At no point since 1945 has the United States accepted a hostile power controlling a strategic sea lane. , the Leiden University historian of American foreign policy and author of , cannot see how it accepts this one.

As he put it to me: this “doesn’t end without the US either using military force to reopen the Strait of Hormuz or definitely calling it a sign of the end of American hegemony — because that would mean accepting something they have never accepted before.”

And yet, one hundred and five days into the closure of the Strait of Hormuz, that is exactly what seemed to have happened, and it’s not even clear if that is enough for Iran. All that while the international oil price sits, implausibly, around $90.

Yesterday, Trump’s rhetoric went from “obliterating Iran” to saying “the discussions and final points were approved by all involved.” He was immediately mocked by an Israeli official, who said “We do not recognize reaching an agreement … he has already said 38 times that there is an agreement”

Iranian state media quickly followed in the mocking: “In just three days, he ‘imaginarily’ sent his deputy to Pakistan four times [...] As long as Iran does not itself announce the existence of a possible understanding or agreement, Trump’s reports on the subject should be considered part of his previous line of messages.”

At this point, Trump should be in the Guinness world record book for successive successful ceasefires. While the US is being “humiliated” by Iranian leadership, as per German chancellor Friedrich Merz, markets (or at least, algorithms reading headlines) seem to take Trump seriously.

His comments led to wild gyrations in commodities, with Brent crude dropping more than 5,5 percent within three hours and gold and copper rising about 3.4 and 3.2 percent respectively.

Do you find it difficult to know what to believe? You are not the only one. Due to the nature (and strategic necessity) of wartime propaganda, it is difficult to see for the general public what is actually happening in physical markets and diplomatic negotiations.

Both Iran and the US, and likely various other actors, are working to influence elite and public opinion, with geopolitical and financial interests alike in play. Orchestration or structural financial interests — probably a mix of both. Call it a conspiracy or a media blind-spot; it does not matter. One has only to set media messaging and political strategic communications against what industry insiders are saying to get what’s really going on.

The same goes for the deal itself: whether it signs in Europe next week or joins the other thirty-eight, it does not matter much. A signature supposedly reopens a strait. It does not yet refill a salt cavern. It does not restart lost production. The 1.2 billion barrels are still gone, the rebalancing year still has to be served, and the incredible historical precedent — that Iran closed Hormuz for over a hundred days and paid no price Washington could enforce — is already written into the new order. Because one thing is clear: the people who actually get their hands dirty are panicking, and the data does not lie.

Listen to the men with dirty hands

The warnings from the people who actually move the molecules have been piling up since late May. At the Wall Street Journal CEO Summit, Chevron’s Mike Wirth warned that the market’s shock absorbers were nearly gone, with physical price pressures weeks away. Exxon’s Neil Chapman called inventory levels across crude, gasoline, diesel and jet fuel “unheard-of”, and put Dated Brent at $150–160 once they run dry. Shell’s Wael Sawan put a number on the supply loss: 1.2 billion barrels, a year to rebalance, and named the suppression mechanism: “We are borrowing from the future.”

I hear you thinking: “oil executives would say this, wouldn’t they?” Yes. But not for the reason you think. Oil companies want high prices, but they want them stable. The sweet spot is where you keep buying and they keep selling. A spike to $150-160 wouldn’t be resolved by new investment in production, it would be resolved by demand destruction: consumers and businesses cutting consumption by force of price. That incentivises a permanent shift away from oil. Which is precisely contrary to their interests.

Even Paul Krugman — no oil interests, a renewable-energy advocate — told a crowd at Erasmus University Rotterdam in May that global stocks were draining at six million barrels a day, with minimum operational levels arriving “as early as next month”. I reported on that talk. The fundamentals have not shifted since, as the deal still awaits a signature from both sides and boats need to get moving to remove any mines.

Confused? So am I. Counterintuitively, modern information technology has thickened the fog of war rather than lifted it. As I write, Trump has once again unilaterally announced a deal — his thirty-ninth, by some counts — and yet the strait remains closed:

A paid subscriber and I disagreed on who was in the weaker position. I thought it was the US. He prodded me to investigate, so I followed the market obsessively for weeks, weighing what credible people said against whose interests it served. This week, the data settled it for me. The frenzied deal-making only confirms it: a hegemon does not announce the same victory thirty-nine times unless it badly needs one.

To triangulate, I interviewed three specialists whose analysis runs through this series: Andrew Gawthorpe again; Damon Golriz, an Iran specialist at The Hague University of Applied Sciences and author of ; and Michel Don Michaloliákos, a geo-economics and Middle-Eastern analyst who co-founded .

Drawing on those conversations, my conclusion is that things will not return to normal, even after a deal. The stakes run well past commodity markets to US hegemony itself. Any deal may prove temporary, the conflict may reignite — but either way, the security architecture of the Middle East, and the projection of American power, has already shifted tectonically.

This is a historical inflection point. Some analysts reach for the Suez-crisis. I resist the comparison — Suez was above all a financial rout, and the dollar has so far been spared that verdict.1 But the geopolitical substance is the same: a previous hegemon discovering, in public, the limits of its reach. While my interviewees did not want to go this far, I am willing to say that this is the definitive end of US hegemony.2

This first piece shows what’s at stake in the physical energy market. The pieces that follow examine how US decision-making has (mal)functioned under Trump; why the US and Israel so badly misjudged the societal resilience of Iran as a civilisational state; how “Iran can win the war, but must also win the peace”; and how the balance of power in the Middle East is shifting, with global implications.

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10 June: the data that sealed it

The EIA’s weekly petroleum report, released on 10 June, is not looking good. Distillate fuel oil, diesel, in plain language, is at a 1990 seasonal low, 13 percent below its five-year average. Diesel is the most important fuel in the US economy: trucking, agriculture, construction, rail. All of it uses diesel. Motor gasoline is 6 percent below its five-year average. With refineries almost running at 100 percent capacity, there is almost no spare throughput to rebuild stocks quickly.

I’ve kept all categories on a single scale — which makes Cushing, Oklahoma look like a rounding error next to commercial crude. Don’t be deceived by that, the rate of change is significant. And Cushing is the most important figure in the short-term: it serves as the physical delivery point for West Texas Intermediate (WTI). This benchmark moves the US oil price. The market doesn’t care about relatively immobile commercial crude sitting in Gulf Coast tank farms. It cares about what’s physically deliverable against a futures contract. At a recent draw rate of 0.8 mb per week, Cushing is one week from the level at which pumps can no longer move oil efficiently and the market would tip into backwardation stress. This is why traders watch it obsessively despite it representing a small fraction of total US stocks.

For context, look at where it is sitting at the 5 year average in relative terms on this nerdy chart posted by Ole S. Hansen from Saxo Bank:

One does not simply drain the SPR

Then the SPR drawdown: as we can see on the chart above, the pace of the drawdown is rapid. The SPR lost 7.9 mb in a single week and is down 52.9 mb year-on-year, currently sitting at 349.2 mb. I once again hear you thinking: “349.2 mb sounds like a lot, seems like we’ve got plenty of time”. Based on the execution of this war, Trump might’ve thought that too. But no, one does not simply draw down the SPR below 300 mb.

The SPR is stored in various deep underground salt caverns across four major sites located along the coastlines of the Gulf of Mexico in Texas and Louisiana. Storing the oil in massive, naturally occurring salt domes provides a highly secure and cost-effective method compared to above-ground metal tanks.

But it also comes with a slight logistical problem. The caverns rely on the constant internal hydraulic pressure of the stored crude oil and brine to maintain their shape. If too much oil is drawn out, the massive weight of the surrounding rock can cause the salt walls to warp, shift, or completely collapse inward, permanently destroying the SPR storage. The reserve has a floor, and the floor is made of salt.

The spread says it all

So, this unsustainable drawdown, combined with jawboning (they should make this the word of the year) has come to the benefit of lower oil prices, with WTI (US) and Brent (international) hovering around $87.60 and $90.90 a barrel in spot prices respectively at the time of writing. Lower WTI prices reflect the fact that shipping landlocked US crude to global markets costs money. The spread between the two inverts or narrows when Cushing gets tight.

The spread right now is $3.30, compared to $5.20 on 20 February, a week before the war. That compression reflects exactly what the inventory data shows: Cushing tightness pulling WTI upward toward Brent. A wider spread increase US export incentives, a tighter one decreases it; at $3.30, those incentives remain intact, which means exports continue draining the very hub whose tightness is compressing the spread. But the narrowing spread does reflect empirically the unsustainable nature of this move, and that is shown in the data:

Though US oil exports surged post war, they seem to have slowed down since the 30th of May. If this trend continues, this spells bad news for markets outside of the US. If the spread narrows further, an official export-ban might not even be necessary to cause havoc in global energy markets. And if you’re sitting in the US reading this, feeling relieved: sorry to break it to you, a global recession would hurt America too.

By all appearances, the White House opted for the huge drawdown and export-surge to maintain both domestic support and international tolerance of the US-Israeli war of aggression. With the US functioning as an international stabiliser of the oil market, while drawing down on reserves aggressively to maintain low gasoline prices at home. Yet, European governments, meanwhile, are juicing demand beyond what market prices justify, shielding households through energy subsidies. The arithmetic shows in the reserves drawdown. No matter what the narrative is, this number is what everyone should be watching. This course of action indicates that the White House had expected this war to last far shorter than it has — a Putinesque gambit. The two men have similarities, but Trump lacks the evil genius of Putin — though they have both miscalculated and underestimated an apparently weaker enemy.

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Trump’s impossible choice

As long as the crisis remains unresolved, Trump is stuck. He either lets Americans pay for the war at the pump, or he imposes export restrictions and torches what remains of Washington’s standing as guarantor of open energy markets. One might think that an easy choice. It is anything but. An export ban would do what no Iranian missile could: convert a US supply problem into a global financial event.

Japan’s financial system is already holding on to dear life, partially as a result of the commodity shock, as I’ve described in a previous post, and Europe’s energy-subsidising governments are borrowing into the same storm. A shock of that size loops back into US financial markets through the Treasury market, through the dollar funding system, through everything. There is no firewall. Eventually, the real economy and financial economy run on the same pipe: you can’t print more molecules.

How did the White House manoeuvre itself into this corner? Part of the answer is a structural dismantlement of internal checks and balances, and I’ll get to it in the next piece with Gawthorpe. Part of it is the man himself.

Most of the establishment — the Pentagon included — understands this has been a disaster, says Gawthorpe. Trump does not, because he has built a bubble in which objective voices simply don’t reach him. The family and loyalists who do are telling him Iran’s new leadership is isolated and ineffective, the damage enormous. “He just won’t admit it was a disaster. I think you’ll never see him willing to put out a statement that truly reflects where things stand, because that would be to admit defeat.”

The conclusion Gawthorpe draws is blunt: “Trump has effectively ceded the Strait of Hormuz. And in doing so, he has demonstrated a real weakening of American power in this era.”

What this war reveals, in his reading, is that global competition is no longer about territory and population. It is about chokepoints, supply chains, and geoeconomic nodes. “Trump going to war in service of this twenty-year-old agenda about Iran having a nuclear weapon, and ending up in a war that is really about a key choke point in the global economy — that’s an old way of thinking colliding with new realities.”

As the Iran expert Damon Golriz said aptly: “America’s got the clock, Iran’s got the time.”

In 1988, it was Iran’s supreme leader Ruhollah Khomeini, who ended a war by drinking what he called a poisoned chalice. Golriz’s prediction, which I’ll unpack later in this series: this time, the chalice is being prepared for Trump.

Pieces like this one take weeks of passive research, days of primary interviews, and more reviewing of data than I care to admit. After all, I want to give you correct and qualified infomation After this series, prices rise to €8/month and €80/year, with more in-depth work moving behind the paywall. If you’ve read this far, you know what you’d be paying for. Now is the time.

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Thank you for reading. I write this between deadlines, on my own time. If it was worth yours, buying me a coffee would mean a lot.

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I have good news, and I have bad news. Potentially really bad news. But first, the good news.

Last Friday, the US reportedly added 172,000 jobs in May, beating the consensus forecast of about 60,000-100,000 by a wide margin — with Olu Sonola, head of US economics at Fitch Ratings telling the Financial Times that “this is a blowout jobs report.”

Now the bad news. Shortly, after the Nasdaq 100 — the index tracking the biggest US-tech stocks — dropped by a whopping 4,7 percent in a single day. For context, a drop of 10 percent constitutes a correction.

Even the GREATEST truther-in-chief is confused:

Let me walk you through it.

By the end of this, you’ll understand the machine keeping the US economy alive better than most of the financial journalists paid to explain it. This includes a few things they’d rather you didn’t know. And you’ll see why there are now only two ways this ends, both of them ugly.

Answering Donald Trump’s confusion

A strong jobs report means that the economy is performing better than expected. Fewer people who are homeless (crude, yes — but that is essentially what “strong employment” means in America) means more inflation, because they are spending money on… Well, necessities.

This in turn means that the Federal Reserve is more likely to raise interest rates, raising the cost of borrowing.

And who is borrowing a lot right now?

You guessed it: AI-companies. They have borrowed roughly $121 billion over the course of 2025 — more than four times their usual pace. Morgan Stanley expects the hyperscalers and their joint ventures to issue $250-300 billion in debt in 2026 alone, and JPMorgan estimates the sector may need to raise as much as $1.5 trillion in investment-grade bonds over the next five years.

And I wish the bit about homeless people was just a joke. It’s not. The fact that such a positive number is followed by such negative reactions in the stock market, is in my view, the proof in the pudding that the US economy is severely sick, and is at least in part running on hot air.

While AI is a revolutionary technology, it is becoming clearer and clearer to citizens and capitalists alike that the costs outweigh the benefits, for different reasons.

The bottom 25-601 percent of Americans are living paycheck to paycheck and look over to the richer and flourishing side of town, where the top 10 percent who own 90 percent of the financial assets live — they currently account for a whopping 49.2 percent of consumer spending. They don’t feel the effects of AI-data centers increasing their energy bills and they don’t see the grass turning brown due to water shortages; matter of fact, when they open their Robinhood account all they see is green.

Simultaneously, in Manhattan and Silicon Valley offices, capitalists are looking at how much of their bottom line is going to Claude now that it has revealed its actual token rates, and are going: “yikes….”

So, to summarise what is keeping the economy afloat: wealthy Americans, buoyed by rising stock portfolios, are sustaining demand; poorer Americans are barely scraping by, but the economy is just performing well enough to give them jobs; authorities are pumping money into the market; and AI-capital expenditures continue to surge to unprecedented levels.

And the cherry on the cake: all of these factors, combined with an expected 4.2 CPI inflation2, are enough for a 4.7 percent sell-off in precisely the sector currently contributing the most to US economic growth.

If this sounds like a very complicated and fragile Ponzi-scheme keeping the economy afloat, that is because, partially, it is. While I would love AI to provide the productivity gains that its fanatics tout, they just aren’t there yet. It would probably take robotics-based AI to make a meaningful contribution to productivity growth.

But the AI bubble is only the surface. Underneath it is a slow-motion crisis in the dollar system itself, decades in the making. This is the thing I spent my Masters thesis (capstone project, for Americans) trying to understand, and what this whole article is really about. Hold that thought.

The concerning part is that seven of the biggest tech stocks now make up around 35 percent of the entire stock market, up from barely 12 percent a decade ago. Just for context: that means a lot of retirement funds and pops and moms who bought the S&P 500 are ALL-IN on the AI-trade.

Those names are soon to be joined by a plethora of previously private companies entering the stock market — SpaceX, Anthropic, and OpenAI all intend to go public soon with a combined valuation north of $3 trillion. On top of that, Google’s parent company Alphabet is selling $80 billion dollars in stock, the largest equity capital raise ever, on top of a $30 billion-plus global bond issuance in February.

It is hard to overstate how big of a reversal that last fact is. Before AI became investable, the growth of tech-giants was decelerating. Most people had smartphones, app downloads for instagram and youtube were into the billions. The companies were actively making their products worse to earn more money.

So big-tech was basically sitting on this huge pile of money, with nowhere to spend it.

This birthed the weird moment when Mark Zuckerberg renamed Facebook to Meta and started to throw good money after bad trying to get people to live in a virtual world rather than a real one.

But more importantly, it meant these companies started to buy back their stock on a massive scale. Approximately over $1 trillion flowed back into markets through buybacks in the decade to 2024 boosting asset prices higher and higher.

The Great Reversal — from buyback-machine to CapEx-behemoth

Now, as Google and Meta both show, that flow has reversed. Tech is now draining money from the financial economy through an upcoming $3 trillion IPO-fest, selling stock, issuing bonds, and importantly, ceasing stock buybacks.

At the same time, tech is investing $400 billion into the real economy against realised AI revenue of about $100 billion, contributing to the very hot growth and inflation that will make their debt-fuelled buildout more expensive through interest rate hikes.

So what’s keeping valuations afloat (for now)? It’s a combination of two things.

First, massive hype around AI is getting people to put all of their money into tech. I was recently listening to the Forward Guidance podcast where called it “partaking in the casino”, and that is exactly what it is.

When your grandma starts telling you she “is extremely bullish on semiconductor stocks”, your bubble-o’-meter should be off the charts.

Stocks are worth what people are willing to pay for them. This shows most visibly in the forward valuation of tech (~29x earnings) relative to other less cool sectors such as utilities (~18x), consumer staples (~22x), and energy (~19x). The market is paying roughly 1.5 times as much per dollar of earnings for an AI software company as for the utilities building out the grid to power its data centres — and for the energy companies supplying the fuel.

The flip side of this compression is that capital is not flowing into sectors without a hype story to tell: money that could be going into the grid or into energy, is instead queuing up for the next AI IPO.

Second, and BY FAR the more important reason, but also the more complicated one: the US monetary and fiscal authorities are manipulating the financial market to make everything look fantastic.

Stick with the technical part that follows, because it leads somewhere genuinely alarming. There is currently a huge battle unfolding over who has power over the US economy, between the independent3 Federal Reserve and the Treasury (the executive), happening right now in plain sight — but most don’t know that it is happening.

Trump seems to be particularly obsessed with the stock market, treating it like it’s his approval rating. He’s likely constantly telling Scott Bessent to juice the books. And during war-time, that is also geopolitically important, because a crashing stock-market is not good for negotiations.

Even though Trump is arguably worse in this regard, this is also a bipartisan problem because of reasons I will explain below.

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We are definitely not doing QE (yes we are)

Despite all the rhetorics coming from the Federal Reserve and those in government regarding Quantitative Tightening, the Federal Reserve and the Treasury have been flooding the financial economy with liquidity through the back door. People in mainstream media don’t tell you this because they either think you’ll find it too complicated and click away, or they are not interested in telling you the truth.

I’ll have a go at it to prove them wrong. Will you prove them wrong too?

What follows is the most technical stretch of the piece, and the most important. Stay with me through it. This is the part the specialists understand and you’re not meant to, and once it clicks, suddenly you will understand what’s happening in the US economy. Once you see it, you can’t unsee it.

In December 2025, the Fed officially ended quantitative tightening — having unwound only half of its pandemic-era expansion, leaving a $6.7 trillion balance sheet in place. Since then, it has been doing something that is TOTALLY not Quantitative easing, namely, “Reserve Management Purchases” in which it buys Treasury bills en masse. I’ll explain the implications in a second.

The Fed’s own FOMC minutes concede that the economic effects, namely: lower rates, higher liquidity, easier financial conditions — are similar to those of traditional QE. The Treasury has been running its own programme in parallel. It is buying back its own old bonds from banks in weekly operations of up to $4 billion, greasing dealer balance sheets and keeping credit flowing. The Treasury’s cash pile at the Federal Reserve currently sits at $845 billion.

But the most important mechanism ran for two years with barely a headline. Only the specialists are told this stuff. I’ll explain it to you in simple terms.

Remember how QE works: the Fed creating money to buy bonds. The banks it buys those bonds from get cash reserves in return. In theory they lend it out into the economy. In practice, they often just sit on it.

And it would be a shame if banks can’t do anything with the free money they just received.

So the Fed created the overnight reverse repo facility as a release valve: a place where financial institutions can hand their excess cash to the Fed at the end of each day, earn a small interest rate on it, and get it back the next morning. Money parked there is not circulating in the financial system. At its peak in 2022, over $2.5 trillion was sitting in this facility.

That is roughly the GDP of France, doing nothing.

Why does it matter whether that money is doing nothing? Because money loose in the financial system gets spent on financial assets, and pushes their prices up. Money frozen at the Fed does none of that. So what moved it? The US Treasury’s deficit.

Now here comes the bubble story: between 2023 and now, the ballooning fiscal deficit was being funded largely with Treasury-bills rather than longer-dated bonds. This policy started under Treasury Secretary Janet Yellen — and was heavily criticized by current Treasury Secretary Scott Bessent, who ironically has doubled down on this policy now that he is in office. It seems to be the case that they just can’t stop doing it.

Which brings us back to that $2.5 trillion sitting inert in the Fed’s parking lot.

When a money market fund parks its cash at the Fed, that money is frozen. But when the same fund uses that cash to buy a T-bill instead, it hands the money to the Treasury, which then spends it immediately on salaries, government contracts, programmes, straight into the economy.

Same cash, opposite effect. One freezes it; the other releases it. So as the Treasury started to issue trillions of dollars of T-bills, money market funds pulled their cash out of the Fed’s parking lot to buy them, and $1.96 trillion that had been sitting frozen came flooding back into the system.

This is the crucial point: none of this was a decision by the Federal Reserve. It happened because the Treasury chose to fund the deficit with short-term bills rather than long-term bonds.

Had they issued ten-year bonds instead, pension funds and insurers would have absorbed them, and the money would be locked up. But T-bills went to money market funds, which pulled the cash directly from the Fed’s holding pen.

Regime change and its relationship to the bubble: more power to the executive

The fiscal deficit, managed in a very specific way, “accidentally” acted like quantitative easing, loosening financial conditions at the exact moment the Fed claimed to be tightening them.

Notice what that means. The Federal Reserve did not decide this (though they did accomodate it). Nobody announced it, and nobody voted on it.

The Treasury is slowly trying to take over monetary policy through fiscal decisions. And the Fed, for all its press conferences and rate announcements, was not in the room — and yet still have to accomodate it. That is the shift of power this section has been building to.

Americans, listen up. The government is actively changing the locus of power in the economy from the independent Federal Reserve towards the Treasury (under control of the President). They don’t need to take control of the Fed for this, though it would certainly help.

They are finding new ways to bolster this infrastructure. The GENIUS Act — a law designed to legitimize and expand the use of stablecoins — requires issuers to back every dollar of stablecoin in circulation with approved short-term assets, of which T-bills are the primary option. Every new dollar of stablecoin issued must be matched by a dollar of Treasury bills purchased. The law, in other words, created a captive structural buyer for US government bills — one that already likely4 accounts for approximately 30 percent of T-bill demand.

None of this shows up in the headline interest rate. It is the plumbing, and arguably it matters more than the rate decisions that fill every newspaper column, because it determines not the price of money but the total volume of it available to buy financial assets.

Raising rates only changes the price of the water; this determines how much of it is in the pipes at all. And if there’s no water in the pipes, finance bros get thirsty.

Because this is not only a power-grab by the executive to fund their fiscal programmes and manipulate the market. It is also because, well, they kind of have to do it so that the system doesn’t collapse. I’ll explain why.

The Treasury basis trade

The funding markets underneath the US government are far more fragile than most people realise.

Consider the Treasury basis trade. Hedge funds exploit the tiny price gap between US government bonds and the futures contracts tied to them, a spread so small it is measured in fractions of a percent. To turn that into real money, they borrow against the bonds in the overnight repo market and lever the position up to ninety-five, sometimes ninety-eight percent. The trade now runs to roughly $1.48-1.69 trillion (depending on measurements) as of January according to Morgan Stanley, about twice the size it reached in 2020.

The problem is that because the borrowing is so short term, it is crucial that the bond market is stable. If there is too much movement in price, dealers will start to ask higher “haircuts” for lending out cash in return for Treasuries. Because if I don’t know what the price of the Treasuries will be tomorrow, why would I lend out the money at a favourable rate?

And that is why it works beautifully, right up until it doesn’t.

The moment funding tightens or those haircuts spike, the funds face margin calls, are forced to dump Treasuries all at once, and the market for US government debt — the foundation of the entire global financial system — just freezes.

That is precisely what happened in March 2020, when the Fed had to step in with hundreds of billions in emergency purchases to halt the unwind. Regulators have been warning about it for months. It was what got Donald Trump to back down from his extreme tariffs after Liberation Day, as he said the bond markets were getting a bit “yippy”. These episodes can be easily identified by looking at the MOVE-index, an index measuring bond-volatility.

Which leaves the authorities cornered: they can talk and will talk about tightening, but financial conditions are actually loosening, because the alternative is watching the world’s safest asset go into freefall. They need to make sure there is enough liquidity in the system, otherwise bond volatility spikes.

This is especially relevant now that an incredibly large wall of debt from the 0 interest rate era is coming due, which is only going to increase in the coming years.5 This is also why policymakers are concerned about rates rising, and why Trump wants to keep rates low, because they are refinancing it with short term debt that is more vulnerable to swings in interest rates.

And this is also what’s making sure the AI-trade doesn’t collapse. Because this all keeps asset prices rising and keeps funding cheap. But then there’s the slight problem that I started this article with: it also makes the economy overheat and causes inflation.

But luckily, there’s a GENIUS in the White House. Trump admitted as much when he signed the GENIUS Act, saying “it was named after him”.

The genius in the White House

So let’s evaluate his highness’s6 policy track record: Trump decided to abandon Biden’s renewable energy ambitions, put all of his chips on fossil fuels and AI, and AFTER THAT decided to NUKE the costs of the primary input of AI: energy.

Not only that, other important commodities for the AI-buildout such as Helium, which is used in semiconductor manufacturing, and sulfuric acid which is used to produce copper that is used in data centers, are also being squeezed like a lemon.

As of Friday’s close Brent crude is currently hovering around $95-100 dollars, while WTI is hovering around $88-95, a number that is in my opinion way too low seeing the situation in Hormuz, but is likewise being manipulated by reserve drawdowns and jawboning.

Meanwhile copper is priced at $13,519 per ton on the London Metal Exchange.

The Hormuz closure put roughly a third of global seaborne fertiliser trade at risk; through April, world urea prices approximately doubled and DAP rose about 35 percent.

Urea climbed above $850/tonne in April, up 80 percent since February. Global fertiliser prices could average 15-20 percent higher in the first half of 2026 if the crisis persists. Food itself has lagged (transmission takes months): US food prices were up 3.2 percent year-on-year in April.

All of this will feed into inflation, and make the AI-trade unsustainable, that is if policymakers decide inflation should be dealt with.

So what Trump’s policy is doing, is kind of like the trick where you pull a tablecloth from the table and the cutlery stays on there, but you didn’t take into account that the real problem wasn’t the cloth, but the massive cabinet you bumped into afterwards that collapsed on top of you:

Trump has gotten himself into a sticky situation he can’t get out of, as sticky as the barnacles and other sea-debris currently multiplying daily on the hulls of ships stuck in the strait of Hormuz, causing ships to become immobile.

To summarize

So to get this straight once again, because these are A LOT of numbers: the AI-buildout is being funded by debt and the issuance of stock, which is being enabled through loose financial conditions as policymakers have been captured by fiscal problems, the AI-hyperscalers are massively short energy and commodities — and precisely those commodities are being disrupted, causing both inflation and calls for rate hikes while they just took up massive amounts of debt.

And I, as a European, cannot sit comfortably here in my chair in the Netherlands being like: “look at these Americans, they’re screwed”. Because the US economy is literally the global consumer of last resort and sustains demand for the rest of the world. This is something Trump is very upset about: namely, the US is the world’s biggest importer. But it is also a powerful tool any problem in the US, will be a problem for the world.

And get this: the only thing keeping this afloat is trust in the promise of AI and massive liquidity injections by authorities into financial markets.

Are you then surprised that Western elites are panicking?

Seeing as Hormuz seems to be outside of Trump’s control, there are, in my view, only two things they can do here:

1. Raise rates, quit the liquidity injections, and let the whole thing implode.

2. Kick the can down to road until after the midterms: raise rates marginally to keep appearances up, but behind the scenes inject the market with even more money and let inflation rip.

Both of these scenarios have different implications. But both of these deserve careful study and consideration, because macro-economic chain reactions are very complex. Let me know if you’d like to see that in a future article. This theoretical part is honestly the most interesting, because it translates how an acute crisis (which is in my view, very likely coming soon) can translate into a global problem that will affect billions of people.

Additionally, all of these problems are inherited from a decades-long crisis of the dollar-system, which is currently in its final phase of exhaustion. I wrote my thesis on this. It would be a lot of work to explain all of that in understandable language. Consider donating or becoming a paid subscriber so I can help you understand our predicament better.

A closing thought: I wonder how much of this is deliberate financialized industrial policy for the new AI-manhatten project. Maybe interesting to explore in the future.

To reflect my current commitment to this publication, and the fact that I will soon be paywalling some parts of larger and more labour-intensive pieces, I will raise subscription prices to 8 euros per month and 80 annually somewhere in the next few weeks. If you enjoy my content, and would like to support me, you should subscribe now to lock in a cheaper rate.

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Reader Tip: The Substack App offers a spoken version of this article at the top right, which can help with longer pieces such as these. Some visual elements are lost when listening, however.

Peter Thiel recently funded an AI startup that hires CIA, FBI and British intelligence to harass journalists. His goal is to discourage critical coverage of powerful individuals. So far, the scoreboard reads as follows: Thiel 0–1 Me. Because I helped defeat his infamous company Palantir in the Netherlands. I’ll tell you how.

But before I do that, for those of you who do not know what Palantir is — you should know, so I’ll explain to you what is at stake. Because they are everywhere, which is why it is relevant to everyone.

In the United States the company has spread its tentacles across almost all government institutions — the Pentagon, the FBI, the CIA, the NSA — and ICE uses it to find and deport immigrants. But it has spread rapidly across the broader West as well through strategic lobbying.

Britain has handed it NHS patient records and Ministry of Defence operations; French intelligence has relied on it since the 2015 Paris attacks; German police in Bavaria, Hesse and North Rhine-Westphalia run it. Denmark predicts crime with it, Norwegian customs screens with it, and Europol uses it too; Poland’s defence ministry and Ukraine’s military targeting pass through it. Most controversially, it is employed by the IDF. And, as I would discover, so did the Netherlands. But these are only the contracts we know of. Like what I’m about to reveal, most were signed in secret — and kept that way on purpose.

The men running it don’t know how to shut up. CEO Alex Karp called “wokeness” the greatest danger to Palantir and America, and “peace activists” the real “war activists”; joked about drone-spraying “fentanyl-laced urine” on analysts who call the stock overvalued; and said Palantir exists ‘to disrupt, and when necessary to frighten our enemies, and occasionally, to kill.”

A lot of the people who defend Palantir — or are at least apologetic about it — make the same point to me: other firms are as bad, often worse, so why should this one company soak up all the outrage? If people weren’t so credulous, they say, they’d be furious about everything.

And maybe we should be. But that would kind of suck for our mental health.

Other than that, I disagree with their assessment. Philosophers have long argued that the range of what can be said in public discourse is itself a frontier of power, and that power is safest precisely where it cannot be named. Yet, simultaneously, it is most dangerous when it comes out in the open and actually becomes widely accepted by parts of the public.

The surveillance economy largely understands this, which is why most of them hide behind “cloud infrastructure” and “data solutions”, a grey language built to slide beneath notice. The firms my critics point to may be worse; they are also boring, on purpose.

Palantir, bless it and curse it, refuses to be boring — it names its software after Tolkien’s far-seeing stones, brags to investors that it exists “to kill”, and says the quiet part into a microphone with fancy slides.

Therefore Palantir polarizes society, sharpens the clash between different societal forces, and openly challenges them to fight them. The techno-fascists on the one hand (with Thiel’s objection.ai being a good example), and those on the side of democracy and the liberty of the people on the other. I have firmly positioned myself on the side of the latter.

But this is also why Palantir is simultaneously the most valuable and most dangerous to public discourse: it drags the whole apparatus out of the unsayable and hands a diffuse dread a single logo to either embrace or rage at. This is why it is important that you pay attention to this matter. All of those who love democracy and freedom should join forces with me and many others who fight against the techno-fascist moloch.

So, let’s cut to the chase. Here is why and when I decided to fight Palantir — and how I scored a small victory in a much larger war for justice. It began with a single sentence, spoken to me by a government official, that I haven’t been able to shake since.

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What was the Dutch government hiding about Palantir?

In the summer of 2025 during the riots in LA, where Palantir was allegedly used for facial recognition, my fascination with the company increased. The deeper I dug, the stranger the story became. The discovery that Palantir was operating in the Netherlands provoked me. I wondered how deep the involvement actually went. So I filed freedom-of-information requests with several ministries, asking them to disclose all communication and contracts with Palantir between 2008 and 2025.

In the end, two ministries responded: Justice and Security, and Defence. With Justice, the contact was vague and fragmentary: answers came, but they left more open than they resolved. With Defence the pattern was sharper: the release of documents was repeatedly postponed, questions were sidestepped, and the contact bore the hallmarks of careful reputation management. Understandable, given the moral controversies surrounding Palantir’s suspected role in Gaza and in Trump’s deportation machine.

The spokesperson warned me early on that many documents, if released at all, would be heavily redacted in the name of “national security”. He added, almost in passing, that every disclosure first had to be coordinated with Palantir. That detail stuck with me. If I didn’t yet appear in their internal systems, my investigation surely would.

The company likes to flaunt its contribution to fulfilling a quote by Nikola Tesla from 1898 about the dangers of technology, specifically remotely controlled devices: “You may live to see man-made horrors beyond your comprehension.”

June through October 2025 – Controlled openness

During my contact with the Defence spokesperson, something striking happened: out of nowhere, a strategic publication about Palantir appeared via Defence. The spokesperson told me it had been communicated internally that Defence works with Palantir. Almost simultaneously, he let slip that NRC and Follow the Money were working on similar articles and investigations.

At the time I was working as an intern at de Volkskrant, but I had started this investigation entirely on my own initiative. I suddenly realised that, driven by nothing but curiosity and a sense of moral responsibility, I had stumbled into a political game I was not prepared for.

As an intern I understandably wasn’t given the freedom to chase this down further, which meant I was always a step behind. When Follow the Money then published what was almost exactly the information that had earlier been “whispered” to me, my suspicion grew that something was being orchestrated. Who their “various sources” are remains unknown to me to this day. I can’t prove it — but my suspicion would later gain weight.

The same went for another, seemingly trivial event. When I filed my freedom-of-information request, David van Weel was Minister of Justice and Security in the Schoof cabinet. At some point, after he had been moved to the Ministry of Foreign Affairs, I was followed on Instagram by his official ministerial account.

It’s a detail. But it’s a strange detail. A Minister of Foreign Affairs whose account follows a student journalist with an open freedom-of-information request about Palantir. I don’t know why I’m one of the 250 accounts it follows, and I don’t claim to know. Perhaps my Volkskrant articles had caught his team’s attention. Perhaps it means nothing. But it stuck with me. To this day my account is followed by the Foreign Affairs profile, and as will become clear later in this article, I would end up indirectly dealing with Van Weel again — and there may even be an indication of why his team started following me.

January 2026 – Notice of default: “A whole lot of mistakes”

By the end of my internship, the ministries’ apparent goal — if you looked at it cynically — seemed to have been achieved. My daily life took over due to personal circumstances, and I had to get on with my International Relations degree.

But I had not forgotten my freedom-of-information request.

On 7 January I sent the ministries a notice of default and, the same day, published an investigation into Palantir in which I described the company’s Machiavellian rise and its origins in the American security and intelligence world. I also examined the political networks surrounding the company: the ties between founder Peter Thiel, Vice President J.D. Vance, “crypto tsar” David Sacks and Elon Musk — a circle of techno-oligarchs who together form the inner sphere of influence of the Trump administration, and who are openly hostile towards European institutions. These anti-European anti-democrats are the beneficiaries of Dutch taxpayers’ money.

That same day I received a response from the Ministry of Defence, from a new freedom-of-information lawyer, with a remarkable message.

Two days before my notice of default, the file had been handed over to a new freedom-of-information lawyer. Curious timing.

On 22 January I got a phone call from a new lawyer, who apologised in a audibly agitated manner. “A whole lot of mistakes had been made”, and it was made clear to me that the former lawyer no longer worked at the ministry. They had been fired.

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February through April 2026 – The swearing-in of the Jetten I cabinet

While my contact with Defence wound down, it picked up with Justice. The swearing-in of the Jetten I cabinet produced fresh delay. The reason given: the documents might ‘attract media attention’ — so the decision had to go past the new minister. That minister turned out to be, once again, David van Weel: the same man whose ministerial account had started following me on Instagram months earlier.

Van Weel is no random politician. He built his career at the intersection of defence, intelligence and technology — advising Prime Minister Mark Rutte (now NATO-SG) personally on foreign affairs and defence, then serving as Assistant Secretary General at NATO responsible for cyber defence, hybrid threats and emerging technologies, where he was also closely involved with the NATO Innovation Fund, NATO’s venture-capital vehicle for dual-use technology companies.

Palantir’s entire business model is built around exactly those companies. As Minister of Justice he had already been forced to account publicly for the Palantir file once before, when it emerged the Dutch police were using the software to analyse citizens’ data. He didn’t merely know what Palantir is — he knew this file inside out.

Contact with the freedom-of-information lawyer remained sporadic. Towards the end of the process I was suddenly informed that the ministry had opted for a “different procedure”: the documents would be made public simultaneously with the decision, rather than reaching me first, which is usually a courtesy they give to journalists.

The reason given was the “principle of due care” — all citizens must have equal access. Defensible in itself. But I do wonder why the same principle didn’t seem to apply when Follow the Money’s sources at Defence proved so talkative. It’s also striking that after my notice of default, the lawyer sought contact exclusively by phone — never in writing. What was discussed is recorded only here.

The process matters at least as much as the findings. Transparency is not a favour governments doles out at its own discretion; it is the condition under which democratic oversight is possible at all.

Anyway, once the documents became available, what had played out behind the scenes became visible for the first time — in internal memos, emails and decision-making documents showing how the cooperation between the Dutch government and Palantir came about, and under what conditions it was continued. Because I was just starting out as a journalist, I approached Follow the Money for editorial support and published it first on their platform. What they contain, you can read here:

Long story short: David van Weel, the Minister of Justice, did not inform parliament correctly about his ministries’ contracts with Palantir. Outrage followed.

In the Netherlands, incorrectly or misleadingly informing parliament is “a constitutional mortal sin” according to Leiden University Professor Reijer Passchier. However, our main ruling class party the VVD — from which current NATO-Secretary General Mark Rutte hails — has had too many scandals to count that had zero political repercussions. Accountability in the Netherlands only occurs when it is politically convenient.

So too, it seemed, is the case with our government’s secretive involvement with Palantir. When MEP Laurens Dassen of Volt Netherlands, requested a formal debate on the mistakes our Minister made, the right wing of parliament voted away the motion. The coalition had successfully lobbied to block any discussion of accountability.

But it had set something in motion and increased political pressure. Parliamentary questions came in from multiple parties. The debate continued online, and many dutch language posts went viral, but here’s an english language one:

Two months later, my colleague Sebastiaan Brommersma published another amazing bombshell article revealing that Palantir-employees can access from sensitive to mission-critical information. In effect, that means the American government is able to surveil Dutch military strategy — and logically speaking, by extension, any government or business that uses Palantir’s tech. Not only that, Palantir can unilaterally stop service without the Dutch military being able to do anything, effectively debilitating strategic capabilities.

The good news: apparently, European alternatives are starting to become competitive in terms of quality. The main problem is that organisations like the MOD have built up institutional expertise and familiarity with the technology that is not easily replicable. This is the pattern with Palantir more generally: they build a custom ontology for their customer which takes time and expertise to recreate, effectively making it difficult to leave Palantir.

Once again, Volt MP Laurens Dassen requested a motion to cease any cooperation with Palantir technologies and look for European alternatives. Once again, the coalition struck it down. But in a not so unusual show of political intrigue a few days later, a coalition party MP from D66, Michelle Jagtenberg, stood across our Secretary of Defence Derk Boswijk. Why? To ask soft-ball questions about the usage of Palantir.

What looked like accountability from the outside, looked like damage control and the gathering of political benefits to those who knew the background. They did not want to give political credit to an opposition party, and wanted to control the fallout from any potential backlash. This was successful: the coalition party MP was quoted widely in Dutch media without mention of the actual critics.

Nevertheless, I am happy. Because it turns out the investigative work of me and my colleague journalists had paid off. MP Jagtenberg started off the questioning by citing verbatim from things I had written in my investigative piece:

(Excuse the video quality, this is the best I could get)

“Democracy and freedom are incompatible” and “it’s fine if our software is used to kill citizens” — Jagtenberg lists these quotes. She finds it deeply alarming that these statements come from the founders of the company supplying software to Defence, the police and NATO. How will the Secretary of State reduce our dependence on this company immediately?”

To my pleasant surprise, the secretary announced later in the debate that the MOD would aim to quit using Palantir’s technology within two years. This decision was apparently taken last month (a short while after my piece was published) in response to “pieces written by Follow The Money” (AKA, my research) and the parliamentary questions that followed. Here’s the excerpt in Dutch:

So: Thiel 0-1 Me. I’ll stand by it, with one hugely important caveat.

What I and my fellow journalists won was one contract, in one ministry, in one small country. Though it took huge effort it’s just a small victory in a larger battle, as I discussed in the introduction. What I tried to show with this piece, walking you through the complete process of evaluating governmental accountability, is that you have to look past the optics. This is relatively obvious to most, but it is sometimes opaque how high the level of conniving is. That is a fight I intend to keep having.

The opaqueness is not incidental, it is something that permeates every step of the process. First, the postponements. Then, the redactions promised in advance. Afterwards, the disclosure that had to be “coordinated with Palantir” before a Dutch citizen could see it.

Then came the silence, only until I spoke up. Even then, the lawyer would keep the mail-channel silent, and switched to phone-only after my notice of default, leaving no paper trail.

Note that none of this is illegal. All of it treated transparency as a favour to be timed and managed, rather than the precondition for democratic control. That is not unique to the Netherlands, and it is not unique to Palantir. It is how Western governments handle any arrangement they would rather not explain.

It is also visible in who got credit and who didn’t. MP Laurens Dassen was voted down twice. The coalition, having blocked every serious motion, then sent in their own MP to ask the soft questions, and was quoted in the press as the responsible face of accountability.

I must give it to them: I now honourably award them with the Elias Rutten prize of political choreography.

Regardless, it is still a victory. And even though these victories are appearing more and more, like in Germany, Palantir, for now, is still everywhere. Britain’s hospitals, France’s intelligence services, Germany’s police, the American deportation machine.

But a continent that aims for sovereignty has to start somewhere, and it is up to the members of society that have to fight for it. Because in the end, politicians are often also trapped in a larger game they do not control.

The scoreboard stays at 0–1. For now.

Thank you for reading. This reseach took considerable time writing, and my pay as a young journalist is quite low, despite the large amount of time I put into the work. If you think this was importan work and worth your time, buying me a coffee would mean a lot. Also consider subscribing.

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After US geoeconomic and military planners ran their war plan through ChatGPT with the prompt “chat, am I missing anything?” and it responded “Your plan looks good! Here are a few slight adjustments and a comprehensive framework for winning World War III 😊👉” officials probably thought they were good. Locked and loaded, ready to go.

The plan was to strike Iran.

Iran, as it happens, sits at the entrance to the world’s most important oil passage. The Strait of Hormuz normally carries about 20 million barrels of oil per day — roughly 25 percent of the world’s seaborne oil, 20 percent of global LNG, and a significant share of fertiliser and industrial commodity inputs.

This was, of course, something that the planners had considered.

Because even if the military operation had gone as abysmally wrong as it has, a negotiated peace settlement — however humiliating it would be — could theoretically restore global oil flows rapidly and bring commodity prices crashing down.

Indeed, Substack star economist also thinks as much:

But what the planners and Robin haven’t considered is that the scorching hot waters of the Persian Gulf are treacherous. Three months and five days later, Robin’s assumption — and probably that of the White House — has been severely undermined from an unexpected corner: sea monsters.

Mother nature’s battallion has joined forces with the physics of the warm Gulf climate to strike a decisive blow to the global economy. An army of billions of barnacles, a horde of tens of millions of jellyfish, and algal biomass measured in millions of tonnes have weakened the US’s negotiating position significantly.1

I am not joking.

Now someone in the White House is probably facepalming, flipping tables, shouting at junior bureaucrats, and having tense phone calls with marine biologists.

And wartime or peacetime, the sea monsters don’t care — because for wildlife, it is always wartime.

Barnacle Guerilla Warfare

Sea barnacles have encircled their helpless adversaries — the roughly 1,550 vessels currently stuck in the Gulf — and are currently multiplying in numbers.

Sea barnacles attach to the underside of a ship’s hull within hours of it going still. A bacterial biofilm forms first, then algae; then barnacle larvae arrive and secrete a proteinaceous cement — one of the strongest biological adhesives on earth — that bonds them permanently to bare steel. Once a colony establishes, it attracts more larvae. Modern anti-fouling coatings are designed to exploit the ship’s own momentum: at cruising speed, water shears larvae off before they can grip. Idle in the Gulf for three months, that protection is gone.

The Persian Gulf is the world’s hottest sea and is getting hotter; Kuwaiti waters hit a record 37.6 °C / 99.7 °F in 2020. Surface temperatures swing from about 16 °C / 61 °F to 35 °C / 95 °F, among the highest of any water body on the planet, the average sits around 30 °C / 86 °F, and restricted exchange through the narrow Strait of Hormuz, little freshwater input and high evaporation make it hypersaline.

Why is this relevant? Well, barnacles are fighting on their home turf.

Warm, saline, shallow water accelerates their attachment, growth and reproduction, and a study conducted in the northern Gulf found that just 2 °C of extra warmth alone produced a 1.5-fold increase in biofouling coverage.

This means that when these ships eventually try to move, they will do so dragging the equivalent of a small reef on their hulls. Hull drag increases by up to 60–80 percent under heavy barnacle growth; fuel consumption rises 40 percent or more. For a supertanker burning 50 tonnes of fuel a day, that is an additional $7,000 per day in costs per vessel, before anyone has gone anywhere.

But that’s not the only tactic up the barnacle’s sleeve. Barnacles colonise the sea chests — the hull openings that draw in seawater for cooling and ballast — clogging the intake grates and, in serious cases, causing total failure of a ship’s cooling system. They trap moisture against bare steel, accelerating corrosion from within.

And here is the trap inside the trap: properly removing heavy barnacle fouling from a large tanker requires dry-docking. That means hauling the vessel out of the water entirely so the hull can be scraped clean. You cannot do that at anchorage in the Persian Gulf. The ships must move to be cleaned, but they are too fouled to move efficiently, and too trapped to go anywhere at all. Every day they sit, the barnacles gain ground.

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So what now?

With Donald Trump claiming his 6th succesful ceasefire, it is unclear when this issue truly resolves and ships can start moving again. And as I said before, barnacles don’t care about peace and war.

By May the total of vessels stuck across every type of ship had climbed past 1,550. The biggest of them, 109 supertankers each able to haul 700,000 barrels or more, were trapped the moment the strait shut. That alone is somewhere north of 70 million barrels of crude.

You might assume, like Robin, that this is a simple problem. Oil’s loaded, the door’s locked, open the door, problem solved.

It is not a simple problem.

Start with the producers. Saudi Arabia normally pushes 5.5 million barrels a day through Hormuz, with Iraq adding another 22 per cent and the UAE 13. When the strait closed, none of them could just... stop. You don’t switch an oil field off like a kitchen tap. Shutting one down and bringing it safely back online takes weeks, and you can wreck a lot of expensive kit trying. Then there are the contracts: barrels promised, dates agreed, signatures dry long before anyone thought to start a war. So the oil kept coming. It kept coming right up until the exporters were forced to throttle back, because the tanks onshore had run out of room.

And here’s the bit everyone forgets. It cuts both ways. The tankers that would normally sail in to collect all this oil can’t get in any more than the loaded ones can get out. Storage across the Gulf is full. And on 4 March, after Iran hit its Ras Laffan terminals, QatarEnergy gave up and declared force majeure on every LNG shipment it had, pulling a fifth of the world’s LNG off the market in an afternoon. The cargo is piling up at both ends at once.

Down the coast, Jebel Ali — Dubai’s port, the biggest in the Middle East — is clogged with ships that diverted and then worked out they had nowhere to divert to. They circle and wait and burn fuel for nothing.

So here’s the thing I want you to sit with. Say the strait opened tomorrow, fully, no conditions. Trade still wouldn’t snap back. The infrastructure’s damaged, the storage is full, there’s a backlog of exports stacked up weeks deep, and a good chunk of the fleet now has to be hauled into dry dock to scrape three months of barnacles off before it can sail anywhere without guzzling fuel. The crews are knackered and long overdue a swap. Even the optimists in shipping reckon “back to normal” is weeks away, at best.

Stepping away from objective and evidence-based reasoning for a second: to me it honestly feels like the media landscape is polluted with propaganda. During a war of global importance, this is of course not a revolutionary statement.

Yet, it remains good to ponder what we are being told, and triangulate that with what is actually happening.

I think some outlets and popular figures have been instructed to be optimistic about oil so that the price stays down. Every once in a while, a figure of importance like, say admits that he is panicking; or a figure like the Exxon Senior Vice President Neil Chapman openly comes out and says: “We’re approaching unheard of inventory levels. I mean, really really, low levels.” With the CEO of Chevron basically saying the same thing.

I discussed this a few days ago in a note, in which I speculated that the Iranians are stalling as long as possible for a ceasefire deal to extract maximum advantage. Why would they sign a deal when they can see Western elites panicking? Why would they sign a deal, when Trump constantly says “he is not in a hurry”, which in fact means he is in a hurry.

Donald Trump can declare his seventh ceasefire. He can declare victory, declare peace, declare a National Day of Maritime Freedom. The Iranians can wait. And the barnacles will respond:

There are no winners in this war, except for the barnacles. They have no negotiating position to weaken, no election to lose, and nowhere to be. They are already exactly where they want to be: welded to the hull of a supertanker, in the warmest water on earth, multiplying.

Thank you for reading. The topics I write about are usually quite serious. This is also a serious issue, with people’s livelihoods and the global economy at stake. But it can get a bit heavy if we constantly take everything so seriously, and stop seeing the silly nature of things from time to time. In my opinion, we are living in ridiculous times, let’s make sure we ridicule that from time to time.

If this informed you and/or made you laugh, buying me a coffee for my unpaid labour would mean a lot. Also consider subscribing.

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A recommendation:

My former university professor runs , and if you want clear-headed analysis of US foreign policy and where the Iran war is actually heading, it is the best thing I read on the subject from a foreign policy perspective. His scenario-mapping has genuinely shaped how I think about this crisis. Worth subscribing.

Some more memes:

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Japan spent forty years running an export-led growth model that suppressed household consumption, channelled savings into industrial conglomerates through a tightly controlled banking system, and held the yen below its market value. The model worked spectacularly until the 1985 Plaza Accord forced a sharp yen appreciation, to which Tokyo responded with monetary easing that produced the largest asset bubble in modern history. When it burst in 1990, Japanese corporations spent two decades paying down debt rather than investing. The government borrowed to fill the gap, and has been borrowing ever since. Public debt now stands above 250 percent of GDP. The Bank of Japan spent twenty-five years inventing unconventional monetary tools such as zero rates, quantitative easing, negative rates and yield curve control, to fight a deflationary trap that turned out to be structural rather than monetary.

Underneath all this, two slow erosions went unaddressed: a demographic collapse shrinking the tax base while expanding pension obligations, and the displacement of Japan’s automotive sector by Chinese electric vehicle manufacturers. Both were knowable. Both were known. Both were treated as problems to be managed rather than confronted, on the implicit assumption that the global environment would remain stable enough to absorb the slow loss of competitiveness.

In March 2026, the global environment stopped being stable.

Before we head into that discussion, let’s look at the historical precedent that makes Japanese markets so relevant for global financial markets, and how the yen carry trade caused global spillovers that could reoccur today on a larger scale.

The yen carry trade — a free money glitch

Around the early 2010s, traders began to notice something that looked suspiciously like a free money glitch in the global financial system. You could borrow in yen at near-zero interest rates, convert the proceeds to dollars or pesos or Australian dollars, and invest in literally anything that yielded more than nothing — US Treasuries, the Mexican peso, Brazilian local-currency debt, US tech stocks, emerging-market high-yield bonds. The differential alone was profit. And as long as the yen kept weakening, it was easy sailing. What could go wrong?

For more than a decade, the answer was: nothing. The yen carry trade became one of the great quiet engines of the post-2010 bull market. Cheap Japanese funding flowed into US technology stocks, into emerging market currencies, into private credit, into anything with a yield. Estimates of its size vary wildly depending on what you count, and we’ll come back to the numbers later. What matters first is what happened when the trade reversed.

On 31 July 2024, the Bank of Japan delivered a surprise rate hike — only its second since 2007. Two days later, a weak US payrolls report sent the dollar sharply lower against the yen. The carry trade went into reverse. On 5 August 2024, the Nikkei fell 12.4% — its worst single day since 1987. The TOPIX dropped 12%. The VIX spiked to pandemic-era levels. UBS estimated that roughly $200 billion of dollar-yen carry positions had been unwound in a matter of days. The Mexican peso, the highest-beta carry-trade beneficiary, was crushed. So was the Nasdaq. Within a week, JPMorgan estimated that 75% of the broader trade had been eliminated.

The episode was a warning shot. Markets recovered. The trade was rebuilt. But everyone who had to live through it knew the architecture was still there, just waiting.

The shock — a closed Strait of Hormuz

If August 2024 tested the financial fragility of the carry trade architecture, March 2026 tested the physical foundations of the Japanese economy itself.

Japan imports 60 percent of its calories and 90 percent of its oil and gas. It is, structurally, the most exposed major economy to a commodity supply shock. On 4 March 2026, that shock arrived. After failed nuclear negotiations, an Israeli-American strike that killed Iran’s Supreme Leader, and the collapse of multiple ceasefires, Iran declared the Strait of Hormuz closed. The International Energy Agency’s Executive Director Fatih Birol called the disruption the largest supply disruption in the history of the global oil market. Brent crude finished April more than 55 percent above its pre-conflict levels, with physical cargoes briefly trading near $150 per barrel — far above futures, an indication of genuine physical scarcity.

Roughly 70 percent of Japan’s crude imports transit the Strait. Around 10 percent of its liquefied natural gas comes through Qatar, which is also exposed. One Japanese economist, cited in Nippon.com, estimated that the country’s trade deficit could balloon from ¥1.7 trillion in fiscal year 2025 to as much as ¥15 trillion in 2026 if the closure persists — a near-tenfold deterioration that mechanically pressures the currency.

The shock arrived on top of a bond market that had already been deteriorating for three years. Japanese government bond yields had been rising steadily since the BoJ began unwinding yield curve control — its policy, in place since 2016, of committing to buy unlimited quantities of Japanese government bonds to pin the ten-year yield near zero. The central bank had, in effect, declared that the price of long-term Japanese debt would be whatever it said it would be. That declaration was withdrawn over 2023 and 2024, and the yields have been moving ever since. By May 2026, the ten-year JGB yielded 2.5 percent, the highest since 1997. The thirty-year touched 3.91 percent in January, and the forty-year hit a record 4.21 percent. None of these are catastrophic by international standards. They are catastrophic by Japanese standards, where the entire fiscal architecture of the state was built on the assumption that long-term borrowing would remain near zero.

The political trigger for the most recent leg up was Sanae Takaichi, who became prime minister in October 2025 and won a parliamentary supermajority in February 2026. Takaichi campaigned, and has governed, on a programme of aggressive fiscal expansion — a record ¥122 trillion budget for fiscal year 2026, a ¥21 trillion supplementary stimulus package, and a proposal to suspend the 8 percent consumption tax on food. Each announcement has produced a JGB selloff. The bond market is, for the first time in decades, refusing to absorb new fiscal commitments without demanding compensation.

Headline inflation looks deceptively contained. National CPI ran at 3.6 percent in March 2026, with core (excluding fresh food) at 3.2 percent. But the headline figure is being held down by aggressive government subsidies on electricity and gas. Strip those out and the underlying rate is considerably higher. Takaichi’s fiscal accommodation is, in effect, papering over the inflation print — and paying for the cover-up by widening the deficit, which feeds the bond market’s anxiety.

What makes the 2026 shock different from earlier Japanese inflation episodes is the company it keeps. Three years of meaningful wage growth (Rengo’s 2026 spring tally landed at 5.26 percent headline, 3.85 percent in base pay), inflation expectations decisively unanchored (83 percent of households now expect higher prices over the next year), real interest rates of nearly minus two percent, a structurally weak yen amplifying every imported price, and a government pouring on fiscal fuel — all at once. This is the closest Japan has come to genuine wage-price spiral conditions in thirty-five years.

The currency, predictably, is reflecting all of this. USD/JPY hit 160.7 on 30 April, prompting the Ministry of Finance to spend ¥5.48 trillion (roughly $35 billion) in a single intervention — the largest since July 2024. A second wave during the Golden Week holidays brought the total intervention spending to roughly ¥10 trillion ($63.6 billion) over two weeks, briefly pushing the rate from 160 back to 155. Markets read the intervention level as having migrated downward from 162 to 157, a sign of declining tolerance, not of strength.

A trilemma with three losers

The contradiction at the heart of Tokyo’s predicament can be stated as a trilemma. Three goals, only two of which can be pursued at once. The third has to give way.

Corner 1: keep government borrowing costs low.

For more than a decade, the Bank of Japan has held long-term bond yields close to zero by the simple expedient of buying whatever the market wouldn’t absorb. With public debt at roughly 250 percent of GDP, this is non-negotiable A move from 1 to 3 percent on a ten-year bond would burn through a meaningful share of government revenue in additional interest payments alone. Every domestic institution holding those bonds — banks, pension funds, life insurers, the postal savings system — has a direct interest in this corner holding. And since those institutions are themselves managing ordinary people’s savings, the exposure is ultimately household exposure, hidden inside institutional balance sheets where it never shows up on a personal statement.

There’s a complication that makes the situation worse, not better. The headline number commentators cite — that the average maturity of outstanding Japanese debt is around 9.5 years — suggests a long fuse before higher yields show up in the budget.

In reality, the Ministry of Finance has been quietly shortening that fuse since 2023, increasing issuance of short-term bills and five-year bonds where domestic bank demand is strongest, and cutting issuance of thirty- and forty-year bonds where life insurer demand has collapsed. This is not a Japanese peculiarity. The US Treasury, the UK Debt Management Office, and most European finance ministries have done variations of the same thing over the past three years, as global appetite for long-duration sovereign debt has thinned. The collective effect is that every major government is now more sensitive to short-term interest rates than it was five years ago. Japan happens to be furthest along this curve.

Corner 2: defend the yen.

A weakening yen feeds the calorie and energy dependence we just described straight into household bills — which is why this corner is ultimately about protecting households from imported inflation. To defend the currency, the central bank can either raise rates, which makes yen savings more attractive, or sell its dollar reserves to buy yen. Intervention without rate hikes has a track record: it slows the slide for a few weeks and then runs out.

Corner 3: Sanae Takaichi’s fiscal programme.

Any deficit has to be financed by issuing new bonds. A flood of new bonds normally pushes yields up — unless someone steps in to swallow them. This corner is what Takaichi was elected to deliver, and it is the one with the most direct democratic mandate.

Now watch what happens when you try to hold all three at once.

1. Suppress yields and run the spending programme. The new bonds get bought by the central bank, paid for in printed yen. The yen weakens. Corner 2 falls.

2. Defend the yen and run the spending programme. Higher rates drag bond yields up across the board, and the new bonds keep arriving. Yields rise, interest costs explode. Corner 1 falls.

3. Suppress yields and defend the yen. Either the central bank prints yen to absorb the bonds (breaking the yen defence) or yields are allowed to rise (breaking the cap). The only escape is to stop issuing new debt — which means austerity. Corner 3 falls, and Takaichi’s mandate falls with it.

The hidden loss has two forms. Hold yields below inflation and the real value of savings erodes, year after year. Let yields rise and the bonds themselves lose value, because bond prices fall when yields rise. Domestic ownership of public debt is functionally a wealth tax on Japanese savers, administered through the central bank rather than the legislature. Corner 1 protects them from the sudden version of the loss. Corner 2 protects them from the slow version. Tokyo cannot deliver both.

What the Japanese state is currently doing is attempting all three corners half-heartedly, which is precisely why the bond market and the currency are stressed at the same time. Yield caps transfer the fiscal stress onto the currency.

The performance of calm

By Wednesday, May 13, the ten-year JGB yield had extended its rise to 2.596 percent, building on Tuesday’s 30-year high. The yen continued to slip on a slow and steady basis through the morning, defying the previous day’s diplomatic theatre. US Treasury Secretary Scott Bessent had been in Tokyo a day earlier, where he met Finance Minister Satsuki Katayama in the morning and Prime Minister Takaichi later in the day before flying on to Beijing.

The Tokyo stop was not, in fact, primarily about the yen. Bessent was on his way to South Korea to meet Chinese economic tsar He Lifeng, and from there to a Trump-Xi summit in Beijing later in the week. Japan got twenty-five minutes with the Finance Minister and a brief follow-up with the Prime Minister, sandwiched into a China trip. That choreography matters. Tokyo was hoping for an unambiguous American endorsement of its intervention. What it got was a transit visit.

The official language from both sides is studied calm. Bessent posted on X that US-Japan coordination on currency volatility was “constant and robust.” Katayama said the two countries were “coordinating extremely well on recent market moves, including exchange rates.” Both confirmed that Japan’s intervention has been “consistent with” the bilateral agreement signed last September, which allows for foreign exchange intervention to “combat excessive market volatility.”

This is the language governments use when they want to project alignment without committing to anything. Notice what was not said. Bessent did not announce that the United States would sell dollars to support the yen. He did not commit to coordinated intervention. He did not endorse Japan’s specific intervention level. On Bank of Japan rate policy he said only that he was confident Governor Kazuo Ueda would guide the central bank to “a very successful monetary policy” — the diplomatic equivalent of a pat on the head — and confirmed that he had made no request of Takaichi on the subject. The yen rallied for ninety minutes on the headlines and then gave it all back. Nomura’s forex strategist told the FT that if the yen drifts toward 158 or 159, further intervention is still on the table.

There is one signal in what Bessent did say. He has previously suggested, and continues to suggest, that he would prefer the BoJ to tighten monetary policy rather than have the Ministry of Finance intervene directly. To understand why this is not a neutral preference, follow the consequences. Higher Japanese rates would unwind the yen carry trade gradually rather than in a single August 2024-style discontinuity, because the gap between yen borrowing costs and dollar returns would narrow trade by trade rather than collapse all at once. They would also make the yen marginally more attractive relative to the dollar, which serves the Trump administration’s stated preference for a weaker dollar overall. The United States would get a slower carry-trade unwind and a weaker dollar without the Federal Reserve having to sell anything or the Treasury having to intervene. Japan would do the work, in its own bond market.

What Japan would pay for delivering this convenient outcome is everything. Higher rates feed directly into debt service costs on a stock above 250 percent of GDP. They crystallise bond-market losses for every domestic institution holding JGBs at suppressed prices — banks, pension funds, life insurers. The BoJ itself absorbs mark-to-market losses on its enormous JGB holdings, meaning the bonds the central bank bought at high prices are now worth less, eating into its own balance sheet. Each of these hits is a transfer from Japanese fiscal capacity, household wealth, or central bank credibility into the global currency outcome Washington prefers. Bessent is, in effect, recommending the path that hurts the Japanese state most while costing the United States least. The recommendation is offered as professional advice between allies.

The reality underneath the performance is straightforward enough to state. The thirty-year JGB yield is at a thirty-year high. The yen is still weakening despite ten trillion yen of intervention spending in two weeks. Japanese household spending fell 2.9 percent in March from a year earlier, far worse than expected, which means the squeeze on consumers from imported inflation is already materialising in the data. The BoJ governor executed a “hawkish pivot” last month that brought the central bank into rare alignment with the Ministry of Finance, and three committee members at the April meeting suggested rates may need to rise as soon as June. Two governments are publicly performing comfort while, on the evidence, both sides are calculating hard.

The reason the US can perform coordination cheaply is that Washington has its own version of the trilemma. The Trump administration wants a weaker dollar overall, it has said so repeatedly. But Washington does not want a sudden carry-trade unwind, because every yen rally over the past two years has coincided with a Nasdaq selloff, and the administration is politically invested in US equity prices, especially before the mid-terms. The first goal calls for dollar weakness. The second calls for yen weakness. Those goals are not compatible — unless someone else does the work.

That someone else is now Japan. Bessent can talk the yen up for a few hours at zero cost, which slows the speed of the unwind without committing to a stronger yen overall. He can recommend BoJ rate hikes, which would resolve both American goals at Japanese expense. Material US coordination — Federal Reserve dollar-selling, or Treasury-side intervention to match Japan’s — would require choosing between the two American goals and absorbing the cost domestically. Washington has not chosen, and as long as it does not have to, it will not. The “constant and robust” language costs nothing and gives Tokyo just enough cover to keep going. It is the diplomatic equivalent of throwing good money after bad.

It is worth lingering on the contrast with the Plaza Accord that closed Part 1. In 1985, James Baker convened the finance ministers of the five largest economies at a hotel in New York and extracted a coordinated agreement to weaken the dollar against the yen and the deutschmark. The accord worked because Japan was a client of the American security order, willing to revalue its currency under American pressure even at catastrophic cost. Forty years later, Tokyo is meeting the American Treasury Secretary in Tokyo rather than New York, asking for help rather than agreeing to terms, and receiving language rather than commitment — between flights to Beijing. The system that the Plaza Accord was designed to manage has aged into one in which the architect no longer wants to coordinate symmetrically, because the architect’s own interests have changed.

All money that’s anywhere must be somewhere — How money might move

The reason any of this matters outside Japan is that money tends to move when conditions change, and a great deal of money is currently positioned around the assumption that Japanese conditions will not change.

Three distinct pools of capital are exposed. They differ in size, in speed, and in how predictable their movements are. It is worth taking them in ascending order of size and decreasing order of probability.

Layer 1: the leveraged carry trade. This is the fastest-moving and best-understood pool. Traders borrow yen at low rates and invest the proceeds in higher-yielding assets abroad. When Japanese rates rise or the yen strengthens, the trade has to be unwound rapidly, because the unwinding itself moves the yen in ways that wipe out the spread. August 2024 was a preview of how this can play out.

Estimates of size vary so much that they require some unpacking. The Bank for International Settlements puts the directly funded portion at around ¥40 trillion (roughly $250 billion). Hyun Song Shin’s Jackson Hole address in August 2024 warned that this estimate was, if anything, biased downward due to data gaps. The broader market for yen-based currency swaps runs to about $14 trillion in outstanding contracts. Deutsche Bank’s widest measure reaches around $20 trillion — about five times Japan’s annual GDP.

The $14 and $20 trillion figures look apocalyptic and require a caveat. They are “notional” numbers, which means they represent the headline size of the contracts rather than the money actually at risk. In a currency swap, two parties agree to exchange currencies now and reverse the trade later; the only thing that actually changes hands is the difference in value between the two legs over the life of the contract, which is typically a small fraction of the headline. So $14 trillion in yen swap notional is not $14 trillion at risk. It is $14 trillion of contracts, of which perhaps a few hundred billion is the real exposure. The number that matters for an unwind is somewhere between the $250 billion BIS estimate and the trillion-dollar range. That is still enough to move markets violently. It is just not, on its own, civilisation-ending.

What is not in dispute is the direction. Bloomberg reports that BCA Research describes the position as “a ticking time bomb.” Japanese insurers cut their currency hedging on foreign assets to 46 percent in late 2025, down from a 63 percent peak in 2020. The hedging matters because an unhedged position is a direct bet that the yen will stay weak — when an insurer holds a foreign bond without a currency hedge, a stronger yen means losses in yen terms on the bond’s principal value, separate from the bond’s interest payments. Cutting hedges from 63 to 46 percent means Japanese insurers have moved from cautious to exposed precisely as the yen has become most vulnerable. Nobody knows exactly how big the carry trade is. Everyone agrees it is bigger than anyone can comfortably manage if it goes the wrong way.

Layer 2: the Japanese household. Japanese households hold over ¥2,000 trillion in financial assets, of which the bulk sits in cash. To put that number in perspective, it is roughly four times Japanese GDP and well over four times the household savings of any other major economy. For thirty years this pool has barely moved, because cash earned nothing and Japanese households were culturally and structurally allergic to risk. Recent tax-advantaged investment reforms have begun, slowly, to push retail money into invested assets — and a meaningful share of that has gone into foreign equities, particularly US tech and global index funds.

The math is straightforward and uncomfortable. A 5 percent reallocation of household financial assets toward foreign assets is roughly ¥100 trillion, or about $650 billion of yen-selling. The April intervention to support the yen was $35 billion. If the famously conservative Japanese saver begins moving meaningfully out of yen, the shift could amplify currency weakness in ways that no central bank balance sheet can offset. Mrs Watanabe, as the archetypal Japanese household investor is sometimes called, is the elephant in this room. Nobody is sure when she wakes up, but if she does, every other actor in the story becomes a footnote.

Layer 3: the structural creditor position. Japan has been the world’s largest net creditor for decades, with foreign assets exceeding foreign liabilities by ¥533 trillion. The headline gross external assets are roughly ¥1,500 trillion, around $10 trillion at current rates. The bulk of this is held by Japanese pension funds, life insurers, and banks, who built enormous portfolios of foreign bonds — above all US Treasuries — because their own government’s bonds paid nothing for thirty years. They had liabilities to pay (pensions, insurance payouts) that required yield, and JGBs at zero percent couldn’t deliver it. They went abroad out of structural necessity, not preference.

That necessity is unwinding. If Japanese yields rise to 2 or 3 percent across the curve, those institutions can suddenly meet their liabilities at home, in their own currency, without taking dollar risk. The original reason for being abroad disappears.

The closest international parallel is the Dutch pension fund sector, which has been shifting away from long-duration foreign assets toward shorter-duration, liability-matched portfolios under regulatory pressure. Dutch pension flows have already reshaped European bond markets despite the country’s modest size. Japan’s potential version of this is much bigger, because Japanese institutions are much bigger, and the asset base they would be rotating out of — primarily US Treasuries — is much more globally significant than what the Dutch funds rotated. The key difference is that the Dutch shift was driven by regulation, with announcement schedules and phased implementation. Japan’s would be driven by market arithmetic. That makes it harder to predict and potentially faster when it tips.

This is the part of the story most commentary misses. It is not panic. It is arithmetic. When the world’s largest creditor moves its money home, every other major bond market loses buyers, and yields go up everywhere. The currencies and assets that climbed furthest on cheap yen — the Mexican peso, US tech stocks, emerging-market high-yield debt — fall the hardest when the trade reverses, because they had the most yen-funded money inside them.

Brad Setser at the Council on Foreign Relations laid out the architecture in March 2024, just as the BoJ was exiting negative rates: Japanese institutions had built their foreign bond portfolios precisely because domestic yields paid nothing, and a meaningful rise in JGB yields would invert the logic. That trigger has arguably now arrived. Setser told Reuters in September 2025 that the striking thing was the lack of repatriation. Japanese institutional portfolios that loaded up on US Treasuries before COVID were now underwater after the Fed’s hikes, and selling meant locking in the losses on paper. Capital was staying overseas not because the structural logic had changed, but because the institutions could not afford to take the hit.

That sounds reassuring. It is not. What it means is that the institutions are sitting on losses they don’t want to crystallise, while watching domestic yields rise above the levels they need. There is a threshold at which the gap between what they could earn at home and what they are earning abroad becomes large enough that taking the loss and moving home is cheaper than staying. No one knows exactly where that threshold is. But every basis point of further JGB rise pushes the institutions closer to it. And the closer they get, the harder it becomes to predict whether the move will be gradual or sudden.

Japan holds roughly $1.24 trillion in US Treasuries, the largest foreign position by anyone. August 2024 involved only the leveraged traders. If the long-term institutional money joins in, the scale would be larger by an order of magnitude.

Time for economic seppuku?

This is unlikely to resolve quickly. The question is which path it takes over the next twelve to twenty-four months. from provided a helpful framework on a recent podcast episode for Forward Guidance to understand what could happen next.

Scenario A: USD/JPY breaks decisively through 160.

Japanese bond yields rise further as markets demand compensation for fiscal unsustainability. US yields are dragged higher with them through global rate contagion. Inflation worsens in Japan via import costs and energy, and potentially in the United States through dollar strength feeding back into commodity prices. The carry trade survives, but the underlying inflation problem festers and compounds.

Scenario B: authorities successfully defend 160 and the yen strengthens.

The carry trade unwinds — and as the August 2024 episode demonstrated, every significant yen rally has coincided with a Nasdaq selloff. A weaker dollar becomes inflationary in the United States precisely when American inflation is re-accelerating. US bond yields still rise, because dollar weakness paradoxically worsens the perception of US fiscal sustainability.

The asymmetry is uncomfortable, and there is no clean exit. But notice what both scenarios share: in each one, Tokyo never actually decides anything. The yen drifts through 160 because no one wanted to raise rates in time. Or the yen rallies because intervention forced what policy refused to choose. The trilemma resolves itself, in either case, by being made to resolve by the market.

There is a third scenario nobody is naming, and to describe it properly requires a Japanese word.

Seppuku is usually translated into English as “suicide,” which gets the act wrong by missing its meaning. In its original cultural register, seppuku is not defeat, it is a deliberate, dignified resolution of an impossible situation by a willing sacrifice of one thing to preserve the integrity of everything else.

What Japan is currently doing is something closer to the opposite. The half-hearted attempt at all three corners of the trilemma is a slow, undignified bleeding, costing the country its currency stability, its bond market credibility, and its fiscal flexibility all at once, with no resolution at the end.

An economic seppuku would be the deliberate choice to abandon one corner cleanly. An explicit end to yield-curve management, a declared restructuring of the debt stock, or an honest acknowledgement that the postwar fiscal settlement is no longer compatible with the inflation regime.

Any of these would be costly, but each of them would be a choice, taken on Japan’s own terms, that resolves the contradiction rather than prolonging it.

Thank you for reading. I write this between deadlines, on my own time, without pay. If it was worth yours, buying me a coffee would mean a lot. Also consider subscribing.

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This is an extensive pre-final edit version of an article that appeared in Follow The Money.

Dutch Version

In short

• Minister Van Weel told parliament in August 2025 that no part of the Ministry of Justice and Security had used Palantir software beyond the known cases. Freedom-of-information documents now show that was incorrect: the ministry signed a licence agreement with Palantir in 2014, deployed by the Royal Military Police to screen passenger data from millions of incoming flights.

• The KMar initially denied ever having used the software. Confronted with the documents, it acknowledged use from approximately 2009 until March 2015 — and the ministry’s own contract was circulating as an attachment in the emails used to prepare Van Weel’s parliamentary answer.

• Constitutional law expert Reijer Passchier argues Van Weel violated Article 68 of the Dutch Constitution. The ministry refuses to respond substantively, citing an organisational argument that contradicts the facts in its own released documents.

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This work is free. Donations welcome.

The question was simple. In August 2025, members of parliament asked — then and current — Minister David van Weel (VVD) whether, beyond the known examples, any parts of the Ministry of Justice and Security (JenV) had used or were using software from Palantir.

His answer was clear: ‘No.’

The parliamentarians posed the question after it had emerged earlier that year that the controversial tech company had been secretly supplying software to the Dutch Police since 2011.

New documents, released under the Public Access to Government Information Act (Woo), show however that Van Weel’s ministry purchased software from the company at least in 2014, which was subsequently deployed by the Royal Military Police (KMar).

The border officers used the Palantir software for the so-called Advance Passenger Information system (API). Using this system, the KMar screens incoming flights from outside the Schengen Area for personal passenger data, including names, dates of birth, nationality, gender and passport numbers. Potentially, this involves millions of people.

The contract was deployed by the Royal Military Police (KMar) for the Advance Passenger Information system (API), with which the KMar at the ‘Targeting Center Borders’ at the API Centre in Soesterberg screens vast volumes of passenger data from incoming flights from destinations outside the EU and Schengen Area. Airlines are legally required to transmit name, nationality, passport number, flight number and destination for every flight from outside the EU. The KMar checks these against watchlists and security databases. The data model used in this process is included in the Woo dossier, but has been withheld in its entirety on grounds of state security.

Notably, a KMar spokesperson told Follow The Money in March of this year that the border service had ‘never’ used Palantir. Confronted with the Woo documents, that same spokesperson now reverses course: the KMar used the software from ‘approximately’ May 2009 until March 2015 for an API pilot. After that, a different technology was allegedly chosen. Since then, he adds, the KMar has made no use of Palantir. The Ministry of Justice and Security declined to answer questions about the use of the software, and also refused to confirm whether usage had actually stopped.

Remarkably, the contract was already circulating within the ministry at the time the answers to the parliamentary questions were being prepared. On the question of why this information nonetheless failed to reach parliament, the ministry provides no substantive response.

Who is behind Palantir?

Palantir was founded in 2003 by, among others, Peter Thiel and CEO Alex Karp, and grew from 2005 — with crucial investment and patronage from the CIA — into one of the most important technology suppliers to the American security state.

The AI giant deliberately operated under the radar for years and imposed strict confidentiality clauses on its clients. But Thiel’s views were already widely known when the contract was signed in 2014: in essays from 2009 and 2014, he argues that freedom and democracy are incompatible, that monopolism is good, and that competition is for losers. Palantir’s ideology became increasingly visible after its stock market listing in 2020. Karp stepped more prominently into the public eye with controversial statements, while Thiel’s political influence grew and his allies embedded themselves in Trump’s White House.

These are not the words you would expect from a software supplier to the Dutch government. Yet Palantir was precisely that — the controversial nature of the company and its leadership is exactly why Follow The Money asked the ministry whether any active collaborations with Palantir were ongoing, and how long previous collaborations had lasted.

Context — Thiel’s ideology: ‘The Education of a Libertarian’ (2009)

In ‘The Education of a Libertarian’, a 2009 essay, Thiel argues that freedom and democracy are fundamentally incompatible. The expansion of the franchise — particularly to women and welfare recipients — has, in his view, rendered ‘capitalist democracy’ a contradiction in terms. He considers political struggle for libertarian goals to have become futile. His conclusion is that the only escape from politics lies in technology: the internet, space travel, and ‘seasteading’ (inhabiting international waters beyond state authority). Technology offers what democracy cannot: an escape from the collective coercion of the majority.

In ‘Competition is For Losers’, Thiel argues that competition is not a virtue but a trap, and that only monopolies create lasting value. The essay reads as an intellectual justification for market dominance: whoever is irreplaceable need not concern themselves with competition, clients or oversight. Palantir is the living embodiment of this: a deliberately irreplaceable supplier that manoeuvres governments into a position of dependency.

Context — Thiel, Vance and Trump’s White House

Thiel put his money — and his influence — where his mouth is. He was the primary mentor and donor of US Vice President J.D. Vance, and maintains close ties with Trump’s White House. After Trump’s election, Thiel’s Palantir gained access to lucrative contracts across various government agencies. Beyond prominent Thiel allies such as Elon Musk, Bloomberg identified at least fourteen people within the Trump administration with close ties to Thiel, primarily in positions relevant to contracts with Palantir. See also: CBS News and The Conversation.

Context — The Palantir manifesto of April 2026

On 18 April, Palantir published a techno-nationalist manifesto calling for an explicit link between technology, national power, and what Palantir’s leadership regards as social responsibility. In this reading, the American tech sector cannot afford a passive stance: innovation must be placed in the service of national security and strategic competition, aligned with the view that AI surpasses nuclear weapons in deterrence. The manifesto is equally steeped in broader cultural critique. It turns against what it sees as complacency — from ‘apps’ to political moralism — and calls for a cultural revaluation in which duty and service take centre stage.

Context — Market capitalisation

On 21 April 2026, Palantir’s market capitalisation hovered around $350 billion. Analysts are sharply divided on the company’s valuation. Source: Yahoo Finance.

Context — Karp’s public statements

In 2024, Karp declared that ‘wokeness’ is the greatest danger to Palantir and America, and that ‘peace activists are war activists’ while ‘we are the peace activists’. (The Guardian, Fox Business.) In 2025, he said he thought it ‘a great idea to use a drone to spray a light mixture of fentanyl-laced urine on analysts who were trying to screw us’, referring to analysts who call his company overvalued. (Palantir investor day.) That same year he announced that Palantir exists ‘to disrupt, and when necessary to frighten our enemies, and occasionally, to kill.’ (YouTube.)

Context — ICE and the Israeli military

Palantir builds the software used by ICE to track and deport undocumented migrants. The software was already used in 2019 ‘to build profiles of immigrant children and their family members, resulting in an ICE operation in which 443 people were arrested, including undocumented family members who had presented themselves to claim unaccompanied children who had previously been separated from an adult guardian and held in concentration camps.’ (ResearchGate.)

During the nascent Israeli genocide in Gaza, Palantir signed a ‘strategic partnership’ with the Israeli Ministry of Defence to ‘assist with the war effort’. (Palantir.)

The contract

The document, registered under number 0012, is a ‘License and Services Agreement’ (LSA) between Palantir and the Ministry of Justice and Security, specifically the ‘Program Directorate Identity Management and Immigration.’ It was signed on 1 January 2014 and provided for twelve software licences for twelve months, exclusively for the Advanced Passenger Information project (API). This system is used to screen passengers on incoming flights at the border. API is used across Europe, and airlines are required to share passenger data in advance.

Context — What ‘API’ actually is

The contract refers to the system as ‘Advanced Passenger Information.’ In brief: airlines are required to transmit passenger data at the close of the boarding process — so before departure — to the KMar’s Targeting Center Borders. There, the data is automatically compared against watchlists and risk profiles. If there is a match, border officers at the gate receive an alert, allowing them to act before the passenger clears customs. Source: KMar Magazine.

Each passenger’s file in the system contains name, date of birth, nationality, gender, document type, flight number, boarding point and travel route, departure and arrival time, total number of passengers on board, and passport number.

IDMI: the eye at the border

The Dutch contracting party was the Programme Directorate Identity Management and Immigration (IDMI), established in 2010 to improve identification processes in the migration chain, initially under the Ministry of the Interior and later under Justice and Security.

The directorate built the digital infrastructure of Dutch border and immigration control: a central repository for fingerprints and facial scans, the automated e-gates at Schiphol, and the Biometrics Chain Platform linking the IT systems of all partners in the migration chain. Two years later, that same directorate signed the contract with Palantir.

The result: a single centralised system in which all passenger data converges, searchable both by the border officer checking a watchlist and by the analyst tracking a suspect returnee from a conflict zone.

The directorate was dissolved at the end of 2014, its tasks transferred to the Directorate-General for Migration. The operational work of chain partners such as the IND and the KMar is still organised around the structure that IDMI established.

Context — The unlawful database

The temporary parliamentary committee on Fundamental Rights concluded in January 2026 that the CATCH-vreemdelingen database, which runs on that same infrastructure, is currently unlawful: facial images of all foreign nationals are recorded without suspicion, whereas Dutch nationals may only be subject to such recording in connection with a criminal offence. An audit found that data which should have been destroyed had remained in the system.

How much taxpayer money went to Palantir, and what happened after the dissolution?

What happened to the Palantir contract when the directorate was dissolved cannot be determined from the released documents. But the documents contain a quotation from COMPAREX Nederland B.V., an IT reseller from Amsterdam, dated 28 November 2014, which suggests the software survived the dissolution. The quotation lists the ‘rental of configured Elise and Palantir licences for API software’ for three months: 1 January to 1 April 2015 — after the dissolution of the IDMI that had signed the contract.

The KMar’s response further confirms that the quotation was in fact honoured: usage continued, by their own account, until March 2015. Who or which organisational unit requested this quotation, and to whom the contractual relationship was transferred, remains unknown. The contract itself provides no clarity on total costs.

The COMPAREX quotation does, however, give an indication of the price: €134,319.90 excluding VAT; €162,527.08 including VAT. For three months. The price per licence has been redacted in the Woo decision as commercially sensitive business information. Whether and for how long the contract continued after the first quarter of 2015 is not confirmed by the ministry — despite the KMar’s firm claim that this marked the end of the relationship.

The contract obliges the ministry to far-reaching confidentiality: all information about the product is classified as ‘Confidential Information.’

Context — The European procurement threshold

The quarterly amount already exceeded the European procurement threshold for central government, which in 2014 was set at exactly €134,000. Whether an exemption from the tender obligation was invoked is not apparent from the documents.

Context — A blank first page

Article 6 of the contract refers to ‘the total amount of fees as set forth on the cover page of this agreement.’ That cover page has been released. But it contains no figure — not redacted, simply absent.

Context — Confidentiality on the software, in perpetuity

The ministry may publish nothing about the workings, specifications or performance of the software. That confidentiality obligation survives the contract by five years. For trade secrets, it is perpetual.

The contract shows that Oracle Database 11g — which the ministry was required to procure separately — was not included in the price. Moreover, the data was stored with the eponymous American cloud provider, which is both legally and geopolitically sensitive, according to data privacy and IT law professor Frederik Borgesius of Radboud University. According to the expert, it is therefore ‘quite possible that passenger data is in practice transmitted to the US for cloud analysis, on a legally precarious basis.’

Context — The CLOUD Act and the Court of Justice

The United States operates legislation, including the CLOUD Act and the Foreign Intelligence Surveillance Act, enabling the American government to request data from US companies. This applies to data stored both in the US and abroad.

‘Over the past ten years, the European Court of Justice has annulled multiple agreements between the EU and the US that permitted data transfers,’ Borgesius explains. ‘At the moment it is again permitted, but under strict conditions.’

Context — Function creep

Because all passenger data converges in a single integrated system — as set up by the IDMI — a different risk emerges, according to Borgesius. Not so much in the original purpose, but in what happens with the data afterwards: ‘When you build an integrated database like this, politicians or the police may later be tempted to use that infrastructure for other purposes.’ This so-called ‘function creep’ is amplified by the connective force of the infrastructure: the more systems are linked to one another, the easier it becomes to deploy data more broadly than originally intended.

What the minister did (and did not) tell parliament

The released emails in the Woo dossier show how the ministry responded internally to the parliamentary questions. On 22 July 2025, an official from the National Coordinator for Security and Counterterrorism (NCTV) circulated a message marked priority ‘High’ to parliamentary liaison contacts at virtually every directorate. The deadline: 24 July, 16:00. The question: did or do separate directorates use Palantir? Civil servants were sent searching. The answers trickled in. 23 July: NCTV no, RIEC/LIEC no, Coast Guard no, Security Regions stopped in 2021.

On 24 July, at 13:34, the NCTV official coordinating the responses noted that the ministry had ‘no or limited visibility’ on Palantir usage at executive agencies and at the Ministry of Asylum and Migration. But in the attachment to that same 24 July email was a file named ‘LSA 2014.01.01 Netherlands Ministry of Security and Justice[1].pdf.’ It is the same date, the same party, the same type of document (LSA: License and Services Agreement) as the contract now sitting as document 0012 in the Woo dossier. The NCTV official had himself come across the 2014 deal and immediately attached it. The Palantir contract was circulating, in other words, as an attachment to the very emails used to prepare the parliamentary answer.

How it is possible that the 2014 contract did not find its way into the minister’s answer, while it was circulating as an attachment to the emails preparing that answer, is one of the questions the ministry has yet to answer.

On 20 April 2026, Van Weel did inform parliament of the Woo decision — five days after it was taken, and only after Follow The Money had submitted additional questions.

Shortly before publication, the Ministry of Justice and Security indicated that the organisational unit that signed the contract with Palantir ‘at the time of the parliamentary questions did not fall under the political responsibility of the Minister of Justice and Security.’ Every further substantive response was withheld.

That defence stands in direct contradiction to the facts in the dossier itself. The IDMI did indeed fall under Justice and Security in 2014 and signed the contract on behalf of that ministry. Its tasks were transferred at the end of 2014 to the Directorate-General for Migration — within the same ministry. The contract was circulating at the Ministry of Justice and Security in July 2025 during the preparation of the parliamentary answers. And in the months after those answers were given, Van Weel also assumed responsibility for Asylum and Migration himself. It is not clear what level of political responsibility the ministry believes to have been absent.

Context — Asylum and Migration goes silent too

The search for answers did not stop at Justice and Security. A Woo request was also submitted to the Ministry of Asylum and Migration — which took over the IDMI’s tasks — and a notice of default was sent. No substantive response came. The acknowledgement of receipt did not come from Asylum and Migration, but from an email address belonging to the Ministry of Justice and Security. Both ministries were at the time led by the same minister.

The man behind the answer

Van Weel is not a politician who stumbled into the Ministry of Justice and Security by accident. Before becoming minister, he spent ten years at the Ministry of Defence, served four years as adviser to Prime Minister Rutte on foreign affairs and defence, and held the position of Assistant Secretary-General at NATO. He served as interim director of DIANA, the alliance’s innovation accelerator, and sat on the board of the NATO Innovation Fund.

At the time the parliamentary questions arrived, Van Weel was Minister of Justice and Security. In the months that followed, he also took on Asylum and Migration, Foreign Affairs, and temporarily Interior. He did so in the cabinet of Dick Schoof — who, as Director-General of Police in 2011, personally signed the first known Palantir contract with Justice and Security.

As Assistant Secretary-General at NATO, Van Weel was responsible for the alliance’s technology policy. Palantir is no stranger within that alliance: the company supplies software to multiple NATO member states, with the US Department of Defense as its anchor client.

A fundamental contradiction

That same American government is now hostile to European institutions, as evidenced by, among other things, the National Security Strategy. The contradiction is striking, according to Reijer Passchier, professor of Digitalisation and lecturer in constitutional law. He calls it ‘highly problematic that the government does business with a company like Palantir.’ The government must realise and protect the democratic rule of law and fundamental rights, yet simultaneously does business with companies ‘that, in collaboration with the Trump administration, undermine those very rights.’ Moreover, researchers raise questions about the software’s effectiveness, says Passchier: ‘It is always said to be a trade-off between privacy and security [...] The violation of privacy is enormous, but whether it actually delivers more security is often highly debatable. Worse still, systems like these can themselves become a major source of insecurity for a great many people.’

Setting aside the controversy, Passchier notes that failing to fully inform parliament is regarded ‘as a political mortal sin in constitutional terms.’ ‘As a minister, you are then acting in violation of Article 68 of the Constitution — the duty to provide information,’ says Passchier.

‘Van Weel should have been capable of making these assessments. Should he have known where Palantir is deployed? In constitutional terms: yes. As a minister you are in principle expected to know everything. If that is not the case, you may sometimes be forgiven. But when parliamentary questions arise, you must ensure you are informed — and civil servants must ensure they inform you.’

Whether any actual political consequences will follow rests with parliament. ‘A minister only needs to offer their resignation to the king once parliament has demonstrated it has lost confidence,’ says Passchier. ‘As long as the contrary has not been established, confidence is assumed.’

Context — Reijer Passchier

Reijer Passchier is professor at the Open University and lecturer at Leiden University. He has published, among other works, the books De vloek van Big Tech and Artificiële intelligentie en de rechtsstaat (The Curse of Big Tech and Artificial Intelligence and the Rule of Law).

Context — Article 68 and the Stiekem committee

Article 68 of the Dutch Constitution obliges ministers to provide parliament with all requested information, unless the national interest dictates otherwise. Even in that case, the minister may inform the Stiekem committee in confidence — fulfilling the obligation nonetheless. It is unclear whether the Stiekem committee was informed.

Context — What sanctions does parliament have?

‘A sanction could be that parliament asks the minister for information again, or requests he correct himself. A motion of censure is also a possibility — that would do him political damage. The most severe sanction is a motion of no confidence: then the minister must go to the king to tender his resignation,’ says Passchier.

The Ministry of Justice and Security was asked to respond to fourteen questions about the contract, the handling of the parliamentary questions, and the relationship between the COMPAREX quotation and the Palantir agreement. The ministry indicated only that the organisational unit that signed the contract ‘at the time of the parliamentary questions did not fall under the political responsibility of the Minister of Justice and Security.’ No substantive response to the remaining questions was provided.

Dit is een uitgebreide pre-eindredactie versie van een artikel dat verscheen in Follow The Money.

English Version

De vraag was simpel. In augustus 2025 vroegen Kamerleden aan – toenmalig en huidig – minister David van Weel (VVD) of er buiten de bekende voorbeelden nog onderdelen waren binnen het ministerie van Justitie en Veiligheid (JenV) die gebruik maakten of hadden gemaakt van software van Palantir.

Zijn antwoord was duidelijk: ‘Nee.’

De parlementariërs stelden de vraag nadat eerder dat jaar naar buiten was gekomen dat het omstreden techbedrijf al sinds 2011 in het diepste geheim software leverde aan de Nederlandse Politie.

Nieuwe documenten, vrijgegeven met een beroep op de Wet open overheid (Woo), tonen echter aan dat Van Weels ministerie tenminste in 2014 software aankocht van het bedrijf die vervolgens werd ingezet door de Koninklijke Marechaussee (KMar).

De grensbewakers gebruikten de Palantir-software voor het zogenaamde Advance Passenger Information-systeem (API). Daarmee screent de KMar inkomende vluchten van buiten het Schengengebied op persoonlijke passagiersgegevens, zoals naam, geboortedatum, nationaliteit, geslacht en paspoortnummers. Potentieel gaat het daarbij om miljoenen mensen.

Het contract werd ingezet door de Koninklijke Marechaussee (KMar) voor het zogenoemde Advance Passenger Information-systeem (API), waarmee de KMar in het ‘Targeting Center Borders’ bij het API Centre in Soesterberg enorme hoeveelheden passagiersgegevens screent van inkomende vluchten van bestemmingen buiten de EU en het Schengengebied. Vliegtuigmaatschappijen zijn wettelijk verplicht om voor elke vlucht van buiten de EU naam, nationaliteit, paspoortnummer, vluchtnummer en bestemming door te sturen. De KMar screent die tegen watchlists en veiligheidsdatabases. Het gegevensmodel dat daarbij wordt gebruikt, zit in het WOO-dossier, maar is volledig geweigerd op grond van staatsveiligheid.

Saillant is dat een woordvoerder van de KMar in maart van dit jaar nog tegen Follow The Money verklaarde dat de grensbewaking ‘nooit’ gebruik had gemaakt van Palantir. Geconfronteerd met de WOO-documenten komt diezelfde woordvoerder daar nu op terug: de KMar gebruikte de software van ‘ongeveer’ mei 2009 tot maart 2015 voor een pilot met API. Daarna zou zijn gekozen voor een andere technologie. Sindsdien, voegt hij toe, maakt de KMar geen gebruik meer van Palantir. Het ministerie van Justitie en Veiligheid wilde vragen over het gebruik niet beantwoorden, en wilde ook niet bevestigen of het gebruik daadwerkelijk gestopt is.

Opvallend is dat het contract blijkens de stukken al circuleerde binnen het ministerie op het moment dat de antwoorden op de Kamervragen werden voorbereid. Op de vraag waarom deze informatie de Kamer desondanks niet bereikte, geeft het ministerie geen inhoudelijke reactie.

Wie zit er achter Palantir?

Palantir werd in 2003 opgericht door onder anderen Peter Thiel en topman Alex Karp, en groeide vanaf 2005 met cruciale investering én klandizie van de CIA uit tot een van de belangrijkste technologieleveranciers van de Amerikaanse veiligheidsstaat.

De AI-gigant opereerde jarenlang bewust onder de radar en legde strikte geheimhoudingsclausules op aan zijn klanten. Maar Thiels opvattingen waren bij het tekenen van het contract in 2014 al wijd en zijd bekend: in essays uit 2009 en 2014 beargumenteert hij dat vrijheid en democratie onverenigbaar zijn, dat monopolisme goed is, en concurrentie iets voor losers. Palantirs ideologie werd na de beursgang in 2020 steeds zichtbaarder. Karp trad nadrukkelijker naar buiten met controversiële uitspraken, terwijl Thiels politieke invloed groeide en zijn bondgenoten zich nestelden in het Witte Huis van Trump.

De meest omstreden contracten zijn die met de Amerikaanse immigratiedienst ICE en met de Israëlische strijdkrachten. Over de kracht van zijn eigen systemen zei Karp tegen The Washington Post: ‘Het staat gelijk aan het bezit van tactische kernwapens tegenover een tegenstander met alleen conventionele wapens.’

Het zijn niet de woorden die je verwacht van een softwareleverancier van de Nederlandse overheid. Toch was Palantir precies dat – de controversiële natuur van het bedrijf en haar bestuurders is precies de reden waarom Follow The Money aan het ministerie de vraag stelde of er nog actieve samenwerkingen lopen met Palantir, en tot wanneer vorige samenwerkingen hebben geduurd.

Context — Thiels ideologie: ‘The Education of a Libertarian’ (2009)

In ‘The Education of a Libertarian’, een essay uit 2009, stelt Thiel dat vrijheid en democratie fundamenteel onverenigbaar zijn. De uitbreiding van het kiesrecht – met name aan vrouwen en uitkeringsgerechtigden – heeft ‘kapitalistische democratie’ volgens hem tot een contradictio in terminis gemaakt. Politieke strijd voor libertaire doelen acht hij zinloos geworden. Zijn conclusie is dat de enige uitweg uit de politiek ligt in technologie: het internet, de ruimtevaart, en ‘seasteading’ (het bewonen van internationale wateren buiten staatsgezag). Technologie biedt wat democratie niet kan: een ontsnapping aan de collectieve dwang van de meerderheid.

In ‘Competition is For Losers’ betoogt Thiel dat concurrentie geen deugd is maar een valkuil, en dat alleen monopolies duurzame waarde creëren. Het essay leest als een intellectuele rechtvaardiging voor marktdominantie: wie onvervangbaar is, hoeft zich niets aan te trekken van concurrentie, klanten of toezicht. Palantir is daar de levende illustratie van: een bewust onvervangbaar gemaakte leverancier die overheden in een afhankelijkheidspositie manoeuvreert.

Context — Thiel, Vance en het Witte Huis van Trump

Thiel deed letterlijk en figuurlijk een flinke duit in het zakje. Hij was de belangrijkste mentor en donateur van de Amerikaanse vicepresident J.D. Vance, en onderhoudt nauwe banden met het Witte Huis van Trump. Na Trumps verkiezing kreeg Thiels Palantir toegang tot lucratieve contracten bij verschillende overheidsinstanties. Naast prominente vrienden van Thiel, zoals Elon Musk, identificeerde Bloomberg ten minste veertien personen binnen de Trump-regering met nauwe banden met Thiel, voornamelijk in posities die relevant zijn voor contracten met Palantir. Zie ook: CBS News en The Conversation.

Context — Het Palantir-manifesto van april 2026

Palantir publiceerde op 18 april een techno-nationalistisch manifesto dat pleit voor een expliciete koppeling tussen technologie, nationale macht, en wat de leiding van Palantir ziet als maatschappelijke verantwoordelijkheid. In die lezing kan de Amerikaanse techsector zich geen vrijblijvende houding permitteren: innovatie moet in dienst komen te staan van nationale veiligheid en strategische competitie, aansluitend op de visie dat AI nucleaire wapens overstijgt in afschrikwekkendheid. Tegelijk is het manifesto doordrenkt van bredere cultuurkritiek. Het keert zich tegen wat wordt gezien als zelfgenoegzaamheid, van ‘apps’ tot politiek moralisme, en pleit voor een culturele herwaardering waarin plicht en dienstbaarheid centraal komen te staan.

Context — Marktwaarde

Op 21 april 2026 schommelde de marktwaarde van Palantir rond de 350 miljard dollar. Analisten verschillen sterk in hun meningen over de waardering van het bedrijf. Bron: Yahoo Finance.

Context — Karps publieke uitspraken

In 2024 verklaarde Karp dat ‘woke’ het grootste gevaar is voor Palantir en Amerika, en dat ‘vredesactivisten oorlogs-activisten zijn’ en dat ‘wij de vredesactivisten zijn’. (The Guardian, Fox Business.) In 2025 vond hij het ‘een geweldig idee om een drone te gebruiken en daarmee licht met fentanyl vermengde urine te spuiten op analisten die ons probeerden te naaien’, verwijzend naar analisten die zijn bedrijf overgewaardeerd noemen. (Palantir investor day.) Datzelfde jaar liet hij weten dat Palantir er is ‘om te ontregelen, en wanneer het nodig is om onze vijanden bang te maken, en af en toe, te vermoorden.’ (YouTube.)

Context — ICE en de Israëlische strijdkrachten

Palantir bouwt voor ICE de software waarmee ongedocumenteerden worden opgespoord en gedeporteerd. De software werd al in 2019 gebruikt ‘om profielen op te stellen van immigrantenkinderen en hun familieleden, wat resulteerde in een operatie van ICE waarbij 443 mensen werden gearresteerd, waaronder familieleden zonder verblijfsvergunning die zich meldden om alleenreizende kinderen op te eisen die eerder van een volwassen voogd waren gescheiden en in concentratiekampen waren opgesloten.’ (ResearchGate.)

Tijdens de ontluikende Israëlische genocide in Gaza tekende Palantir een ‘strategisch partnerschap’ met het Israëlische ministerie van Defensie om met de ‘oorlogsinspanning te helpen’. (Palantir.)

Het contract

Het document, geregistreerd onder nummer 0012, is een ‘License and Services Agreement’ (LSA) tussen Palantir en het Ministerie van Justitie en Veiligheid, specifiek de ‘Program Directorate Identity Management and Immigration.’ Het werd op 1 januari 2014 ondertekend en voorzag in twaalf softwarelicenties voor twaalf maanden, uitsluitend voor het Advanced Passenger Information-project (API). Daarmee worden passagiers van inkomende vluchten aan de grens gescreend. API wordt in heel Europa gebruikt en luchtvaartmaatschappijen zijn verplicht passagiersgegevens vooraf te delen.

Context — Wat ‘API’ precies is

In het contract wordt het systeem ‘Advanced Passenger Information’ genoemd. Het proces in het kort: luchtvaartmaatschappijen zijn verplicht om aan het einde van de instapcontroles, dus nog voor vertrek, de passagiersgegevens door te sturen naar het Targeting Center Borders van de KMar. Daar worden de gegevens geautomatiseerd vergeleken met ‘watchlists’ en risicoprofielen. Bij een treffer krijgen grensbewakers aan de gate een alert, zodat ze gericht kunnen handelen nog voordat de passagier door de douane loopt. Bron: KMar Magazine.

Elk van de passagiers komt met naam, geboortedatum, nationaliteit, geslacht, documenttype, vluchtnummer, instappunt en reisroute, tijdstip van vertrek en aankomst, het totale aantal passagiers aan boord, en paspoortnummer in het systeem.

IDMI: het oog aan de grens

De contractpartij aan Nederlandse zijde was de Programmadirectie Identiteitsmanagement en Immigratie (IDMI), in 2010 opgericht om de identificatieprocessen in de migratieketen te verbeteren, aanvankelijk onder Binnenlandse Zaken, later onder Justitie en Veiligheid.

De directie bouwde de digitale infrastructuur van het Nederlandse grens- en vreemdelingentoezicht: een centrale voorziening voor vingerafdrukken en gezichtsscans, de automatische e-gates op Schiphol, en het Ketenplatform Biometrie dat de ICT-systemen van alle partners in de migratieketen verbond. Twee jaar later tekende diezelfde programmadirectie het contract met Palantir.

Het resultaat: één centraal systeem waarin alle passagiersgegevens samenkomen, doorzoekbaar voor zowel de grenswachter die een watchlist checkt, als de analist die een verdachte terugkeerder uit een conflictgebied volgt.

De directie werd eind 2014 opgeheven en haar taken overgedragen aan het Directoraat-generaal Migratie. De operationele uitvoering van ketenpartners zoals IND en de KMar is nog altijd georganiseerd rond de structuur die de IDMI optuigde.

Context — De onrechtmatige database

De tijdelijke commissie Grondrechten concludeerde in januari 2026 dat de database CATCH-vreemdelingen, die op diezelfde infrastructuur draait, op dit moment onrechtmatig is: gezichtsopnames van alle vreemdelingen worden opgenomen zonder verdenking, terwijl dat voor Nederlanders alleen mag bij een misdrijf. Uit een audit bleek dat gegevens die vernietigd hadden moeten worden, in het systeem zijn blijven staan.

Context — Function creep

Doordat alle passagiersgegevens samenkomen in één geïntegreerd systeem – zoals opgezet door de IDMI – ontstaat er volgens Frederik Borgesius, hoogleraar ICT en -recht aan de Radboud Universiteit, een ander risico. Niet zozeer in het oorspronkelijke doel, maar in wat er daarna mee gebeurt: ‘Als je zo’n geïntegreerde databank bouwt, kunnen politici of de politie later verleid worden om die infrastructuur voor andere doeleinden te gebruiken.’ Die zogeheten ‘function creep’ wordt versterkt door de koppelende kracht van de infrastructuur: hoe meer systemen aan elkaar hangen, hoe makkelijker het wordt om gegevens breder in te zetten dan oorspronkelijk bedoeld.

Hoeveel belastinggeld ging naar Palantir, en wat gebeurde er na opheffing?

Wat er met het Palantir-contract gebeurde bij die overdracht is uit de vrijgegeven documenten niet op te maken. Maar de documenten bevatten een offerte van COMPAREX Nederland B.V., een IT-reseller uit Amsterdam, gedateerd 28 november 2014, die suggereert dat de software de opheffing overleefde. Op de offerte staat de ‘Huur geconfigureerde Elise en Palantir licenties ten behoeve van API software’ genoteerd voor drie maanden: 1 januari tot 1 april 2015 – ná de opheffing van de IDMI dat het contract tekende.

Uit de reactie van de KMar volgt bovendien dat de offerte ook is verzilverd: het gebruik liep, volgens hun eigen opgave, tot maart 2015. Wie of welk organisatieonderdeel deze offerte heeft aangevraagd, en bij wie de contractuele relatie is terechtgekomen, is onbekend. Het contract zelf geeft geen uitsluitsel over de totale kosten.

De COMPAREX-offerte geeft wel aanwijzingen voor het kostenplaatje: €134.319,90 netto. €162.527,08 inclusief btw. Voor drie maanden. De prijs per licentie is in het WOO-besluit weggelakt als concurrentiegevoelige bedrijfsinformatie. Of en hoe lang het contract doorliep na het eerste kwartaal van 2015 wordt door het ministerie niet bevestigd – ondanks de stelligheid van de KMar dat dit het einde van de relatie was.

Het contract verplicht het ministerie tot verregaande geheimhouding: álle informatie over het product wordt gekwalificeerd als ‘Confidential Information’.

Uit het contract blijkt dat de Oracle Database 11g – die het ministerie zelf moest aanschaffen – niet in de prijs was inbegrepen. Bovendien werd de data opgeslagen bij de gelijknamige Amerikaanse cloudprovider, en dat is volgens hoogleraar ICT en recht Frederik Borgesius, verbonden met de Radboud Universiteit, zowel juridisch als geopolitiek een heikel punt. Volgens de dataprivacy-expert is het daardoor ‘goed mogelijk dat passagiersgegevens in de praktijk toch naar de VS worden gestuurd voor cloudanalyse, op een juridisch wankele basis.’

Context — De Europese aanbestedingsdrempel

Het kwartaalbedrag lag al boven de Europese aanbestedingsdrempel voor de centrale overheid, die in 2014 op precies €134.000 was gesteld. Of een uitzondering op de aanbestedingsplicht is ingeroepen, blijkt niet uit de stukken.

Context — Een lege eerste pagina

Artikel 6 van het contract verwijst naar ‘het totale bedrag van de kosten zoals vermeld op de eerste pagina van deze overeenkomst’. Die eerste pagina is vrijgegeven. Maar er staat geen bedrag op, zonder weglakking.

Context — Geheimhouding op de software, voor altijd

Het ministerie mag niets publiceren over de werking, de specificaties, of de ervaringen. Die geheimhoudingsplicht overleeft het contract met vijf jaar. Voor bedrijfsgeheimen geldt ze oneindig.

Context — De CLOUD Act en het Hof van Justitie

De Verenigde Staten hanteren wetgeving, zoals de CLOUD Act en de Foreign Intelligence Surveillance Act, die het de Amerikaanse overheid mogelijk maken om data op te vragen bij Amerikaanse bedrijven. Dit geldt voor zowel data die in Amerika als in het buitenland is opgeslagen.

‘De afgelopen tien jaar heeft het Europese Hof van Justitie meerdere keren overeenkomsten tussen de EU en de VS vernietigd die dataoverdracht mogelijk maakten,’ legt Borgesius uit. ‘Op dit moment mag het weer, maar onder strikte voorwaarden.’

Wat de minister de Kamer (niet) vertelde

De vrijgegeven e-mails in het WOO-dossier laten zien hoe het ministerie intern reageerde op de Kamervragen. Op 22 juli 2025 stuurde een ambtenaar van de Nationaal Coördinator Terrorismebestrijding en Veiligheid (NCTV) met prioriteit ‘Hoog’ een bericht rond naar parlementair contactpersonen bij vrijwel alle directies. De deadline: 24 juli, 16:00. De vraag: gebruiken of gebruikten aparte directies Palantir? Ambtenaren moesten op speurtocht. De antwoorden druppelden binnen. 23 juli: NCTV nee, RIEC/LIEC nee, Kustwacht nee, Veiligheidsregio’s gestopt in 2021.

Op 24 juli, 13:34, merkte de NCTV-ambtenaar die de antwoorden coördineerde op dat het ministerie ‘geen/beperkt zicht’ had op Palantir-gebruik bij uitvoeringsorganisaties en bij het ministerie van Asiel en Migratie. Maar in diezelfde mail van 24 juli zat een bijlage met de naam ‘LSA 2014.01.01 Netherlands Ministry of Security and Justice[1].pdf’. Het is dezelfde datum, dezelfde partij, hetzelfde type document (LSA: License and Services Agreement) als het contract dat nu als document 0012 in het WOO-dossier zit. De NCTV-ambtenaar was zelf op de deal uit 2014 gestuit en sloot het document direct bij. Het Palantir-contract circuleerde, met andere woorden, als bijlage bij precies de e-mails waarmee de Kamervragen werden voorbereid.

Hoe het kan dat het contract uit 2014 niet in het antwoord van de minister terechtkwam, terwijl het als bijlage circuleerde bij de e-mails die het antwoord voorbereiden, is een van de vragen die het ministerie nog niet heeft beantwoord.

Op 20 april 2026 informeerde Van Weel de Kamer alsnog over het WOO-besluit – vijf dagen nadat het was genomen, en pas nadat Follow The Money aanvullende vragen had gesteld.

Kort voor publicatie liet het ministerie van Justitie en Veiligheid weten dat het organisatieonderdeel dat het contract met Palantir sloot ‘ten tijde van de Kamervragen niet onder de politieke verantwoordelijkheid van de minister van Justitie en Veiligheid viel’. Iedere verdere inhoudelijke reactie bleef achterwege.

Dat verweer staat haaks op de feiten die uit het dossier zelf naar voren komen. De IDMI viel in 2014 wel degelijk onder Justitie en Veiligheid en tekende het contract namens dat ministerie. Haar taken werden eind 2014 overgedragen aan het Directoraat-generaal Migratie – binnen hetzelfde ministerie. Het contract circuleerde in juli 2025 op het ministerie van Justitie en Veiligheid bij de voorbereiding van de antwoorden. En in de maanden na de Kamervragen kreeg Van Weel ook Asiel en Migratie zelf onder zijn hoede. Het is niet duidelijk welk niveau van politieke verantwoordelijkheid het ministerie precies meent ontbroken te hebben.

Context — Ook Asiel en Migratie zwijgt

Het is niet zo dat er niet naar verdere inzet van de software is gevraagd. Bij het ministerie van Asiel en Migratie, dat de IDMI-taken heeft overgenomen, is eveneens een WOO-verzoek ingediend en een ingebrekestelling verstuurd. Een inhoudelijke reactie bleef uit. De ontvangstbevestiging kwam niet van Asiel en Migratie, maar van het e-mailadres van het ministerie van Justitie en Veiligheid. Beide ministeries werden destijds bestuurd door dezelfde minister.

De man achter het antwoord

Van Weel is geen politicus die per ongeluk op het ministerie van Justitie en Veiligheid terecht is gekomen. Voordat hij minister werd, werkte hij tien jaar op Defensie, was hij vier jaar raadadviseur van premier Rutte voor buitenlandse zaken en defensie, en bekleedde hij bij de NAVO de functie van Assistent-Secretaris-Generaal. Hij leidde als interim-directeur DIANA, de innovatieversneller van het bondgenootschap, en zat in het bestuur van het NATO Innovation Fund.

Op het moment dat de Kamervragen binnenkwamen was Van Weel minister van Justitie en Veiligheid. In de maanden daarna kreeg hij ook Asiel en Migratie, Buitenlandse Zaken en tijdelijk Binnenlandse Zaken onder zijn hoede. Hij deed dat in het kabinet van Dick Schoof – die als directeur-generaal Politie in 2011 zelf het eerste bekende Palantir-contract met Justitie en Veiligheid tekende.

Als Assistent-Secretaris-Generaal bij de NAVO was Van Weel verantwoordelijk voor het technologiebeleid van het bondgenootschap. Palantir is binnen dat bondgenootschap geen onbekende: het bedrijf levert software aan meerdere NAVO-lidstaten met als ankerklant het Amerikaanse ministerie van Defensie.

Fundamentele tegenstrijdigheid

Diezelfde Amerikaanse overheid staat nu vijandig tegenover Europese instituties, blijkens onder andere de National Security Strategy. Die tegenstelling is opvallend, volgens Reijer Passchier, hoogleraar Digitalisering en universitair docent staatsrecht. Hij noemt het ‘heel problematisch dat de overheid zaken doet met een bedrijf als Palantir.’ De overheid moet de democratische rechtsstaat en grondrechten realiseren en beschermen, maar doet tegelijkertijd zaken met bedrijven ‘die in samenwerking met de Trump-regering diezelfde rechten ondermijnen’. Bovendien stellen onderzoekers volgens Passchier vragen bij de effectiviteit van de software: ‘Er wordt altijd gezegd: het is een afweging tussen privacy versus veiligheid [...] De inbreuk op privacy is enorm, maar of het ook meer veiligheid oplevert is vaak zeer discutabel. Sterker nog, dit soort systemen kunnen op zichzelf een grote bron van onveiligheid worden voor heel veel mensen.’

Controverse daargelaten, noteert Passchier dat het onvolledig informeren van de Kamer ‘staatsrechtelijk als een politieke doodzonde’ beschouwd wordt. ‘Als minister handel je dan in strijd met artikel 68 van de Grondwet – de inlichtingenplicht.’

‘Deze afwegingen had Van Weel ook moeten kunnen maken. Had hij moeten weten waar Palantir allemaal wordt ingezet? Staatsrechtelijk is het antwoord: ja. Als minister hoor je in principe alles te weten. Als dat niet zo is, wordt je dat weleens vergeven. Maar als er Kamervragen ontstaan, dan moet je wel zorgen dat je op de hoogte bent, en dan moeten de ambtenaren je ook op de hoogte stellen.’

Of er daadwerkelijke politieke consequenties aan verbonden zullen worden, ligt bij de Kamer. ‘Een minister hoeft zijn ontslag bij de koning pas aan te bieden als de Kamer geen vertrouwen meer blijkt te hebben in de minister,’ zegt Passchier. ‘Zolang het tegendeel niet is gebleken, gaan ze uit van vertrouwen.’

Context — Reijer Passchier

Reijer Passchier is als hoogleraar verbonden aan de Open Universiteit en als universitair docent aan de Universiteit Leiden. Hij publiceerde onder andere de boeken De vloek van Big Tech en Artificiële intelligentie en de rechtsstaat.

Context — Artikel 68 en de commissie Stiekem

Artikel 68 van de Grondwet verplicht bewindspersonen de Kamers alle opgevraagde informatie te geven, tenzij het belang van de Staat zich daartegen verzet. Zelfs in dat geval kan de minister de commissie Stiekem vertrouwelijk informeren – dan voldoet hij alsnog aan zijn plicht. Het is onduidelijk of de commissie Stiekem geïnformeerd is.

Context — Welke sancties heeft de Kamer?

‘Een sanctie kan zijn dat de Kamer de minister alsnog om inlichtingen vraagt, of hem verzoekt zichzelf te corrigeren. Een motie van afkeuring is ook een mogelijkheid – dan loopt hij politieke schade op. De zwaarste sanctie is een motie van wantrouwen, dan moet de minister naar de koning om zijn ontslag aan te bieden,’ aldus Passchier.

Het ministerie van Justitie en Veiligheid is om een reactie gevraagd op veertien vragen over het contract, de beantwoording van de Kamervragen, en de verhouding tussen de COMPAREX-offerte en de Palantir-overeenkomst. Het ministerie heeft enkel laten weten dat het organisatieonderdeel dat het contract sloot ‘ten tijde van de Kamervragen niet onder de politieke verantwoordelijkheid van de minister van Justitie en Veiligheid viel’. Een inhoudelijke reactie op de overige vragen bleef uit.

On the weekend of March 28th, the Iran war escalated further after the US and Israel destroyed Iranian targets. Iran retaliated by attacking two of the world’s largest aluminum smelters. Aluminum prices surged to a 4-year high.

The targeted facilities are Emirates Global Aluminium in Abu Dhabi and Aluminium Bahrain (ALBA) in Bahrain, producing 1.3 million and 1.6 million tonnes respectively. Together, the smelters account for roughly 5 percent of global production capacity. The installations were reported as “heavily damaged,” and EGA confirmed staff had been injured. It remains unclear whether operations have been fully halted.

The potential impact, however, reaches far beyond the direct damage. Aluminum smelters operate continuously at temperatures around 950 degrees Celsius; a sudden shutdown can cause installations to “freeze” within days, as the liquid metal solidifies and critically damages key components beyond repair. In such a scenario, recovery can take months to over a year, with enormous costs and permanent capacity loss as a result.

On the morning of March 30th, prices for the industrial metal surged over 5 percent to $3,470. Aluminium prices had already been gaining momentum after shipping through the Strait of Hormuz ground nearly to a halt. Analysts at ING have already war-gamed the scenarios. Their most severe case — a roughly three-month disruption to shipping through the Strait of Hormuz — envisions a combination of lost production, stranded metal, and cascading logistics failures that could tighten global aluminium availability dramatically. Under that scenario, prices could briefly spike above $4,000/t before demand destruction begins to cap the upside. Even then, ING expects prices to remain well above pre-conflict levels for the remainder of the year, as the underlying supply deficit persists.

Countries around the Persian Gulf account for nearly 10 percent of global refined aluminum production, but produce only around 3 percent of the world’s alumina, a critical input. Smelters in the region are therefore almost entirely dependent on imports, with inventories typically covering only a few weeks of supply. Further disruptions in the Gulf threaten to rapidly deepen production constraints.

European countries, the US, and Japan are particularly exposed to instability in the region. The Middle East accounts for 30 percent of Europe’s aluminium imports. The world’s largest automakers were already in a panic before the attacks, according to the Financial Times, and are currently buying up aluminium in bulk out of fear of shortages and production disruptions.

At the same time, Guinea — the West African nation responsible for 40 percent of global bauxite reserves — has announced export restrictions on the raw material essential for alumina production. The country aims to stimulate domestic refining and support prices, after they fell sharply over the past year.

In short: the aluminium market is being hit by a toxic cocktail of chokepoint control, physical destruction of production capacity, and resource nationalism — a combination that not only drives up prices, but exposes the structural vulnerability of global industrial supply chains.

One unpredictable wildcard for the future of the aluminium market is Chinese production, which accounts for 60 percent of the global total. Since 2017, the Chinese government has imposed a production cap on its producers to curb oversupply, emissions, and energy use. So far, there are no indications that China intends to raise this cap.

What could flip the narrative?

The bullish case for aluminium rests on supply disruption — but markets rarely move in one direction for long. Two forces could push back hard.

First, oil. The same conflict driving aluminium higher is also pushing crude prices up sharply. Higher energy costs hit aluminium smelters directly, since smelting is one of the most energy-intensive industrial processes in existence. This could paradoxically accelerate smelter shutdowns beyond the war damage itself — particularly in Europe, where energy-vulnerable smelters have already been idled repeatedly since the 2022 energy crisis.

Second, and more importantly: a prolonged war in the Middle East, combined with oil above $100, raises serious global recession risks. Aluminium is one of the most economically sensitive industrial metals — demand tracks GDP closely. If growth concerns start to dominate headlines, the narrative could flip quickly from supply shock to demand destruction, putting heavy downward pressure on prices regardless of what happens to Gulf production capacity.

The aluminium market is therefore caught between two opposing forces: a structural supply shock on one side, and the very real possibility that the war causing that shock also kills the demand that makes high prices sustainable.

Earlier that day, the G7 announced it stood ready to release emergency oil reserves of roughly 300–400 million barrels, exceeding the 300 million barrels jointly released in 2022 following Russia’s full-scale invasion of Ukraine.

Oil prices fell almost as quickly as they had risen. After peaking at nearly $120 per barrel on March 9, prices dropped to $81 per barrel on March 10.

The decline followed a now-deleted post on X by US Energy Secretary Chris Wright claiming that the US Navy had escorted an oil tanker through the Strait of Hormuz. The White House later clarified that the statement was false.

Shortly afterwards, White House press secretary Karoline Leavitt told reporters that Trump would only end the war after “complete and unconditional surrender.”

Following the White House’s contradictory messaging, Iranian Foreign Minister Abbas Araghchi posted the following message on X:

The confusion may not be accidental. Strategic ambiguity allows the administration to calm oil markets—and prevent gasoline prices from surging—while keeping military options open. In effect, it buys political room to continue the conflict without immediately triggering domestic economic backlash.

That suggests the current volatility may be less a resolution than a pause. The underlying geopolitical risk remains, and any broader economic disruption may simply have been delayed.

I’ll leave you with two relevant tweets.

[This article was originally published for The Hague Institute for Geopolitics]

In Summary

• A new struggle within American capital. The rise of stablecoins has triggered a power struggle between the crypto sector and the traditional banking system over who will control the infrastructure of the dollar.

• Stablecoins as a digital extension of the dollar system. New U.S. legislation ties stablecoins ever more closely to U.S. government debt, allowing them to evolve into a global channel for digital dollars.

• A strategic dilemma for Europe. As dollar-denominated stablecoins gain ground, the digital euro remains cautiously designed. Without an attractive alternative, Europe risks losing monetary influence in the emerging digital financial infrastructure.

Anyone fixated on America’s trade offensive or theatrical military interventions is missing the Trump administration’s monetary Schlieffen plan. At the core of the dollar system a political struggle is currently unfolding between powerful factions of American capital. The stakes: who gets to keep collecting the rents generated by the dollar.

On one side stands rising techno-capital; on the other, the established financial elite.

That conflict is now playing out in the open. In a recent post on his platform Truth Social, President Donald Trump accused American banks of trying to undermine new crypto legislation and called for rapid progress on further regulation, arguing that the United States must become “the crypto capital of the world.”

To understand this struggle, this article looks at three developments: the integration of stablecoins into the dollar system, the rise of the crypto sector as a political interest group, and the legislative battle around new regulation such as the CLARITY Act — with implications for the American monetary system and foreign policy.

The “WhatsApp Moment” of Money — The GENIUS Act

This internal struggle has been triggered by the most recent American offensive on the international financial battlefield: the recently adopted GENIUS Act.

At the center of this law are so-called stablecoins — cryptocurrencies issued by private companies with the promise that they can be exchanged one-to-one for regular fiat money such as dollars. In doing so, stablecoins function as stable anchor points within the otherwise volatile crypto market. As crypto exchanges expand, their role in the global economy is increasing, particularly in developing countries where access to stable currencies is scarce. [1] [2]

Chris Dixon, crypto partner at Andreessen Horowitz, recently described stablecoins as the “WhatsApp moment of money.” Just as WhatsApp reduced the cost of international SMS messages to nearly zero, stablecoins push the cost and friction of cross-border payments toward zero.

While the law has already sent shockwaves through financial circles, it is still not fully recognized in public and intellectual debate for what it represents: a digital update of the dollar system, with potentially major consequences for the American financial system as a whole and for the monetary influence of the dollar.

Stablecoin issuers create tokens when users deposit dollars. The corresponding reserves are invested almost entirely in “safe” assets such as U.S. government debt.

With the GENIUS Act, Washington aims to provide further regulatory certainty to the stablecoin market while simultaneously “strengthening the American dominance of global finance,” according to President Trump.

Since the law was passed, the stablecoin market has grown from roughly $200 billion in 2025 to a peak of $317 billion in January 2026.

The legislation is meant to increase demand for U.S. government debt, push down interest rates, and strengthen the dollar as the global reserve currency “for generations.” Stablecoin issuers are therefore required to fully back their tokens with High Quality Liquid Assets — in practice mainly short-term U.S. Treasury securities.

Estimates for further growth of the stablecoin market range from $1 to $2 trillion in total market capitalization by the end of 2026 — a substantial boost for the American budget.

The Crypto Sector Gains Ground

The crypto industry is increasingly presenting itself as an organized capital faction within the American political economy. In the run-up to the GENIUS Act, major players in the sector poured hundreds of millions of dollars into lobbying efforts, campaign donations, and the financing of so-called crypto PACs. [3] [4]

With hundreds of millions spent on lobbying and campaign contributions, the crypto sector is pushing for a federal regulatory framework for stablecoins. Companies such as Coinbase, Ripple, and Andreessen Horowitz are openly positioning themselves as a new capital faction within the American political economy.

For market leaders such as Tether, the incentives are obvious. On the asset side of the balance sheet, U.S. government debt yields substantial returns.

In January 2026, Tether reported that it held more than $112 billion in Treasury bills, alongside tens of billions in short-term money market transactions backed by government bonds.

As a result, stablecoin reserves do not function as passive buffers but actively circulate within the core of the dollar funding system.

In practice, Tether operates as a large-scale liquidity manager within the U.S. money market and, through its Treasury holdings, has become one of the largest holders of American government debt in the world.

The interest income on these reserves generated more than $10 billion in profit in 2025 — more than banks such as ING — with margins reaching roughly 99 percent.

Even the Trump family itself has reportedly earned billions from its own crypto initiatives, with major investors in Trump-branded tokens gaining direct access to the president during a dinner organized at Mar-a-Lago.

What Is the Struggle About?

The best way to view the struggle over the dollar system is to think of different political jurisdictions as spheres of influence for financial actors. In that sense, the crypto sector has already conquered new territory — primarily in developing countries and within the crypto market.

Developing countries captured by the crypto sector

According to Chainalysis and the IMF, stablecoin growth is strongest in low- and middle-income countries, particularly in Sub-Saharan Africa and Latin America, where they are primarily used for remittances, protection against inflation, and access to dollars outside the formal banking system, especially in countries with high inflation and unstable national currencies.

Although the IMF finds that the largest stablecoin flows in absolute terms occur in North America (around $633 billion) and Asia-Pacific (around $519 billion), flows relative to GDP are highest in Latin America and the Caribbean (7.7% of GDP) and Africa and the Middle East (6.7%), where usage is largely international in nature and focused on remittances and capital flight.

North America effectively functions as a net exporter of stablecoins and a source of global dollar liquidity, with stablecoin flows demonstrably increasing when local currencies weaken, inflation rises, and the dollar appreciates. The IMF study also concludes that Chinese stablecoin flows are significantly underestimated in commercial datasets, suggesting that the real inflows are considerably larger. Currently, around 99 percent of the stablecoin market is denominated in dollars.

The CLARITY Act: The Battle for Developed Markets

After capturing the savings of citizens in developing countries, the crypto sector is now attempting to gain a foothold in the financial systems of developed economies.

The central issue now revolves around the CLARITY Act. As the name suggests, the law aims to bring greater regulatory clarity to cryptocurrencies and stablecoins. The legislation was expected to pass Congress last year but has stalled due to intense lobbying by both banks and the crypto sector.

The most controversial issue on the agenda: whether stablecoins should be allowed to pay interest.

The GENIUS Act explicitly prohibited stablecoins from paying interest. Yet through partnerships with crypto exchanges such as Coinbase it is still possible to earn returns of up to 3.5 percent (previously 4.5 percent). Technically these are not called “interest” payments but “rewards,” since interest is traditionally created through bank lending while these returns are backed by underlying reserves.

Banks are furious — and at the same time deeply worried. They fear that Americans will move their deposits to stablecoins en masse.

Their concern goes beyond lower profit margins on savings accounts. What is at stake is their position at the heart of the American monetary system.

Since the 1930s the system has been based on an implicit compromise: commercial banks create most of the money through lending, while the Federal Reserve sets the conditions and intervenes during crises. Household deposits form the stable foundation on which banks extend credit.

If savings were to shift to stablecoins on a large scale, more than just bank funding would change. Banks use savings deposits to extend loans to households and businesses. Stablecoin issuers do not: they invest the funds almost entirely in U.S. government bonds.

Money that would normally enter the economy as bank credit would instead flow directly into financing the American state. Banks would therefore lose not only a cheap source of funding, but also part of their role in credit creation.

This would represent a shift within what economists call “shadow banking”: financial institutions that perform bank-like functions without actually being banks. Yet even those systems ultimately remained connected to the traditional banking system and could rely on central bank support in times of crisis.

Stablecoins, in principle, sit outside that framework. They are issued by technology companies that are not banks and have no access to the Federal Reserve’s safety net. If such systems grow large enough, a crisis could eventually raise the question of whether the central bank should intervene to stop a run on stablecoins.

The stakes of the CLARITY Act are therefore less technical than they appear. At issue is whether stablecoins remain a complement to the banking system, or evolve into a parallel channel through which dollar liquidity is distributed outside the traditional banking hierarchy. Such a development would be a major blow to bank profitability, but it could also have significant consequences for the role banks play in money creation in the economy, and for the Federal Reserve’s ability to conduct effective monetary policy.

Europe’s Strategic Dilemma & Policy Recommendation

Warnings are now also being heard in Europe.

In its latest Financial Stability Review, the European Central Bank argues that strong growth in stablecoins could cause valuable retail deposits to flow out of eurozone banks. This would undermine an important and relatively stable funding source for banks, making their balance sheets more volatile.

The ECB also points to systemic risks. Two of the largest stablecoins hold volumes of U.S. Treasury securities comparable to those held by the twenty largest money market funds in the world. A sudden loss of confidence — a “run” — could trigger forced sales of these bonds, potentially disrupting the market for U.S. Treasuries.

This could also create problems for European banks if European savings migrate to American stablecoins. That would weaken Europe’s monetary autonomy.

This leaves Europe facing a strategic choice.

The digital euro could help protect European monetary autonomy in the digital age, but the current proposal of the Council of the EU remains cautious. Under the current design, the digital euro would pay no interest, and holding limits would apply to prevent deposits from leaving the banking system on a large scale.

That caution is understandable: banks play a central role in credit provision and money creation.

At the same time, an overly defensive design risks making the digital euro unattractive to consumers — thereby undermining its strategic purpose.

A possible middle ground would allow limited interest on digital euro holdings up to a certain threshold. That could encourage banks to offer more competitive savings rates — something that barely happens in countries such as the Netherlands, where savers have missed out on significant interest income.

At the same time, a gradual rollout combined with increasing holding limits could prevent deposits from abruptly leaving the banking system.

In addition, Europe could create space for euro-denominated stablecoins for international use, allowing public and private forms of digital money to complement rather than displace each other.

The digital euro is meant to strengthen Europe’s strategic autonomy. But if USDC yields roughly 3.5 percent and the digital euro nothing, Brussels appears to be hoping Europeans will keep their savings in a worse product for the sake of strategic autonomy.

What Now?

The outcome of this struggle may partly be determined in the upcoming midterm elections.

In a short period of time, the crypto industry has developed into one of the best-funded political forces in Washington. With nearly $200 million in campaign funding, the sector is attempting to secure its position in the legislative process around the CLARITY Act and further crypto regulation.

In the previous election cycle, this strategy already produced tangible results: a federal framework for stablecoins.

What is at stake in these elections therefore goes beyond the future of digital assets.

Congress is effectively deciding the institutional form of the American monetary regime. Will stablecoins become structurally embedded as a new pillar of the dollar system, or will they be restricted to protect the traditional banking system and existing power structures?

The real question is not whether the dollar will retain its dominant position, but through which infrastructure that dominance will be organized.

What is currently presented as technical regulation is in reality a renegotiation of power over liquidity, state financing, and the global circulation of money.

The midterms will reveal which coalition ultimately prevails.

In 1670, a royal charter granted a trading company control over a territory that would later constitute nearly a third of Canada. In 2025, that same company closed its final department stores.

Few corporate histories span such extremes. Fewer still reveal so clearly how economic institutions are born from political power — and how they fade when the structures that once sustained them shift. The story of the Hudson’s Bay Company is not merely the collapse of a retailer. It is a 355-year case study in how markets are constructed, how corporations can function as quasi-states, and how even the most entrenched institutions eventually become misaligned with the economic order they once helped build.

At a time when headlines are dominated by trade fragmentation, industrial policy, and the reshaping of global supply chains, it is tempting to treat corporate decline as a symptom of contemporary disruption. But some endings begin centuries earlier. The arc of the Hudson’s Bay Company stretches from the age of chartered monopolies to the era of platform capitalism — from imperial concession to liquidation notice.

In early 2025, the Hudson’s Bay Company (HBC) closed its final stores, marking the end of the oldest continuously operating company in North America. A decade earlier, in 2016, it had attempted to expand into the Dutch market by taking over former locations of V&D, itself recently bankrupt. The effort failed. Nearly three and a half centuries after its founding, the firm — once a territorial power controlling vast swaths of North America — disappeared as a retailer.

Its decline was gradual. Sales eroded structurally as the company struggled to adapt to e-commerce and shifting consumer habits. Rising debt burdens mounted. Trade frictions between the United States and Canada in the early 2020s tightened financial conditions and made refinancing more difficult. By 2025, with roughly $2 billion in debt and dwindling credit access, the company could no longer sustain operations.

Yet to describe HBC merely as a failed department store misses the deeper story. Over three and a half centuries, it transformed from colonial sovereign to landowner, from fur-trading monopoly to real estate actor, and eventually into a conventional retail chain. Its trajectory mirrors the evolution of global capitalism itself.

On 17 November 1671, patrons of Garraway’s Coffee House in London — a meeting place for shipowners and merchants — encountered an unusual announcement:

“On the fifth of December next will be sold here, in the Great Hall of this place, 3,000 pounds of beaver skins, divided into thirty lots, belonging to the Honourable Governor and Company of Adventurers of England trading into Hudson’s Bay.”

The anecdote opens Dani Rodrik’s book The Globalization Paradox, where he uses it to illustrate an early moment of globalization. Beaver pelts were a luxury commodity in 17th-century Europe, highly prized for hat-making. English elites envied continental cities such as Amsterdam and Paris, which had better access to Russian supplies.

But how did furs from the North American interior end up in London?

In October 1668, French trader Médard Chouart des Groseilliers entered Hudson Bay seeking a northern route to bypass French-controlled territories to the south. Backed by Prince Rupert of the Rhine, nephew of the English king, the expedition proved successful. Trade relations were established with Indigenous communities, and the party returned with a valuable cargo of pelts.

The English Crown responded enthusiastically. In 1670, King Charles II granted HBC a royal charter giving it control over all lands draining into Hudson Bay — territory later known as Rupert’s Land. With the stroke of a pen, a monarch transferred ownership of an area nearly one-third of present-day Canada to a private company.

In effect, a corporation had been given sovereign authority over a continental expanse.

To operate across such territory, HBC functioned less like a firm and more like a state. It built trading posts and transport networks, maintained armed forces, administered justice, issued its own tokens (a form of currency), and negotiated — often coercively — with Indigenous nations.

Rodrik’s broader point is that markets are not self-creating. Long-distance trade required enforcement mechanisms, property rights, logistics infrastructure, and political backing. Early globalization was scaffolded by concentrated institutional power — frequently violent and exclusionary.

The darker side of this arrangement was profound. HBC set the terms of exchange with Indigenous communities, shaping prices and access. The fur trade contributed to social disruption, dependency, and overexploitation of wildlife. European diseases devastated populations. No meaningful consent underpinned this corporate sovereignty.

Like many chartered companies of the era — including the Dutch East India Company — HBC blurred the line between commerce and empire.

From Fur Monopoly to Retail Chain

By the mid-nineteenth century, the economic foundations of the fur empire were eroding. Beaver populations had been depleted by overhunting, and European fashion had shifted. The commodity that had justified corporate sovereignty over a subcontinent no longer guaranteed prosperity.

The decisive break came in 1863, when control of the Hudson’s Bay Company passed into the hands of new financial interests. These investors were less interested in pelts than in land. Western Canada was opening to settlement, railways were advancing, and urban development beckoned. The company’s vast territorial holdings suddenly appeared more valuable as real estate than as fur-trading hinterland.

In 1870, HBC sold Rupert’s Land to the Canadian government for £300,000 — a sum that would prove negligible relative to the territory’s long-term value. With that transaction, nearly two centuries of corporate sovereignty formally ended. The company that had once governed rivers, forests, and trade routes across a continent ceased to be a quasi-state. It became instead a commercial actor embedded within a consolidating nation-state. Empire yielded to capitalism under public authority.

Yet the instinct to adapt remained. The trading posts that had once exchanged beaver pelts with Indigenous communities were gradually repurposed. They began selling flour, tools, textiles, and household goods to settlers moving westward. What had been extraction outposts became supply depots; what had been imperial infrastructure became commercial retail space.

Over decades, these posts evolved into department stores. The red-and-gold coat of arms that once marked territorial authority came to adorn storefronts in Canadian cities. HBC embedded itself in everyday life — not as a sovereign power, but as a national brand. By the twentieth century, it was no longer a fur monopoly but a retail institution.

At its height, the company operated hundreds of stores across North America and abroad. Yet the twenty-first century proved less accommodating. The structural logic of retail shifted. E-commerce platforms redefined convenience and pricing power. Shopping malls lost foot traffic. Real estate — once the backbone of expansion — became a fixed cost in a world optimized for distribution centers and digital storefronts.

Like many legacy retailers, HBC leaned increasingly on financial engineering: asset sales, leasebacks, and debt-financed restructuring. The company that had once controlled land as sovereign now found itself exposed to property valuations and interest-rate cycles. Real estate functioned simultaneously as buffer and burden.

Back to the old continent

Its 2016 expansion into former V&D locations in the Netherlands carried a historical irony that few noticed at the time — and that would become sharper in hindsight. The Hudson’s Bay Company had been conceived in London in the seventeenth century — in a European coffeehouse, under a European monarch, funded by European capital — to extract wealth from the North American interior and channel it back to the metropole. Nearly three and a half centuries later, the same company returned to the Old Continent not as an imperial venture, but as a department store chain seeking European consumers.

The direction of economic flow had reversed. What began as a colonial enterprise projecting European commercial power outward now attempted to project North American retail branding inward. A firm once chartered to expand Europe’s commercial frontier across oceans found itself competing for mall foot traffic in mid-sized Dutch cities.

The effort failed quickly. The Dutch stores struggled from the outset with weak footfall, an undifferentiated product range, and high operating costs. Within a few years, the experiment was abandoned. The company that had once imposed monopoly terms across a continent proved unable to secure a durable foothold in a mature European retail market.

The symbolism was difficult to ignore. A company born from early modern globalization returned to the continent that had created it, only to discover that scale and history offered no protection in an era defined by digital platforms, thin margins, and relentless price competition. Its history had begun with Europe exporting power to the periphery; it ended with a failed attempt to sell sweaters back to the center.

A Corporate Arc Across Centuries

The history of the Hudson’s Bay Company is not simply a story of managerial error or technological disruption. It is a case study in how corporations are shaped by — and survive only within — specific political and economic orders.

In the seventeenth century, it functioned as an instrument of imperial expansion.
In the nineteenth, as a landholding intermediary in settler capitalism.
In the twentieth, as a national retail institution.
In the twenty-first, as a debt-laden legacy chain struggling within platform capitalism.

Its rise and decline illustrate a structural truth: corporate power is never autonomous. It depends on alignment with the dominant institutional and technological regime of its era. HBC survived the transition from mercantilism to industrial capitalism. It did not survive the transition from industrial retail to digital platform economies.

The coat of arms that once signified sovereign authority across rivers and forests now lingers on a handful of façades — including in Dutch cities where its brief expansion left architectural traces. What began as a chartered empire ended as a liquidation notice.

Few firms have spanned so much history. Fewer still have embodied so clearly the shifting entanglement of markets, territory, and power.

[English version]

Afgelopen zomer raakte ik gefascineerd door een bedrijf dat Palantir heet. Hoe dieper ik groef, hoe vreemder het verhaal werd. Naast de rol die het bedrijf speelt bij het deporteren van immigranten met geavanceerde AI-technologie, de actieve ondersteuning van de Israel Defense Forces (IDF), en het uitgebreide netwerk van contracten binnen de Amerikaanse veiligheidsstaat, ontdekte ik dat Palantir zich tijdens de coronapandemie ook stilletjes binnen de Nederlandse overheid had genesteld.

Voordat ik meer vertel over dit opmerkelijke bedrijf, wil ik schetsen hoe ik bij dit verhaal terechtkwam.

Wat verbergt de Nederlandse overheid?

De ontdekking dat Palantir actief was in Nederland zette iets in gang. Ik vroeg me af hoe diep de betrokkenheid precies ging. Daarom diende ik bij meerdere ministeries informatieverzoeken in, waarin ik vroeg om alle communicatie en contracten met Palantir tussen 2008 en 2025 openbaar te maken.

Wat volgde was een trage stoet van uitstel, omwegen en ontwijkende formuleringen. Uiteindelijk kwam ik terecht bij het Ministerie van Defensie, dat vanaf dat moment de vrijgave van documenten bleef uitstellen, vragen uit de weg ging en subtiel aan reputatiemanagement leek te doen, gezien de morele controverses rond Palantir’s rol in Gaza en in de Amerikaanse deportatiemachine.

De woordvoerder waarschuwde me al snel dat veel documenten, áls ze al worden vrijgegeven, zwaar zwartgelakt zullen zijn vanwege “nationale veiligheid”. Hij voegde daar terloops aan toe dat elke openbaarmaking eerst met Palantir moest worden afgestemd. Dat detail bleef hangen. Als ik nog niet in hun interne systemen voorkom, dan doet dit onderzoek, en zeker dit artikel, dat waarschijnlijk wel.

Gecontroleerde openheid

Tijdens mijn contact met de woordvoerder gebeurde iets opvallends: ineens verscheen er via Defensie een strategische publicatie over Palantir. Intern was gecommuniceerd dat Defensie met Palantir werkt. Vrijwel tegelijk liet de woordvoerder doorschemeren dat NRC en Follow the Money met vergelijkbare artikelen/onderzoeken bezig waren.

Toen Follow the Money vervolgens publiceerde wat vrijwel exact de informatie was die mij al eerder was ‘ingefluisterd’, werd mijn vermoeden sterker dat er een vorm van regie achter zat. Wie hun “diverse bronnen” zijn, is tot op heden voor mij onbekend.

Maar wat staat er dan precies op het spel?

Palantir binnen Nederlandse Special Forces

Defensie maakt gebruik van Palantir-software binnen het Special Operations Command (SOCOM): het onderdeel dat alle Nederlandse specialforcesoperaties plant, uitvoert en evalueert. Hoe Palantirs systemen precies worden ingezet bij deze geheime operaties, blijft onbekend.

Ook werd duidelijk dat Defensie werkt aan de implementatie van het nieuwe Maven Smart System, een AI-platform dat door de NAVO werd aangeschaft en nu in lidstaten wordt uitgerold. Maven verwerkt dronebeelden, satellietinformatie en andere sensordata om samenwerking tussen eenheden en wapensystemen te versnellen.

Kortom: Palantir zit niet aan de rand van de Nederlandse defensie-infrastructuur, het vormt er een kernonderdeel van.

Dat deze informatie precies op dit moment naar buiten kwam, voelde niet toevallig. Mijn indruk, hoewel ik het niet kan bewijzen, is dat dit een vorm van narratief beheer was. Alsof ik subtiel werd aangespoord om mijn stuk snel te publiceren bij de Volkskrant, waar ik destijds stage liep.1
Met andere woorden: vóór zijn, voordat het verhaal uit de hand loopt.

Wat is Palantir?

Opgericht in 2003 door Peter Thiel, Joe Lonsdale en Alex Karp, is Palantir uitgegroeid tot een van de invloedrijkste – en meest omstreden – data-analysebedrijven ter wereld. Thiel ontleende de naam “Palantir” aan de palantíri uit The Lord of the Rings: magische orbs waarmee de bezitter “op elk moment alles kan zien wat er in de wereld gebeurt.” Palantirs orb is niet magisch maar technologisch. De software is ontworpen om enorme hoeveelheden data voor overheden en bedrijven te integreren, doorzoekbaar te maken en te analyseren.

Van PayPal naar de ‘War on Terror’

Palantirs technologische fundament ligt in “Igor”, PayPals fraudedetectieprogramma dat verdachte transacties markeerde voor menselijke beoordeling. Toen PayPal in 2003 werd verkocht – na de fusie met Elon Musks bedrijf X.com – begon Peter Thiel te onderzoeken hoe de logica achter Igor kon worden ingezet voor nationale veiligheid. Samen met Alex Karp paste hij het systeem aan om terroristische netwerken op te sporen via financiële patronen.

Een cruciaal moment kwam toen In-Q-Tel, het durfkapitaalfonds van de CIA, 2 miljoen dollar investeerde. Daarmee was Palantirs toegang tot het Amerikaanse nationale veiligheidsapparaat verzekerd, wat al snel leidde tot brede adoptie binnen verschillende inlichtingendiensten.

Is het dan voor iemand nog verrassend dat een van de oprichters later openlijk toegaf dat het bedrijf is opgericht om communisten te elimineren?

Het counterinsurgency-DNA van Palantir

(Gebaseerd op het uitstekende onderzoek van Benjamin Gutman, George Washington University)

Wat de meeste mensen helemaal missen, is dat Palantirs technologie niet simpelweg uit Silicon Valley voortkomt. Ze stamt uit een oudere, donkerdere traditie. Uit gedeclassificeerde documenten blijkt – zoals onderzoeker Benjamin Gutman overtuigend laat zien – dat de softwarelogica die Palantir tegenwoordig aan overheden verkoopt, voor het eerst werd ontwikkeld binnen counterinsurgency-programmas uit de Koude Oorlog, geleid door ARPA (nu DARPA).

Het gaat om projecten zoals Project Agile, Igloo White en het beruchte Project Camelot, die allemaal probeerden computergestuurde systemen te bouwen om politieke onrust, linkse bewegingen en “risicogroepen” te voorspellen en te neutraliseren voordat ze zichtbaar werden. Deze programma’s vormden een experimentele infrastructuur voor het monitoren, modelleren en preventief onderdrukken van “ongewenste bevolkingsgroepen”, zowel in Zuidoost-Azië tijdens de oorlog in Vietnam als in de Verenigde Staten zelf.

Gutman wijst erop dat zelfs het Cambridge Project aan MIT – waar interactieve computers voor sociale modellering werden ontwikkeld – kan worden gezien als een vroege voorloper van Palantirs hedendaagse datamining- en patroonherkenningstechnologie. Volgens hem vormt dit een directe genealogie: Palantir moderniseert de counterinsurgency-logica van de Koude Oorlog in commerciële vorm.

Dit is het ideologische ecosysteem waaruit Palantir is voortgekomen.

Tussen 2005 en 2008 was de CIA – via haar investeringsfonds In-Q-Tel – Palantirs enige klant. In die periode consolideerden Peter Thiel, Alex Karp en Stephen Cohen hun greep op het bedrijf. Insiders spraken van een “oligarchie van drie”: een kleine, hechte topstructuur die Palantir uitbouwde tot een privaat inlichtingenbedrijf met een wereldbeeld dat nauw aansloot bij de counterinsurgency-doctrines waaraan het zijn technische fundamenten ontleende.

Vanuit dat perspectief is Joe Lonsdale’s opmerking dat Palantir werd opgericht om “communisten op te blazen” geen provocatie, maar eerder een onbedoelde bekentenis van de ideologische afstamming van het bedrijf.

Mijn indruk is dat met de huidige Trump-regering deze techno-oligarchen simpelweg openlijker durven te zeggen wat ze al die tijd dachten.

En welke techno-oligarchen staan er aan de roer van dit machtige bedrijf?

Deze ogenschijnlijk mentaal instabiele man heeft de leiding:

Online reacties op de video variëren van bezorgdheid tot amusement en zelfs bewondering. Op Reddit viel men op dat hij “uit zijn stoel springt”, terwijl Instagram-gebruikers zich afvroegen wat dit gedrag op zijn 58ste verklaart. In wat duidelijk op reputatieschadebeperking leek, reageerde Palantir door een Neurodivergent Fellowship te lanceren, gericht op mensen die zich in zijn stijl herkennen, met goedbetaalde functies in het vooruitzicht.

Een andere opmerkelijke uitlating van Alex Karp kwam naar voren tijdens de bespreking van de kwartaalresultaten van Q4 2024, waarin hij het volgende zei:

“We hebben ons bedrijf gewijd aan de dienstverlening aan het Westen en de Verenigde Staten van Amerika, en we zijn enorm trots op de rol die we spelen, vooral op plekken waar we niet over kunnen praten. […] Palantir is hier om te ontregelen […] en wanneer het nodig is om onze vijanden bang te maken, en af en toe te vermoorden.” (Quote start rond 0:40)

Laat me uitleggen hoe deze hyperactieve Tech-CEO en zijn kring wisten op te klimmen tot enkele van de machtigste mannen van de Verenigde Staten.

Inbedding in de Amerikaanse defensie

Na zijn doorbraak binnen de inlichtingendiensten richtte Palantir zijn aandacht op het Amerikaanse ministerie van Defensie. Daar kreeg het te maken met concurrentie van software die intern door het Pentagon was ontwikkeld. In plaats van traditionele lobby koos Palantir voor een onconventionele strategie: het bood zijn platform en trainingen gratis aan militaire eenheden in Irak en Afghanistan aan. Soldaten ontwikkelden al snel een voorkeur voor Palantirs systeem vanwege de gebruiksvriendelijkheid en betrouwbaarheid, waardoor het bedrijf zich wist in te nestelen als een belangrijke defensie-aannemer.

Hoewel het Pentagon een eigen intern systeem had dat minstens zo capabel was, wist Palantir dat programma te ondermijnen via strategische lobby en een aantrekkelijker interfaceontwerp. Het daaropvolgende succes van het bedrijf markeerde de langzame, parasitaire kannibalisatie van de Amerikaanse overheid door de private sector, ironisch genoeg gesteund door de staat die het ogenschijnlijk moest reguleren.

Een brede en omstreden inzet

Palantirs software is ingezet in een ongewoon breed scala aan domeinen. Amerikaanse overheidsinstanties, van de CIA en NSA tot lokale politiekorpsen, hebben het gebruikt om:

• Terroristen op te sporen (Geweldig!)

• Financiële fraude te detecteren (Ook goed!)

• Cyberaanvallen te stoppen (Top!)

• Ongedocumenteerde migranten te deporteren (Problematisch!)

Het speelde ook een rol in verschillende spraakmakende operaties, waaronder de distributie van COVID-19-vaccins en de veroordeling van financier Bernard Madoff. Geruchten beweren zelfs dat Palantir heeft bijgedragen aan de operatie waarbij al-Qaida-leider Osama bin Laden werd gedood.

Palantir en het Israëlische leger

Een van Palantirs meest verstrekkende en controversiële partnerschappen is de langdurige samenwerking met de Israel Defense Forces. Sinds 2014 levert Palantir platforms zoals Gotham en Foundry aan de IDF voor inlichtingenanalyse, surveillance en operationele planning. In januari 2024 reisden Peter Thiel en Alex Karp naar Tel Aviv om deze samenwerking uit te breiden en Palantirs AI Platform (AIP) officieel in te zetten voor “oorlogsgerelateerde missies” tijdens het conflict in Gaza.

De systemen van Palantir ondersteunen inmiddels een breed spectrum aan IDF-activiteiten, van razendsnelle datafusie en slagveldsimulaties tot AI-ondersteunde targetselectie. Sinds oktober 2023 werken er zelfs Palantir-medewerkers ter plaatse met Israëlische veiligheidsdiensten, wat tot kritiek heeft geleid dat het bedrijf helpt bij het opbouwen van een digitale oorlogslaag in Gaza en de Westelijke Jordaanoever.

De tegenreactie groeit. Het Noorse Storebrand trok zich in 2024 terug als investeerder vanwege zorgen dat Palantirs technologie de surveillance en voorspellende profilering van Palestijnen mogelijk maakt. Mensenrechtenorganisaties waarschuwen dat Palantir in feite bijdraagt aan een “digitale kill chain”, een beschuldiging die het bedrijf ontkent, waarbij het zijn werk omschrijft als defensief en vergelijkbaar met zijn ondersteuning aan Oekraïne.

De kern van Palantirs bedrijfsmodel is de inzet van kunstmatige intelligentie om patronen te ontdekken in complexe datasets, zodat overheden en bedrijven beter onderbouwde beslissingen kunnen nemen. Een belangrijk ontwerpprincipe is toegankelijkheid: de software is niet bedoeld voor computeringenieurs, maar voor analisten en operationele medewerkers. Zo kan een CIA-officier bijvoorbeeld een verdachte volgen door gekoppelde databases te doorzoeken met telefoongegevens, creditcardtransacties, adressen en live videobeelden.

Wie houdt toezicht op de toezichthouders?

Een systeem dat is ontworpen om “op elk moment alles te kunnen zien wat er in de wereld gebeurt” heeft onvermijdelijk een duistere keerzijde.

Na de onthullingen van Edward Snowden in 2013 over de schaal van de NSA-surveillance werd Palantir weliswaar niet genoemd in programma’s als PRISM of XKEYSCORE, maar al snel bleek uit berichtgeving dat Gotham werd gebruikt om enorme hoeveelheden onderschepte e-mails, metadata en internetgedrag te ordenen en te analyseren. Omdat het uiteenlopende databronnen kan samenbrengen, fungeert Gotham als een extra analysetool bovenop dat gigantische surveillancenetwerk: van een enkel IP-adres naar een persoon, diens contacten en complete gedragspatronen.

Palantir presenteerde zijn zogeheten “immutable log” – een functie die elke handeling van een gebruiker vastlegt – vervolgens als bescherming tegen een “nieuwe Snowden”. Critici wezen er echter op dat dit de infrastructuur van massasurveillance juist versterkt: het maakt die beter beheersbaar, makkelijker deelbaar en vrijwel onmogelijk te ontwijken.

Na Snowden profileerde Palantir zichzelf graag als hoeder van burgerrechten, als bedrijf dat orde schept in chaotische datasets zonder de privacy te schenden. Maar de werkelijkheid is eenvoudiger, en ongemakkelijker: alles wat de staat verzamelt, maakt Palantir doorzoekbaar. En wat doorzoekbaar wordt, kan worden gecontroleerd.

Trump en de techno-oligarchen

De groei van Palantir is niet alleen te danken aan technologische prestaties, maar ook aan politieke toegang, vooral via Peter Thiels positie binnen conservatieve donornetwerken. Zijn steun aan Donald Trump gaf Palantir directe toegang tot invloedrijke beleidsmakers tijdens de Trump-regering, wat leidde tot lucratieve overheidscontracten. Daaronder een overeenkomst van 7 miljoen dollar met de National Institutes of Health, een defensiedeal van 876 miljoen dollar en meerdere opdrachten tijdens de coronacrisis.

Volgens Intelligencer waren deze strategische verbindingen essentieel voor Palantirs succes. Software-analist Gil Luria (DA Davidson) zei in de Financial Times:

“Palantir heeft twee vormen van aansluiting bij de nieuwe regering. De oprichters behoren tot de binnenste invloedssfeer. De tweede aansluiting is ideologisch: Palantir heeft een duidelijke missie om de westerse beschaving te beschermen, iets wat naadloos aansluit bij de filosofie van de nieuwe regering.”

De PayPal-maffia en de anti-EU techno-oligarchen

Hoewel Joe Lonsdale niet langer actief is binnen Palantir maar wel aandeelhouder blijft, speelt zijn voormalige PayPal-maffia-partner Peter Thiel nog altijd een centrale rol. Hij heeft meerdere bondgenoten in de regering gepositioneerd: vicepresident J.D. Vance, die omvangrijke financiële steun en persoonlijke begeleiding van Thiel heeft ontvangen; vertrouweling David Sacks, aangesteld als “crypto-tsaar”; en Elon Musk, die ondanks hun recente conflict nog steeds nauwe banden onderhoudt met president Trump.

Zowel Vance, Thiel als Musk staan bekend om hun uitgesproken vijandige houding tegenover het Europese politieke establishment en proberen de invloed van de EU openlijk te ondermijnen met scherpe publieke aanvallen.

• In februari 2025, tijdens de Munich Security Conference, schokte Vance aanwezigen door te beweren dat de grootste bedreiging voor Europa niet Rusland of China is, maar “de vijand van binnenuit”: Europese elites die volgens hem vrije meningsuiting onderdrukken, verkiezingsuitslagen ongeldig verklaren (zoals in Roemenië na “desinformatie”-claims), en populistische kiezers negeren. “Leiders die bang zijn voor hun eigen bevolking verdienen geen Amerikaanse steun,” zei hij.

• In december 2025 fulmineerde Vance tegen de dreigende Digital Services Act-boete voor X, die hij bestempelde als een aanval op de vrije meningsuiting. Brussel moest volgens hem “de vrijheid verdedigen in plaats van Amerikaanse bedrijven te belagen om onzin.”

• Thiel bestempelde de EU al eerder als een “gedegenereerde, verstarde bureaucratie” die innovatie en grenzen verlamt en lijnrecht ingaat tegen Amerikaanse kapitalistische waarden.

• Musk noemde de Digital Services Act op zijn beurt “tirannieke censuur, erger dan bij enige overheid”, en kondigde aan dat X zich tegen de “afpersende boetes” van Brussel zou verzetten.

De kernvraag

Nu we een beetje zicht hebben op de techno-oligarchische, hyperkapitalistische en anti-demcoratische kring die rond Palantir hangt, wil ik lezers één vraag meegeven:

Waarom ondersteunt de Nederlandse overheid financieel een bedrijf waarvan de leiders openlijk streven naar het verzwakken van Europese macht?

Conclusie: wat staat er op het spel?

Mijn WOO-ervaring heeft iets blootgelegd dat dieper gaat dan bureaucratisch getreuzel: een bewuste ondoorzichtigheid rond een bedrijf dat gebouwd is om in het duister te opereren. Contracten met Palantir zitten vrijwel altijd vol strikte geheimhoudingsclausules, waardoor inzicht in hun werkwijze, datatoegang en klantenrelaties systematisch wordt afgeschermd van publieke controle. Zoals Alex Karp zelf ooit zei: geheimhouding is geen neveneffect van Palantirs werk, maar een structureel onderdeel ervan – versterkt door het feit dat de grootste deals persoonlijk worden gesloten door de top van het bedrijf, volledig buiten normaal democratisch toezicht om.

Juist daarom is de stille omarming van Palantir door de Nederlandse overheid zo zorgwekkend. Nederland werkt hier niet samen met een neutrale softwareleverancier, maar met een privaat inlichtingenimperium, geworteld in counterinsurgency-programmas uit de Koude Oorlog en geleid door een groep techno-oligarchen die openlijk vijandig staat tegenover Europese instituties. Het feit dat dit bedrijf inmiddels diep verweven is met enkele van onze meest gevoelige militaire capaciteiten, dwingt tot ongemakkelijke vragen over soevereiniteit, transparantie en wie er uiteindelijk zeggenschap heeft over onze nationale veiligheidsinfrastructuur.

Ik blijf vechten voor iets basaals: openheid. Het recht om te weten wat mijn overheid, in mijn naam, doet met een bedrijf dat de wereld leesbaar wil maken voor instellingen en onzichtbaar voor burgers. In welke vorm de Nederlandse staat deze documenten uiteindelijk vrijgeeft, zal meer onthullen dan Palantir’s rol. Het zal laten zien hoe serieus we democratische verantwoording nog nemen in een tijd waarin surveillance en private macht steeds vaker achter gesloten deuren opereren.

Waar sta ik nu in het proces?

Mijn laatste gesprek met de woordvoerder van Defensie was begin oktober. Tijdens dat telefoontje verzekerde hij mij dat het ministerie de gevraagde documenten uiterlijk aan het eind van de maand zou vrijgeven. Die deadline is inmiddels ruim verstreken, zonder dat er ook maar één pagina is verschenen.

Intussen nam mijn dagelijks leven het weer over, ik had andere verplichtingen en kon het ministerie minder actief achter de vodden zitten. Vandaag heb ik echter formeel een klacht ingediend bij zowel Defensie als het Ministerie van Justitie en Veiligheid wegens het niet naleven van de procedure die ik in gang heb gezet.

Uit wat ik erover heb gelezen, kunnen dit soort verzoeken – zeker wanneer “nationale veiligheid” in het spel is – uiteindelijk uitmonden in juridische procedures. Als onafhankelijk onderzoeker zonder institutionele rugdekking weet ik niet of ik een rechtszaak daadwerkelijk kan voeren. Maar het principe staat: transparantie is belangrijk genoeg om voor te vechten.

[Dutch Version]

Last summer, I found myself slipping into an obsession with a company called Palantir. The deeper I went, the stranger its story became. Beyond its role in helping ICE deport immigrants with advanced AI systems, its active support to the Israel Defense Forces, and its sprawling network of contracts across the U.S. national security apparatus, I discovered that Palantir had also quietly embedded itself within the Dutch government during the COVID-19 pandemic.

Before revealing more context about this highly controversial company, let me explain how I ended up writing this article.

What is the Dutch government hiding?

My discovery of Palantir’s presence in the Netherlands set something in motion. I began to wonder just how deeply its reach extended into Dutch institutions. So I turned to the tools available to every citizen and filed formal information requests across multiple ministries, demanding the release of all communications and contracts with Palantir from 2008 to 2025.

What followed was a slow, opaque procession of delays and evasions. Eventually, I reached the Ministry of Defence—who, from that moment on, stalled the release of any documents, deflected direct questions, and engaged in a subtle form of damage control as they navigated the optics of cooperating with a company whose ethics are extremely controversial for its alleged use in the genocide in Gaza and its massive inhumane deportations in the United States.

The MOD spokesperson warned me early on that much of the material—if released at all—would arrive heavily redacted, blacked out in the name of “national security.” They added, almost casually, that any disclosure would require consultation with Palantir. That detail lingered with me. If I wasn’t already flagged in some internal system, I suspect this investigation—and now this article—may well light up their polished dashboard.

The MOD’s Response: Breadcrumbs and Strategic Transparency

While I was in contact with the MOD spokesperson, something curious happened: a strategic release of information was suddenly made public. The spokesperson told me that internally, they had circulated the message that “the MOD was working with Palantir.” Almost simultaneously, they hinted that several Dutch media outlets—from NRC to Follow the Money—were preparing stories on Palantir as well.

My suspicions gained further weight when Follow the Money published an investigation containing almost exactly the same information the MOD spokesperson had alluded to in our conversations. They named “various sources”, which to this day haven’t been revealed.

So what information are we talking about?

The Ministry of Defence has been using Palantir’s software within the Special Operations Command (SOCOM)—the unit responsible for planning, directing, executing, and evaluating all Dutch special forces missions, including covert operations by the Korps Commandotroepen and the Marine Corps. How Palantir’s systems are deployed in these classified operations remains unknown.

It was also revealed that Defence is currently implementing Palantir’s Maven Smart System, an AI-driven platform purchased by NATO in March and now being rolled out across member states. Maven processes vast streams of data—drone footage, satellite images, sensor inputs—to create faster, more reliable communication between allied partners and weapons systems during military operations. In other words: Palantir’s footprint in the Netherlands is not peripheral or experimental. It sits at the core of some of the most sensitive military capabilities the Dutch state possesses.

The timing of this article was difficult to ignore. My suspicion—though I cannot confirm it—is that this breadcrumbing was part of a broader strategy of narrative management. Whether intentional or not, it seemed designed to nudge me toward publishing something quickly for de Volkskrant, where I was interning at the time. In other words: get ahead of the story before it grows teeth.1

What is Palantir? Some context.

Founded in 2003 by Peter Thiel, Joe Lonsdale, and Alex Karp, has become one of the most influential—and controversial—data analytics companies in the world. Thiel derived the name “Palantir” from the palantíri in The Lord of the Rings: magical orbs through which the wielder can “see everything happening in the world at any moment.” Palantir’s orb is not magical but computational. Its software is designed to integrate, search, and interpret enormous volumes of data for governments and corporations.

From PayPal to the War on Terror

Palantir’s technological foundations lie in “Igor,” PayPal’s fraud-detection program that flagged suspicious transactions for human review. When PayPal was sold in 2003—after its merger with Elon Musk’s company X.com—Peter Thiel began exploring how Igor’s logic could be used for national security. Working with Alex Karp, he adapted the tool to detect terrorist networks through financial patterns.

A pivotal moment came when In-Q-Tel, the CIA’s venture capital arm, invested $2 million. This secured Palantir’s entry into the U.S. national security ecosystem, soon leading to widespread adoption across intelligence agencies.

Is it then suprising to anyone, that one of its founders has openly admitted that it was founded to eliminate communists?

The Counterinsurgency Blueprint Behind Palantir

The following section draws on excellent research from Benjamin Gutman, of George Washington University.

What most people miss is that Palantir’s technology didn’t emerge from Silicon Valley alone—it descends from an older, darker lineage. As Benjamin Gutman documents, the software logic that Palantir now sells to governments was first developed in Cold War counterinsurgency programs run by ARPA (now DARPA). These programs—Project Agile, Igloo White, and the infamous Project Camelot—sought to build computerized systems capable of predicting and neutralizing left-wing political movements before they could take root. In practice, they were experiments in tracking, modeling, and pre-emptively suppressing “undesirable populations”, whether in Southeast Asia during the Vietnam War or in American cities at home.

Gutman also traces Palantir’s lineage to the Cambridge Project at MIT, one of the earliest attempts to use interactive computers to map social networks, political tendencies, and potential dissident groups. He argues that this was effectively a prototype for the kind of data-mining and predictive analytics that Palantir now markets as cutting-edge innovation. In his telling, Palantir is not a break from these Cold War systems but their commercial modernization: a privatized continuation of the same counterinsurgency logic, upgraded for the twenty-first century.

This is the ecosystem Palantir was born into. From 2005 to 2008, the CIA—operating through its venture arm In-Q-Tel—was Palantir’s sole customer. Within this tight relationship, Peter Thiel, Alex Karp, and Stephen Cohen consolidated control over the company in what insiders called “an oligarchy of three,” building a private intelligence contractor whose worldview echoed the doctrines of counterinsurgency that preceded it.

Seen in this light, Joe Lonsdale’s comment that Palantir was founded to “eliminate communists” is less a provocation than an inadvertent confession of lineage. And with the current Trump presidency, it seems the techno-oligarchs behind Palantir simply feel more comfortable saying the quiet part out loud.

And just for your information, this is the guy currently in charge of running this whole operation:

Online reactions to this video mix concern, amusement, and admiration, with Reddit threads noting him “leaping out of his seat” and Instagram posts questioning his behavior at age 58. In apparent damage control, Palantir responded by launching a Neurodivergent Fellowship, targeting those who relate to his style with high-paying roles.

So, let me explain how this hyperactive tech CEO and his circle ascended to become some of the most powerful men in the U.S.

Establishing a Foothold in the Defense Sector

After its intelligence breakthrough, Palantir turned its attention to the U.S. Department of Defense. Here it faced competition from software developed internally by the Pentagon. Instead of relying on traditional lobbying, Palantir adopted an unconventional strategy: it offered its platform and training free of charge to military units deployed in Iraq and Afghanistan. Soldiers rapidly developed a preference for Palantir’s system due to its usability and reliability, which helped the company embed itself as a major defense contractor.

Though the MOD had their own internal system, which was equally competent, Palantir was able to destroy the programme through its strategic lobbying and its attractive UI Design. Its continued succes marked the slow parastical cannibalization of the US government by the private-sector, which ironically was supported by the deep state.

A Broad and Controversial Range of Use Cases

Palantir’s software has been deployed across an unusually wide set of domains. U.S. agencies—from the CIA and NSA to local police forces—have used it to:

• Track terrorists (Good!)

• Detect financial fraud (Also good!)

• Stop cyberattacks (Great!)

• Deport undocumented migrants (Boo!)

It has also played roles in high-profile operations, including the distribution of COVID-19 vaccines and the conviction of financier Bernard Madoff. Persistent rumors even claim it contributed to the operation that killed al-Qaeda leader Osama bin Laden.

One of Palantir’s most consequential—and controversial—partnerships is its long-standing relationship with the Israel Defense Forces. Since 2014, Palantir has supplied the IDF with platforms like Gotham and Foundry for intelligence analysis, surveillance, and operational planning. In January 2024, Peter Thiel and Alex Karp traveled to Tel Aviv to expand this cooperation, formally committing Palantir’s AI Platform (AIP) to “war-related missions” during the Gaza conflict.

Palantir’s systems now support a range of IDF activities, from high-velocity data fusion and battlefield modeling to AI-assisted targeting. Employees have even worked on the ground with Israeli security units since October 2023, prompting criticism that the company is helping build a digital layer of warfare in Gaza and the West Bank.

The backlash is growing. Norway’s Storebrand divested from Palantir in 2024 over concerns that its tools enable surveillance and predictive profiling of Palestinians. Human rights groups warn that Palantir is effectively contributing to a “digital kill chain”—a charge the company denies, framing its work as defensive and comparable to its assistance to Ukraine.

The core of Palantir’s business model is its ability to use artificial intelligence to detect patterns in complex datasets, enabling more informed decisions by governments and corporations. A key design principle is accessibility: the software is intended not for computer engineers but for analysts and field operators. A CIA officer, for example, can track a suspect by querying linked databases containing phone records, credit card transactions, addresses, and live video feeds.

But who watches the watchmen?

But a system designed to “see everything happening in the world at any moment” carries a darker charge. After Edward Snowden’s 2013 disclosures exposed the scale of NSA surveillance, Palantir was never named directly in programs like PRISM or XKEYSCORE—but its Gotham platform quickly surfaced in reporting as one of the tools used to analyze the oceans of intercepted emails, metadata, and web activity those leaks revealed. Gotham’s ability to fuse disparate datasets made it an analytic layer atop the surveillance dragnet, allowing intelligence officers to move seamlessly from an IP address to a person, a network, and a pattern. Palantir even marketed its “immutable log”—a feature that records every analyst’s action—as a safeguard against another Snowden, even as critics warned it simply fortified the architecture of mass surveillance by making it more efficient, shareable, and difficult to escape. In the post-Snowden era, Palantir positioned itself not as a violator but as a custodian of civil liberties. Yet the reality is simpler, and more unsettling: whatever the state collects, Palantir makes legible. And legibility, in the hands of powerful institutions, is the beginning of control.

Political Influence and the Trump Administration

Palantir’s growth has also been shaped by political access—particularly through Peter Thiel’s role within conservative donor networks. Thiel’s support for Donald Trump provided Palantir with direct connections to powerful policymakers during the Trump administration, yielding lucrative contracts. These included a $7 million agreement with the National Institutes of Health, an $876 million defense deal, and additional contracts during the COVID-19 crisis.

According to Intelligencer, these strategic connections were essential to Palantir’s success. A DA Davidson software analyst, Gil Luria, told the Financial Times:

“Palantir has two levels of alignment with the new administration. The founders are within the inner circle of influence. The other alignment is ideological: Palantir has a clear mission to protect Western civilization, which fits well with the philosophy of the incoming administration.”

Paypal-Maffia and the anti-EU Techno-Oligarchs

Though Joe Lonsdale is no longer involved in Palantir but remains a shareholder, his fellow PayPal Maffia associate Peter Thiel is still heavily involved in the business, and has installed numerous allies in government; with Vice-President J.D. Vance receiving significant financial support and mentorship from him and his techno-oligarchic circle; close associate David Sacks installed as “crypto-czar”; and collaborator Elon Musk enjoying continuous close connections with President Donald Trump despite their recent falling out.

Each of JD Vance, Peter Thiel, and Elon Musk holds openly hostile views toward the European establishment, actively seeking to weaken its bureaucratic grip through sharp public critiques.

In February 2025, at the Munich Security Conference, Vice-President JD Vance stunned attendees by declaring Europe's greatest security threat to be the “enemy from within”—not Russia or China—but its elites’ suppression of free speech, annulment of elections like Romania's on "misinformation" grounds, and stifling of populist voters amid migration crises, warning that leaders fearing their own citizens deserve no US aid

In December 2025, Vance blasted the EU’s looming Digital Services Act fine on X as an assault on free speech, urging Brussels to defend expression instead of “attacking American companies over garbage.” guises, sneering that fearful leaders deserve no US aid.

Thiel notoriously labeled the EU a “degenerate” sclerotic bureaucracy crushing innovation and borders, antithetical to American capitalism.

Musk, meanwhile, branded the EU’s Digital Services Act tyrannical censorship worse than any government, vowing X’s defiance against Brussels’ “extortionate” fines.

Now that we have minimal background established about the techno-oligarchical, hypercapitalist-libertarian (or one might say, privately authoritarian), and corrupt circle that is involved with Palantir, I want to invite readers to question: Why on Earth is the Dutch government financially supporting a business of which the learders are actively seeking to undermine European power?

Conclusion: What This Means for the Netherlands

My FOI experience has revealed something deeper than bureaucratic delay: a deliberate opacity surrounding a company engineered to operate in the dark. Palantir’s contracts often come wrapped in strict non-disclosure clauses, shielding its methods, data access, and client relationships from public scrutiny. As Alex Karp has admitted, secrecy is not a byproduct of Palantir’s work but a structural feature—reinforced by the fact that major deals are personally handled by Palantir’s leadership, beyond any normal democratic oversight.

This makes the Dutch government’s quiet embrace of Palantir especially troubling. The Netherlands is not partnering with a neutral software vendor, but with a private intelligence empire rooted in Cold War counterinsurgency doctrines and steered by a circle of techno-oligarchs openly hostile to European institutions. That this company now sits at the core of some of our most sensitive military capabilities should force us to ask uncomfortable questions about sovereignty, transparency, and who truly wields power over national security infrastructure.

I’m still fighting for basic transparency—simply to know what my government is doing, in my name, with a company built to make the world legible to institutions and invisible to everyone else. Whether the Netherlands ultimately releases these documents will reveal more than Palantir’s footprint: it will show how seriously we take democratic accountability in an era where surveillance and private power increasingly operate behind closed doors.

Where am I now in the process?

My last conversation with the MOD spokesperson was in early October. During that call, he assured me that the Ministry would release the requested documents by the end of the month. That deadline came and went without a single page.

In the meantime, life took over—I was consumed by other responsibilities and unable to chase the Ministry as actively as before. Today, however, I formally filed a complaint with both the MOD and the Dutch Ministry of Justice and Security for failing to follow the procedure I initiated.

From what I’ve read, these kinds of requests—especially when they involve national security—often escalate into legal battles. As an independent investigator without institutional backing, I’m not sure whether I can realistically pursue litigation. But the principle matters, and transparency is worth fighting for.

If anything changes, I’ll report back.

What is the Genius Act, recently signed by Donald Trump?

The law is meant to provide clarity for consumers and businesses active in the crypto market. Companies must comply with rules against money laundering and terrorism financing, as well as measures to protect consumers. In doing so, the law aims to build trust in cryptocurrencies.

It is the first law to define how the crypto sector must operate and which rules it must follow. That marks a major breakthrough, as very little had previously been regulated in this area. The fact that the U.S. government is regulating the crypto industry is a big boost for the sector.

Crypto companies were generous donors to Trump’s election campaign. “I supported you so you would vote for me, and you did,” Trump said. Now, he is giving the sector what it asked for: respectability through the Genius Act. Trump also couldn’t resist pointing out that the word “Genius” refers to himself as well.

The law is intended to provide certainty for the crypto market and to “strengthen America’s dominance in global finance,” Trump said. In his view, the law will increase demand for U.S. debt, lower interest rates, and reinforce the U.S. dollar as the world’s reserve currency “for generations to come.”

At the heart of the plan are so-called stablecoins, which have existed for some time but legally remain in a gray area. Trump wants people around the world to make greater use of them.

What are stablecoins?

They are cryptocurrencies designed to be exchangeable one-to-one with regular currencies such as the dollar or euro. When you open a crypto account, you can choose from various stablecoins offered by private companies.

When you buy a stablecoin, you pay, for example, one euro to a stablecoin provider in exchange for one stablecoin. You can then trade the stablecoin for other cryptocurrencies, like bitcoin, and vice versa.

If you want to exchange the stablecoins back into real euros, the company guarantees you’ll get back the same amount you started with. Because of this stability and security, stablecoins have become popular as a safe haven for crypto investors who want to avoid the extreme volatility of bitcoin and other cryptocurrencies. Increasingly, they are shifting from a niche crypto instrument into a payment method that is actually used in the global economy.

One aim of the Genius Act is to boost the role of crypto-dollars and reduce distrust of the coins. In the past, stablecoins have not always proven as stable as promised, which triggered panic in the crypto market and caused crashes.

How does Trump want to use crypto to finance U.S. debt?

The Genius Act requires stablecoin providers to back 100 percent of their stablecoins with dollars held in a U.S. bank account. Providers may then use these dollars for “safe” investments, such as purchasing short-term U.S. government debt. Stablecoin giant Tether is already making enormous profits from buying U.S. debt, and it has already become a bigger creditor than Germany.

U.S. Treasury Secretary Scott Bessent speculates that the growing popularity of dollar stablecoins could boost demand for U.S. government debt by $2 trillion. Supporters see this as a win-win: people worldwide gain reliable access to dollar stablecoins, while indirectly financing the U.S. budget.

Sounds genius. What could go wrong?

Economists and international organizations are sounding the alarm: they see risks in the growing role of crypto in financing the U.S. budget. The Bank for International Settlements (BIS) warns of a potential bank run: if customers were to suddenly sell off their stablecoins en masse, providers would need to liquidate their government debt holdings to repay customers in dollars. Since U.S. government debt is the lubricant of global financial markets, this could have unpredictable consequences, potentially triggering a financial chain reaction reminiscent of 2008.

Both the BIS and the European Central Bank (ECB) see risks for Europe. A surge of dollar stablecoins in the eurozone could, according to ECB chief economist Philip Lane, lead to “digital dollarization,” causing the ECB to lose control over payments and monetary policy—ultimately benefiting the U.S. The same applies to countries where stablecoins are already popular.

How are other countries and banks responding?

Lane stresses the need for a digital euro to prevent dollar stablecoins from deepening dependence on the U.S. In light of their rise, some European banks now view a digital euro as the least bad option, according to Politico.

Banks fear that dollar stablecoins could steal market share in payments, savings, and loans. A digital euro would offer the same benefits as a stablecoin but would be issued by the ECB instead of a foreign private company.

Other banks want to compete directly by launching euro-stablecoins. Deutsche Bank, together with Dutch firm Flow Traders, has announced the launch of a euro-stablecoin. ING spokesperson Daan Wentholt has also confirmed that the Dutch bank is exploring whether to offer stablecoins. For now, the dollar dominates with a 99 percent share of the stablecoin market.

This dominance stems from the growing digitalization of the global economy and the financial innovation enabled by crypto technology: thanks to crypto exchanges, all you need is a phone and internet access to open a crypto-dollar account—even if you have no access to traditional banks.

Stablecoin transactions can take place 24/7, are nearly instantaneous, and typically cost less because there are no intermediaries charging transaction fees.

Because of these advantages, stablecoins are ideal for migrant workers sending money home to their families, and for people without access to a traditional bank account. They are also popular in countries with unstable currencies, where stablecoins inspire more trust than the local money.

In China, the first stablecoins are cautiously being allowed via Hong Kong to make the renminbi more attractive internationally and less dependent on the dollar. Progress is slow, however, due to fears of capital flight and the government’s reluctance to lose control over money.

In the UK, former finance minister George Osborne has warned that the country is falling behind because it lacks clear legislation on stablecoins, while other countries like the U.S. and EU are moving much faster to regulate the market. As a result, British stablecoins remain scarce, and dollar variants dominate worldwide.

The astronomical growth of the Chinese economy in recent decades has reshaped global power dynamics, with an impressive 9% average yearly growth since 1978 (World Bank, 2023) sparking predictions of China surpassing the United States as the biggest economy measured by nominal GDP (BBC News, 2020), and has caused some to even posit that China will be able to rival the US in power (Tucker, 2023).

However, a more nuanced examination reveals complexities in China's economic development model and its intersection with foreign policy. This article delves into the evolution of China's economic rise, emphasizing its high-savings, investment-led growth model and its profound global implications. The inherent connection as well as tension between China’s domestic economic policies and its foreign policy will be examined.

China’s economic rise and the development of its economy over time

To understand how China has managed to join the ranks of the most influential players in the global economy, and what consequences it has for its foreign policy, it is essential to understand its political economic development model. Additionally, for the argument of this article it is important to understand how the Chinese economy fits into the global economic puzzle.

A short history of the Chinese development model

From an economic perspective, societies can improve standards of living in a number of ways: increasing employment, improving the efficiency of workers, or expanding production through investment in capital equipment. Crucially, all of these factors highlight the importance of investment for development (Klein, Pettis, p.68, 2020). When domestic production is running at maximum capacity, there are two major development models (often applied simultaneously) that economies can follow to pay for additional investment (Klein, Pettis, p.68, 2020): On the one hand there is the ‘high savings model’, which transfers resources from domestic consumers to businesses and the government who save more than they consume. This thereby creates a trade surplus because it raises domestic production relative to domestic demand (Klein, Pettis, p. 68, 2020). On the other hand, there is the high-wage model, which transfers resources from the rest of the world by raising imports relative to exports in an attempt to attract foreign investment by raising domestic demand, increasing the trade deficit (Klein, Pettis, p. 68, 2020).

Authoritarian political culture made a state-directed export-led growth model a logical option for the CCP. From the 1990s onwards, the Chinese government started to transfer spending power from ordinary Chinese people in order to subsidize domestic investment and export-oriented industries - in effect subsidizing foreign consumption (Klein, Pettis, p. 108, 2020). Even though household income would increase greatly due to the substantial economic growth that these investments generated, households consumed an increasingly smaller share of economic output as savings increased as a share of the economy (Klein, Pettis, p. 108, 2020).

China utilized several internal transfer mechanisms to supress consumption and increase savings which included: currency manipulation; regulatory measures such as expropriations; unfavourable lending conditions for consumers and favourable lending conditions for elites with political connections; and lastly, the hukou system which deprived internal migrant workers of social security (Klein, Pettis, pp. 108-112, 2020).

As a result, the decrease in household spending relative to GDP during the 1990s and 2000s was significantly more pronounced than the increase in investment (Klein, Pettis, 2020, p. 108). To generate the required growth, investment in infrastructure and manufacturing skyrocketed: however this meant that China produced more value than it consumed. The difference had to be exported.

This led to a significant surplus in the current account, amounting to around 10 percent of China's total economic output by 2007-8 (Klein, Pettis, 2020, p. 108).

Untenable numbers

Global investment on average represents 25% of GDP (World Bank, 2023), and even though it is normal for a developing economy to have a higher rate of investment, China’s investment share of GDP sits at an exceptional 43% (World Bank, 2023). With a GDP of almost $18 Trillion accounting for ~18% of the world’s economy (World Bank 2023), China’s economic imbalances have great implications for the world economy, and at the same time the state of the world economy has great implications for China.

In his recent blog, Michael Pettis (2023) argues that with a share of only 13% of global consumption while having a 32% share of global investment, the Chinese economy cannot sustainably grow at 4-5% with the same model as it currently follows. Pettis (2023) argues:

Every $1 of investment has required approximately $3 of consumption globally to sustain it during this century. In China, however, $1 of investment is balanced by only $1.30 of consumption. If the global relationship between consumption and investment held over the next decade, an increase in the Chinese share of global investment from 32 percent today to 38 percent in a decade would require that the rest of the world disinvest to accommodate China’s domestic imbalances. (Pettis, 2023)  

The following sections will discuss how China’s increasingly aggressive foreign policy, in combination with changing geopolitical circumstances has made global disinvestment extremely unlikely.

The evolution of Chinese foreign policy over time

As explained previously, the Chinese rise as an important actor in the global system has been facilitated by foreign consumers who consume the excess production which underpaid Chinese workers cannot consume themselves. Hence, China has great interest in maintaining the current global liberal trade regime, from which it has greatly benefited following its accession to the WTO in 2001. Seeing as trading relations with Western countries are of paramount importance to China’s economic prospects under the current economic model it pursues, it should be in China’s interests to avoid antagonizing the West. This section will explain how the historical Chinese stance allowed or its rise within the international system, and why its current stance undermines its future.

Chinese foreign policy pre-Xi

For a long time, Chinese foreign policy had been led by a quote of Deng Xiaoping in reaction to the international backlash to the Tiananmen Square incident. Around this time, he told other CCP leaders that their reaction should be to “lengjing guancha, wenzhu zhenjiao, chenzhuo yingfu” (observe calmly, secure our position, cope with afairs calmly) (Chen, Wang, 2011, p. 5). The foreign policy debate in China would long centre around this stance, paraphrased as “Tao Guang Yang Hui” roughly translated as: “hide your strength and bide your time” or “hide capabilities and keep a low profile”[1] (Chen, Wang, 2011).

The relative low-profile of China meant that other great powers not only tolerated its rise in the global system, but they also increased their ties with China dramatically, Western companies poured into the Chinese market to take advantage both of cheap manufacturing (caused by aforementioned reforms and industrial policy) and the large Chinese market. Between 1980 and 2004, US-China trade rose from $5 billion to $231 billion (Council on Foreign Relations, 2017).

Another guiding principle in the Chinese rise within the international system was the supposed “peaceful development” of China, a concept where progress and expansion were based on the historical philosophy of the “Middle-Kingdom” in which a non-confrontational approach was valued highly (Stevens, 2014, p. 1). The peaceful development narrative has persisted until this day but has arguably been more of a soft power campaign as of late to counter the “China threat” discourse (zhongguo weixie, 中国威胁) (Sørensen, 2015, p. 8), which has taken hold among foreign powers. The “China threat” discourse refers to a narrative that frames China as a potential menace to global stability and established international norms. This discourse encompasses concerns related to China's military modernization, economic influence, territorial claims, and geopolitical ambitions. Wang Yi, currently the Chinese minister of foreign affairs, called this discourse an “outdated Cold-War mentality” which has “no place in the new era of globalization” (Wang, 2013). Crucially, Wang's statements along with the "China threat" discourse within China concerning globalization, demonstrate an acknowledgment of the adverse consequences stemming from China's assertive actions in the realm of foreign policy. Wang went on to reassure that “China would never seek hegemony in the world” (Wang, 2013).

However, sentiment within the Chinese government started shifting around the 2010s (Stevens, 2014, pp. 1-2). The combination of the great financial crisis in 2008 and the resource intensive US-led wars in Afghanistan and Iraq, combined with the symbolic achievement of holding the 2008 Beijing Olympics, made some government officials believe that the balance of power was shifting, and that China should be more assertive towards a declining US (Stevens, 2014, p. 1). This was not truly a dramatic shift, which was to come later, with a new leader taking the stage.

Chinese foreign policy after Xi

The ascension of Xi Jinping as Chinese leader has dramatically altered the way China interacts with the world. Bolstering development was no longer the only priority. A new moral objective inspired by the century of humiliation had entered the picture. Essentially, Xi Jinping has changed Chinese state identity within the international system. Under Xi Jinping, China no longer lay low and started to figuratively stand up, from 2013 the new guideline was to be “Fen Fa You Wei” (奋发有为, “striving for achievement”) (Sørensen, 2015), with the ultimate goal of achieving the “Chinese dream”.
The Chinese dream is inspired by historical revanchism, with the ultimate goal being the great “rejuvenation of the Chinese nation”, in which China regains its international status, rights and power (Sørensen, 2015, p. 10); reminiscing over times when China made the rules as hegemon within East-Asia. Essentially, Xi Jinping slowly and methodically started reconstructing Chinese state identity within the international system. This rhetoric has attracted negative attention in the Western media, seen as carrying sinister implications for the international order (Sørensen, 2015, p. 5). In 2017, Xi definitively departed from keeping a low profile. In his (im)famous “new era” speech at the commencement of the 19^th party congress, Xi presented statements that appeared contradictory to Wang’s 2013 remarks. Xi asserted that Beijing would no longer shy away from world leadership and would aim to promote its model around the world: “It is time for us to take centre stage in the world and to make a greater contribution to humankind […] [China is] standing tall and firm in the east”. (Xi, 2017)

Chinese assertiveness antagonizes the world: The rediscovery of industrial policy, protectionism, and economic deterrence

Beyond long speeches and articulate rhetoric, Chinese assertiveness has manifested in such numerous ways that it is difficult to name every incident. The most prominent examples include its aggressive military posture in the Taiwan strait and the South China sea, where the Chinese military and coast guard have initiated numerous hostile encounters over the years. These encounters have prompted the EU and US to voice strong opposition to the PRC’s (People’s Republic of China) actions, with the US calling PRC actions “unlawful” (Reuters, 2023) and the EU “emphasising” that parties should “respect freedom of navigation” and settle disputes “through peaceful means in accordance with international law” (EEAS, 2021). However, more direct confrontations with Western powers have taken place in the economic realm. In 2005 Robert Zoellick, then Deputy Secretary of State of the United States urged the Chinese to become a “responsible stakeholder” within the system, as a result of Chinese hostile actions however, these hopes have been given up; the EU has labelled China a “systemic rival” (EEAS, 2023) and the Sino-American competition is no secret. The West is now changing its geo-economic policy according to the perceived “China threat” that Wang Yi (2013) was worried about.

Chinese economic coercion

Through its strategic use of industrial policy China has managed to forge several dependencies for the West, notably in the area of green energy, where it dominates the refining of rare earth minerals, the production of electric vehicles and batteries (Hárven, 2023).  China has been abusing such dependencies through economic coercion (Cha, 2023). In a testimony to the US congress, Senior Vice president for Asia and Korea Chair at CSIS Victor Cha, perfectly articulates the consequences of Chinese economic coercion:

China’s economic coercion has become part and parcel of its foreign policy against many trading partners. Countries that interact with Taiwan, support democracy in Hong Kong, oppose genocide in Xinjiang or offend any other “core interests” of China face discriminatory, non-WTO-conforming sanctions and embargoes. Targets of this weaponization of trade since 2008 range widely. Eighteen Western and Asian countries, including Japan, Lithuania, Norway, and Australia, and over 123 private companies, including Walmart and the National Basketball Association, have been targeted precipitating tens of billions of dollars in economic damage. (Cha, 2023)

Cha (2023) went on to call on the United States and like-minded partners to consider a “collective resilience” strategy to deter China’s economic coercion. Even though Cha (2023) recognizes that most targets of coercion are asymmetrically dependent on China, he highlights that there are still a number of export items these countries possess on which the Chinese market is “highly dependent” and “in some cases almost 100% dependent”. If states come together to promise collective retaliation, Cha (2023) argues, it would be enough of a deterrence to Beijing to cease its aggressive behaviour.

In Europe too there has been a response to Chinese economic coercion, with the introduction of the Anti-Coercion Instrument, which went into force on the 27^th of December 2023, providing the EU with means to deter and respond to economic coercion acting as a deterrent for future coercion by China (European Commission, 2023).

The rise of industrial policy and protectionist measures as a response to the fragmentation of the Liberal International Order

A more serious concern for China is the rise of industrial policy and protectionism in states that have until now acted as a sponge for excess Chinese production. Arguably, this is the most serious threat to the Chinese economic growth model. In the United States, the concept of economic decoupling from China, as advocated during President Trump's tenure, may have been an extreme interpretation of this viewpoint. However, the Biden administration has sustained and expanded specific policies aimed at reviewing critical supply chains, enhancing investment screening and export controls, and allocating substantial subsidies to national industries (Gehrke, 2022). In a similar vein, the European Union (EU) has also been actively pursuing strategic autonomy in response to the evolving landscape of global economic interdependence. A catalysing factor in the rise of European industrial policy has been the Russian invasion of Ukraine and the Chinese alignment with Russia in the conflict, leading some to say that this has been the starting point of a fragmentation of the Liberal International Order (Costa, Barbe, 2023, p. 2). There are strong signs that the dependence on China is viewed in Brussels in a similar vein as the one with Russia. This was signified by a statement by Ursula von der Leyen in the State of the Union of 2022: “Lithium and rare earths are already replacing gas and oil at the heart of our economy. [...] The not so good news is – one country dominates the market. So, we have to avoid falling into the same dependency as with oil and gas.” (Von der Leyen, 2022).

As a response to this dependence the Commission introduced the Critical Raw Materials Act (European Commission, 2023), which seeks to reduce EU dependence and was adopted last December. In addition, the EU is bolstering its industry through the Green Deal Industrial Plan and is seeking to apply tariffs to products which are produced with a lower environmental standard than within the EU through the Carbon Border Adjustment Mechanism (European Commission, 2023). Similarly, the United Kingdom, under Project Defence, is exploring ways to diminish dependence on key imports from China, while Japan has elevated its bureaucratic infrastructure to monitor new technology and economic security threats, including potential risks associated with foreign dependence (Gehrke, 2023). Additionally, India's economic and technology policy, encapsulated by the term "Atmanirbhar Bharat" (self-reliant India), has become a focal point under the Modi administration (Gehrke, 2023). ECB research from 2019 indicated that if trade tension were to escalate significantly in the future, global trade would decline significantly. Based on the previously mentioned policy initiatives, this scenario seems more likely than ever, with potentially severe implications for the Chinese economy.

Implications for China

As mentioned earlier in this article, the rest of the world would have to disinvest to accommodate Chinese investment-led growth. Seeing the discussion above, this seems like an extremely unlikely outcome. Critics might argue that the CCP has been aware of the problems its internal imbalances generate, for it can simply choose to escape the investment-trap by sharply increasing consumption, which it is already attempting to do under its “Common Prosperity Policy” (Koty, 2022). However, here Michael Pettis’s (2023) calculations can assist with finding out whether this is manageable within a reasonable timeframe. Michael Pettis makes two optimistic assumptions regarding China's rebalancing process. Firstly, considering China's historical high investment levels and the recent surge in its debt-to-GDP ratio, Pettis (2023) suggests a sustainable investment share might be lower than the global average. However, for this analysis, Pettis (2023) assumes it can be as high as 33–34 percent. Despite being one-fourth below the current level, this would still make China the world's top investor for the next decade. Secondly, based on Pettis's (2023) perspective, there is an assumption that China has a decade to bring its investment share to a more sustainable level, with GDP growth outpacing investment growth, reducing the investment share by nearly 10 percentage points to 34 percent. However, to achieve such a transformation Pettis notes that GDP growth would have to outpace investment growth by 2-3 percent per year, which would in turn necessitate consumption to outgrow GDP by 2-3 percent per year.

Pettis (2023) notes that the above will be incredibly difficult to achieve, as slowing investment growth will require a painful transformation in which construction jobs are lost and household income growth would have to be accelerated drastically through either direct transfer in wages or indirectly through a more generous social safety net. The challenge with implementing transfers lies in the financial burden they pose, and only three sectors can viably shoulder this responsibility. The first sector that wealth could be transferred from is the affluent, who consume a much lower share of their income, but seeing the size of China’s population this would have a smaller impact on consumption than it would have in economies like that of the US (Pettis, 2023). Pettis (2023) argues that the business sector is also an unlikely candidate, as jeopardizing China’s manufacturing competitiveness will likely be difficult given the “vested interests” which have been shown to have a significant influence on CCP policymaking, with Le Keqiang once saying: “It is now more difficult to deal with vested interests than it is to touch the soul” (Spegele, 2013). The last option is the government, specifically local governments, since the central government has explicitly stated reluctance to bear the costs of adjustment (Pettis, 2023). According to Pettis (2023) it would technically be possible to do this, but seeing the limited room for choice the Chinese government has as explained above and the trickiness of reversing four decades of direct and indirect transfers from household savings into investment (Pettis 2023), Beijing might very well fail in this task which might lead to a global overproduction crisis, or it might resort to a softer foreign policy stance. There are signals that Beijing is attempting to rescue its foreign image by going on a charm offensive and softening its stance, with China’s controversial “wolf warrior diplomacy” falling out of fashion, with prominent “Wolf Warrior” Zhao Lijan being “banished” according to Foreign Policy (Palmer, 2023). Additionally, China is presenting itself as an international peacemaker, although it is unclear whether this is a true change in policy or simply a “cosmetic change” (Harper, 2023).

Conclusion

In conclusion, the interplay between China's economic trajectory and its foreign policy shapes a complex narrative that underscores how domestic policy can influence foreign policy and vice-versa. This article highlights the inherent tension between the investment-based Chinese economy versus its assertive global posturing. Xi Jinping and the CCP have arguably hurt the PRC’s economic prospects by poor coordination between the political-economic and foreign policy domain.
The response of the West to Chinese economic coercion and the nascent disintegration of the liberal international order underscores the pervasive implications of China’s economic course. The implications for China are substantial, encompassing the formidable challenges associated with rebalancing its extremely unbalanced economy and contemplating potential adjustments in its foreign policy to address global reactions. As the international community grapples with the ramifications of China's ascendance, the CCP faces a critical juncture. The decisions forthcoming will not merely shape China's trajectory but will wield strong influence over broader global economic developments and geopolitics.

[1] Some Chinese officials like the former deputy chief of the PLA have argued that the phrase is more benign than it sounds, due to difficulties in translating the phrase to English. (Chen, Wang, 2011, p.9)

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Introduction

Why Nations Fail: The Origins of Power, Prosperity, and Poverty is an influential book in the field of International Development, written by Daron Acemoglu and James A. Robinson. Published in 2012, the book delves into why some nations are prosperous and democratic while others suffer from poverty and dictatorship.

Daron Acemoglu received his PhD in economics from the London School of Economics. He is currently the Elizabeth and James Killian Professor of Economics at the Massachusetts Institute of Technology (MIT).[1] James Robinson received his PhD in economics from Yale University. He is currently a University Professor at the Harris School of Public Policy at the University of Chicago. [2] Acemoglu and Robinson are both associated with the new institutional economics school, which emphasizes the role of institutions in shaping economic and political outcomes. In this review, I will review their arguments as well as their critiques on other theories. Keep in mind that this book has 546 pages, and it will be impossible for me to discuss all arguments and cases, this review is rather meant to be a digestible critique of the central argument.

“Theories that don’t work.” According to Acemoglu & Robinson

International Development contains three dominant approaches that explain the bulk of development across the globe. In no particular order, those are approaches of geography, culture, and finally institutional theory. Acemoglu and Robinson staunchly argue against all of these approaches except their own.[3] The authors make a compelling case as to why geographical and cultural explanations for development differences do not work. The authors give examples like the divide between North-Korea and South-Korea, and the West-German state and the East-German state as proof that the vastly similar cultures and geographies cannot explain development.[4] New world examples include the Inca and Aztec empires in contrast to contemporary development distributions in the Americas. [5] The authors discuss a plethora of other examples that support their position that the dominant approaches lack explanatory power. Moreover, they fail to appreciate important factors in their analysis that help to understand the phenomenon they are explaining. More on this in the review section of this paper.

Why do nations fail? The central argument

The central argument of the book claims that differences in institutions between states is the main driver of global inequality.[6] They posit two types of institutions: inclusive institutions, which allow people to express their own talents, make their own choices, and reap the rewards of their talents and choices. Inclusive institutions are characterized by pluralism and encourage investment and innovation, they include “private property rights, an unbiased judicial system, as well as public services that give people equal chances on the commercial and financial market and with the signing of contracts” [7],[8]. Extractive institutions on the other hand benefit only a rent-seeking elite and do not secure similar economic opportunities for the broader population.[9] The authors differentiate between economic and political institutions, they argue that these two dimensions are mutually reinforcing.[10] The authors attribute an important role to path dependency, critical junctures, and feedback loops. Examples include societal implications of the black death in Europe, explaining how the diseases’ impact on demographic and geographic realities in different areas shaped institutional make-up.[11]

In the 11^th and 12^th chapter they discuss how institutional distribution of power creates feedback loops, where vicious cycles of development occur under extractive institutions, and positive economic spirals under inclusive institutions. In combination with the emphasis on critical junctures and path dependency we could conclude that the authors subject their theory to historical determinism.

A lack of attention to real-world complexity discredits an otherwise convincing premise.

The authors make valid critiques against some geographical and cultural arguments, but they take this intellectual victory over some arguments as proof that overarching paradigms do not have merit, which is a bold claim. The authors do not touch on credible theories like the resource curse also known as “Dutch disease”.  They also ignore research (Hausmann, 2001, pp. 44-53) that provides empirical evidence that some countries are inherently geographically disadvantaged, where tropical countries have 1.5% slower growth rates per year while landlocked countries suffer 0.6% slower growth. Other arguments by Hausmann (2001, pp. 44-53) about the geographical reasons for US’s dominance are also ignored. Overall, the authors seem to disregard arguments that give credit to the other schools of thought.

Another problem with the level of analysis is that Acemoglu & Robinson focus on many cases ranging from prehistory to the modern day. Although it does not disqualify their argument completely, it does not take the evolution of the world economic system into account, and focusing solely on domestic institutions does not do justice the field of international political economy (IPE) and its complexities.

Adding to the critique of the disregard of complexities in IPE, Peer Vries (2012, p.6) made an important point about the disregard of the Heckscher-Olin model of international trade, as the authors focus mainly on ultimate causes rather than proximate causes of development. In his critique he mentions the early industrialisation of the West as a factor in the establishment of a modern-world-system as Wallerstein (2011) calls it (Vries does not explicitly mention this, but in this instance his argument resembles dependency theory and Wallerstein). The increase in population and purchasing power in the West increased demand for commodities from third world countries. Vries (2012, p. 7) notes that this does not necessarily invalidate the central argument, since institutional factors did play an important role in countries like the US and Canada that could have been “cursed” by their resources as well, Vries rather criticizes the authors for not even asking the question whether the “predicament” of third world countries was a “matter of basic economic mechanisms” (p.7). This already shows that institutional primacy is not possible, as in this case it is rather an interaction between geography, demographics, and institutions. I agree strongly with this critique, and it ties into my main critique of the book, which I will come to in my conclusion.

When criticizing their main argument, one could say that a simple dichotomy between "inclusive" and "extractive" institutions, does not capture the complexity and nuance of real-world institutions. For example, the authors name patents as an inclusive institution that encourages investment in expensive research in search of new technologies. [12] However, one could argue that patents are double edged swords, as they can also harm the consumer as well as innovation and preserve monopolies for stagnant industries with great lobbying power, barring future innovators from entering the game. From that perspective patents qualify as an extractive institution (Boldrin & Levine, 2013, p. 4). Finally, the authors basically ignore the largest part of cultural theories of development, as they only discuss the cultural hypothesis for a mere 7 pages, and in these pages, they focus on easily refutable theories. For a convincing rebuttal I would have expected more thorough arguments.

Conclusion

Why Nations Fail has been a very influential book for a good reason, the authors eloquently explain why institutions are one of the most significant factors when determining a state’s success. However, Why Nations Fail attempts to establish itself as the bible of international development theory, and in social-sciences it is best to be sceptical of grand-theories, as evidenced by the many critiques that can be made. It is a shame that the authors proclaim their theories’ superiority with such primacy and dichotomy because I do think that their core premisses and arguments explain a great deal of international development. If the authors had stuck to more modest claims the book would have come across as more scientific. Regardless, I would still recommend people interested in the field to read this book, as it does contain many valid points and observations about historical events and processes, the reader must just keep in mind that the world is more complex than the authors would like to claim it is.

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[1] https://mitsloan.mit.edu/faculty/directory/daron-acemoglu#:~:text=Daron%20Acemoglu%20is%20Elizabeth%20and,the%20Massachusetts%20Institute%20of%20Technology.

[2] https://harris.uchicago.edu/directory/james-robinson

[3] Acemoglu & Robinson (2012, pp. 52-75).

[4] These examples have been given earlier in the book but have been summarized on page 56 of the Dutch translation of the book.

[5] Ibid.

[6] Acemoglu and Robinson (2012, pp. 78-87)

[7] Acemoglu & Robinson (2012, p. 79)

[8] Acemoglu & Robinson (2012, p 429 – 430)

[9] Ibid.

[10] Acemoglu & Robinson (2012, pp. 84-87)

[11] Acemoglu & Robinson (2012, p. 104)

[12] Acemoglu & Robinson (2012, p.39)

Bibliography

Acemoglu, D., & Robinson, J. A. (2012). Why Nations Fail: The Origins of Power, Prosperity, and Poverty. Profile Books.

Boldrin, M., & Levine, D. K. (2013). The case against patents. Journal of Economic Perspectives, 27(1), 3-22.

Hausmann, Ricardo (2001), "Prisoners of Geography", Foreign Policy, 122, pp. 44-53

Vries, P. (2012). Does wealth entirely depend on inclusive institutions and pluralist politics? A review of Daron Acemoglu and James A. Robinson, Why nations fail. The origins of power, prosperity and poverty. Tijdschrift voor sociale en economische geschiedenis. https://doi.org/10.18352/tseg.278

Wallerstein, I. (2011). The Modern World-System IV: Centrist Liberalism Triumphant, 1789–1914. Univ of California Press.