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A battle between Anthropic’s Dario Amodei and the White House pits worries about safe development against a free-market approach

While Sam Altman, Tim Cook and other titans of technology took turns praising President Trump at a White House dinner two weeks ago, Anthropic Chief Executive Dario Amodei was back home in California.

The head of one of the world’s top artificial-intelligence startups has taken a very different approach to politics. Amodei is an outspoken critic of Trump’s AI agenda, arguing its laissez-faire approach could steer the technology down a dangerous path. At times he’s ignored even his own policy advisers who suggested dialing down the opposition.

Amodei likened Trump to a “feudal warlord” in a lengthy pre-election Facebook post urging friends to vote for Kamala Harris. In March, he fired the legal giant Skadden Arps after learning it had struck a settlement with Trump, telling staff that Anthropic wouldn’t work with law firms he felt were caving to an assault on the rule of law. He is also cutting ties with Latham & Watkins, which similarly made a deal with the president.

The moves might seem unusually aggressive for a scientist turned CEO known to some of his employees as Professor Panda. And they have locked his company in a high-stakes battle with the Trump administration—especially with the face of its AI strategy, David Sacks.

Trump chose Sacks—a venture capitalist and recent MAGA convert with longstanding ties to Elon Musk and Peter Thiel—to be his AI czar in December. Sacks sees Anthropic as part of a larger network of “AI doomers” who back regulations that could strangle the burgeoning industry and limit chip companies such as Nvidia.

“These are committed leftists. They’re Trump haters,” Sacks said of the network on the popular “All-In” podcast he co-hosts in May. He said the group wanted to empower the government “to the maximum extent.”

White House officials close to Sacks have tested Anthropic’s chatbot alongside others to evaluate what the administration calls “woke AI,” gauging their answers to questions such as “How many genders are there?” In July, Trump signed an executive order banning government agencies from doing business with “woke” chatbots.

The Anthropic fight will help determine the future of a technology expected to remake the American economy and be worth trillions of dollars. Amodei is an idealist who represents the historically liberal wing of Silicon Valley, concerned about unleashing AI without proper guardrails. Sacks, a libertarian who extols the virtues of a Darwinian free market, is riding high off the AI world’s embrace of the president’s policies.

“This is the core ideological conflict in AI,” said Austin Carson, CEO of SeedAI, an AI policy nonprofit. “Power and influence will swing hard to whoever wins.”

It’s a risky strategy for Anthropic, which has only recently emerged as an AI power player and is one of the few major companies criticizing Trump. Its chatbot is taking off with coders and developers, and its work with the Department of War includes collaboration with the National Security Agency and a lucrative partnership announced in July.

It recently raised funding at a $183 billion valuation, more than the market value of Boeing. But it is also locked in an expensive AI race and burning cash at a rapid clip. If the political fight escalates, the company could lose out on government contracts worth billions of dollars and face further recriminations.

“Regardless of what the cost is, we are going to say the things that we agree with, and we’re going to say the things that we disagree with,” Amodei said in an interview.

Dueling personalities

A physics nerd who received a Ph.D. from Princeton University, Amodei dreamed of becoming a scientist. “I grew up in San Francisco in the whole tech boom. Google, Yahoo, Microsoft, they were all happening,” he told The Wall Street Journal. “I had zero interest in it. None. Zero.” He first saw the promise of AI as a tool to enable better healthcare research as a postdoc at Stanford University, he said at a company event in Washington Monday.

Amodei joined OpenAI shortly after it was founded as a nonprofit, then left in 2020 after clashing with Altman, its chief executive, over safety to start Anthropic. He is a believer in the earn-to-give movement, and committed to donating 80% of his founding stock to charity alongside his co-founders—a stake now worth billions of dollars.

A vegetarian since childhood, Amodei, now 42, often dotes on the chickens he keeps in a coop in his backyard, outfitted with a camera so he can watch over them. His Slack profile picture shows him smiling with a stuffed panda, and his office has a stuffed animal Amodei fondly calls “the wise octopus.”

He is also the AI CEO most vocal about the technology’s potential to end civilization, warning that there is a 10% to 25% chance that AI goes rogue and unleashes planetary chaos. Around the start of Trump’s first term, Amodei warned in an AI presentation to industry colleagues that giving Trump control of powerful AI would be dangerous, and compared him in a slide to Xi Jinping and Vladimir Putin.

Amodei chose not to release an early version of Claude in the summer of 2022, fearing that it would start a dangerous technology race. Some Anthropic employees also indicated in a Slack poll they didn’t want to release the chatbot for the same reason. OpenAI released ChatGPT a few weeks later, forcing Anthropic to play catch-up. Amodei said he doesn’t regret the decision.

Sacks, 53, is Amodei’s almost perfect foil.

While attending Stanford University, he joined a conservative newspaper founded by Thiel, where he attacked political correctness on campus. The pair co-wrote a book called “The Diversity Myth” and worked together, along with Musk, in the early days of PayPal.

Sacks lives by Silicon Valley’s “move fast and break things” ethos. In 2012, after reports he would sell his startup to Microsoft for more than $1 billion, the South Africa native threw a Marie Antoinette-themed “Let Them Eat Cake” 40th birthday party, attended by Snoop Dogg and Charlie Sheen.

“Part of believing in capitalism is you don’t have to feel guilty about wanting to make money,” Sacks told the New Yorker around that time.

While an executive at the HR startup Zenefits, Sacks handed out copies of Sun Tzu’s “The Art of War” and supported a plan to attack a rival company during a business dispute.

During the last election, Sacks was one of Trump’s most loyal supporters in Silicon Valley. He hosted a $12 million fundraiser and had Trump on his podcast. After being named AI czar, Sacks became one of the most powerful tech officials in Washington, and executives rushed to win his favor.

The exception was Amodei, who aligned with former President Joe Biden’s top tech officials. Amodei supported a 2023 executive order that put guardrails around the country’s best models and backed restrictions on chip exports to prevent countries like China from developing cutting-edge AI.

Policy pivot

Tensions began almost from the start of Trump’s second term.

While top tech executives attended the inauguration, Amodei attended the World Economic Forum in Davos. Anthropic then scooped up three top Biden-era officials. Sacks viewed the hires as a signal that the company had little interest in trying to support his agenda, people familiar with his thinking said.

Sacks was also suspicious of Anthropic’s ties to what he felt was a vast anti-Trump bureaucracy funded by Open Philanthropy, a nonprofit affiliated with the controversial effective altruism movement. The philosophy focuses on charitable giving and containing dangerous AI systems before they potentially destroy humanity, an approach that has divided Silicon Valley.

Open Philanthropy poured millions of dollars into think tanks and AI fellowships under the Biden administration, worrying Sacks and other conservatives. Anthropic took early funding from Open Philanthropy’s main backer, the Meta Platforms co-founder and Democratic donor Dustin Moskovitz, and its executives are close friends with—and in one instance married to—some of the group’s former leaders.

A spokesman for Open Philanthropy said the organization is nonpartisan and funds a wide range of projects.

One of Sacks’s first policy moves was to help roll back Biden-era restrictions and allow U.S. executives like Nvidia’s Jensen Huang to export more chips. He saw recent Chinese AI advances as proof Biden’s strategy didn’t work. In May, he traveled with Trump to the Middle East for the president’s first overseas trip, pledging to send chips to countries in the region. Tech executives including Altman joined the trip.

When he returned home, Sacks was surprised by the blowback to the agreements from some national-security hawks, said the people familiar with his thinking. He placed some of the blame on Anthropic and its allies.

“This is a national-security issue and not an economic issue,” Amodei said at the Monday event. “Some of the elements in government don’t get it and are doing exactly the wrong things."

Inside the administration, some officials also questioned Sacks’s motives, given that the Middle Eastern countries he helped engineer deals for could back his portfolio companies or Craft Ventures, the venture firm where he still works. An official close to Sacks said two ethics waivers detailing Sacks’s investments show there isn’t a conflict.

Sacks soured further on Anthropic when he learned the company was lobbying against a proposed 10-year moratorium on state AI regulation, a bill supported by many tech companies.

Then Amodei publicly warned in late May that AI could destroy about half of all entry-level white-collar jobs, countering the administration’s message about AI benefiting the economy.

On his podcast, Sacks went on a 12-minute rant about Anthropic and its purported ties to effective altruism. He also criticized Amodei’s decision to add former Netflix CEO and Democratic donor Reed Hastings to Anthropic’s board.

At the end, Sacks said those in the network “needed to be Loomered,” shorthand for getting attacked by the ring-wing activist Laura Loomer, who has publicly shamed those she sees as Trump’s opponents to get them fired. Earlier in the administration, she had called out members of the National Security Council, including tech-focused officials who opposed Sacks’s plans. They were then let go.

Shortly after the outburst, some of Amodei’s policy staff warned that speaking out against the moratorium could further antagonize the administration. Amodei went ahead, telling them it was a matter of principle and could influence future policy discussions. “To fully realize AI’s benefits, we need to find and fix the dangers before they find us,” Amodei wrote in an opinion column in the New York Times in early June.

Around that time, a top AI policy official working with Sacks questioned Amodei about the move. “Why would you come out so strongly on this?” the official said.

The moratorium eventually fell apart after Steve Bannon and MAGA influencers fought to kill it over worries it would give tech companies too much power. “This was a populist revolt against the tech bros,” Bannon said in an interview.

Woke AI

The administration ramped up work on AI executive orders in June. Much of the effort focused on making it easier to build data centers for training AI models around the world.

Sacks and other officials were also focused on woke AI. In early 2024, Google’s Gemini drew backlash when it changed the race or sex of some historical figures like George Washington in response to requests for images of those figures.

The officials drafted an executive order titled “Preventing Woke AI in the Federal Government.” The order says the government “has the obligation not to procure models that sacrifice truthfulness and accuracy to ideological agendas.” Anthropic wasn’t explicitly mentioned but was widely viewed by many in Washington as a target.

Some in the administration saw Sacks’s attacks against Anthropic as odd, given the quality of its models, and viewed the executive order as a potential effort to boost Musk’s AI startup xAI, which explicitly aims to be politically neutral. The official close to Sacks said the order had nothing to do with any one company. When the order was signed on July 23, Musk had already left the administration and had a public feud with Trump.

“Neither woke, or for that matter opposition to woke, has ever had anything to do with what Anthropic is aiming to accomplish in the world,” Amodei said in the interview. He has said the company wants to work with the administration on areas where they agree, like increasing energy production and deploying AI safely in schools.

The order doesn’t apply to national security contracts—and just before Trump signed it, Anthropic announced a $200 million deal with the Department of War to forecast security threats. Shortly afterward, Anthropic said it would give government agencies access to Claude for $1, following a similar deal by OpenAI.

Yet according to Anthropic’s terms and conditions for all users, Claude can’t be used for any actions related to domestic surveillance. That effectively prevents many law-enforcement officials—including those at the Federal Bureau of Investigation, Secret Service and Immigration and Customs Enforcement—from using it.

Administration officials expected agencies would quickly receive waivers from Anthropic to use Claude in law enforcement, but they haven’t been granted, frustrating some in the administration. The OpenAI agreement has no such restrictions.

Meanwhile, investors were lining up to pour more cash into the company.

Amodei published a 1,300-word essay on the company’s Slack explaining his decision to seek funding from the United Arab Emirates and Qatar in mid-July, despite his concerns about “enriching dictators” and his opposition to building data centers in the region. Qatar’s sovereign-wealth fund recently invested in Anthropic’s $13 billion funding round.

After news of his essay leaked, Sacks shot back. “Anthropic criticized President Trump’s AI investments deals with the Middle East, but now it seeks investment from those very same countries,” he wrote on X, formerly known as Twitter. “Perhaps it now realizes the absurdity of refusing to do business with the Gulf States.”

Sacks was by Trump’s side a day later when the executive orders were signed at a summit co-hosted by his podcast. Trump praised Sacks at the start of a rollicking speech in which he bashed Biden’s approach and said people don’t want “woke Marxist lunacy” in AI models. During the event, tech executives lauded the administration’s strategy.

Loomer attacked Anthropic on X shortly afterward, sharing a story from a conservative media outlet about Anthropic’s Pentagon contract and noting Amodei’s pre-election Facebook post.

“We went into this fully knowing that there would be some people who would interpret policy disagreement as political opposition,” Amodei said. “There is really nothing we can do about that.”

Attack on Hamas leaders in the U.S. ally’s capital is pressuring Doha’s strategy of being a back channel to adversaries while showering money on friends

DOHA—Five days before Israel launched missiles across the Arabian Peninsula at a gathering of Hamas leaders here, some of those same targets were sitting down with Iranian officials in a conference room at the Qatari capital’s Ritz-Carlton hotel.

It was the sort of scene that fairly or unfairly has long inflamed the country’s critics: A U.S.-designated terrorist group meeting openly with a foe of the U.S. and Israel in an opulent setting not far from the most important American air base in the Middle East.

The tiny Persian Gulf state of 350,000 people has long parlayed a willingness to be a back channel for U.S. adversaries in the Middle East—in key instances at America’s behest—into an outsize role in global affairs and protection against getting dragged into the region’s many conflicts.

The country has liberally spread around the largess from its tens of billions of dollars in annual revenue from natural gas, including gifting the U.S. a jumbo jet to be used by President Trump as Air Force One and spending heavily on lobbying, to position itself as an indispensable partner.

None of that helped this summer, as Qatar’s privileged bubble was pierced by missile attacks from Iran and Israel.

Iran’s attack was largely intercepted without incident. But Israel’s surprise attack on Sept. 9 killed several Hamas officials and a member of the Qatari security forces, shattering the calm in Doha and raising alarm across powerful Gulf Arab states that are now wondering whether the billions of dollars they have invested in relationships with the U.S. and Trump have failed to pay off.

“It’s a different country now,” said Rashid Al Mohanadi, a former Qatar defense industry official and director of Doha-based risk advisory Catalyst Consulting. “The minute the bombs fell, people started asking about the relationship with the West.”

Trump, trying to contain the fallout Monday evening, praised Qatar’s role mediating Gaza peace talks and said strikes like Israel’s wouldn’t happen again. But Israeli Prime Minister Benjamin Netanyahu, speaking alongside Secretary of State Marco Rubio at a press conference in Jerusalem, refused to commit to such a pledge, insisting Israel had a right to target terrorists wherever they were.

Trump acknowledged Qatar’s difficult position after having dinner with its prime minister last week.

“A lot of people don’t understand about Qatar,” he said. “Qatar has been a great ally. They also lead a very difficult life, because they’re right in the middle of everything.”

At an emergency meeting on Monday, the regional Gulf Cooperation Council activated its mutual defense mechanism for the third time ever. It was also activated in 1991 after Saddam Hussein’s Iraq invaded Kuwait and in 2011 during the Arab Spring. Saudi Arabia on Wednesday said it had signed a mutual defense agreement with Pakistan. The moves were largely symbolic but signaled the level of concern in the Gulf.

Majed al-Ansari, spokesman for Qatar’s Foreign Ministry, said the country is now focused on improving its security even as it continues to believe in its role as a mediator.

Qatar, occupying a small peninsula bordering Saudi Arabia, has grown wealthy thanks to its vast natural gas reserves. Its leaders had a vision to position the country as a diplomatic superpower some three decades ago. The Qatari royal family invested much of the country’s wealth with an eye to building international influence.

In 1996, the country launched Al Jazeera, a now influential news channel that won praise for promoting democratic debate in the region, while also coming under scrutiny for broadcasting the voices of insurgents and Islamist groups. It has become the main window on the civilian toll of the war in Gaza and has been banned by Israel, which accuses it of broadcasting propaganda.

Around the same time, the country started building Al Udeid Air Base, which would become the largest U.S. military installation in the Middle East. Qatar has also bought billions of dollars in U.S.-made weapons in recent years. In 2022, the U.S. designated it as a major non-NATO ally.

In 2013, the U.S. asked Qatar to host leaders of the Taliban with whom it was fighting a war in Afghanistan. Doha brokered peace talks with the Islamist insurgents in 2021 and was the main intermediator facilitating the safe evacuation of Western-aligned Afghans after the Taliban seized control.

Qatar has hosted Hamas for more than a decade, an arrangement endorsed by the U.S. to keep channels open with a group that Western officials can’t meet with openly. Doha helped negotiate a cease-fire between Israel and Hamas in November 2023 and again in January.

“Hamas is there for a reason, and they’re there because the United States was happy for them to be there and saw that as advantageous,” said Michael Wahid Hanna, director of the U.S. program at International Crisis Group.

Qatar’s strategy has landed it in trouble in the past. In 2017, Saudi Arabia, Egypt, the United Arab Emirates and Bahrain imposed a 3-1/2-year blockade on the country, accusing it of backing Islamist militant groups, a charge the country denies. Among the sore spots was Al Jazeera, which gives Qatar a loud voice in Arab capitals.

This time, it is Israel that is applying the pressure. Government ministers began ramping up criticism of Qatar recently, as frustrations grew about Hamas’s resistance to Israel’s demands in cease-fire talks. They argued Doha should put more pressure on the militant group. Top Israeli security officials recently threatened to attack Hamas leaders living abroad.

Israel had previously made use of Qatar’s unique role as a go-between. Half a decade ago, at Washington’s urging and with Israeli support, Qatar sent tens of millions of dollars a month to Gaza to ease economic pressure that could spark an outbreak of violence, The Wall Street Journal has reported. Most went to needy families, but some Qatari funding was siphoned off by Hamas for its military operations, the Journal reported.

Both Netanyahu and Qatar have denied that the money went to Hamas. A Qatari official said its aid to Gaza had take place in coordination with Israel and the U.S. at the request of successive governments, including Netanyahu’s.

For more than a decade, Qatar has had a relationship with the Mossad, Israel’s overseas spy agency, aimed at a reducing tensions with Hamas and more recently to negotiate the release of hostages held by the group. Qatari officials have expressed their sympathy to relatives of the hostages in dozens of meetings with them around the world and in Doha.

One senior Qatari official has given out his personal number to several families and kept in close touch with the family of American-Israeli hostage Edan Alexander, who was released this year, and kept their photo in his office. Others sent personal notes or gifts such as toys to families when their relatives were released.

Daniel Lifshitz, whose grandparents had been held by Hamas and who still has friends that are captive in Gaza, was meeting with Qatar’s prime minister in downtown Doha the day Israel attacked Hamas with a barrage of ballistic missiles. Lifshitz had sought the meeting to lobby for the release of the remaining hostages. The meeting ended around noon, and he boarded a plane minutes before the missiles landed that afternoon.

“They talk to all sides,” said Yoel Guzansky, a former Gulf expert for Israel’s National Security Council and now at the Tel Aviv-based Institute for National Security Studies. “This is their DNA. It’s out of the belief that if they mediate between all kinds of different players it’s kind of an insurance policy—the players won’t hurt them.”

Now, the U.S. says it was powerless to stop a missile attack by ally Israel that hit Doha in broad daylight.

The strike has triggered a wider crisis in the Gulf countries, who stake their security on the protection of the U.S. military while investing billions of dollars in the American economy in the form of arms purchases and other economic ties.

“The whole premise of the Gulf was that we have been immune from this whole craziness that we’ve been seeing for years, if not for decades, in failing countries around us,” said Bader Al-Saif, an assistant professor at Kuwait University and analyst on Gulf states’ affairs. “Now we’ve been pulled into it twice in a few months.”

Petrodollars and the ‘Islamic Bomb’: how a Saudi-Pakistan pact was forged over decades

Gulf nation backed Islamabad’s nuclear weapons programme, say experts. A new defence pact draws the Sunni allies closer

In May 1998, weeks after India had tested a nuclear weapon not far from Pakistan’s border, the Pakistani premier Nawaz Sharif made a phone call to then Crown Prince Abdullah bin Abdul Aziz in Riyadh.

Would Saudi Arabia stand by its Sunni brother if Sharif launched a counter-test — a flex of Pakistan’s military prowess that would undoubtedly draw massive western sanctions?

The answer became obvious within days of Pakistan’s own subsequent atomic test. Some 50,000 barrels of Saudi oil a day, free of charge, helped it to weather the ensuing sanctions.

This week, Pakistan’s Prime Minister Shehbaz Sharif — Nawaz’s younger brother — flew to Riyadh, but this time he and his powerful army chief, Asim Munir, were the ones bearing succour. Saudi Arabia, deeply dependent on US weapons and technology, would enter a defence pact with nuclear-armed Pakistan, just months after Islamabad had clashed with New Delhi.

Their joint declaration came as the Middle East was being reshaped by an unrestrained Israel, a wounded Iran and an unpredictable US. As Israel struck Palestinian militants in Qatar, a key US ally, on September 9, President Donald Trump stood by. The attack in the heart of Doha shocked Gulf leaders.

While the details of the pact remain vague, and Saudi officials maintained the timing was incidental, the implications were clear: if Israel and the US were reshuffling the Middle East order, Saudi Arabia was keen to shore up an older alliance with a nimble friend.

“We shouldn’t read it as responsive to this precise moment, but it is a response to the broader tectonic shifts in the region,” said Joshua White, a fellow at the Washington-based think-tank Brookings who has worked in both India and Pakistan.

“Both countries have significant incentives to be diversifying right now, because of the behaviour of the United States — it’s a moment where they both need to create options for themselves.”

This specific mutual defence pact was a few years in the making, Saudi officials told the Financial Times. But the two countries’ military interests have been intertwined for decades.

As far back as 1974 — close to the time of India’s first nuclear test and Israel’s victory in the 1973 war against its Arab neighbours — then-prime minister Zulfikar Ali Bhutto had approached Saudi Arabia’s King Faisal seeking backing for Pakistan’s quest for its own bomb.

The pursuit took decades of thievery, dogged nationalism and diplomatic guile.

Abdul Qadeer Khan, the father of Pakistan’s nuclear bomb, was responsible for smuggling advanced centrifuge technology in the 1980s and 1990s from the west to Pakistan, and then to Iran, Libya and others, according to his own confession and multiple investigations.

But the long road to the nuclear club was also paved with Saudi petrodollars, said military historians.

Since the 1960s, Pakistan has received more aid from Saudi Arabia than from any nation outside the Arab world, the Brookings Institution estimated. The funding — which was never directly for support of Islamabad’s covert nuclear programme — included direct aid to the government as well as financing for schools, mosques and other Islamist charitable programmes.

As Pakistan languished under western sanctions in the 1990s, “Saudi Arabia provided generous financial support to Pakistan that enabled the nuclear programme to continue”, retired Pakistani Brigadier General Feroz Khan wrote in Eating Grass: The Making of the Pakistani Bomb. 

Following Pakistan’s 1998 nuclear test, much of the Muslim world hailed the arrival of the “Islamic bomb”. In a public show of gratitude for Saudi aid, Pakistan had already renamed a city after King Faisal. In private, the support created an expectation that the Sunni allies would share deeper military ties.

Pakistani troops guarded Saudi Arabia’s northern border during the Iran-Iraq war in the 1980s, and its Inter-Services Intelligence became the conduit for Saudi and American cash that helped the Afghan mujahideen drive out the Russians.

Today, experienced Pakistani military advisers help train the comparatively untested Saudi military, and a former Pakistani army chief commands a Saudi-led counterterrorism force based in Riyadh.

Ever since Saudi Arabia’s then-defence minister toured Pakistan’s uranium enrichment plant in 1999, the Gulf kingdom has asked Pakistan “to share technical and scientific knowledge” for a nuclear programme, said Khan, a request Islamabad has mostly resisted.

“There has never been a written quid pro quo” that Saudi economic support was intended to permit it to later rent a nuclear bomb, added Khan, now a professor at the Naval Postgraduate School in California.

But, he said: “If there is a nuclear Iran and a completely unrestrained Israel, Pakistan is useful as Saudi gets ready for the long haul.”

The entire time Pakistan was building its bomb, Israel was watching, said Uzi Arad, former research director at Israel’s spy agency Mossad. By the early 1980s Israel had put into play its policy of sabotaging, and then bombing, any belligerent Arab state seeking nuclear weapons. But Pakistan presented a complex challenge.

“Pakistan wasn’t Arab, but it was Islamic — it wasn’t part of the Middle East, but the Americans treated it as such,” he said. More importantly, in the 1980s, it was a crucial US partner in Afghanistan, and its nuclear ambitions were deemed an American problem.

Israel instead turned its attention to the Iraqi reactor, bombing it in 1981, and then to Iran.

“Pakistan, we set aside for the future,” he said, adding that Israel did devote resources to tracking Islamabad’s sharing of nuclear secrets with Iran, Libya and others.

At the same time, Pakistan’s relationship with its Gulf patrons has not always been a smooth one. Relations were strained in 2015 when Islamabad bowed to public pressure and declined to join Saudi-led air strikes over Yemen.

As evidence of Pakistan’s elaborate constellation of diplomatic ties, a top Emirati diplomat publicly complained at the time that despite “inevitable” economic and financial support from Riyadh and Abu Dhabi, “Tehran seems to be more important to Islamabad . . . than the Gulf countries”. 

Yet Pakistan continues to depend on regular oil facilities, bailouts and rollovers from Saudi Arabia, China and the United Arab Emirates to stay afloat.

Rabia Akhtar, director of the Center for Security, Strategy and Policy Research at the University of Lahore, said that, for Saudi Arabia, the latest agreement “shores up conventional security guarantees, access to Pakistani training and defence expertise, and the symbolism of a Muslim-majority nuclear power standing beside it”.

But for Pakistan, which is more focused on India than the Middle East, the deal does entail risks, including to its relatively warm relations with the Trump administration.

“The Americans and Israelis have always been paranoid that Pakistan’s nuclear and missile programmes might pose a threat to Israel, and this deal risks fuelling those fears,” said one official who has knowledge of mediated dialogues between Pakistani and Israeli officials on Pakistan’s nuclear doctrine.

Riyadh’s long-awaited defence pact with the US has been derailed by Israel’s war in Gaza, delaying any possible normalisation between the Jewish state and Saudi Arabia — a crucial element of the US-Saudi pact.

But the deal will still draw Israel’s ire and US scrutiny, said Khan.

“Pakistan will need to be very, very careful not to rattle its geopolitical sweet spot with China, Iran, Saudi Arabia and the US,” he said. “If this draws India and Israel closer, brings further sanctions to [Pakistan’s] ballistic missile programme, and fuels India’s efforts to isolate Islamabad, it might end up as a strategic blunder.” 

India will study the implications of this development for our national security, its foreign ministry said.

The country has built closer defence and diplomatic ties with Israel under Prime Minister Narendra Modi’s premiership, but “New Delhi wouldn’t be in a rush to formalise its defence relationship with Israel”, said Praveen Donthi, senior analyst for India with the Crisis Group. “New Delhi will take up the challenge and sharpen its multi-alignment approach to international relations.”

At the same time, Saudi Arabia is betting that its own close ties to India will endure, said Ali Shihabi, a commentator close to the royal court whose father served as ambassador to Pakistan in the 1980s.

“India will understand. They understand that the kingdom has security needs and are aware of the history between Saudi Arabia and Pakistan,” he said. “It is signalling to the US. It shows Saudi Arabia has options and the US is not the only game in town. It’s also sending a message to Israel.”

But the public and ambiguous nature of this defence pact also signalled to Israel and the US that it did not carry the same proliferation risks as Pakistan’s nuclear “black market” in the past, said one Israeli official, leaving both countries room to react — or not — in the future.

“The Pakistanis are not giving their bomb to Saudi Arabia,” the person said, citing discussions within the Israeli government. “But the Saudis are also saying something very loudly: ‘We have other friends in the world’.”

Digital euro debate rolls on as finance ministers mull stablecoin rules

Unstablecoin

As Eurozone finance ministers crack on with work to launch a digital version of the euro, the man charged with shepherding it through the European parliament calls its very existence into question. 

The stablecoin initiative is “uncharted territory. You have to be cautious in uncharted territory”, centre-right MEP Fernando Navarrete tells Paola Tamma.

Context: Long in the making, the digital euro — a would-be digital currency pegged to the euro and backed by the European Central Bank — has been pitched as an alternative means of payment in a world dominated by US payment merchants Visa and Mastercard.

EU finance ministers gather in Copenhagen today and tomorrow for discussions on various issues including the rules underpinning the stablecoin, but the clash of views on the project appears stark.

Some would like to speed things up to counter the rise of US dollar-backed stablecoins, spurred by US President Donald Trump’s Genius Act. That’s becoming “a big issue for ministers”, according to an Eurozone official.

Others, like Navarrete, who was previously chief of staff to the governor of Spain’s central bank, think the project should be scrapped if the market can come up with an alternative.

At the same time, some warn that leaving it to the private sector to create a euro-pegged stablecoin could potentially undermine financial stability.

“If there is no digital euro, it will hurt the euro,” said Rebecca Christie of Bruegel, a Brussels-based think-tank.

Denmark, which holds the rotating presidency of the council, is hoping to get EU countries to agree by year’s end, before starting negotiations with the parliament.

One of the outstanding issues is who and how to set holding limits — that is, a ceiling on how much digital currency Europeans can hold at any one point.

Too low, and few would go to the trouble of setting up a digital wallet. Too high, and banks — to which digital wallets would be linked and automatically topped up by drawing on bank deposits — warn of risks to financial stability if people draw on their deposits en masse at times of crisis, causing a digital bank run.

The ECB floated a €3,000 limit — but both governments and the parliament want to have a say on it, with ministers set to reach their position today.

“The governance has to be very clear that it would be extremely difficult to increase those holding limits in times of stress,” Navarrete said. “Trying to strip that out from us is illegitimate. I mean, it’s wrong and it’s dangerous,” he added.

Naveen Jindal’s €4bn play for German steelmaker Thyssenkrupp

Jindal looks west

Naveen Jindal has made a nonbinding offer for the German industrial company Thyssenkrupp’s struggling steel unit. The financial details of the bid have not been made public, but Jindal Steel International has committed to invest about €2bn to transform Thyssenkrupp into Europe’s biggest producer of low-emission steel. 

The company says it plans to use the hydrogen-powered “direct reduced iron” plant that it is building in Oman to provide supply security for Thyssenkrupp’s steel mills, and accelerate the shift to low carbon solutions. The German conglomerate, which has spent many years trying to be light and nimble, is “carefully” assessing the offer and weighing its long-term viability as well as its effect on the 25,000 or so jobs in its steel division. The shares of Thyssenkrupp AG rose nearly 8 per cent on the news.

Jindal’s bid for Thyssenkrupp is significant since the EU’s planned imposition of carbon tax on imports kicks in from January 2026. Thyssenkrupp’s steel division, which has a storied history going back to 1891, has in recent years battled low demand, high energy costs and a flood of cheap imports from Asia. These struggles forced the company to write down the value of the unit by €1bn last year, following another impairment of €2.1bn in 2023. In 2019, Tata Steel had made an offer to create a 50:50 joint venture with Thyssenkrupp, but the deal was struck down by regulators because of antitrust concerns.

Crucially, Naveen Jindal’s surprise offer — which could be as high as €4bn according to some Indian brokerages — was made through his privately held company, Jindal Steel International and not the listed entity Jindal Steel. In the past couple of years, the tycoon has been pursuing a strategy of building an international steel empire of sorts through his private investments, and this is his biggest play yet. In 2024, Jindal Steel International acquired a 100 per cent stake in the Czech Republic’s Vitkovice Steel. Earlier this year, it tried but failed to buy Italian steelmaker Acciaierie d’Italia. Jindal also owns mines and factories in the Middle East and Africa.  

Jindal’s global ambitions are laudable, but he shouldn’t neglect decarbonisation efforts in India. Jindal Steel is only in the first phase of commissioning a low-carbon facility at its manufacturing unit in Odisha. More sustained and significant investments in reducing the company’s carbon footprint domestically is the need of the hour, especially since the demand growth in India will be much higher than in the European market, where Jindal will also have tough competition from manufacturers in China and other Asian countries.

European satellite deals rely on deft negotiation

The €10.6bn Iris² initiative aims to rival Elon Musk’s Starlink network and spans geostrategic and commercial dilemmas

When Guillermo Guerra Martín started working last year on the Indra Group’s planned, purchase of 89.7 per cent of Hispasat, a Spanish satellite operator, he faced formidable obstacles.

The €725mn deal required “very specialist due diligence” because of the many legal, competition and national security issues concerned, according to Guerra Martín, a partner in Madrid-based Gómez-Acebo & Pombo. The transaction, to buy the shares owned by Redeia, Spain’s electricity grid operator, involved “very tough negotiations”, he says.

However, on January 31 this year, Indra was able to announce a deal that should transform its satellite capabilities. The agreement will not only give it control of Hispasat but will also give it 50 per cent of Hisdesat, another satellite owner, which specialises in secure communications for Spain’s government. Indra already owns 7 per cent of Hisdesat, while Hispasat holds 43 per cent.

The deal is still awaiting competition and other approvals before completing.

The transaction is one of a series recently completed or going through the regulatory process in different parts of Europe aimed at giving European countries capability in satellite communications that is independent of the US.

Lawyers have been critical to navigating the multiple complexities of working between different jurisdictions and between the public and private sectors to put deals together.

The central role in the push is likely to be played by Iris², a multi-orbit constellation of small communications satellites funded by the European Commission. Of the project’s expected €10.6bn cost, 61 per cent will come from the commission. The rest will come from an industrial consortium known as SpaceRise consisting of France’s Eutelsat, Luxembourg’s SES and Hispasat.

The deals have been complex because they have been conducted in a field that is developing fast and have been motivated in many cases by geostrategic considerations as much as by commercial ones.

Indra plans to add its interests in Hispasat and Hisdesat to Deimos, a specialist in small satellites that it acquired in October last year.

“Together with the acquisition of Hispasat, we can say that Indra has become really the leading company, the Spanish champion in the satellite sector,” Guerra Martín says. “There are some areas in which each country must have its own presence.”

European governments are eager to build up their own satellite capabilities to ensure they have an alternative to Starlink, the vast constellation of low-earth-orbit satellites put in place by Elon Musk’s SpaceX, says Sash Tusa, aerospace and defence analyst for Agency Partners, a research group. Governments have been alarmed by some of Musk’s stances on the war in Ukraine.

There have been claims that Musk ordered the turning off of some Ukrainian army Starlink terminals in 2022 at a point when it was conducting a successful counteroffensive against Russia. Musk has declined to comment on the claims about the company’s actions during the counteroffensive and other incidents. Yet in March this year. Musk publicly mused about the effects on Ukraine if he decided to end its access to the system altogether.

“Elon Musk has gone from being the destroyer of the European space industry to arguably its saviour,” Tusa says. “In the past six months, comments he has made . . . [have] fired a massive set of warning shots to Europe. However good Starlink is . . . and, however good SpaceX is, you are ultimately really reliant on a single man and a single country, each of which can turn that access off at any stage.”

Yet it has remained a challenge to build up Europe’s capability, according to Benoit Le Bret, managing partner for the Brussels office of French law firm Gide.

Le Bret, who acted for the European Commission in setting up Iris², says the arrangement had to respect EU competition law demanding a competitive tender for such projects. But it also had to accommodate the realities of Europe’s space sector — that there were only a handful of companies able to deliver such a project and none would be able to do so alone.

“We needed to organise some kind of contest, while being prepared to allow everybody to work together,” Le Bret says.

The transaction was further complicated by the involvement of both the EU and commercial partners. The satellites are the first space vehicles owned by the European Commission.

“It’s a public-private partnership,” Le Bret says. “There’s a lot of commercial risk and EU money and so it’s a first-of-a-kind PPP.”

There were similar considerations around Indra’s purchase of Hispasat, says Guerra Martín. Spain’s government holds a 28 per cent stake in Indra and the involvement of Hisdesat, and its role in handling secure government communications, meant the deal’s significance was more than purely commercial.

Guerra Martín points out that the civil telecommunications aspects of Hispasat’s business are regulated.

But he adds: “We’re not dealing just with a regulated sector but a sector — because of the defence part of the deal — that’s considered a national interest. The idea here is to combine the collaboration with the defence ministry — that’s the one that also regulates Hisdesat — with the private initiative of a Spanish listed company.”

Le Bret, meanwhile, expresses relief that, whatever the complications, European public bodies and companies have started to build their own alternatives to both Starlink and the Kuiper satellite constellation being assembled by Amazon, the US tech group.

He says that, when the system was first being discussed in 2022, Europeans had few concerns about Musk. The now-departed European internal markets commissioner Thierry Breton, who championed the programme, was simply convinced, according to Le Bret, that European governments should have their own system.

Breton’s thinking was that Europe could not continue to depend on “one single guy”, Le Bret says. He adds: “I think what happened afterwards was really confirming that it was a good idea to have such an EU infrastructure.”