Wednesday, July 29, 2026

Eurasia Review Interviews: Dr. ‘Lumpy’ Lumbaca On Cognitive Warfare, AI-Enabled Influence Operations, And The Future Of Military Decision-Making



July 29, 2026
By Aritra Banerjee


‘Cognitive Warfare’ has become one of the most debated concepts in contemporary security discourse. As artificial intelligence (AI), synthetic media, algorithmic amplification, and increasingly sophisticated influence operations reshape the global information environment, militaries, governments, and policymakers across regions, particularly in strategically contested environments such as the Indo-Pacific, are grappling with a fundamental question: does cognitive warfare represent a distinct form of strategic competition, or a new conceptual framework for understanding longstanding efforts to influence perceptions, beliefs, narratives, and decision-making?

The debate has also raised difficult questions around measurement, causality, ethics, and operational control. While advances in AI may significantly expand the speed, scale, and personalization of influence activities, questions remain about whether adversaries can reliably manipulate cognition in predictable ways, or whether the concept risks overstating what can currently be achieved.

In this conversation with Eurasia Review, Dr. Jeremiah “Lumpy” Lumbaca delves deep into the evolving debate surrounding cognitive warfare, its relationship with established disciplines such as Psychological Operations (PSYOP), Military Information Support Operations (MISO), Information Operations (IO), Information Warfare (IW), and Strategic Communication (StratCom), and the challenges involved in translating theoretical concepts into practical capabilities.

Lumpy Lumbaca, PhD, is a retired United States Army Special Forces officer and currently serves as a civilian professor of irregular warfare, resistance, counterterrorism, and special operations with the U.S. Department of War. He is also a Non-Resident Fellow with the Irregular Warfare Initiative (IWI). The views expressed in this interview are his own and do not reflect the official policy or position of the U.S. Government or the Department of War.


Drawing from his extensive body of work on cognitive warfare, Dr Lumbaca argues that the central distinction lies not simply in changing what people think, but in attempting to influence how individuals and groups form beliefs, interpret information, and make decisions. However, he cautions against assuming that cognitive effects can be easily measured, deliberately engineered, or predictably controlled in complex operational environments.

The conversation explores the role of artificial intelligence as a force multiplier for influence operations; the opportunities and limitations of AI-enabled persuasion; the challenges of assessing cognitive effects; the risks associated with offensive cognitive warfare; and the growing importance of cognitive resilience in contested information environments.

Dr Lumbaca also discusses why the defensive dimensions of cognitive security may currently offer a more practical path forward, highlighting the importance of resilience-building, prebunking, critical thinking, institutional credibility, and trusted communication systems in helping organisations and societies navigate an increasingly complex information landscape.


Q. In your recent Small Wars Journal essay, you reject both of the easy positions on cognitive warfare: that it is simply a recycled label for old practices, and that it is a wholly new domain with unique laws of action. What analytic threshold would have to be met before you would say a problem is genuinely “cognitive warfare” rather than better described as IO, MISO, PSYOP, IW, subversion, or StratCom?
Dr. Jeremiah “Lumpy” Lumbaca

A: First, thank you for the chance to talk here. I must state explicitly up front that everything I’m sharing here today is in my personal capacity and does not reflect the official policy or position of the U.S. Government or the Department of War.

The threshold question is a definitional one. It hinges on the word “process.” Dr Frank Hoffman provided a definition of cognitive warfare that addresses this: the key is whether an operation targets how an adversary forms beliefs and makes decisions, rather than what they believe at any given moment. If you are pushing a narrative, correcting a false impression, or discrediting a source, that is PSYOP. The goal is a change in content. If the operation is designed to degrade the cognitive process itself, to erode the reliability of the mechanisms by which a person evaluates truth, to induce something like epistemic closure through sustained information overload or psychographically targeted curation, then you are now talking about cognitive warfare.


The secondary threshold is the scale and technical mechanism. Traditional influence operations are limited in their simultaneity. An AI system that generates thousands of individually tailored influence products targeting individual psychographic profiles, delivered simultaneously across a population (or at an individual), is doing something structurally different from what any PSYOP unit can currently replicate. The combination of that technical capacity and the process-level target is the key. The term ‘cognitive warfare’ should be reserved for operations that aim to restructure how an adversary thinks, rather than what they conclude.

Q. U.S. doctrine already defines IO as influencing or disrupting adversary decision-making and MISO as influencing foreign audiences’ emotions, motives, reasoning, and behavior. If those definitions are already broad, where exactly do you think ‘cognitive warfare’ adds explanatory or operational value: target, mechanism, time horizon, technical enablers, or organizational design?

A: All five, but the mechanism and the time horizon are the most important and the most underappreciated. The doctrinal definitions of IO and MISO describe goals: influence adversary decision-making, shape foreign audience emotions, without specifying the pathway. A PSYOP unit generating a commercial and an AI system running a sustained psychographic targeting campaign are both ‘influencing decision-making’ in the doctrinal sense, but the pathways are different. Cognitive warfare, in its most theoretical form, posits a specific neurological mechanism: repeated exposure to algorithmically curated content can produce structural changes in how the brain processes information. This is not done through persuasion but through neuroplasticity. This is a different claim about causation.

The time factor follows. You cannot induce neuroplastic change in an adversary theater commander’s cognitive processes during an operation cycle. The theory requires sustained, repeated exposure. That implies a peacetime and competition-phase activity with long lead times, which has major implications for authorities, campaign planning, and resourcing.

Q. It has been recently argued that cognitive warfare may be “dead on arrival” inside the U.S. military unless it confronts the same unresolved problems that weakened earlier information and influence efforts: measurement, norms, politics, and organizational structure. This sentiment is also echoed in numerous Global South military organisations as well. Do you agree with that diagnosis, and if so, which of those four problems is most likely to determine whether cognitive warfare survives as a serious military concept?

A: Cole Livieratos makes this argument in a recent publication with the IWI, and I think his diagnosis is largely correct. I engage it directly in one of my recent Small Wars Journal essays as well. As Cole pointed out, PSYOP and IO lost 74 percent of their budget between 2009 and 2015. Not because they failed, but because no one could prove they succeeded.

Of the four problems, measurement is the one that determines the fate of the others. The normative problem is real. It is manageable if you can demonstrate value. The political problem is a downstream function of measurement: without provable results, there is no constituency and the budget gets traded away. The organizational problem is real, but organizations can be built if leadership commits.


Measurement, however, is structurally resistant. The variables involved in attributing adversary decision outcomes to specific cognitive operations are, as Livieratos correctly notes, so numerous and so tangled that establishing causality is effectively impossible. You cannot separate psychological, organizational, and exogenous variables in a commander’s decision with the precision required by oversight bodies. The instinct to propose better metrics, decision latency, and decision error is right, but these improvements will not solve the fundamental attribution problem.

Q. Your Joint Special Operations University (JSOU) paper pushed strongly for cognitive warfare capability development in Special Operations Forces (SOF), while your newer essay appears more cautious about offensive claims, validation, and controllability. How has your own thinking evolved between those two pieces, and what prompted that evolution?

A: The honest answer is that I wrote the JSOU paper and then had to defend it in front of people who have been doing influence operations for 20 years. SOF operators, Combatant Command staff, and senior officials who had watched rebranding cycles before pushed back in ways I had to take seriously. When I presented the case for offensive cognitive warfare, psychographic profiling of adversary commanders, AI-generated narrative superposition, and synthetic media targeting, experienced professionals pointed out that they had been doing versions of this for decades without the AI. The targeting logic was the same: profile the target, exploit the profile, deliver through trusted channels. The AI adds scale and precision, but the logic was not new.

Two specific objections reshaped my thinking. The first was about controllability. A senior operator asked: even if you successfully overload an adversary commander’s cognitive processes and induce the epistemic failure the theory predicts, what do you actually get? A commander in cognitive overload might freeze, delegate to a subordinate with different vulnerabilities, or choose to escalate as his capacity to evaluate risk degrades. You can introduce chaos into cognition, but chaos is not a course of action. The causal chain from cognitive disruption to controlled behavioral change is unproven. It may be structurally uncontrollable.

The second objection was the evidentiary gap between the clinical research and the military application. The neuroplasticity claims in the JSOU paper draw from legitimate research: repeated stimulation of neural pathways does produce structural changes. Prolonged exposure to emotionally manipulative content does correlate with epistemic closure. But that research was not conducted in adversarial military contexts. Extrapolating from “social media use changes adolescent brain development” to “we can deliberately induce epistemic failure in a theater commander” requires assumptions that the evidence does not currently support. I still believe the mechanism is real, but the application is not yet operationally validated.

Q. You draw attention to the difference between changing what people think and changing how they think. In practical terms, how would you distinguish influence over attitudes from influence over belief formation, attention, interpretation, or decision style, and which of those do you consider realistically targetable in operational settings?


A: The distinction matters more in theory than most planners acknowledge. Attitude change, moving someone from opposing to supporting a policy position, for example, is what PSYOP has always done and what most influence operations are actually designed to produce. It is finite. It is reversible. It also does not require a structural change in how the mind processes information. Belief formation is a step deeper: it concerns the habits of evidence evaluation, source trust, and epistemic standards that determine which new information gets accepted and which gets rejected. Attention shaping is more tractable and closer to what algorithmic curation actually does, not telling you what to think but determining what you are exposed to long enough to form impressions. Interpretation and decision style are further out. They describe the heuristics and biases that shape how someone processes ambiguous information under pressure.

Of these, attention shaping is the most realistically targetable in operational settings, and AI has already changed it. If you can influence the information environment that shapes an adversary’s attention before a crisis, you can narrow the range of interpretations and options that feel salient when the crisis arrives. That is not a dramatic epistemic intervention, and it does not require neuroplasticity, but it is real, and it compounds over time. Attitude change remains the workhorse of most operational influence work. Belief formation and decision style are legitimate research targets for the medium term. Claiming operational control over them now is premature, in my opinion. That doesn’t mean we won’t get there, though.

Q. The literature now suggests that AI can generate persuasive content, adapt arguments in conversation, automate message variation, and support microtargeting at scale, but it also suggests that its real-world influence may be more incremental than revolutionary. Which specific operational tasks do you think AI has already changed in influence competition, and which claims about AI-enabled persuasion remain overstated?

A: The tasks AI has genuinely changed: content generation at scale, psychographic segmentation and message calibration, message variation and testing across large target populations, synthetic media production for deception and narrative support, and the detection of adversary influence operations through pattern analysis. These are not theoretical. Adversaries are doing them now.

What is likely overstated at this point is the claim that AI-generated persuasion can reliably and predictably change deeply held beliefs at scale in the short term. The research on AI persuasion shows incremental effects in controlled settings. Real-world information environments are noisier, more redundant, and more resistant to single-source influence than laboratory conditions imply. The idea that an AI-generated influence campaign can produce measurable and predictable changes in the decision-making of a hardened adversary commander within an operational timeframe remains difficult.

Q. Your work touches on neuroplasticity, neuroscience, and the possibility of deeper cognitive intervention, but the evidence base for battlefield-relevant neurocognitive control still looks thin. Where do you currently draw the line between near-term military relevance, medium-term monitoring concern, and speculative futurism?


A: Near-term military relevance covers what we already know affects cognitive performance under stress: sleep deprivation, information overload, decision fatigue, and the compounding effects of sustained psychological pressure. These are not new discoveries, but AI-enabled adversaries can now deliver information overload at a scale and pace that earlier influence operations could not sustain. Defending our own forces against these performance degraders is immediately actionable and does not require the neuroplasticity argument.

Medium-term monitoring concern, over the next five to ten years, covers the accumulating evidence on how algorithmically curated information environments affect belief formation and epistemic standards over time. The clinical literature is growing. Its translation into adversarial military applications is not yet operationally validated, but it is credible enough to watch closely and to invest in understanding. Neurostimulation technologies that affect attentional focus or decision speed, currently in clinical and sports performance contexts, also belong here.

Speculative futurism is everything that requires capabilities that do not currently exist: real-time neural monitoring of adversary decision-makers, deliberate and reversible induction of specific cognitive states in hostile commanders, and implantable or ambient neuromodulation of large populations. These may become relevant in decades.

Q. If cognitive warfare claims to affect adversary decision-making, what evidence would you actually accept as operationally meaningful? Are proposed measures such as decision latency, decision error, behavioral change, or trust degradation useful enough for planning, or are cognitive effects destined to remain partly unmeasurable in real conflict?

A: Cognitive effects will remain partly unmeasurable in real conflict, and the field would be better served by accepting that rather than searching for the metric that will finally satisfy those with oversight. Decision latency and decision error are real improvements over social media impressions as measures of effectiveness, but they do not solve the attribution problem. In a complex operational environment, separating the latency introduced by cognitive operations from that introduced by kinetic pressure, communications degradation, leadership friction, and the fog of war is not analytically tractable.

What I would accept as operationally meaningful: repeated, documented patterns of adversary decision failure in situations where the information environment had been deliberately shaped; behavioral changes in target populations that correlate across multiple independent operations; adversary countermeasures that suggest they perceive our cognitive operations as effective enough to warrant resource expenditure in response. None of these constitutes proof of causation. They indicate that the activity is creating friction.

Q. For SOF specifically, which mission areas do you now believe are most appropriate for cognitive warfare-related activity, and which should remain outside SOF lead responsibility because they demand interagency, civilian, educational, platform, or diplomatic ownership?


A: SOF are well-suited to cognitive resilience training embedded in partner capacity building: teaching partner forces to recognize influence operations, build critical-thinking habits into unit culture, and understand how adversaries exploit information environments in their specific regional contexts. Special operators living with, advising, and training partner forces for extended periods are positioned to deliver this in ways a visiting lecturer or a training package cannot. SOF is also appropriate for limited, targeted influence operations against specific adversary decision-makers in support of an approved campaign, where the target is specific, the legal authorities are in place, and the activity supports a defined operational objective.

Q. You appear more persuaded by the defensive case than the offensive one. If you had to design a realistic defensive cognitive security architecture for military organizations and democratic societies, what would its core components be: prebunking, trusted crisis communication, bias recognition, resilience training, platform cooperation, legal tools, or something else?

A: The core would start with prebunking and bias recognition training embedded at the unit level. The research on prebunking, inoculating against manipulation by exposing people to weakened forms of influence tactics before they encounter the real thing, is among the more actionable findings in the influence literature. It does not require proving neuroplasticity. It requires only building into unit culture the habit of identifying manipulation techniques before they hit.

Trusted crisis communication is the second pillar. Much of what adversaries exploit is not the disinformation they introduce, but information vacuums that institutions create through secrecy, inconsistency, or slow response. A system that communicates consistently, acknowledges uncertainty honestly, and does not wait for perfect information before speaking gives adversaries far less to work with.

Platform cooperation belongs here, but it is the most politically fraught component and should not be treated as a substitute for the others. Legal tools matter for the most egregious foreign influence operations, but move too slowly for operational timelines. The foundation that actually holds is built on people who know how they are being manipulated before the manipulation starts, which means training, honest communication, and institutions that have earned enough trust to be believed when they push back against adversary narratives.

Q. Many Western institutions remain organized around separate categories such as cyber, intelligence, PSYOP, IO, MISO, StratCom, public affairs, and diplomacy. If cognitive security is everyone’s responsibility, it may become no one’s responsibility; but if assigned to one office or command, it may become too narrow. What kind of institutional model would make sense?

A: The model I find most defensible is a federated one with a designated integrating function rather than a single owner. No single office should own cognitive security because the problem spans domains that require different authorities, different relationships with civilian institutions, and different timelines. The integrating function should be responsible for three things: common concepts so that the people in cyber, public affairs, intelligence, PSYOP, and diplomacy share a working model of the cognitive threat; shared indicators so that each function can recognize and report patterns that only become visible when you aggregate across domains; and doctrine that assigns clear accountability for specific activities rather than leaving everyone responsible for everything and therefore no one responsible for anything.


Q. What are the most important research questions that still need to be answered before cognitive warfare deserves more formal institutionalization, especially on mechanism, measurement, escalation, ethics, and civil-military governance?

A: On mechanism: what is the actual dose-response relationship between AI-curated information environments and changes in belief formation? The clinical literature on neuroplasticity is genuine, but the extrapolation to adversarial contexts involves assumptions that need field testing in conditions as close to operational as ethics and authorities permit. What exposure duration, intensity, and targeting precision are required to produce measurable process-level cognitive effects rather than attitude-level effects? This is not answerable from the current literature.

On measurement: is there a proxy indicator for cognitive effect that is observable from outside the adversary’s decision process, reliable enough to serve as a planning metric, and specific enough to support after-action analysis? The field needs sustained methodological investment here, with realistic expectations about what level of precision is actually achievable.

On escalation: how do adversaries interpret cognitive operations, and at what point does a sustained cognitive campaign cross thresholds that produce kinetic responses? This is under-researched compared to cyber escalation, and the dynamics are likely different because cognitive operations are harder to attribute and to demonstrate in ways that justify a proportionate response.

On ethics and civil-military governance: what oversight mechanisms can make offensive cognitive warfare programs legally sustainable and publicly defensible? What is the appropriate role of civilian review, legislative oversight, and judicial authorization for different categories of cognitive operation? These questions need substantive legal and ethical development, beyond policy memos.

Q. Some scholars argue that cognitive warfare should be understood less as a new operational domain and more as a cross-domain condition affecting cyber, information, intelligence, public affairs, strategic communication, and kinetic operations. Do you see cognitive warfare as a domain, a layer across domains, or a planning consideration?

A: I think a layer across domains is the most accurate description, though I would not treat it as a planning consideration in the sense of something that gets addressed in its own annex and then set aside. The human cognitive dimension is the base on which every other domain operates. Cyber operations produce effects that matter because human beings interpret and act on the disruption. Kinetic effects are significant partly because of what they communicate to adversaries and audiences, as much as because of what they destroy. Public affairs exists because of how military actions are perceived and narrated. Treating cognitive warfare as a separate domain with its own authorities, capabilities, and operational logic risks creating another institutional silo, a new row in the effects matrix that competes for resources without integrating with the others.


The more useful question is not “is cognitive warfare a domain?” but “how does attention to cognitive effects change how we plan, execute, and assess operations across all domains?” That question applies to the kinetic planner asking whether a strike will produce the narrative environment we want, to the cyber operator asking what the target’s human interpreter will do with a degraded system, and to the public affairs officer asking whether our communication creates cognitive space that adversaries can fill.

Q. In contested information environments, tactical actions can be rapidly reframed into strategic narratives by adversaries, media ecosystems, or platform dynamics. How should military organizations train personnel to anticipate the narrative consequences of their actions without making them overly risk-averse?

A: The goal is not risk-aversion but narrative awareness. A soldier who hesitates to act because every action might be reframed is operationally degraded. A soldier who understands how adversaries reframe actions, what visual and verbal framing they use, and what information voids invite hostile narratives is better equipped to act and communicate effectively.

Training should focus on specific adversary narrative patterns, not abstract media literacy. Operators working in a specific region should know, from their area study and their PSYOP colleagues, the three or four narrative lines their adversary deploys routinely: which claims about friendly intent, which images, which incidents get amplified, and how. That knowledge changes how they document, communicate, and report. It also changes how they train partner forces, who are often the primary targets of reframing.

Most tactical actions get reframed into strategic narratives because there is a delay, a vacuum, or an inconsistency in how the military speaks about what happened. Training personnel to act with narrative awareness matters less than training senior leaders to communicate quickly, honestly, and with institutional confidence.

Q. Much of the cognitive warfare debate focuses on adversarial influence, but friendly institutions can also undermine resilience through poor communication, secrecy, inconsistency, or loss of public trust. How important is institutional credibility as a defensive cognitive-security asset?

A: It is probably the most important single asset and the one most consistently underinvested. Adversary cognitive operations work best in environments of pre-existing distrust. When a population trusts its institutions, adversary disinformation faces a credibility threshold that is hard to overcome. When trust has eroded through real institutional failures, inconsistent communication, or secrecy that invites conspiracy, adversary narratives need not be convincing on their own merits.

Q. Epistemic closure, polarization, distrust, and conspiracy thinking are often discussed as societal vulnerabilities. From a military and national-security perspective, should these be treated as pre-existing social conditions that adversaries exploit, or as operational effects that adversaries can deliberately create?


A: Both. Pre-existing social conditions are what adversaries exploit. Distrust in institutions has domestic sources, real policy failures, real communication breakdowns, real scandals, that adversary campaigns do not create but do accelerate and amplify. Treating polarization and distrust purely as adversary-created operational effects is analytically convenient but wrong. Adversaries can deliberately deepen these conditions with persistent, targeted operations that would not produce the same effect in a high-trust environment.

Q. Looking ahead five to ten years, what development would most change your assessment of cognitive warfare: more capable AI agents, improved behavioral targeting, neurotechnology, immersive media, social platform fragmentation, authoritarian information control, or democratic institutional adaptation?

A: Democratic institutional adaptation, because it is the variable with the most pull. Every other item on that list describes either a threat trajectory or a technical capability. AI agents will become more capable. Behavioral targeting will improve. Neurotechnology will develop. These are not questions of whether but of pace. The question that will determine whether cognitive warfare produces fundamentally different strategic outcomes in the next decade is whether democratic institutions adapt their communication practices, their trust-building behaviors, their oversight mechanisms, and their doctrinal flexibility fast enough to operate in the environment those technologies create.




About Aritra Banerjee

Aritra Banerjee is a Consulting Editor, South Asia at Eurasia Review with a focus on Defence, Strategic Affairs, and Indo-Pacific geopolitics. He is also the co-author of The Indian Navy @75: Reminiscing the Voyage. Having spent his formative years in the United States before returning to India, he brings a global perspective combined with on-the-ground insight to his reporting. He holds a Master's in International Relations, Security & Strategy from O.P. Jindal Global University, a Bachelor's in Mass Media from the University of Mumbai, and Professional Education in Strategic Communications from King's College London (King's Institute for Applied Security Studies).
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I Spent 28 Years Arresting Criminals: Rothbard Was Right All Along – OpEd



July 29, 2026
 MISES
By  
Carlos Dória

Key Takeaways:

Drawing on 28 years of police experience in Brazil, the author argues that the criminal justice system functions less as genuine justice and more as a modern sacrificial ritual that provides public catharsis by using offenders as scapegoats.

Economic critiques (Becker and Rothbard) both conclude that prison fails—either as costly waste or as injustice that leaves victims uncompensated—yet societies continue demanding “more cages” because of a deep psychological need for exemplary punishment.

True resolution requires shifting to victim-centered restitution (repaying what was taken, possibly through supervised work), which could satisfy both economic efficiency and the social need for accountability while actually addressing the harm done to victims.


The year was 2016. I was deputy commander of a Military Police battalion in one of the most dangerous neighborhoods of the capital of Pará—one of the poorest and most violent states in Brazil. At 3:40 in the morning, the radio broke into an intense exchange of dispatches, unusual for a Wednesday. The operations center gives me the picture: a sequestro relâmpago in progress, the “lightning kidnapping”: criminals take over the victim’s car at a traffic light and force cash withdrawals from ATMs. I head to the scene. It looked like a movie—negotiators, press, ambulances. The negotiation ran past sunrise, and at six o’clock the two kidnappers surrendered without hurting anyone. Both were 19 years old.

That same afternoon—to absolutely nobody’s surprise—they were already out. At the custody hearing, a procedure whose underlying goal, in practice, is to decarcerate (an ideology deeply rooted in the Brazilian judiciary), the judge basically asks whether the detainee was mistreated by the officers. No victim or police officer is heard. The accused walk free. Next case. The victims’ money, the trauma, the cost society paid to arrest the criminals safely? None of it matters.

That closed one more successful episode for the state: the police showed efficiency, the judge proved worthy of the robe, the press got its footage, the criminals gained notoriety with organized crime. The victims—that middle-aged couple coming home from their daughter’s birthday party—never received so much as a visit from a state psychologist.

I spent 28 years watching episodes of this macabre series called crime in Brazil. What I was watching has a name. I found it, years later, in the work of a French anthropologist. Before we get to him, though, two economists tried to solve this puzzle, without success.


Two Tests, One Failing Grade


Gary Becker, in his 1968 essay “Crime and Punishment: An Economic Approach,” treated the criminal as a rational agent and asked what the “optimal” amount of crime for a society would be, weighing enforcement costs against the value taken. A prisoner produces nothing: imprisoning criminals is expensive and repairs none of the victims’ losses. A fine at least transfers resources to someone instead of burning them in costly prisons. That arithmetic belongs to the Chicago School, not to me.

Murray Rothbard rejects Becker’s utilitarian framework entirely. In The Ethics of Liberty, crime is aggression against someone’s just property, and the only justice is double restitution to the victim: give back in full what you took, and pay the same amount again for having taken it. Prison, in the Rothbardian view, is also useless: the victim receives nothing and is then “robbed” once more through taxes to feed and house the criminal.

A utilitarian and a natural-rights theorist diverge on method and converge on the conclusion: prison fails. What Becker calls waste, Rothbard calls injustice, and these two are almost never on the same side of anything. A policy that fails both tests should be fragile; in practice, in Brazil and elsewhere, the opposite wins: “more cages, more votes” keeps setting electoral agendas around the world.
The Standard Answer, and Why It Is Not Enough

Public choice has a ready answer: prison guard unions, construction lobbies, prosecutors and police building political careers on conviction counts—concentrated benefits, dispersed costs.

Fine. That explains who profits from the appetite for punishment, but not the appetite itself. Even the voter in a gated community, who will hardly ever cross paths with a street criminal, keeps voting for the “more cages” candidate and shrugs at anyone talking about compensating the victim. The lobby surfs this appetite. But who created it?


The Sacrifice Factor


The French anthropologist René Girard spent a career troubled by that question. In Violence and the Sacred and The Scapegoat, he argues that archaic societies contained the tension born of imitative rivalry through a sacrificial mechanism: choose a victim, load society’s guilt onto it, kill or banish it, feel the peace return. The Judeo-Christian tradition exposed the victim’s innocence; after that, nobody sacrifices with a clean conscience, and the mechanism operates in disguise.

Girard has passed through this site before: David Gornoski, on the Human Action Podcast, cast the state itself as sacrificer. What I have not seen anyone do is point the lens where I watched this mechanism run for 28 years: criminal justice.

Understand the penal system as a sacrificial ritual: the defendant carries far more than his own act; he carries the entire tension of a society that needs to expiate its sins and contained anger through a scapegoat. Prison is that altar. What it produces is not only justice: it is public catharsis. That explains why neither Becker nor Rothbard gets traction with a society that applauds candidates shouting that “a good criminal is a dead criminal,” a slogan that wins elections in Brazil. Those voters are buying exemplary punishment as the sine qua non of social peace: society left the archaic period; the rituals were merely replaced. Calling the new ritual “justice” is the modern version of calling the sacrifice the will of the gods.

The Ritual Seen from Inside

Go back to that morning in 2016. There are details in it that took me years to understand. That day, the ritual worked halfway. The staging of the capture played its part: the pre-dawn cordon, the negotiation, the surrender, the press hungry for footage. That was the day’s catharsis. But the release by the courts prevented full consummation, and Girard has a name for that: sacrificial crisis.

When the rite fails to discharge society’s tension, the violence does not disappear: it spreads without form. A country that treats sacrifice as mere spectacle and fails to punish its scapegoats reaps both plagues at once: the victim goes without the restitution preached by Rothbard, and the crowd goes without the catharsis described by Girard. So the crowd seeks the sacrifice on its own: lynching, vigilante killings, expanding militias, a cult of police violence.

Before anyone concludes that the answer is to consummate the sacrifice properly, look at the other laboratory. The United States consummated it like no one else: it holds the largest prison population on the planet. Did it buy peace? No. Did it restitute one cent to the victims? Also no. Impunity and mass incarceration are not opposites; they are the two failure modes of the same sacrificial game.

The social tension of crime is born of an open account. Someone took and did not pay. Punishment closes that account symbolically, and that is why it must repeat forever: the audience is never sated. Restitution closes the account for real: the offender himself pays his own victim, in public, which carries within it the ritual aspect of sacrifice. Before the state monopolized justice, the legal orders that contained vengeance were restitution systems: the Anglo-Saxon weregild, the customary law Bruce Benson documents in To Serve and Protect. Public compensatory payment was the meeting point between Rothbard’s restitutive thesis and Girard’s sacrificial one, replacing blood with money to end a feud. Vengeance thrives where the account does not close. Punitivism burns the debtor; impunity tears up the debt; the victim is left with the loss either way, and that feeling of injustice is the perfect recipe for violence and populist votes.

And I owe Rothbard’s readers an honest objection, straight from the street. Restitution is elegant on paper. Most criminals I arrested could not have restituted so much as a bus fare to their victims. A nineteen-year-old with no assets does not create assets because a court ordered him to pay double. I carried that objection for years, and it made me see libertarians as dreamers who had never personally met cruel criminals.


I discovered later that the objection was aimed at the wrong target. It does not disqualify restitution; it rested on the fantasy that restitution means writing the victim a check. Rothbard admitted that restitution could be paid off with work over time, and Bruce Benson documented practical mechanisms for it in “Restitution in Theory and Practice.” Hard to implement? Yes, but do the math nobody does. We already spend fortunes to cage thousands of insolvent criminals for years. A society willing to fund that fortune in cages would also be willing to fund supervised work that pays down the debt to the victims. The obstacle is not fiscal, it is liturgical.


What This Means for Austrians


The defense of a victim-centered legal order keeps losing, and it does not lose for lack of a better argument. It loses to a ritual need, the oldest social technology our species owns, and will keep losing, election after election, until someone names the mechanism out loud: the real product of the penal system is collective catharsis, and the bill is still paid by the victim.

Becker proved the altar is expensive. Rothbard proved it is unjust. Girard explains why it is still standing. Restitution as public ritual is the only proposal on the table that passes all three tests, and it comes from the Austrian School: cheap enough for Becker, just enough for Rothbard, and the only one able to satisfy the sacrificial desire the altar never sates. And somewhere in Brazil, a couple who was driving home from their daughter’s birthday party still waits for some institution of their country to treat what was taken from them as the point of it all.


About the author: Carlos Dória served 28 years in the Brazilian Military Police, retiring as colonel after commanding operational battalions. He holds a graduate degree in Policy and Strategy from Brazil’s Superior War College (Escola Superior de Guerra). He writes at The Legionary Diary.

Source: This article was published by Mises


About MISES
The Mises Institute, founded in 1982, teaches the scholarship of Austrian economics, freedom, and peace. The liberal intellectual tradition of Ludwig von Mises (1881-1973) and Murray N. Rothbard (1926-1995) guides us. Accordingly, the Mises Institute seeks a profound and radical shift in the intellectual climate: away from statism and toward a private property order. The Mises Institute encourages critical historical research, and stands against political correctness.
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Is A Return To Civil War In Yemen Inevitable? – Analysis


Houthi military parade. Photo Credit: Tasnim News Agency

July 29, 2026
Arab News
By Jonathan Gornall


Key Takeaways:

After nearly four years of relative calm, the Houthis have escalated by attacking Saudi targets, striking ships, and declaring a blockade on the Bab al-Mandab Strait, drawing Yemen back into the widening US-Iran conflict that has already closed the Strait of Hormuz.

Analysts see the moves as partly opportunistic support for Iran and partly driven by the Houthis’ own goals of gaining leverage, deterring Saudi Arabia, reinforcing domestic legitimacy, and positioning themselves as an indispensable regional actor.

The escalation raises the risk of reigniting Yemen’s internal war and further disrupting global oil and shipping routes, with calls for renewed Saudi-Houthi talks and a halt to the broader Iran conflict to prevent a larger regional or global crisis.


For almost four years, Yemen has been enjoying a period of relative peace. So why do the Houthi militia suddenly appear to be doing their best to provoke a return to large-scale military operations in the country?

The answer, analysts believe, is that the war in Iran, which has steadily escalated out of control, embroiling the Arab Gulf states, leading to the closure of the Strait of Hormuz and dramatically impacting global oil supplies, is now dragging Yemen into its orbit.


“The Houthis had been waiting to see whether their military involvement might be needed or called for in the conflict between the US and Iran, and had largely kept their powder dry, apart from a limited number of attacks targeting Israel,” wrote Nabeel A. Khoury, a former US deputy chief of mission at the US Embassy in Yemen, in an analysis issued by the Arab Center Washington DC.

Despite their backing for Hamas during the 2023-25 war in Gaza, he added, the Houthis had “initially kept a low profile during the war on Iran launched by Israel and the Trump administration in February 2026.”

With the signing of the June 2026 memorandum of understanding between the US and Iran, there was even “some optimism in the region that the war might be coming to an end and that the Yemen front would not be re-opened.”

The 14-point Islamabad MoU declared the immediate and permanent termination of military operations on all fronts and the reopening of the Strait of Hormuz to all traffic, pending an envisioned “final deal,” due to have been reached within 60 days.

But no sooner had the MoU been signed, than it began to unravel.


On July 7, following a series of “unwarranted, dangerous” attacks on three commercial ships in the Strait of Hormuz, US Central Command launched a series of retaliatory strikes against more than 80 targets in Iran, “to impose heavy costs for targeting and attacking commercial shipping crewed by innocent civilians in an international waterway.

For its part, Iran claimed it had struck the ships because they were attempting to navigate via a new route through the strait, which the US had been trying to open up in contravention of the provisions of the MoU.

The following day, at the NATO summit in Ankara, US President Donald Trump declared the ceasefire with Iran was over.

“I don’t want to deal with them any more … They’re sick … vicious, violent people,” he said.

In Yemen, tensions were also beginning to boil over.

On July 12, Yemeni government aircraft bombed Sanaa airport, part of the territory in the north that is controlled by the Houthi rebels.

The attack appeared to have been prompted by the return of an aircraft which had carried Houthi representatives to Tehran for the long-delayed funeral of Ali Khamenei, the supreme leader of Iran who was assassinated by an Israeli airstrike in February.

“The Houthi terrorist militia, supported by the Iranian regime, prevented Yemeni national aircraft from landing at the capital’s airport, Sanaa, and insisted that the Iranian aircraft violated Yemeni airspace,” said the Yemeni government in a statement.

“Therefore, the airport runway was targeted.”

The Houthis’ response was to fire a salvo of ballistic missiles and drones at Saudi Arabia’s Abha International Airport, 100 km from the Kingdom’s border with Yemen.


“Air defenses intercepted a ballistic missile threat launched by the terrorist Houthi militia towards the southern region,” a spokesman for the Saudi-led coalition posted on social media.

Then, on July 20, the Houthis announced that they were finally doing what many had feared they would — entering the war by imposing a blockade on the Bab Al-Mandab Strait at the southern end of the Red Sea, tightening the grip on global oil supplies already being exercised by Tehran in the Strait of Hormuz.

In a message to shipping companies, the Houthis’ Humanitarian Operations Coordination Center, warned that no voyages to or from Saudi ports on the Red Sea should be contemplated, “as any such activity would expose the violating vessels to sanctions.”

Any ships that ignored the ban “may be subject to targeting in any location within the operational reach.”

The first victim of the proposed “sanctions” was the Saudi-owned Encelia, a 250-meter oil-products tanker, which was struck by a missile late on July 22, causing a fire in the bow.

That weekend, Saudi air defense systems intercepted two ballistic missiles and a drone fired from Yemen, aimed at Aramco oil refineries in Yanbu.

On Saturday, Iran’s foreign minister, Abbas Araghchi, said developments in Yemen “cannot be attributed to Iran.”

In an interview with the state newspaper, Iran Daily, he called for dialogue and added that the clashes in and around the Bab Al-Mandab Strait were “rooted in old disputes and issues between Yemen, Saudi Arabia and the countries of the region.”

But, said Khoury, “the recent internal flare-up between the Houthis and Yemen’s internationally recognized government, as well the buildup of tensions with Saudi Arabia, point to the likelihood of a Yemeni front being opened in the renewed escalation between Iran and the US.”

On July 23, President Trump, reacting to the attacks on Saudi shipping in the Red Sea, the Houthi blockade and the subsequent climb in oil prices, issued a stern warning.

“A year ago the US attacked, very powerfully, the Houthis, for their interference with commerce and trade, by shooting at ships,” Trump wrote on Truth Social.

“Since that time, and during our conflict with Iran, they have acted very responsibly. Unfortunately, now they are starting up again, shooting at two Saudi Arabian ships last night.”

He added: “If they do this again, the US will hold Iran responsible, in that the Houthis are a Surrogate and/or Proxy of Iran, and major military punishment will be inflicted upon Iran and, of course, the Houthis, themselves, who I am very disappointed with.”

On Friday, Mohammed Al-Jaber, the Saudi ambassador to Yemen, attempted to pour diplomatic water on the fire.

“The Kingdom of Saudi Arabia has sought, and continues to seek, to support all de-escalation and peace efforts, and to back the efforts of the UN envoy to Yemen to reach a comprehensive political solution that ends the suffering of the Yemeni people,” he wrote in a post on X.


“However, the terrorist Houthi militia continues to insist on pursuing the path of escalation and violence instead of the path of de-escalation and peace, in service of external agendas that have no connection to Yemen and do not serve the interests of its people.”

Regardless, he added, “the Kingdom of Saudi Arabia will remain … a supporter of the brotherly Yemeni people throughout all of Yemen, and a backer of its legitimate government, until Yemen enjoys security, stability, and peace.”

On Monday, April Alley, an analyst who worked on Yemen’s peace process at the UN, told The New York Times there was “real concern that the internal Yemeni war could reignite.”

It was no coincidence that the Houthis were seeking to escalate conflict in Yemen precisely when Saudi Arabia was working hard to re-route oil exports via the Red Sea.

She added: “The Houthis are good at smelling blood in the water.”

Egyptian journalist Abdellatif El-Menawy told Arab News that “a return to full-scale civil war is not inevitable, but the risk is now higher than at any point since the 2022 truce.”

Renewed Houthi attacks in the Red Sea and possible Saudi retaliation “could reactivate Yemen’s internal front lines and pull the country back into a wider regional conflict.”

The Houthis, he said, wanted “more than control of northern Yemen.”

“Their objective is to secure recognition as the country’s dominant power, dictate the terms of any national settlement, and use their position near Bab Al-Mandab to establish themselves as a regional actor that cannot be ignored.”

In a recent analysis, Ahmed Nagi, a senior Yemen specialist at the International Crisis Group, proposed that “the most effective way to contain the crisis would be to reactivate the direct political track between the Saudi-led coalition and the Houthis.”

“The two sides could return to the broad understandings reached prior to the Gaza war that began in October 2023.”

But, in order to achieve “sustainable calm,” it was “imperative to bring a halt to the latest US-Iranian clashes, lest they engulf Yemen and plunge the region back into another years-long conflict to the detriment of all concerned.”

It might already be too late, feared Khoury.

With the Houthis having closed the Bab Al-Mandab Strait, “in a desperate attempt to help Iran build pressure on the world economy, an already dangerous regional conflict could metastasize into a global calamity,” he said.

According to a briefing by Chatham House, the Houthis are not simply doing Tehran’s bidding.

“The Houthis are deeply embedded within the ‘Axis of Resistance’ and reliant on Iranian military assistance,” wrote Farea Al-Muslimi, a research fellow in the think-tank’s Middle East and North Africa Programme.

“But they retain significant autonomy, particularly in pursuing domestic political objectives. Their interests frequently overlap with Tehran’s, but they do not always coincide.”


For the Houthis, he believes, “maritime disruption in the Red Sea serves several purposes besides supporting Iran.

“It provides leverage over the international community, acts as a deterrent against regional adversaries — particularly Saudi Arabia — and reinforces their domestic legitimacy by portraying the movement as capable of confronting powerful external actors.”


About Arab News
Arab News is Saudi Arabia's first English-language newspaper. It was founded in 1975 by Hisham and Mohammed Ali Hafiz. Today, it is one of 29 publications produced by Saudi Research & Publishing Company (SRPC), a subsidiary of Saudi Research & Marketing Group (SRMG).
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Electrifying Asia – where EVs are reshaping power demand and fuel use

Electrifying Asia – where EVs are reshaping power demand and fuel use
/ Michael Förtsch - UnsplashFacebookTwitter
By Mark Buckton in Taipei July 28, 2026

Asia’s electric vehicle revolution is no longer simply a transport story. Across much of East and Southeast Asia it is now becoming a major electricity story, altering how power is generated, accelerating investment in renewable energy and, over time, reducing the existing demand for imported oil and LNG. The shift is uneven though.

China dominates in scale, as might be expected, while countries such as Thailand, Vietnam and Indonesia are quickly emerging as manufacturing and policy hubs. Taiwan, meanwhile, has carved out its own distinctive niche through electric scooters and battery swapping technology.

The most immediate effect of EV adoption in recent years is largely straightforward. Every battery-powered car, bus or scooter replacing an internal combustion engine reduces petrol or diesel consumption. And what replaces those fuels depends on the electricity mix in any given country. Where coal still dominates, emissions savings are smaller – for obvious reasons. Where renewables are expanding rapidly, however, electrified transport increasingly runs on solar, wind or even hydropower.

China offers the clearest and by far the world’s best example. It is the world’s largest EV market by a wide margin and has simultaneously built the world’s largest solar and wind generation capacity. Beijing is increasingly shifting energy demand away from imported crude oil and towards domestically generated electricity, according to the International Energy Agency’s (IEA) Global EV Outlook 2026 and figures from China’s own National Energy Administration (NEA). That does not eliminate fossil fuels from the system. What it does though is change where they are consumed and in turn reduces the exposure to the ever volatile oil markets.

The interaction then between EVs and renewable electricity is becoming increasingly important. Vehicle charging typically occurs overnight when cars and scooters are not being used. This helps to absorb off-peak generation, while smart charging systems increasingly encourage motorists to recharge when renewable output is abundant – and in some cases when power being supplied to homes is cheaper. In the future it has been speculated that millions of vehicle batteries could even provide grid balancing services through vehicle-to-grid technology, although commercial deployment of such remains limited, the IEA says.

For LNG exporters, this matters – and hurts. Gas-fired generation has often been viewed as the natural partner for intermittent renewable energy because it can ramp output quickly. Yet rapid growth in battery storage in China and across Asia is beginning to challenge that assumption.

As battery costs fall – and they are, rapidly - utilities can increasingly pair solar farms with storage rather than relying solely on gas-fired peaking plants, according to BloombergNEF’s Energy Storage Market Outlook.

The IEA’s Southeast Asia Energy Outlook 2026 meanwhile, expects electricity to become the backbone of Southeast Asia’s energy system over the coming coming decades. EV sales in the region more than doubled during 2025 to about half a million vehicles, representing nearly 20% of all new vehicle sales. Electric two- and three-wheelers are expected to account for almost 60% of these sales figures by 2035.

And as electricity demand will continue rising rapidly, oil use in transport will grow much more slowly than vehicle ownership. One day it will start to drop.

Thailand has emerged as arguably Southeast Asia’s leading EV production centre. Generous incentives have attracted Chinese manufacturers including BYD, Great Wall Motor and Shanghai Automotive Industry Corporation (SAIC), alongside domestic investment in charging infrastructure. The country’s own expanding solar industry complements the transport transition, allowing an increasing share of vehicle charging to come from renewable electricity rather than imported oil, according to Thailand’s Board of Investment (BOI) and the IEA.

Vietnam is also following a similar path. Domestic manufacturer VinFast has driven rapid EV adoption across the country’s main cities of Ho Chi Minh, Hanoi and Da Nang, while the government continues expanding solar and wind capacity after one of the world’s fastest solar installation programmes. This combination is gradually shifting transport energy demand from imported fuels towards domestically generated electricity, according to the International Renewable Energy Agency (IRENA).

Indonesia to the south and Southeast Asia’s most populous nation, presents a different model. Rich in nickel reserves, it has positioned itself as a battery manufacturing hub rather than simply an EV market.

As such, Chinese and South Korean companies have invested heavily in battery plants and vehicle assembly. At the same time, Indonesia continues adding geothermal, hydropower and solar capacity, although coal still dominates electricity generation for now. As the power mix gradually decarbonises, however, the climate benefits of EVs will increase correspondingly, Indonesia’s Ministry of Energy and Mineral Resources states.

Neighbouring Malaysia and Singapore are pursuing complementary strategies. Singapore’s emphasis lies in charging infrastructure, smart grids and fleet electrification rather than vehicle manufacturing for which it simply does not have the space. Malaysia has focused on attracting investment into battery components and EV assembly as Kuala Lumpur expands solar generation through large-scale solar auctions, according to the Jakarta-based ASEAN Centre for Energy (ACE).

Taiwan, also limited in size, has taken a distinctive approach centred on two-wheel transport. Rather than prioritising electric cars, it has become synonymous with Gogoro’s battery-swapping ecosystem although there are others now trying to carve a niche for themselves. Millions of battery swaps occur every month across thousands of stations, allowing riders to exchange depleted batteries in seconds instead of waiting for charging. The model reduces range anxiety while providing a potentially valuable distributed energy asset, according to Gogoro’s annual sustainability and investor reports even if customers do complain of battery capacities, even when fully charged, gradually decreasing.

Similar battery-swapping concepts are now being explored elsewhere in Asia, including India, Indonesia and the Philippines, although none has yet matched Taiwan’s scale.

Electric scooters are particularly significant because two-wheelers dominate urban transport across much of Southeast Asia and into the South Asia region.

Indonesia, Vietnam and Thailand collectively have well over 200mn motorcycles. Even Taiwan with a population of around 24mn has 14mn registered scooters on the road.

Electrifying even a fraction of that fleet produces immediate reductions in petrol demand while requiring relatively modest battery capacity compared with passenger cars. Gogoro has reportedly sought partnerships in Indonesia, India and other regional markets to export its battery-swapping model.

And with renewable energy infrastructure increasingly following EV deployment, China remains the clear leader, manufacturing most of the world’s solar panels, batteries and EVs while continuing massive investment in wind and solar generation.

But with Vietnam an important solar manufacturing base, while Thailand and Indonesia are expanding both renewable generation and battery supply chains, these countries too increasingly see transport electrification and renewable power as parts of a single industrial strategy rather than separate sectors.

That does not mean LNG demand disappears or will, overnight. In many Asian electricity systems, gas remains the preferred flexible generation source capable of balancing intermittent solar and wind output. The IEA’s Southeast Asia Energy Outlook 2026 expects natural gas to continue playing an important role in regional power systems, particularly where coal is displaced. However, stronger renewable deployment combined with battery storage could moderate long-term LNG demand growth compared with earlier expectations. And much sooner than expected.

Oil on the other hand faces a more direct challenge. Every additional EV permanently removes future demand for petrol or diesel. While aviation, shipping and heavy industry will continue consuming hydrocarbons for decades, passenger road transport is steadily shifting towards electricity. According to the IEA’s Southeast Asia Energy Outlook 2026, EVs and biofuels in Asia and worldwide could eventually displace oil demand equivalent to a substantial share of the region’s crude imports under more ambitious policy scenarios.

To this end, and given that electrification, coupled with domestic renewable generation, offers greater energy security as well as lower emissions, the result is a structural shift in Asia’s energy landscape. Transport is becoming increasingly tied to electricity rather than oil, while electricity itself is becoming progressively cleaner. The winners are likely to be countries capable of building integrated ecosystems spanning renewable generation, batteries, charging networks and EV manufacturing.


Driving Influence: China’s EV Strategy In South Asia And Implications For India – Analysis



An XPeng electric car showroom at the Taikoo Li Sanlitun shopping center in Beijing, China. Photo Credit: Raysonho, Wikipedia Commons
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July 29, 2026
Observer Research Foundation
By Aditya Gowdara Shivamurthy and Sakshi Kapoor


Key Takeaways:

China has rapidly become the dominant supplier of electric vehicles and related ecosystems (batteries, charging infrastructure, software) to South Asian countries, driven by competitive pricing, state-backed overcapacity, and alignment with local green-transition goals.

This expansion creates long-term structural dependence on Chinese technology, standards, spare parts, and critical minerals, while raising security concerns over data collection from connected vehicles and potential intelligence risks.

The trend erodes India’s traditional advantages in automobile and petroleum trade with its neighbors and challenges New Delhi’s efforts to expand its own EV manufacturing and regional influence.



In April 2026, Asia became the largest buyer of Chinese electric vehicles (EVs), as Chinese exports jumped by almost 40 percent. Within this broader trend, South Asian nations – Nepal, Bangladesh, Sri Lanka, Pakistan, Bhutan and the Maldives – are emerging as important markets. Through the export of vehicles, batteries, charging infrastructure and digital ecosystems, Beijing is steadily restructuring South Asia’s technological standards. China exports not just products but complete mobility systems designed to generate long-term structural reliance that binds importing nations to Chinese manufacturers, standards and supply chains. This will have long-term implications for the region by creating dependency and security challenges, and by eroding India’s trade advantages.
China’s Domestic EV Transformation and Global Leadership

China’s dominance of the global EV industry is the outcome of three decades of sustained state-led effort. Between 2009 and 2023, China invested over US$230.8 billion in the EV industry. Government spending has been the primary driver, accounting for 60 percent of total global spending in 2025. Schemes such as purchase tax exemptions, performance-linked incentives and scrappage schemes have accelerated adoption, while large-scale investment has enabled China to account for 80 percent of the world’s installed charging capacity. In 2025, it sold 13 million electric cars, accounting for 65 percent of global EV sales, with sales projected to reach 14 million in 2026. Chinese automobile firms – BYD, SAIC, Geely, Changan, NIO and Xpeng – have emerged as major players across the world. At the centre of this ecosystem is Contemporary Amperex Technology Co., Limited, which controls 38 percent of the global lithium-ion battery supply, exemplifying how vertical integration has solidified China’s position.


China’s drive to dominate the sector is fuelled by both ambition and vulnerability. It seeks to break the historical pattern of Western and Japanese dominance in the conventional automobile sector. EVs offer a domain in which China can set standards, shape supply chains and gain a long-term technological advantage, while reducing its exposure to oil import shocks and advancing its 2060 carbon neutralitytargets. It has built a highly integrated system spanning the mining, refining and processing of key minerals, large-scale battery and component manufacturing, and software and charging infrastructure. China controls around 70 percent of global rare earth mining, 90 percent of separation and processing, and over 80 percent of lithium-ion battery manufacturing. Additionally, China has been expanding abroad because of its overcapacity and domestic price wars amid slowing demand.

Expansion of Chinese EV Ecosystem in South Asia


South Asia has emerged as an increasingly attractive destination for China’s EV industry. The West imposes high tariffs and other non-tariff barriers on the country, whereas South Asian markets offer expanding consumer bases, favourable investment conditions and policy alignment with national green transition agendas. Nepal aims for carbon neutrality by 2045, Sri Lanka targets net-zero by 2050, Bhutan emphasises sustainability via Gross National Happiness, and Bangladesh pursues 30 percent EV deployment by 2030. Furthermore, the rising cost and risk of importing fuel, along with multiple economic shocks since COVID-19, are motivating countries to embrace this transition. This creates a window for monopolistic Chinese firms to systematically exploit South Asian markets.

Chinese EVs also stand out for their competitive pricing. In Nepal, Chinese manufacturers account for the majority of new EV sales, owing to their affordable pricing. Dealers earn higher margins on Chinese vehicles than on those of other players. A mature manufacturing supply chain, lower input costs and favourable financing conditions allow China to offer the world’s lowest battery prices. Another tool of expansion is Government-to-Government assistance. For instance, in January 2026, China donated 100 electric buses to Sri Lanka for its major Colombo-Kandy and Colombo-Galle routes; similar gestures have been extended to Nepal. Such grants build familiarity and consumer appeal, while also creating dependence on Chinese spare parts and maintenance services. Recently, Sri Lanka requested Chinese assistance in building charging stations nationwide.

Chinese firms have also pursued assembly operations in the region. In Pakistan, BYD has established a facility, but operations remain limited, with no local R&D or component manufacturing. Bangladesh shows a similar pattern. Since the 2021 National Electric Mobility Action Plan was initiated, China has continued to establish distributor networks and explore battery assembly in export zones, though investments are yet to materialise. At the same time, Bangladesh’s structural dependence on Chinese capital across sectors gives Chinese firms preferential access that Asian and European competitors lack. With supply lines and local partnerships already in place, market entry is easier for Chinese firms. This also provides a way to bundle in vehicle software and connected charging networks, and to integrate them.

There has been a significant increase in both the value and the number of Chinese EV units imported into South Asia between 2019 and 2025 (as Table 1 and Graph 1 show). The year 2019 is taken as the baseline, given the noticeable shift in EV trade that year. In Nepal and Bhutan, around 90 percent and 60 percent, respectively, of vehicles imported from China are EVs. Graph 1 shows that imports have increased significantly in Sri Lanka, and moderately in Pakistan, the Maldives and Bangladesh. The demand for EVs has fuelled an increase in total imports of Chinese vehicles since 2019, with Bangladesh as an exception. Table 2 shows that Chinese EV imports dominate the EV market in the region, with Bangladesh and the Maldives being exceptions. While Japanese vehicles and two-wheelers have dominated the Maldivian market, Bangladesh, until recently, lacked a policy framework and public appetite for EVs. This is gradually changing.

Table 1. China’s Vehicle and EV Trade with South Asia

Source: Authors’ collation from UN Comtrade and official trade statistics from respective countries’ ministries. Note: *Figures are approximate and represent average estimates, as reported values vary across sources. **Total Vehicle Imports are derived from WCO HS Code 8703: Passenger vehicles (all types), whereas EV Imports are derived from HS 870380: Battery electric vehicles (pure EVs) category.

Graph 1. China’s Share of EVs in Imports into South Asia
Source: Authors’ own


Table 2. Chinese Dominance in the South Asian EV Market
Source: Authors’ collation from UN Comtrade and trade statistics from respective countries’ official websites. Note: *Figures are approximate and represent average estimates, as reported values vary across sources. ** Total Vehicle Imports are derived from WCO HS Code 8703: Passenger vehicles (all types), whereas EV Imports are derived from HS 870380: Battery electric vehicles (pure EVs) category.


EVs as a Diplomatic Instrument and Their Strategic Implications


China’s expanding EV footprint risks creating a new form of “dependency diplomacy,” in which technological and industrial reliance translates into long-term economic influence. Sri Lanka, for example, possesses critical minerals but lacks the processing capacity to convert them into battery-grade materials. For South Asian economies, developing even parts of the full value chain requires large investment, sustained policy action and time. Furthermore, these countries depend on China for critical minerals, advanced components and chips. When batteries degrade, nations face expensive replacements or premature retirement of vehicles, owing to a lack of battery recycling capacity. Given China’s technology-transfer restrictions, assembly lines are expected to generate only logistics and retail employment. This makes it difficult for South Asian economies to develop genuine domestic manufacturing capacity.

Security concerns also persist regarding these imports. Modern, internet-enabled Chinese vehicles generate detailed location data, driving patterns and camera feeds, which are stored on cloud servers. The most advanced variants function as ‘smartphones on wheels‘, equipped with facial recognition, AI systems and over-the-air software updates. This is further complicated by China’s National Intelligence Law, which obliges individuals and companies to assist state intelligence, opening up the possibility of Chinese authorities accessing this data. In sensitive environments, this could enable the tracking of movements near ports, diplomatic sites or military installations, as well as remote interference with vehicle fleets. Such concerns have already been raised in Norway and Denmark.


The Belt and Road Initiative’s (BRI) Green Finance Agenda, which has directed US$11.8 billion into renewable infrastructure, also feeds into China’s EV expansion. Pakistan’s BYD assembly facility, linked to the China-Pakistan Economic Corridor (CPEC), illustrates how EV investments are being integrated with geopolitical objectives. Future BRI projects, especially highways, are likely to be designed with EV integration in mind. If this trajectory continues, South Asia’s transport, energy and data infrastructures will become highly vulnerable.

Finally, beyond these strategic and security challenges, Chinese dominance of the EV industry poses a significant threat to India’s trade in the region. India has traditionally been South Asia’s principal source of automobile and petroleum imports. Firms such as Tata, Mahindra, Ashok Leyland, Maruti Suzuki and TVS have built strong market positions through extensive dealer networks, joint ventures, readily available spare parts and well-established service ecosystems. As such, the growing preference for Chinese EVs is likely to affect India’s automobile and petroleum trade with all countries in the region (by 14 to 33 percent, as shown in Table 3), barring the Maldives and Pakistan.

Table 3. India’s Trade with South Asian Countries
Source: Authors’ collation from UN Comtrade and Trade Intelligence and Analytics Portal, Department of Commerce, Government of India. Note: *Total Vehicle Imports are derived from WCO HS Code 8703: Passenger vehicles (all types) **Petroleum Imports values are derived from Chapter 27 of the HS Code, which covers “Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes.”

India is accelerating its EV transition to expand manufacturing and exports, and is deploying it as a foreign policy instrument — yet the scale of this expansion remains modest compared to China’s. Between 2020 and 2025, India’s EV sector attracted around US$25 billion in investment, well short of its targets, leaving China to dominate the market. At a time when India is investing significantly in energy and oil connectivity and easing trade and transit networks for its neighbours, the surge in Chinese EVs — and their potential transit through strategic regions, especially the Northeast — could add to existing economic and security risks.

China’s EV expansion in South Asia goes beyond commerce, reflecting a broader pattern of tactical economic integration. By exporting the entire EV ecosystem and offering India’s neighbours access to finance, technology and clean transport solutions, China builds leverage over them without resorting to coercion. For South Asia, affordable Chinese EVs — combined with growing climate commitments and the need to reduce dependence on imported fossil fuels — present a new set of choices. Taken together, these dynamics suggest that South Asia’s clean transport future lies as much in the realm of geopolitics as in markets and climate policy. While geography and commercial ties continue to favour India overall, these advantages alone may not be sufficient to sustain its primacy in trade.


About the authors:
Aditya Gowdara Shivamurthy is an Associate Fellow with the Strategic Studies Programme at the Observer Research Foundation.

Sakshi Kapoor is a Research Intern at the Observer Research Foundation.

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

Disclaimer: ChatGPT 5.5 was used to generate infographics and tables.

About Observer Research Foundation
ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

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