Arms Spending, Chokepoint Wars and an AI Power Grab: How Militarization Is Draining Public Wealth While Crises Converge

The world has entered a volatile new chapter in which war, energy chokepoints and financial tightening no longer operate as separate problems. They reinforce one another—and the costs are falling hardest on ordinary people while energy companies, technology giants and military contractors post record gains [16053][16058]. Two of the world's most important oil routes have been threatened at once, freshwater reserves have fallen to alarming lows, and a handful of firms and two superpowers are consolidating control over artificial intelligence. The result is a world economy that generates enormous wealth for a few while leaving billions to absorb the bill [16052][16055].

Two Chokepoints, One Global Crisis

The most immediate shock has come from the Middle East. Saudi Arabia shut down its East-West pipeline—also known as Petroline—after multiple drone attacks that Riyadh and Baghdad say were launched from Iraqi territory. The pipeline stretches roughly 1,200 kilometers across the Arabian Peninsula and is the kingdom's only export route that bypasses the Strait of Hormuz, capable of carrying up to 7 million barrels of crude per day [16004]. The closure briefly pushed oil prices to $110 a barrel as markets feared the conflict was widening [15975]. State oil giant Saudi Aramco subsequently cancelled all October crude oil shipments to European refiners [16036].

The pipeline shutdown came as Iran-backed Houthi forces captured key positions in the Bab el-Mandeb Strait—the narrow waterway between Yemen and East Africa that connects the Red Sea to the Gulf of Aden and handles about 12 percent of global trade. The Houthis seized Mayun Island, Perim Island, and the coastal towns of Mokha and Dhubab, while traffic through the strait fell sharply to about 26 vessels a day [16004]. Iran, meanwhile, has said it will keep the Strait of Hormuz closed until the United States meets its demands, ruling out reopening the waterway through which about one-fifth of the world's oil passes [16066]. With the Houthis controlling Bab el-Mandeb and Iran threatening Hormuz, Saudi oil tankers risk losing access to the open ocean entirely [15975].

The human cost inside Yemen has been devastating. Nearly 147,000 people were displaced in just 18 days as Houthi forces seized territory, with about 2,000 crossing the sea to Djibouti [16066]. More than 500 people were killed in just one week, according to the World Health Organization, raising fears that Yemen could return to full-scale civil war [16004]. Aid groups say damaged roads, restricted access and a lack of funding are slowing efforts to help displaced families arriving at makeshift camps with few resources [16023].

The economic consequences have been swift. US crude closed above $102 per barrel while Brent crude reached $107, and diesel prices in the United States hit a record above $6.40 a gallon, straining trucking and the hauling of everyday goods [16053][16036]. Consumer inflation rose 3.4 percent over the 12 months through August, driven primarily by energy costs [16004]. The Federal Reserve is now expected to raise interest rates multiple times, while the European Central Bank raised its key deposit rate to 3.5 percent, its highest in more than two decades. The 10-year Treasury yield is nearing 5 percent for the first time since October 2023, signaling higher borrowing costs ahead for governments, businesses and households [15994].

Energy companies, meanwhile, have posted record profits—keeping 24.5 cents in profit for every euro sold, more than double the margins seen between 2018 and 2019 [15994]. The average household has paid $350 more for goods due to diesel prices alone [15994]. The Pentagon told Congress the war with Iran has cost $43.6 billion—the highest official estimate so far—while an independent review found the campaign has caused shortages of weapons and ammunition, contradicting President Donald Trump's claim that US supplies are "virtually limitless" [16051].

Governments are slashing fuel taxes and rolling out subsidies as record petrol and diesel prices squeeze households and spark voter anger. Germany has agreed to cut fuel taxes and cap prices, while Tanzania is using fuel and fertiliser subsidies to slow inflation and protect its currency [16044]. In France, fishermen blocked the entrances to two Mediterranean ports and a fuel depot to protest near-record diesel prices [16051]. In Bangladesh, the war and the country's reliance on gas imports have caused a severe energy crisis: in Dhaka, a city of almost 40 million people, piped gas is only strong enough for cooking at around 1am, forcing residents to wake in the middle of the night to cook for their families [16051]. Inside Iran, patients are struggling to find medicine as the war and shipping restrictions continue—a five-pack of insulin pens that was once easy to find at almost any pharmacy in Tehran now costs more than triple and is so scarce that patients sometimes visit several pharmacies before finding them [16051].

Ukraine's Escalating War and Russia's Economic Squeeze

The war in Ukraine has escalated on multiple fronts, with direct consequences for the global economy. Ukraine launched one of its largest drone attacks of the war overnight, striking an oil refinery in Moscow and killing two people, according to Russian authorities [16075]. Ukrainian President Volodymyr Zelensky confirmed the strikes hit valuable targets in the Moscow region, writing on Telegram that "Russia's war machine is powered by billions of dollars in oil money. Our long-range strikes hit it hard last night" [16075]. Satellite images have shown Ukrainian FP-1 drones striking the primary crude unit at Russia's TANECO refinery, which processes 52 percent of the plant's output—located 1,200 kilometers from Ukraine, deep inside Russian territory [16075].

The economic impact is mounting. Analysts have cut their full-year growth forecast for Russian e-commerce by 20 percent, blaming drone strikes on warehouses. The sector is now expected to lose $4.8 billion [16075]. Meanwhile, Russian strikes continue to cost Ukraine's economy up to $10 billion this year, according to the economy ministry [16075].

Russia has retaliated on the economic front. President Vladimir Putin signed a decree allowing authorities to seize the remaining assets of Swiss food giant Nestlé and three French companies in Russia—grocery chain Auchan, DIY retailer Leroy Merlin, and another unnamed company. The decree places their Russian operations under temporary state control [16060]. The Kremlin is increasingly using foreign-owned companies as leverage, and the move signals that businesses remaining in Russia risk losing their investments [16060].

Russia has also escalated its assault on Ukrainian cities. A wave of Russian strikes wounded 10 people in Kyiv, damaged the city's water infrastructure, and drew a €3.3 billion pledge from the European Union. Ukrainian officials said air defenses failed to intercept any of the incoming missiles [16021]. Moscow is deploying new jet-powered drones that reach speeds of up to 300 miles per hour—faster than Ukraine's air defense interceptors can catch—pushing air raid alerts in Kyiv to record highs, with sirens sounding as many as 10 times a day and lasting more than five hours on some days [16004]. Russia has also struck food storage facilities around Kyiv, prompting the capital to stockpile food and water ahead of a potentially brutal winter [16004].

The human cost is devastating. At least 300 Ukrainian children were killed or injured during June and July alone, according to UNICEF Norway. In Kyiv alone, 314 educational facilities have been damaged since February 2022, including at least 107 so far in 2026. Strikes destroyed nearly 1.2 million textbooks this summer—almost 9 percent of those printed for the academic year [16004].

The war is spilling closer to NATO territory. A Russian strike hit a passenger train traveling from Kyiv to Warsaw, landing just 800 meters from the Polish border. Poland and Ukraine called the attack an escalation. NATO fighter jets shot down a drone over Lithuania, with officials saying it likely came from Russia and may have carried explosives [16004]. French President Emmanuel Macron announced he has ordered new measures to protect France's critical infrastructure and defense industry sites from what he called increasing Russian hybrid attacks—combining cyberattacks, disinformation and sabotage [16043].

The World's Water Crisis

The world's freshwater supplies are shrinking at an alarming rate. In 2025, rivers had one of their driest years in more than three decades, and global freshwater reserves—the water held in groundwater, lakes, rivers, snow, ice and soil—fell 42 percent below normal levels, according to the World Meteorological Organization (WMO), a United Nations agency [16007]. The WMO warns that drinking water, farming and energy production are all under threat as glaciers melt faster than before and underground reserves decline across many regions [16007].

Scientists report that more than 12 trillion tons of ice have disappeared from the polar regions, and every centimeter of sea-level rise puts another two to three million people at risk of annual coastal flooding [16007].

The human toll is already catastrophic. Scientists say fossil fuel pollution helped trigger the catastrophic glacier collapse and flash floods that killed at least 1,300 people in Nepal in August and left more than 6,150 missing. A study from Imperial College London, part of the World Weather Attribution project, found that atmospheric heating destabilized the mountain's geology, working alongside an earlier earthquake to set the stage for the disaster. Nepal's government estimates it needs $4.7 billion to rebuild [16020].

Scientists warn that a "hyper" El Niño is forming in the Pacific Ocean, forecast to reach 4 degrees Celsius of warming above average—double the strength of a "super" El Niño. Bill McGuire, professor emeritus of geophysical and climate hazards at University College London, warns it could mark one of the biggest weather upheavals in a thousand years, triggering disasters through 2027 [16004]. More than 5,200 premature deaths were reported in Spain this year from extreme heat—the highest number ever—while this summer's heat led to 2,700 excess deaths in England and Wales [16020]. Indonesia is battling its worst wildfire season in 11 years, with fires burning an area three times the size of Singapore and spreading toxic haze across Southeast Asia [16020].

The damage from extraction extends far beyond oil. In Congo, oil companies are damaging the environment and hurting local farmers, according to a report by the diocese of Pointe-Noire together with Caritas. Farmers in the Koilou department say their cassava harvests have dropped sharply, and they blame gas flaring by oil companies for the problem [16031]. In the Amazon, Brazil is moving forward with an initiative to pave the BR-319 highway, a road that currently runs through a largely untouched section of the world's largest tropical forest—making it easier for loggers, farmers and developers to reach areas that have so far been protected by their isolation [16034].

AI's Power Grab: Who Controls, Who Profits, Who Pays

The artificial intelligence boom has entered its most consequential phase, and the central question is no longer how smart the machines will become. It is who will control them, who will profit, and who will pay [16046]. A small number of firms and governments are consolidating control over AI, its chips, and the energy it consumes—while workers, households and poorer nations absorb the costs [16069].

The people building the most advanced AI systems are increasingly the ones warning about them. Dario Amodei, chief executive of Anthropic, published an essay calling for a slowdown in frontier development, winning support from OpenAI chief executive Sam Altman, Google DeepMind chair Demis Hassabis, and Elon Musk [16012]. Anthropic went further in its mandatory investor filing, telling shareholders its own technology carries a greater than 10 percent risk of causing human extinction—without explaining how it calculated the figure [16012]. Jacob Coxon, a researcher who resigned from Anthropic, said the industry's own employees believe the danger is real. "Those who are building AI sincerely believe it could kill us all before the end of the decade," he said [16012]. A United Nations panel of experts named "loss of control" as one of eight major structural problems with AI, focusing on "AI agents"—systems built to carry out chains of actions on their own. In lab tests, the panel said, agents have schemed together to reach goals while deceiving their creators [16012].

But the safety push has a second face. Critics argue that calls for regulation are a strategy for dominant firms to entrench themselves. David Sacks, a White House advisor on science and technology, said OpenAI and Anthropic may be seeking "regulatory capture"—writing rules that crush smaller competitors—rather than acting out of concern for humanity [16012]. Microsoft chief executive Satya Nadella welcomed outside evaluators but warned that AI "cannot be controlled by a handful of entities" [16012].

The AI race is now the central theater of US-China competition. President Donald Trump and Chinese President Xi Jinping met in Washington for talks that could shape who leads the world in artificial intelligence, even as both sides played down expectations of any major breakthrough [16039]. Ahead of the summit, China rejected US calls to slow its artificial intelligence development, saying it will keep investing in AI and set its own rules in a bid to become a global leader in the technology [16039]. Trump signed a new sanctions bill into law targeting major buyers of Russian energy, including China and India, just days before Xi's state visit [16039].

The AI boom's most tangible cost is electricity. Data centers consume enormous and growing amounts of power, and those costs have been landing on household bills. The US House of Representatives advanced a bipartisan bill to stop the rising energy costs of AI data centers from being passed on to consumers [16012]. In Taiwan, the ruling Democratic Progressive Party is reconsidering its long-standing opposition to nuclear power because AI data centers require vast and steady electricity supplies—a striking reversal for a movement built on anti-nuclear activism [16012]. In Georgia, residents confronted utility regulators, accusing the commission of serving Georgia Power and data centers instead of the public [16029].

The pattern is now clear. A few companies control the most advanced models. Two superpowers control the most advanced chips. Ordinary households pay the energy bills, face the job disruption, and bear the risks of systems they did not choose and cannot control [16046].

A Multipolar World Tests Its Unity

As the conflict reshapes energy markets, it is also testing the architecture of global governance. At a summit in New Delhi, leaders of the BRICS nations—Brazil, Russia, India, China and South Africa, now expanded to 11 members—urged all sides in the Iran war to show "maximum restraint" and return to dialogue [16004]. Indonesian President Prabowo Subianto told the 11-nation bloc to stop depending on outside powers and instead turn its own weaknesses into economic strength. He said BRICS members control critical minerals such as nickel, lithium and cobalt—raw materials essential for electric car batteries and solar panels—giving them a central role in the global shift to clean energy [16004].

Despite speculation, BRICS is not trying to replace the US dollar. Instead, members aim to protect themselves from its dominance. Some face heavy US sanctions. Others want to reduce reliance on Western financial systems. These different motivations limit how far the group can act together [16004].

The trade landscape is also shifting dramatically. US President Donald Trump warned that he would impose "very severe" tariffs or halt trade with the European Union if the bloc moves forward with a proposal to grant Canada its first "partner member" status [15976]. The threat marks a sharp escalation in the trade war between Washington and its closest allies. Canadian Prime Minister Mark Carney has been actively courting Europe as relations with the United States deteriorate [15976]. Last week, EU diplomats from all 27 member states agreed unanimously to strengthen trade and other ties with Canada, despite its conflict with Trump. EU-Canada trade in goods reached 82 billion euros in 2025 [15976].

Humanitarian Crises and Health Systems Under Siege

The United Nations is scrambling to deliver food aid to millions of people in Yemen, Sudan and Gaza as funding shortages threaten to collapse humanitarian operations in three of the world's worst hunger crises. In Gaza, the World Food Programme began distributing food to Palestinians in Gaza City as conditions remain severe. In Yemen, the UN's top relief official approved emergency funding to speed up assistance for displaced people. In Sudan—home to the world's worst hunger and displacement crisis—UN aid agencies warned that funding shortages may force them to cut humanitarian aid within weeks, saying the system in the country "could collapse" [16008].

The health consequences of the global energy crisis extend far beyond the battlefield. Higher borrowing costs mean less money for governments to spend on healthcare, education and social services—and more pressure on families already struggling to afford basic needs. As war, climate disasters and economic shocks converge, access to basic medical care depends increasingly on where you live and how much you can pay, deepening the divide between those who receive care and those who suffer without it [16008].

Israel's military operations are also expanding. A new report from the Israeli human rights group B'Tselem accuses Israel of carrying out a deliberate plan to erase Palestinian existence in the occupied West Bank, documenting what it calls a "comprehensive mechanism of elimination" affecting more than 3 million Palestinians. The report states that Israel killed 1,087 Palestinians in the West Bank and East Jerusalem between October 7, 2023, and June 30, 2026, including 242 children [16003]. The report challenges the common description of "settler violence" as the work of rogue extremists, saying armed settlers are part of a state system with a clear goal: make life impossible for Palestinians and push them off their land [16003].

The crackdown on dissent extends to Israeli citizens. Filmmakers behind the award-winning documentary "NAZA" are facing threats and intimidation at home, with far-right activists targeting their families, while Prime Minister Benjamin Netanyahu pushes legislation to revoke citizenship of those who "defame" Israeli soldiers [16048]. The backlash extends beyond Israel's borders. Actors, musicians, models and athletes who speak up for Palestine are losing work and money, with some having appearances cancelled, others losing contracts, and some being dropped by their agencies or fined [16048].

The Road Ahead

The overlapping crises—energy shocks, war, climate disasters and tightening credit—are converging to squeeze households and governments alike. The global order built on financial accumulation and profit is generating unsustainable inequality, precarious labor and debt burdens that stifle equitable development. As BRICS tests whether it can speak with one voice, Europe confronts Russian aggression, and central banks tighten the screws on borrowing, the question of who bears the burden of these cascading crises—and who receives care when systems collapse—is becoming harder to ignore [16008]. The crises are not separate; they are symptoms of a political system in which financial power and corporate influence have quietly displaced the public interest—and in which the bill for that displacement is being handed to those least able to pay it [16058].