Defense Briefing

At the NATO Summit on July 7–8 in Ankara, Europe is to officially assume primary responsibility for conventional defense – a historic paradigm shift in the alliance. Undersecretary Elbridge Colby is leading the initiative under the label 'NATO 3.0', flanked by US demands on Europe and Canada to massively expand air and naval forces. Italy is also proposing an independent European defense alliance, further increasing pressure for strategic restructuring.

On day 100 of the Iran War, the US military shot down two Iranian attack drones over the Strait of Hormuz – the conflict remains locked in an exhausting escalation-de-escalation pattern. Iran continues to attack Bahrain, with Polymarket assigning only 44% probability to a permanent peace treaty by August. Trump signals readiness to negotiate, Iran has so far declined – the Strait of Hormuz remains a critical chokepoint for global energy supply.

NATO members are discussing a new military aid package worth 70 billion euros for Ukraine, which could be approved at the July Ankara summit. The background is Russia's worst war month since the Ukrainian counter-offensive in fall 2022 – 31,500 Russian soldiers killed or severely wounded in May alone. Growing Western military pressure is intended to further destabilize Russia's already struggling war economy.

British Prime Minister Starmer named a specific attack window for the first time: Russia could attack NATO territory as early as 2030 – the most concrete warning from a Western government leader to date. This overlaps with intelligence assessments from Latvia (2028) and creates significant political pressure to accelerate European rearmament. Polymarket rates a direct NATO-Russia clash by year-end at only 18% – markets remain calmer than politics for now.

Another NATO ally has joined the French nuclear umbrella, while the US is considering expanding nuclear weapons to more European locations while simultaneously withdrawing conventional troops. This paradoxical strategy – nuclear engagement amid conventional withdrawal – signals a fundamental realignment of US deterrence architecture in Europe. The development is driving defense stocks and structurally transforming the European defense industry.