legislative reviews to aggressively dismantle the EV support system established during the Biden era. On his first day in office, Trump signed the Unleashing American Energy executive order, which suspended all fund disbursements originating from the IRA and the Bipartisan Infrastructure Law (BIL). By January 2026, the Department of Energy announced it had restructured, modified, or rescinded over USD 83 billion in Biden-era loans and conditional commitments. The policy reversal extended to the regulatory front as well. In June 2025, Trump signed a congressional resolution revoking the Clean Air Act waiver previously granted to California by the EPA, effectively nullifying the state’s target to ban the sale of internal combustion engine vehicles by 2035. Furthermore, in September 2025, the federal government formally terminated consumer tax credits for EV purchases. This move led to an immediate crisis in the market, with total U.S. EV sales in the fourth quarter plummeting by 36% year-over-year.

This policy shift has proven fatal for an industry so heavily reliant on government scaffolding. Prior to this, firms had aggressively scaled up capacity to secure future market share and capture subsidies, often before their profit models had matured or costs had reached sustainable levels. While this strategy appeared rational under the assumption of continuous demand growth, the reality of a market shortfall has rapidly transformed those front-loaded investments into a crippling burden. It is this fundamental misalignment that has triggered the current and severe contraction of the American EV industry.


Ultimately, the challenges facing the American EV industry represent a periodic fallout resulting from a fundamental mismatch between policy mandates, market realities, and the natural rhythm of technological maturation.

The Biden administration’s EV industrial policy suffered from a clear disconnect between developmental assessments and strategic pacing. By leveraging policy instruments to force a rapid industrial expansion before the demand base had solidified, infrastructure had matured, or technical costs had reached parity, the administration generated a short-term mirage of investment and employment prosperity. However, this approach simultaneously created medium-term exposure to resource misallocation and structural risks. In several regions, these risks have already manifested as a compounding effect of idle capacity and labor volatility. This effectively created a “New Rust Belt” of the EV era. Such a development has in fact undermined the stability of the very path through which the U.S. sought to achieve a manufacturing revival.

Looking at the issue more deeply, this phenomenon shows the inherent limitations of government-led industrial development. When demand is highly dependent on policy incentives rather than organic market drivers, the policy framework itself becomes the primary variable governing industrial volatility. Once policy expectations shift, the demand side contracts rapidly, sending a shockwave through the supply chain to the production and employment sectors. During this process, risk premiums rise and the cost of capital escalates, forcing businesses to recalibrate their investment cycles. Consequently, the manufacturing layout based on the assumption of policy stability would begin to fracture. For local economies, this translates into a swift pivot from an investment boom to restructuring pressure, manifesting as a classic expansion-contraction cyclical fluctuation.

Final analysis conclusion:

The Biden administration’s state-led climate and electric vehicle initiatives initially catalyzed a rapid industrial expansion in the U.S., yet ultimately culminated in the creation of a new “Rust Belt”. This outcome is the byproduct of a fundamental misalignment between aggressive policy-driven bets and the underlying realities of market demand, technological costs, and industrial structure. Consequently, the overstated demand projections have rapidly inverted into contractionary pressures. In this process, corporate investment, supply chain configurations, and local economies have all been swept into a period of severe volatility, effectively shattering the vision of a revitalized American automotive sector. Perhaps more critically, when industrial progress is heavily predicated on policy continuity, the oscillation of that policy becomes the primary source of uncertainty. This volatility amplifies systemic risk by driving up capital costs and triggering sharp fluctuations in demand.


Chen Li is an Economic Research Fellow at ANBOUND, an independent  China think tank.

From Self-Defence To Deterrence: The Quiet End Of Japan’s Postwar Experiment – Analysis

April 29, 2026 
Observer Research Foundation
By Manoj Joshi

Even as the world’s attention is on West Asia, significant developments have been unfolding in the East. On April 21, Japan endorsed scrapping a ban on the export of lethal weapons, the last major hurdle in its move away from its post-war pacifist policy. As part of this shift, the country is now seeking to build up its arms industry and deepen cooperation with its defence partners.

For now, exports will be limited to 17 countries, including India, that have signed defence equipment and technology transfer agreements with Japan. Such exports will require approval from the National Security Council and will be monitored by the government to ensure proper end-use. In principle, Japan will not export lethal weapons to countries at war. Even so, Japan’s shift has generated interest in countries such as Poland and the Philippines.

Facing serious security concerns related to China and North Korea, and influenced in part by uncertainties in US alliance commitments under Trump, Japanese strategic thinking had already begun to shift. The war in Ukraine added further urgency. Now, with the United States fully preoccupied in West Asia, the Japanese assessment is that the US pivot to the Indo-Pacific is unlikely to materialise anytime soon.

Despite isolating itself from the global arms market for decades, Japan has developed significant capabilities through its domestic industry and licensed production. At present, the United States dominates the Japanese market, accounting for 95 percent of its defence imports. Yet well-known companies such as Mitsubishi, Kawasaki, and Fujitsu have meaningful defence divisions, and the country maintains an extensive defence-industrial base. It is capable of manufacturing submarines, fighter jets, and warships.


In terms of technology, Japan is second to none. However, it faces gaps in certain areas of military technology, which it is seeking to address through the new Defense Innovation Science and Technology Institute established in 2025 by its Ministry of Defense. Its Taigei-class submarines, equipped with lithium-ion batteries, are considered among the most advanced conventional submarines in the world. The Hyper Velocity Gliding Projectile (HVGP), under development since 2018, was formally deployed for the first time to the Japan Ground Self-Defence Force’s Camp Fuji in Shizuoka Prefecture. A more advanced variant is scheduled for the 2030s. In 2025, Japan conducted the first successful test firing of an electromagnetic railgun at a sea-based target and is likely to become the first country in the world to deploy such systems.

Things on the export front are already moving faster. In its biggest deal ever, Japan formalised an agreement to deliver three frigates to Australia, to be built in Japan by Mitsubishi Heavy Industries, with Australia constructing the remaining eight domestically. The initial three-ship contract is valued at approximately A$10 billion (US$6.5-7 billion), part of a total programme estimated at A$15-20 billion for all eleven Mogami-class frigates, with the first vessel due for delivery by December 2029.


Japan’s post-2022 security policy moves reflect a strategic pivot: from a strictly defensive “self-defence” policy to a more assertive, deterrence-oriented posture equipped with stand-off strike capabilities, integrated air and missile defence, multi-domain operations, and deeper alliance cooperation. While still framed under the rubric of self-defence, the underlying shift seeks to adapt Japan to a rapidly deteriorating regional security environment and position it as a more resilient actor in Indo-Pacific stability.

Japan’s pacifist restrictions were rooted in Article 9 of its 1947 Constitution, which renounced war and the maintenance of “war potential.” Over time, however, Japan began to loosen its pacifist stance, beginning in 1954 with the establishment of the Self-Defence Forces (SDF), on the argument that Article 9 permitted “individual self-defense.”

By 1972, this had evolved into a strict “exclusive defence” policy that banned collective self-defence, limited military spending to below 1 percent of GDP, prohibited the export of lethal arms, and barred the possession of “offensive” weapons such as long-range bombers or aircraft carriers. Arms exports were governed by the “three principles” adopted in 1967, which banned exports to communist countries, countries under UN Security Council embargoes, and those involved in or likely to be involved in international conflicts. In 1976, Japan clarified that, as a peace-loving country, it would refrain from promoting arms exports regardless of destination.

The long road to change began in 1987, when Prime Minister Yasuhiro Nakasone effectively removed the 1 percent GDP cap, and in 1992, the SDF was permitted to participate in overseas peacekeeping operations.

The key shift, however, began with the prime ministership of Shinzo Abe (2006-7 and 2012-2020). In 2014, his Cabinet passed a resolution permitting collective self-defence, allowing the Self-Defence Forces (SDF) to be used to protect allies such as the United States in a crisis. Thereafter, the government allowed limited arms transfers for humanitarian relief and international cooperation. In 2016, the Philippines leased five used trainer aircraft for maritime patrols over the disputed South China Sea. Later, new air surveillance radars were also sold to Manila.


In 2022, the Cabinet of Prime Minister Fumio Kishida approved new security documents — a National Security Strategy, a National Defense Strategy, and a companion Defense Buildup Program (2023–2027). The new National Security Strategy stated that Japan was “facing the most severe and complex security environment since the end of World War II.” Tokyo stopped short of formally designating Beijing as a “threat,” but described the rise of China as “the greatest strategic challenge that Japan has ever faced.”

In a further policy shift, Japan decided to acquire counter-strike capabilities against adversaries and announced plans to raise defence spending to 2 percent of GDP within five years. In 2023, a new rule was adopted enabling the export of licence-produced weapons manufactured in Japan to the original licence holders.

Policy changes were accompanied by specific capability programmes. The first was the acquisition of US Tomahawk cruise missiles and the decision to upgrade Japan’s own Type 12 missiles, aimed at striking enemy staging areas and missile launch sites. The second was the expansion of its integrated missile defence architecture and sensor networks to counter ballistic and cruise missile attacks. This includes Aegis-equipped ships, land-based interceptors, space-based and persistent ISR capabilities, and investment in early-warning satellites. Third, Japan began investing in unmanned maritime and aerial systems. Fourth, it significantly upgraded its offensive and defensive cyber capabilities to protect critical national infrastructure.

Japan is not pursuing these steps alone. The United States remains Tokyo’s central security partner and is cooperating with Japan on areas such as integrated air and missile defence development, high-power microwave systems, and hypersonic glide-phase interceptors. Beyond the United States, Tokyo is deepening trilateral and multilateral cooperation with partners such as Australia, the United Kingdom, and European states on capability development, intelligence sharing, and joint exercises. In 2022, Japan joined the United Kingdom and Italy in an effort to build a new sixth-generation fighter aircraft by the mid-2030s. Japan is also being considered as a partner in advanced military technology projects with the United States, the United Kingdom, and Australia under AUKUS, particularly in the area of autonomous maritime systems.

India and Japan share a “Special Strategic and Global Partnership,” manifested in a range of agreements and institutionalised dialogues. Yet efforts to deepen defence technology cooperation remain below potential — as much a result of Japanese restrictions until recently as of Indian bureaucratic lassitude.

The two countries also have an agreement to jointly develop an advanced underwater surveillance system and other maritime technologies — areas of direct relevance given their shared concerns about Chinese naval expansion in the Indian Ocean and the Western Pacific. In February, New Delhi hosted the 11th India-Japan Naval Staff Talks. According to one analyst, the talks “demonstrate that the India-Japan relationship has transitioned from a consultative phase to a phase that is deeply integrated and operational.” The naval talks followed the 18th round of the India-Japan Foreign Ministers’ Strategic Dialogue, which focused on security and defence, investment, and innovation.


Japan’s transformation is neither sudden nor complete. It has been a slow, at times reluctant, evolution of its post-war identity — nudged along by an aggressive, nuclear-armed North Korea, an increasingly assertive China, and an unreliable American patron in a neighbourhood that has steadily grown more dangerous. The April 21 decision represents less a rupture than the removal of the last symbolic fig leaf.

For the Indo-Pacific, a rearmed and strategically assertive Japan is a major asset. It strengthens the web of security partnerships that the United States helped build, but may no longer be relied upon to anchor alone. For India, it opens avenues in defence technology and industrial cooperation that go well beyond what the bilateral relationship has so far achieved. Japan spent seven decades seeking to limit its military profile. That post-war experiment, born of genuine guilt and enforced by American design, is now almost certainly over.

About the author: Manoj Joshi is a Distinguished Fellow at the Observer Research Foundation.

Source: This article was published by the Observer Research Foundation.

 

IMF: Can advanced economies avoid debt distress?

IMF: Can advanced economies avoid debt distress?
Many highly indebted advanced economies face a grim fiscal outlook. Their debt is too high and bringing it down will be very painful. / bne IntelliNewsFacebook
By Zsolt Darvas senior fellow at Bruegel in Brussels, Jeromin Zettelmeyer director of Bruegel in Brussels April 27, 2026

Many highly indebted advanced economies face a grim fiscal outlook. Under current policies, the public debt ratios of countries including Belgium, France, the United Kingdom, and the United States are set to deteriorate over the next two decades. They still have room to borrow, but there are limits.

So far, financial markets have been forgiving. But recent tremors suggest that they may become more sensitive to negative news about the fiscal or economic outlook. They may demand higher interest rates even from countries with highly liquid government bond markets, making the job of reducing debt that much harder.

AI-driven productivity growth may slow the increase in debt ratios and reduce the needed adjustment. But the magnitude and timing of this effect are unclear. Population aging and growth declines linked to trade fragmentation and political uncertainty pull in the opposite direction.

What will it take to stabilize debt ratios? In a recent paper with Gonzalo Huertas and Lennard Welslau, we assessed the fiscal adjustment needed in EU countries, the UK, and the US. Using official growth forecasts and market-based projections for interest rates, exchange rates, and inflation, combined with simulated shocks, we generated probability distributions for future debt ratios under different scenarios for the primary balance, which excludes interest payments on the debt.

We considered a 20-year horizon starting in 2024 and divided it into two periods. In the first, a seven-year period, governments raise the primary balance to a level that ensures debt sustainability. In the following, 13-year, period, governments keep the primary balance constant, excluding spending changes driven by an aging society. We aimed to ensure a 70 percent probability that the fiscal adjustment in the first period was large enough to stabilize the debt ratio over the final five years of the 20-year horizon.

Mixed findings

On the positive side, the required long-term primary balance does not look dramatically high in many cases. For example, it is 1.3 percent of GDP for France and the US, 1.8 percent for Belgium and the UK, and 2.5 percent for Italy. On the negative side, however, given large deficits in 2024, substantial adjustments are likely to be needed. About a dozen countries require adjustments of more than 3 percent of GDP; five of those–France, Poland, Romania, the Slovak Republic, and the US–need adjustments of 5 percent relative to 2024.

On paper, almost all EU countries plan adjustments to stabilize the debt ratio. However, several use macroeconomic assumptions that are more optimistic than the EUs common methodology. Germanys plan, for example, assumes higher inflation and growth than expert forecasts. If actual growth and inflation turn out lower, Germanys deficit and debt will end up much higher than it projects.

Moreover, forecasts by the European Commission and the IMF suggest that countries with the biggest adjustment needs are unlikely to deliver the measures needed to stabilize their debt levels. This reinforces doubts about the likelihood of these adjustments.

 

Historical precedents

While the US and several other advanced economies are unlikely to make fiscal adjustments needed to stabilize debt in the medium term, they may try later. To see how likely this is, we looked at historical precedents: how often countries achieved the required primary balance, the longest period balance was maintained, and how often they made the needed adjustment within seven years.

Our results show that primary balances at the level needed to stabilize debt in several high‑debt advanced economies—and the large adjustments needed to get there from current fiscal positions—are rare. France, for example, would need a primary surplus of 1.3 percent of GDP to stabilize its debt, which has happened only six times in five decades. This does not mean such adjustments are impossible, but history suggests it will be difficult and likely to take longer than the seven years EU fiscal rules envisage.

Policymakers in these economies can take heart from the transformation of what were once considered the euro areas weakest links. In 2024, Greece posted a primary balance of 4.0 percent, adjusted for swings in the business cycle—well above what is needed to stabilize debt. Portugal needs only a minor adjustment of 0.5 percent of GDP; Irelands required adjustment of 1.9 percent is modest, and the countrys debt ratio is exceptionally low, at 39 percent of GDP, far below 122 percent in the US and the UKs 101 percent.

How did countries that faced severe fiscal crises 15 years ago become examples of discipline today? After the 2008 global financial crisis, financial markets drove them to the edge of collapse, forcing them to accept EU/IMF lending programs. Despite design flaws, these programs’ essential fiscal tightening and structural reforms put their economies back on track for sustainable growth. The adjustment was painful and, in the case of Greece, very long-lasting, but it was eventually effective.

The results speak for themselves. With average annual growth between 3.1 percent and 4.2 percent in 2022–25, all three countries exceeded the US pace of 2.6 percent.

The lesson: Fiscal discipline and structural reforms—along with public and private debt restructuring when debt is unsustainable—pay off eventually. Not surprisingly, these reforms and restructurings did not stem from domestic political momentum but were forced on them by market pressure.

Recognize the risks

The question is, How will countries adjust this time? We see several possibilities.

The best outcome would combine growth-enhancing reform—including by implementing the Draghi reports single-market agenda in the EU—with deep reforms to social security and pension systems. It could also include overhaul of tax systems to raise revenue without discouraging growth. The latter is particularly true for the US—the only Organisation for Economic Co-operation and Development country without a value-added tax.

Unfortunately, this outcome is also politically the most difficult. A more likely path to fiscal consolidation involves a shift in domestic political leadership that prioritize fiscal discipline but not necessarily deep reform. Italy offers an example. Scarred by near disaster in the early 2010s, Italian governments across the political spectrum have kept budgets broadly under control. Italys debt ratio of roughly 135 percent of GDP is still high, but its cyclically adjusted primary balance of 0.3 percent of GDP looks far healthier than those of Belgium, France, or the UK.

A hard‑landing scenario could be triggered by a sudden spike in borrowing costs, leading to debt distress. As debt rises, interest rates could also climb, and markets might become more sensitive to news that calls fiscal sustainability into question. Governments might attempt forms of financial repression—for example, encouraging domestic banks or institutions to absorb additional government debt—but such measures have limits. Surprise inflation could temporarily ease fiscal pressures, but persistently higher inflation would eventually drive up nominal interest rates.

Let’s hope that policymakers recognize these risks and act early enough to prevent such an outcome.

AUSTERITY KILLS

Magyar promises austerity to get into Eurozone by 2030

Magyar promises austerity to get into Eurozone by 2030
Incoming prime minister targets eurozone membership by 2030, but analysts warn the economics are daunting and the politics harder still — while a deteriorating fiscal position inherited from Orbán makes every deadline look optimistic / bne IntelliNewsFacebook
By Ben Aris in Berlin April 28, 2026

For sixteen years, the question of Hungary joining the euro was not really a question at all. Viktor Orban's government was antagonistic towards Brussels, his party had deep eurosceptic roots, and his long-serving central bank governor argued publicly that it would be better to wait until Hungary's income had converged more fully with the rest of the EU. Analysts who examined the issue concluded that Hungarian euro adoption before 2040 was unlikely.

That calculus has changed following a landslide election victory that ousted former Hungarian Prime Minister Viktor Orban. Peter Magyar's Tisza party won a two-thirds supermajority in Hungary's April 12 vote, ending Orban's sixteen-year rule, and has pledged to "choose Europe" — rebuilding trust with EU institutions and committing to eurozone membership by 2030. Finance minister nominee Andras Karman has confirmed that timetable, pledging to meet the Maastricht criteria by 2030.

Hungarian financial news outlet index.hu reported that the euro question "has gained new momentum in Hungary," with Karman having already indicated among his first steps that he would launch the accession process. According to experts cited by the publication, the move is "not only economically justified, but also strategically correct: the path to the euro can bring discipline, predictability and long-term stability — in other words, the very foundations on which sustainable convergence can be built."

Markets have noticed. Hungary's ten-year bond yield, which stood at 7% at the end of last year, has fallen to 6% since the election — a sign that investors are already pricing in some probability of the macro adjustment that euro accession would require.

European Commission President Ursula von der Leyen said "Europe's heart is beating stronger in Hungary" on election night. Commission officials have already been in Budapest to begin work on unlocking approximately €17bn in EU funds frozen during the Orban era, with Hungary required to fulfil 27 so-called super-milestones to access the money. Talks are going to be tough as Magyar has only agreed to make four of the changes.

But it is going to be an uphill battle. As IntelliNews reported, most of Europe’s leading economies have severe economic problems and Hungary is one of them.

 

The numbers

Hungary currently does not meet any of the four quantitative Maastricht criteria in a sustainable manner. The five criteria for eurozone membership require: inflation no more than 1.5 percentage points above the average of the three best-performing EU member states; long-term interest rates within 2 percentage points of the same benchmark; a budget deficit below 3% of GDP; public debt below 60% of GDP; and exchange rate stability within the ERM II mechanism for at least two years.

Hungary fails on almost all of them. The Hungarian budget deficit came in at 4.7% of GDP in 2025 — nearly double the EU limit — according to the Hungarian Central Statistical Office's official Eurostat notification. The gross public debt-to-GDP ratio stood at approximately 74.6% in 2025, rising rather than falling, and well above the 60% ceiling. Inflation, while lower than its 2022-23 peaks, remains among the highest in the EU. Hungary has not yet joined ERM II, the exchange rate mechanism that is a prerequisite for euro entry.

The fiscal trajectory is moving in the wrong direction. Hungary's deficit is projected to widen further to 5.1 to 5.2% of GDP in 2026, driven by new household tax measures including personal income tax exemptions for mothers and expanded family allowances — popular policies that Tisza itself championed in opposition. GKI, Hungary's leading economic research institute, forecasts the general government deficit will hover around 6% in 2026.

Meeting the Maastricht criteria will require at least HUF3-4 trillion— equivalent to €8 to €11bn — in fiscal adjustment. That is a painful level of austerity for a government that simultaneously campaigned on doubling family allowances, expanding healthcare spending and cutting taxes for lower earners. Neither Karman nor Magyar spelled out during the campaign what specific austerity measures would be required for euro entry.

Magyar himself has already shown signs of moderating his timetable. While Tisza originally set 2030 as its target date, Magyar is now striking a more cautious tone, talking about 2031, and emphasising that a comprehensive budget review must first take place before a responsible decision on the accession date can be made.

The benefits

Analysts argue that the economic benefits of euro adoption for Hungary are real, though unevenly distributed across time. The gains would arise through several channels: removing exchange rate risk, lowering transaction costs, improving financial sector stability through ECB oversight and access to its lending facilities, reducing the country's risk premium, and potentially accelerating credit growth.

Some of these gains may be modest. 70% of Hungary's imports and exports are already invoiced in euros, many large firms hedge their foreign exchange exposure at low cost, and cross-border trade costs with eurozone countries are already very low, reflecting Hungary's deep integration into EU manufacturing supply chains. Exchange rate risk, while real, is smaller than in some peer economies.

The more significant benefits would come from importing Western Europe's monetary policy credibility — lowering inflation expectations, sustaining capital inflows and reducing real interest rates. These gains are greatest for economies without a long track record of low and stable inflation. Within non-euro Central and Eastern Europe, Hungary and Romania are the most prominent candidates. Moreover, a credible euro accession path would likely trigger country risk premium reductions and credit ratings upgrades, as has happened elsewhere in the region.

Hungary's debt-servicing costs are among the highest in the EU, with spreads between Hungarian government bond yields and German yields standing above 400 basis points. The ten-year bond yield would probably need to fall from its current 6% towards 4 to 5% to meet the convergence criteria — still a significant distance, but a journey markets appear to have already begun pricing.

Critically, much of this benefit need not wait for actual accession. The tightening of fiscal and monetary policy required to meet the Maastricht criteria would itself begin to compress bond yields and lower inflation expectations during the pre-adoption phase. In Bulgaria's case, most of the fall in bond yields occurred ahead of accession rather than after it.

The politics

The economic challenges, though daunting, may prove more tractable than the political ones. Joining ERM II requires the agreement of eurozone finance ministers and the ECB. Full euro entry requires approval by the Council of the EU. To be accepted, Hungary will need to convince eurozone partners on two counts: first, that euro entry enjoys cross-party political support sufficient to survive a future election; and second, that it is meeting not just the macroeconomic criteria but also improving its institutional framework — rule of law, judicial independence and media plurality among them.

According to the 2025 Eurobarometre survey, 75% of the Hungarian population fully supports the introduction of the euro — higher than in Bulgaria, which joined at the start of this year. However, 72% of respondents believe the country is not yet prepared for the transition.

Given that ERM II membership requires European Commission signoff, Brussels is likely to use the issue as leverage in its push to get Hungary to comply with its 27 reform requests. That could slow the whole process down.

The euro debate is unfolding in parallel as urgent negotiations between Budapest and the European Commission on unlocking the frozen EU funds are already underway. The institutional credibility needed for euro accession is largely the same credibility needed to access the frozen cash needed to reduce the budget deficit in the short-term.

Both Bulgaria and Croatia committed to significant institutional reforms ahead of and during their ERM II accession processes. Brussels is likely to apply the same template to Budapest — meaning the political and institutional reform process is not a precondition that can be deferred until after the economics are sorted. It must run simultaneously.

Magyar says he wants the euro by 2030 but analysts say a more realistic entry date is probably around 2034, assuming Tisza wins a second term in the next elections.

The 2030 target is therefore best understood as a credibility anchor — a signal of seriousness to Brussels and to markets — rather than a realistic operational deadline. Whether Magyar can reconcile the austerity required for Maastricht compliance with the spending promises that won him a supermajority is the central tension his government must resolve. The euro dream is real — and for the first time in years, genuinely possible. The work that needs to be done to get there remains formidable.

EU and Hungary open talks on reforms to release €17bn in frozen funds

Hungary’s incoming government is entering talks with European Union leaders aimed at releasing €17 billion in frozen funding, while advancing reforms to address long-standing rule of law concerns.


Issued on: 29/04/2026 - RFI

Election winner and leader of Hungary's Tisza party Peter Magyar at a press conference following the first official meeting of the party’s new parliamentary group in Budapest, Hungary, 20 April. AFP - ATTILA KISBENEDEK


The meeting between top EU officials and Hungary’s incoming leadership in Brussels on Wednesday is a bid to unlock billions of euros in frozen funding – and there are growing signs a breakthrough could come quickly.

The talks will bring together European Commission President Ursula von der Leyen and Hungary’s incoming prime minister Peter Magyar, following a decisive election earlier this month that has reshaped Hungary's political landscape.

Around €17 billion in EU funds is at stake, previously blocked over rule of law concerns under the outgoing administration of Viktor Orban.

The discussions are expected to focus on concrete legal and institutional changes Budapest must deliver to secure the release of the money.

August deadline

A significant portion of the frozen funding – including €11 billion from the EU’s post-pandemic Recovery Fund – must be accessed by mid-August or be lost entirely.

That urgency has added momentum to negotiations, with both sides having already held two preparatory meetings since Magyar’s landslide victory on 12 April.

His Tisza party secured a two-thirds parliamentary majority, giving him the power to amend Hungary’s constitution – a factor EU officials believe could accelerate reforms.

“This engagement is about making swift, tangible progress,” said Commission spokesman Olof Gill, emphasising a structured approach aimed at ensuring Hungarians benefit from the funds as soon as possible.

The European Commission has made clear that the funding is intended to support citizens directly.

Beyond financial issues, Wednesday’s talks could open the door to a broader reset in relations.

Discussions could include Hungary’s potential return to the Erasmus student exchange programme, from which it has been excluded since early 2023 over concerns about academic freedom.

There is also the possibility of movement on Hungary’s previous veto of EU reimbursements for military equipment supplied to Ukraine – an issue that has strained unity among EU member states since Russia’s 2022 invasion of the country.


 

Rift surfaces in BRICS over West Asia conflict

Rift surfaces in BRICS over West Asia conflict
/ Dr. S. Jaishankar - External Affairs MinisterFacebook
By IntelliNews April 29, 2026

A routine meeting has revealed sharp divisions among BRICS member states over the West Asia conflict. The divergences reportedly prevented the representatives of the states involved from agreeing on a unified communiqué at the bloc's annual Middle East and North Africa consultations, held in New Delhi on April 23 and 24, 2026. As an alternative the meeting chair's statement was released in lieu of the customary joint declaration, Deccan Herald reported.

Purportedly, the two-day meeting of BRICS Deputy Foreign Ministers and Special Envoys on the Middle East and North Africa was chaired by India, represented by Secretary South Dr Neena Malhotra of India's Ministry of External Affairs.

While the various delegations exchanged assessments on the deteriorating regional situation, covering the Gaza crisis, Lebanon, Syria, Yemen, Sudan and Libya, consensus broke down over how to characterise the conflict stemming from US and Israeli strikes on Iran, and Iran's subsequent response, with member states holding materially divergent positions on attribution and resolution.

In follow-on unilateral press briefings though, India's Ministry of External Affairs moved to address reports suggesting New Delhi had softened its position on Palestine, stating explicitly that its long-standing stance on the issue remains unchanged and that no dilution of any kind had occurred.

Unconfirmed social media reports and claims were also denied by India suggesting that all other BRICS member states were unhappy with New Delhi’s closeness to the US and Israel and its perceived neglect towards supporting Iran.

In line with this, at least one social media influencer peddling a pro-Pakistan line was observed repeating unfounded claims that other members of BRICS were even looking to expel India from the grouping while inviting Pakistan in as a replacement.

However no formal mechanism exists by which any of the members can be expelled, although new members being admitted does require a full consensus among all current members, with India’s objection to Pakistan being admitted immediately dousing Islamabad’s hopes of joining the grouping.

In spite of the diplomatic impasse at the declaration level, the consultations reportedly addressed humanitarian conditions across several conflict-affected states and examined prospects for post-conflict stabilisation in the broader MENA region.

While the failure to produce a joint communiqué is a visible signal of the stress that the West Asia conflict is placing on BRICS cohesion, the members states including India, China and Russia realise that while not economically competitive on the same scale as the US and EU, the grouping represents the majority of the world’s population, natural resources and industrial base.

Any wedges or divisions among the group will derail the goals of its members to project a joint front against the economic dominance and policy hegemony of the collective West.