Posted Originally on Aug 30, 2026 by Martin Armstrong |
Listen to more on Kerry Lutz’s Substack.
Categories
Exclusive Forecasts to 2032, Sovereign Debt Contagion & The Four-Front War
Category Blogger Martin Armstrong
Operation Economic Outcast
Posted Originally on Aug 29, 2026 by Martin Armstrong |
Correlating Forecasts
Correlating Forecasts
Posted Originally on Aug 28, 2026 by Martin Armstrong |
QUESTION: I have read your report on October. I see the correlation. Was your famous forecast that Communism would fall in 1989, when people thought you were crazy, the result of your 72-year Revolutionary Cycle on Russia lining up with the first 8.6-year wave after the start in 1985? Do we have such a correlation here going into what appears to be a major turn in 2028?
Bob
ANSWER: Yes, when I have multiple models point to the same target, this increases the likelihood that will be important. I have been touting the risk factors here for August since last WEC in November 2025. In addition to this target showing up on numerous markets in the timing arrays that have over 70 individual models to create those arrays, then we have the September turning point on NATO.
I have warned many times that the volatility will rise during the last 3 waves of the ECM. That will begin with NATO as on September 2nd, 2026. I have also warned that they lose their jobs if there is peace and no threat from Russia. So they have done their best to sabotage any peace negotiations and constantly preach Russia wants to invade Europe. The only reason to invade Europe now would be to destroy an adversary. Europe has nothing of value to warant an invasion for the classic economic gain. Thus, any war would be to destroy Europe and Zelensky is trying to bring down Russia. We do not see it as a profitable venture to conquer Europe and then occupy it.
Consequently, once again we have a serious correlation that starts September 2nd. Look at the timing arrays around the world. Many have the week of September 7th as a key week globally suggesting this is not a localized turning point but an international influence.Posted Aug 28, 2026 by Martin Armstrong |
Spread the love
QUESTION: I have read your report on October. I see the correlation. Was your famous forecast that Communism would fall in 1989, when people thought you were crazy, the result of your 72-year Revolutionary Cycle on Russia lining up with the first 8.6-year wave after the start in 1985? Do we have such a correlation here going into what appears to be a major turn in 2028?
Bob
ANSWER: Yes, when I have multiple models point to the same target, this increases the likelihood that will be important. I have been touting the risk factors here for August since last WEC in November 2025. In addition to this target showing up on numerous markets in the timing arrays that have over 70 individual models to create those arrays, then we have the September turning point on NATO.
I have warned many times that the volatility will rise during the last 3 waves of the ECM. That will begin with NATO as on September 2nd, 2026. I have also warned that they lose their jobs if there is peace and no threat from Russia. So they have done their best to sabotage any peace negotiations and constantly preach Russia wants to invade Europe. The only reason to invade Europe now would be to destroy an adversary. Europe has nothing of value to warant an invasion for the classic economic gain. Thus, any war would be to destroy Europe and Zelensky is trying to bring down Russia. We do not see it as a profitable venture to conquer Europe and then occupy it.
Consequently, once again we have a serious correlation that starts September 2nd. Look at the timing arrays around the world. Many have the week of September 7th as a key week globally suggesting this is not a localized turning point but an international influence.
They Will Do Anything to Avoid Returning to Cash
Posted Originally on Aug 28, 2026 by Martin Armstrong |
Switzerland is developing a nationwide system that will allow consumers to make card payments even when internet and telecommunications networks are unavailable. The government, Swiss National Bank, commercial banks, payment providers, terminal manufacturers, and major retailers are working together to make approximately 16.5 million debit and credit cards capable of operating offline, with broad deployment planned by the end of 2027. They are constructing an entirely new emergency payment infrastructure to create “offline payments” that are still under government’s watchful eye.
Cash does not need authorization, a PIN, a working terminal, a battery, a generator, or a promise that the banking network will return. It settles the transaction immediately and leaves no unfinished claim waiting to be processed. Yet the Swiss Federal Office for National Economic Supply declared that while cash is an alternative, it is “always advisable” to be able to complete purchases without it.
Under the proposed system, the customer must use a physical card and enter a PIN. Authorization occurs locally between the chip and the terminal, which stores the transaction until communications are restored. The account is debited later after the terminal finally reconnects to the payment system. This means the payment is not truly settled offline. It is merely recorded offline and submitted to the banks later, ensuring that the transaction eventually returns to the same centralized financial network government claims was temporarily unavailable.
The terminal must still have electricity from the grid, a battery, or a generator. Therefore, if the emergency is prolonged, cash remains the only reliable option. The system will also be restricted initially to retailers selling government-defined essential goods. A person may be permitted to purchase food, medicine, and fuel but not necessarily repair equipment, obtain supplies from a small independent business, or pay another individual. Cash does not ask a bureaucrat whether the merchant or product belongs to an approved category.
A society dependent entirely upon banks, cards, telecommunications, and electricity is fragile regardless of whether the terminal can temporarily store transactions. Cash creates an entirely separate payment channel outside the electronic network. It works when banks fail, cards are blocked, systems are hacked, power disappears, or government declares an emergency.
The objective is to ensure that money never truly leaves the banking system. When people hold cash, banks cannot use those funds, governments cannot instantly observe transactions, payment providers cannot collect fees, and monetary authorities cannot impose negative rates or control how quickly money circulates. Cash gives the individual direct possession of money. A card provides access to a liability recorded on someone else’s computer, subject to contractual terms, technical limits, institutional solvency, and government regulation.
Sweden also expanded offline card payments in July 2026 to cover communications disruptions lasting as long as seven days, and Finland, Norway, and Estonia are developing similar arrangements. The same pattern is spreading across nations that allowed cash usage to decline and then discovered that their digital economies could stop functioning during a cyberattack, telecommunications failure, power interruption, or war. Rather than admit that abandoning cash was reckless, they are building another layer of technology to keep everyone inside the electronic cage.
The War Cycle makes this particularly disturbing because payment infrastructure will become an obvious target during any major conflict. Cyberattacks can cripple banks, communications networks, power grids, and payment processors without a single soldier crossing a border. Governments know this, which is why they are suddenly concerned about emergency payment resilience. Nevertheless, the solution remains controlled by the same banks, card networks, and state institutions whose failure would trigger the emergency. That is not independence from the system. It is a delayed connection to the system.
This also provides the bridge toward CBDCs. Once the public accepts that offline electronic payments are safer and more convenient than maintaining cash, central banks can claim that digital currency offers every benefit of banknotes without the physical inconvenience. The digital euro is already being designed with offline functionality, and the ECB promotes it as providing “cash-like” privacy. Cash-like is not cash.
Governments want the public to believe that the future of money is inevitable and that cash has become an obsolete nuisance. It is not obsolete to possess an asset that cannot be remotely frozen, rejected by a terminal, erased by a software error, or made inaccessible because a bank’s server failed. Cash remains dangerous only to those who want every unit of currency deposited, traceable, taxable, and ultimately controllable.
The Swiss plan may provide a useful emergency service, and nobody should object to having an additional payment option during a temporary outage. The issue is the relentless refusal to treat cash as the primary layer of financial resilience. They will redesign cards, reconfigure millions of terminals, coordinate banks and retailers, install backup power, and store transactions for later surveillance, but they will not simply encourage people and businesses to keep enough physical currency available for an emergency. They will do anything to keep your money inside the system because once you hold cash, you no longer need their permission to use it.
The Entire Financial System Is Chained to Government Debt
Posted Originally on Aug 28, 2026 by Martin Armstrong |
The Bank for International Settlements is warning that near-record public debt and the growing role of hedge funds and other nonbank financial institutions have created what it calls a “fiscal-financial stability nexus.” That is sanitized bureaucratic language for a system in which governments, banks, pension funds, insurers, hedge funds, and central banks are all chained to the same mountain of sovereign debt. If government bonds begin to fail, the losses will not remain confined to some account at the Treasury. They will spread through the institutions holding the public’s savings and eventually force central banks to choose between the currency and the financial system.
Government debt is treated as the foundation of modern finance. Banks use sovereign bonds as collateral, pension funds hold them to match future obligations, insurers depend on them for income, and hedge funds trade them using enormous leverage through repurchase markets. Regulators assign government debt privileged treatment because they have declared it “risk-free,” but no investment is free of risk. The label exists because government needs financial institutions to purchase its bonds, and admitting that sovereign debt can become unstable would expose the fraud supporting the entire system.
The BIS estimates that the probability of a financial-stress event comparable to the Global Financial Crisis occurring within three months is roughly ten times higher when public debt relative to GDP is elevated. The probability rises from approximately 0.3% under lower-debt conditions to 3.8% when government debt is high. The risk increases further when nonbank financial institutions hold a larger share of the market because many depend on leverage and short-term funding that can disappear the moment bond prices move against them.
This is how a routine selloff can become a systemic event. Government bonds decline, yields rise, and leveraged funds suffer losses. Lenders demand additional collateral, forcing those funds to sell more securities into a falling market. Liquidity disappears, borrowing costs surge, and the losses spread to banks and other institutions connected through funding markets. Government then complains that the market is “dysfunctional” because investors are no longer purchasing its debt at politically convenient prices.
The central bank is forced to intervene because allowing the bond market to clear naturally could bring down the financial system. It purchases government securities, supplies emergency liquidity, and claims that the operation is temporary and has nothing to do with financing the state. Yet every rescue teaches the market that excessive leverage will be protected and teaches politicians that reckless borrowing carries no immediate consequence. This creates the next crisis by encouraging the exact behavior that caused the first one.
The BIS openly admits that repeated central-bank interventions can weaken market discipline over government spending. This is the vicious circle they cannot escape. Governments borrow excessively, bond markets become unstable, central banks suppress the instability, and politicians interpret the rescue as permission to borrow even more. The debt increases until each attempt to restore honest interest rates threatens the banks, pensions, and funds that were encouraged to hold it.
The Federal Reserve and other central banks are therefore losing control of monetary policy. Raising rates to fight inflation reduces bond prices and inflicts losses on financial institutions while simultaneously increasing the government’s interest expense. Lowering rates or purchasing bonds protects the debt structure but risks weakening the currency and reigniting inflation. They can defend the purchasing power of money or defend the government bond market, but the size of the debt will eventually make it impossible to defend both.
Shorter debt maturities make this trap even worse. Governments have moved toward short-term borrowing to avoid paying higher long-term rates, but that means more debt must be refinanced sooner. Every rate increase passes through to the government’s interest bill more quickly. If investors suddenly question fiscal sustainability, the state must return to the market repeatedly while buyers demand increasing compensation for the risk. The rollover mechanism that once concealed insolvency then accelerates it.
The BIS expects debt pressure to continue beyond 2031 as aging populations increase pension and healthcare costs while governments demand more money for infrastructure, renewable energy, and defense. This is precisely why the War Cycle and Sovereign Debt Crisis are converging. Governments already cannot finance their domestic promises, yet they are expanding military budgets, subsidizing strategic industries, and preparing for prolonged geopolitical conflict. War does not eliminate old obligations. It piles new debt on top of them.
Pensioners and ordinary savers will ultimately be trapped in the middle. Their retirement funds hold government bonds because regulators call them safe, but those same bonds lose value when rates rise or inflation accelerates. If funds experience losses, government will use the crisis to justify additional regulation, mandatory asset allocations, restrictions on withdrawals, or public bailouts financed through still more debt. The citizen will be taxed to rescue an institution that lost money financing the government that imposed the tax.
This is also where digital currencies and capital controls enter the picture. When voluntary demand for government debt becomes insufficient, the state will search for methods to direct private savings into approved securities. A financial system built around identified digital wallets and programmable payment rails would make it far easier to restrict capital movement, limit withdrawals, and steer money toward government obligations. They will call it financial stability because admitting that the objective is financial repression would provoke revolt.
The Sovereign Debt Crisis will spread through the financial system because sovereign bonds have been embedded into everything. The state borrowed the money, regulators declared the debt safe, institutions bought it with the public’s savings, and central banks promised to rescue the market if anything went wrong. The entire structure depends upon confidence that government will always honor its obligations without destroying the value of the currency used to repay them. Once that confidence breaks, there will be nowhere inside the conventional financial system to hide.
The Economy Is Stagnating
Posted Originally on Aug 27, 2026 by Martin Armstrong |
The Federal Reserve’s preferred inflation gauge rose again in July, with the headline Personal Consumption Expenditures index increasing 0.2% for the month and 3.7% from a year earlier. Economists expected the annual rate to decline to 3.6%, yet it remained unchanged from June, while core PCE excluding food and energy increased 0.2% monthly and 3.3% annually. The political class has spent years promising that inflation was retreating, but prices are still rising at nearly twice the Federal Reserve’s official target after households already endured the largest cumulative increase in the cost of living in decades.
This is what they refuse to explain when they celebrate a lower inflation rate. A decline in the RATE of inflation does NOT mean prices declined, for it merely means the government believes they are increasing at a slower pace. The rent, insurance premium, electric bill, grocery receipt, property tax, and cost of borrowing do not return to where they stood before the inflationary wave began, and wages must rise faster than this accumulated increase simply to restore purchasing power that has already been destroyed.
The core figure is equally deceptive because removing food and energy excludes two of the expenses people cannot avoid. Economists defend this practice by claiming those categories are volatile, but that volatility does not make the expense imaginary. Energy flows into transportation, agriculture, manufacturing, utilities, packaging, and practically everything that must be produced or delivered, while food is not some discretionary luxury that families can postpone until the next Federal Reserve meeting.
The problem is now spreading well beyond one monthly inflation report. The economy expanded at an annualized rate of only 1.5% during the second quarter, employers eliminated 23,000 jobs in July, and May and June payrolls were revised downward by a combined 103,000. Inflation remains at 3.7% while employment has been stagnating for months, which is the precise environment the Keynesian playbook cannot resolve because raising rates attacks economic activity while doing nothing to repair the geopolitical, fiscal, regulatory, and supply-side pressures driving prices.
The Federal Reserve is now trapped by government. Washington continues to borrow and spend regardless of the business cycle, forcing the Treasury to compete for capital while interest payments consume an expanding share of federal revenue. The central bank can raise short-term rates, but it cannot produce oil, lower insurance costs, reverse taxation, rebuild supply chains, end wars, or restore confidence among businesses that no longer know what their expenses will be six months from now.
This is not a new inflation cycle appearing in July, just as the weak employment report did not suddenly mark the beginning of labor deterioration. Both figures confirm a trend that has been in motion beneath the government’s revised statistics for some time. The private economy is losing momentum while the cost of government, debt, energy, insurance, and basic necessities continues to rise, and calling this a “soft landing” will not change the fact that Americans are being forced to pay more merely to stand still.
Categories:Inflation
Europe’s Digital Euro Is Coming in 2029
Posted Originally on Aug 27, 2026 by Martin Armstrong |
The European Central Bank is moving ahead with the digital euro and expects to begin a 12-month pilot during the second half of 2027. Thirty-six banks and payment providers have already been selected to participate, legislation is expected to be completed by the end of 2026, and the ECB intends to be ready for a potential first issuance during 2029. Brussels is spending approximately €1.3 billion to prepare the system, with projected operating costs of €320 million annually beginning in 2029, while pretending the final decision has not already been politically engineered.
The ECB insists the digital euro will never be “programmable money,” but in the same breath admits that it will facilitate “conditional payments.” This is the word game they always play. Programmable money is defined narrowly as currency restricted by where, when, or with whom it may be spent. Conditional payments, meanwhile, occur automatically only after predefined conditions have been satisfied. Brussels claims these are completely different concepts because the condition is attached to the payment service rather than the currency itself. To the person whose transaction is blocked until the system approves it, that distinction is meaningless.
The first examples sound harmless. A customer orders a product online, the money is reserved, and payment is released after delivery. Funds could be transferred according to milestones, pay-per-use arrangements, or other automated terms. That may offer convenience and reduce fraud, but the infrastructure does not possess morality. A system capable of withholding a payment until a commercial condition is satisfied can also withhold it until a regulatory, tax, identity, geographic, or political condition is satisfied. The technology only executes the rules written by those who control it.
The ECB also says the digital euro will complement rather than replace cash, just as every government program begins as voluntary before the alternatives are slowly made inconvenient, expensive, or unacceptable. Merchants that accept digital payments could be required to accept the digital euro, and banks could be required to distribute it to their customers. This is not a product attempting to win public support through competition. Brussels intends to manufacture adoption through regulation while calling it consumer choice.
Digital euro holdings will not pay interest and will be subjected to limits designed to prevent people from withdrawing too much money from commercial banks. The system will include a “waterfall” mechanism that automatically moves excess digital euros into a linked bank account when the holding ceiling is reached. Therefore, this supposed digital equivalent of cash will already contain restrictions that physical euros do not possess. Nobody programs a €50 note to return automatically to a bank because the owner accumulated too many banknotes.
The ECB claims that it will not be able to identify users from payment data and that offline transactions will provide cash-like privacy between the payer and recipient. Yet online transactions will still move through payment providers that can identify users for anti-money-laundering compliance. The central bank may construct a technical wall between itself and personal identities today, but laws can be rewritten, emergency powers can be expanded, and intermediaries can be ordered to disclose information. Privacy that exists only through legislation is not privacy. It is temporary permission from government.
Europe claims it needs a digital euro to reduce its dependence on American payment companies and defend its “monetary sovereignty.” That argument has become more powerful as the United States has weaponized the dollar, sanctions, and financial networks against political opponents. Nevertheless, Brussels is using the external threat to construct a domestic instrument of financial control. It is not restoring monetary sovereignty to European citizens. It is concentrating monetary power in an unelected institution that cannot be removed by voters.
The 2029 timetable is particularly disturbing because it coincides with the rising geopolitical and monetary pressure approaching the 2030 Economic Confidence Model turning point. The War Cycle is accelerating, Europe is taking on enormous debt to rearm, and the European economy is being destroyed by high energy costs, taxation, regulation, and collapsing competitiveness. When the Sovereign Debt Crisis intensifies, governments will need to ensure that capital remains inside their financial system and continues financing public debt.
A digital euro provides exactly that infrastructure. Holding limits, linked accounts, identified intermediaries, mandatory distribution, mandatory acceptance, automated transfers, and conditional payments are being assembled inside one system. Brussels will market each feature separately as a technical safeguard or consumer benefit, but together they create the framework through which government could eventually monitor, restrict, and direct the movement of money across the eurozone.
They will never announce that the objective is capital control. They will speak of resilience, inclusion, innovation, security, sovereignty, and convenience. When war or debt produces the next emergency, additional restrictions will be presented as temporary measures required to protect financial stability. Europe has already demonstrated how quickly temporary emergency powers become permanent bureaucratic institutions.
The ECB says the digital euro will not be programmable, yet it is creating a currency system capable of supporting payments that execute only when predetermined conditions are met. Brussels can manipulate the terminology, but it cannot alter the function. By 2029, Europe may possess the technical foundation for a monetary system in which money no longer represents unconditional purchasing power. It will represent permission to transact under rules established by government.
Categories:
Will WAR Bankrupt the West?
Posted Originally on Aug 27, 2026 by Martin Armstrong |
War and sovereign debt are merging into a vicious spiral that will determine which nations survive the coming monetary crisis. Governments entered the conflicts in Ukraine and Iran, along with the escalating confrontation between the United States and China, already buried beneath debt accumulated through decades of fiscal incompetence. Now they are increasing military spending, subsidizing domestic industries, restructuring supply chains, and borrowing even more money to prepare for conflicts their own foreign policies helped create.
The United States, China, France, the United Kingdom, and Japan already carry gross government debt exceeding an entire year of economic output. Russia has drained much of its National Wealth Fund to finance the war in Ukraine while Western governments froze approximately $300 billion in Russian sovereign assets. Gulf states are being forced to expand defense spending amid the conflict with Iran, and Europe has committed itself to raising NATO-related expenditures toward 5% of GDP by 2035. Trump wants to increase annual US defense spending by $500 billion to reach $1.5 trillion, but Washington is already borrowing simply to pay interest on the debt it accumulated before this latest round of wars began.
These people speak about military spending as if the money materializes from thin air without consequences. Government does not possess wealth of its own. Every missile, drone, weapons package, foreign aid program, and military deployment must be financed through taxation, borrowing, or inflation. Taxation drains the productive economy, borrowing competes for private capital, and inflation silently confiscates purchasing power from everyone. Politicians choose debt because it conceals the cost until after the election, allowing them to play emperor today while leaving future generations with the bill.
The yield on the 10-year US Treasury has nearly tripled over five years to 4.3%, which means Washington is financing a vastly larger debt at far higher interest rates. This is elementary mathematics that the political class refuses to confront. A government may survive $10 trillion in debt when rates are near zero, but the same fiscal structure becomes impossible when the debt multiplies and borrowing costs normalize. Every additional dollar devoted to interest is a dollar that cannot maintain infrastructure, reduce taxes, or support genuine economic development. Government then borrows more to cover the interest, increasing the debt that created the problem in the first place.
The attempt to separate national economies from geopolitical rivals will impose another enormous cost. Europe abandoned cheap Russian energy and then wondered why its industries became uncompetitive. The West wants to reduce dependence on Chinese manufacturing and rare earths, but rebuilding those supply chains will require subsidies, tariffs, controls, and years of expensive investment. Iran’s position around the Strait of Hormuz demonstrates how quickly a regional conflict can threaten a route that previously carried roughly one-fifth of the world’s daily oil supply. Every attempt to create economic security through political coercion raises prices, reduces efficiency, and demands still more government borrowing.
The United States depends on foreign capital after decades of deficits. The value of foreign investments in America exceeds American investments abroad by roughly $27 trillion. Washington’s reserve currency privilege has allowed it to finance military operations, trade deficits, and domestic spending on a scale no other country could sustain. Yet sanctions, the weaponization of payment systems, and the seizure of sovereign assets have encouraged foreign governments to reduce their dependence on the dollar. The United States cannot use the dollar as a political weapon indefinitely while assuming the rest of the world will continue financing its debt without question.
Europe is in an even more desperate position because it has chosen rearmament while its economy stagnates, its population ages, and its welfare state consumes the productive capacity of the private sector. France cannot reform its pension system without civil unrest. Germany destroyed its energy advantage to satisfy Brussels and the climate zealots. Britain is drowning in debt while pretending it remains an imperial military power. These governments cannot finance the promises already made to their citizens, yet they are volunteering hundreds of billions more for a geopolitical confrontation that has no clear objective or exit.
The War Cycle will now intensify the Sovereign Debt Crisis because these are not independent trends. War increases spending and inflation, inflation pushes borrowing costs higher, higher rates worsen the deficit, and deteriorating finances weaken the nation’s ability to sustain the war. Politicians respond by raising taxes, imposing controls, and demanding further sacrifice from the public while refusing to reconsider their own policies. Government becomes more authoritarian as its financial position deteriorates because coercion replaces the confidence it has lost.
The nations that emerge strongest will not necessarily be those possessing the largest armies today. Power will migrate toward the governments capable of financing themselves without destroying their currencies or crushing their domestic economies. The West is entering this struggle with record debt, aging populations, collapsing political trust, and leaders who believe every crisis can be solved with another bond auction. They are preparing for endless war with money they do not have, and the debt required to preserve their power will ultimately become the force that destroys it.
Categories:War
The Middle East Turkey vs Israel
Posted Originally on Aug 27, 2026 by Martin Armstrong |
QUESTION: Mr. Armstrong, You previously predicted that gold would decline due to forced selling to raise cash, partly triggered by the energy crisis involving Iran, and I believe that assessment was correct. Turkey, for instance, has reportedly sold 60 tons of gold while also dumping U.S. Treasuries. Now, with tensions escalating between Turkey and Israel—and given Netanyahu’s recent rejection of negotiated peace with Iran, stating that “savages cannot be trusted”—I am concerned about the broader implications. Given that U.S. Treasury yields are rising as you anticipated due to geopolitical conflict, do you foresee this escalating into a major Middle Eastern war?
HL
ANSWER: In the case of Turkey, it is a significant net importer of oil. The country relies heavily on foreign sources to meet its energy needs, with domestic production covering only a small fraction of its consumption. To meet that cost in the face of their perpetual currency decline, they dumped US treasuries and sold 60 tons of gold to buy energy. The currency is in a virtual religious bear market.
Consequently, I have said many times, when domestic tension rises, government look for an external enemy. This is what you are witnessing. There is significant tension between Turkey and Israel right now. Relations have severely deteriorated, reaching one of their most strained points in years, driven by the faltering economics using a combination of the ongoing war in Gaza and a new, direct rivalry in Syria to justify the tension.
The Main Sources of Conflict used to Divert Domestic Tension
Turkey has been one of the most vocal critics of Israel’s military actions in Gaza, accusing it of committing “genocide.” Turkey has suspended all trade with Israel, closed its airspace to Israeli aircraft, and joined a genocide case against Israel at the International Court of Justice . In a striking escalation, a Turkish court has even issued an arrest warrant for Israeli Prime Minister Benjamin Netanyahu on these charges, and Turkey has requested Interpol to issue a “red notice” for his arrest. None of this alters the domestic economic deuteriation. Yet, it makes a great diversion tactic.
The most immediate flashpoint is Syria. Following the fall of the Assad regime, Turkey has deepened its ties with Syria’s new government and is seen as trying to expand its military influence there. This is a major concern for Israel. On August 18, 2026, Israel launched an airstrike on the Abu al-Duhur airbase in Syria, claiming it was a preemptive strike to prevent Turkey from deploying air defense systems that could threaten Israeli aircraft. This event brought the two countries dangerously close to a direct military confrontation.
Historical Disputes:
Mutual accusations have also spiked around historical issues as they always do. In July 2026, Israel officially recognized the Armenian Genocide, a move that deeply angered Turkey. The accusation is that the Ottoman Empire systematically killed 1.5 million Armenians during World War I, and it is recognized as genocide by over 30 countries and numerous international organizations. In response, Turkish officials made strong statements against Israel, which Israel’s Foreign Minister called “textbook incitement to genocide.” Turkey accuses Israel of Genocide in Gaza.
Could This Lead to a Direct War?
Despite the intense hostility, most analysts do not believe a direct war likely. Both sides have stated they do not seek a direct conflict. They are continuing to use back channels that I know of off the headlines. This is standard in an effort to prevent any miscalculation.
I can confirm that the US is acting as a mediator right now since it is a key ally to both countries. It is trying to de-escalate tensions in Syria, to prevent an accidental clash.
There is no question that this is a Middle East “cold war.” The conflict is playing out in the political, diplomatic, and legal arenas, as well as through competition for influence in places like Syria and the Eastern Mediterranean, rather than on a direct military battlefield. The red flag is the triumvirate of Turkey, Saudi Arabia, and Pakistan.
In short, while the relationship has hit a new low and the risk of a direct incident is rather high. There are efforts underway behind the curtain trying to manage the tensions to keep them from escalating into a full-blown war.
We have an important Directional Change in Israel in 2027 and the critical turning point aligns with the ECM in 2028.Our models have shown rising volatility was to begin here in August and escalate into November.
Syria Is Converting a Russian Military Pier into a Trade Route
Posted Originally on Aug 26, 2026 by Martin Armstrong |
Syria has received its first shipments of wheat and cement at Berth No. 4 in the port of Tartous, a facility previously controlled by Russian forces. On the surface, this appears to be a minor logistical development involving a few cargo vessels. In reality, it symbolizes a major change in the balance of power following the collapse of Bashar al-Assad’s government. A military pier that once supported Russia’s projection of power across the Mediterranean and Africa is being absorbed into Syria’s civilian economy. The first cargoes reportedly arrived through Turkish ports. Military influence is retreating while trade and capital are moving in to replace it.
Russia and Syria reached an agreement after 18 months of negotiations over the future of Tartous and the Hmeimim air base. Syria will regain control of the civilian facilities, while the remaining military installations are expected to become joint training centers. Moscow therefore retains a reduced presence, but it no longer possesses the same unrestricted position it enjoyed under Assad. This is not a complete Russian withdrawal. It is the conversion of direct military control into a negotiated relationship with a government that is seeking investment from Turkey, the Gulf states, Europe, and the United States.
Tartous was never valuable merely because Russian ships could dock there. Its true strategic importance came from geography. It gave Russia a Mediterranean repair and replenishment point, supported military operations in Syria, and served as a staging route into Africa. Great powers have always fought to control ports because ports connect military force with economic power. Athens built its empire through maritime tribute, Venice became wealthy through Mediterranean trade, and Britain’s global influence rested upon ports and commercial routes long before economists began measuring power through GDP. Control the port and you influence the movement of food, energy, armies, and capital.
Syria is now attempting to reverse that relationship by turning a military asset into a commercial one. DP World signed a 30-year concession to develop and operate Tartous and committed $800 million to modernize its infrastructure. The French shipping group CMA CGM reached a separate 30-year agreement involving approximately $260 million of investment in Latakia. Together, these projects could reconnect Syria with Southern Europe, Turkey, the Gulf, North Africa, and the wider Mediterranean economy after more than a decade of war and sanctions.
This is precisely how reconstruction begins. Politicians hold conferences, make speeches, and announce billions in theoretical aid, but an economy cannot recover without moving physical goods. Syria needs wheat, cement, machinery, fuel, construction materials, electrical equipment, and industrial components. It must also create the ability to export goods if it intends to obtain foreign currency without surviving indefinitely upon foreign assistance. A functional port does more for economic recovery than another international declaration because it lowers the cost of every imported input required to rebuild the country.
The arrival of wheat and cement is particularly symbolic. Wheat represents survival while cement represents reconstruction. Syria requires both before it can pretend to attract large-scale industry or tourism. The World Bank estimated the country’s reconstruction cost at approximately $216 billion. Saudi Arabia has announced billions in potential investment, while Turkish companies see opportunities across construction, logistics, manufacturing, telecommunications, and consumer goods. None of that capital will arrive on a meaningful scale unless investors believe contracts can be enforced, money can move through the banking system, and goods can enter and leave the country safely.
The removal of most American and European economic sanctions opened the door, but sanctions relief does not automatically create confidence. Syria still faces damaged infrastructure, fragmented political authority, armed groups, sectarian divisions, unresolved property claims, and a banking system isolated for years from international finance. Foreign investors will not commit capital merely because Washington changes a regulation. They will demand security, predictable taxation, enforceable contracts, and the ability to repatriate profits. Governments always assume that removing a legal barrier will cause money to rush in immediately, but capital remembers losses long after politicians have forgotten them.
Turkey is in the strongest position to benefit because it shares a border, possesses an established industrial base, and already has companies familiar with Syrian markets. Turkish firms can supply cement, steel, food, machinery, household goods, and construction services more efficiently than distant competitors. The initial shipments through Turkish ports demonstrate how rapidly geography reasserts itself once political barriers weaken. Ankara does not need to occupy Syria to dominate parts of its reconstruction. Trade can accomplish what military force cannot by creating relationships that become increasingly expensive to break.
The Gulf states are approaching Syria through capital rather than troops. Saudi Arabia and the UAE can finance real estate, infrastructure, telecommunications, energy, and logistics. DP World’s investment in Tartous is therefore not simply a commercial transaction. It places an Emirati company at the center of Syria’s maritime recovery and gives Gulf capital influence over one of the eastern Mediterranean’s strategic gateways. Russia used the port to project military power. The UAE is using the same location to project commercial power.
Russia has not disappeared from the equation. Syria reportedly obtained approximately 85% of its imported wheat during the 2025–2026 season from Russia and Russian-controlled Crimea. Damascus cannot replace that relationship overnight, particularly when food security is involved. Moscow will therefore attempt to preserve influence through grain, energy, military training, debt, and technical cooperation even as its direct control declines. This is a transition from patronage under Assad to competition under the new government.
The mistake would be to interpret the agreement as a victory for one side and a total defeat for another. Syria is attempting to balance Russia, Turkey, the Gulf states, Europe, and the United States because accepting complete dependence upon any single power would merely replace one master with another. Smaller states survive by forcing larger powers to compete for access. The port becomes valuable not only because of the goods passing through it, but because several rival powers now have an interest in Syria remaining stable enough for commerce.
There is an important lesson here for the rest of the Middle East. Military occupation consumes capital while commerce attracts it. Russia spent enormous resources preserving Assad’s government and securing its bases, yet years of military investment could not guarantee permanent control. DP World entered with an $800 million commercial agreement and immediately acquired influence tied to Syria’s need for reconstruction. A military base remains valuable only as long as force can preserve it. A productive trade route creates its own constituency among workers, merchants, consumers, and governments.
The future of Syria will not be determined merely by who controls Damascus. It will be determined by whether capital returns, whether refugees believe they can rebuild their lives, and whether the country becomes a bridge for regional commerce instead of a battlefield for foreign armies. Tartous offers Syria an opportunity to replace military dependency with economic interdependence, but that will require the government to protect investment rather than simply divide it among political factions.
The first ships carried wheat and cement. What follows will reveal whether Syria is genuinely rebuilding an economy or merely auctioning strategic assets to a new collection of foreign patrons. Russia once measured its influence at Tartous by the warships tied to the pier. Syria will now measure its recovery by the cargo passing through it. That is the difference between controlling territory and creating wealth.
Categories:World Trade
Centinel2012 