Interview with Elton Smole, Analyst

Risk Outlook: August 21, 2026

Aug 21, 2026

Welcome to the Stepwise Risk Outlook, which highlights and contextualizes over-the-horizon developments in key regions of the world and industries of the global market. Today’s featured interview is with Elton Smole, Analyst.

Interview with Elton Smole, Analyst

By Elton Smole

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Elton Smole is an intelligence analyst with Steptoe’s Global Strategic Engagement Team, with a focus on international trade, sanctions and geopolitics across North and South America. Elton provides market intelligence and political risk analysis in support of client legal proceedings and strategic advising. He speaks and researches in Spanish and Portuguese (with additional language skills in German and Albanian).

Elton sat down with Stepwise Editor-in-Chief Anni Coonan to discuss his takes on ongoing developments in the Americas.

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Global

President Trump issued a memo to expand the space transportation industrial base, launching a new national effort for American space superiority. The National Security Presidential Memorandum seeks to enable over 1,000 space launches and reentries on American soil annually by 2030. The memo prioritizes enabling commercial enterprises to lead in the development of a vibrant commercial space economy as a critical asset essential for military readiness and American economic dominance.

The US leads the world in space launches, with China surging to catch up in the space race. There were 324 orbital launch attempts worldwide in 2025, a 25% increase over 2024. SpaceX conducted 170 launches in 2025, deploying about 2,500 satellites, more than the rest of the world combined. China conducted 92 orbital launches, placing more than 300 satellites into orbit through a mix of state-owned and commercial missions. China targets 140 launches in 2026 amid a commercial space surge. SpaceX aimed to reach 10,000 annual launches within five years. The new presidential memo will assist SpaceX and other American space companies by expanding launch sites, expediting permitting and environmental reviews and ensuring wireless spectrum for space launches.

Read More: Reuters [paywall], White House, SpaceNews

Europe

Romania scrambled jets yesterday to destroy an armed naval drone near a Neptun Deep gas platform. The drone was spotted a few hundred meters from the platform around 6:30 am local time and destroyed by two Romanian F-16s without incident. Romanian President Nicușor Dan condemned Russia, the suspected origin, for “intensification of irresponsible incidents”; Russian drones and sea mines have intermittently drifted onto Romanian territory over the course of the Ukrainian war. European Commission President Ursula von der Leyen described the naval drone incident as part of an “escalating campaign” of hybrid warfare against Europe.

The drone attack may have been an attempt to disrupt Romania’s natural gas extraction, which offers a regional alternative to Russian supplies. Neptun Deep is an exclusive economic zone about 80 miles east of Constanța, a coastal town, with an estimated 100 billion cubic meters of recoverable natural gas. A drilling rig has completed 6 of 10 wells and a pipeline connecting the drilling site with the shore has been completed. The project is expected to begin production and export in 2027, thereby easing Europe’s gas pressure owed to the Russia-Ukraine war and the Iran war.

Read More: Romania Insider, Euractiv, The Wall Street Journal [paywall]

Asia-Pacific

China on Wednesday labeled the EU’s probe into e-commerce giant JD.com “improper extraterritorial jurisdiction” and ordered entities and individuals not to implement or assist with the probe. This marks China’s second use of regulations outlined in State Council Decree No. 835, introduced in April, to push back against what it deems demands for “extensive and unnecessary” information located in mainland China and “a serious violation of the international rule of law.” The EU launched its investigation in May following JD.com’s €2.2 billion ($2.5 billion) bid for German electronics retailer Ceconomy, amid concerns JD.com may have received foreign subsidies that could distort competition within the bloc.

Thus far, China has only used this blocking power against the EU in response to scrutiny under the EU’s Foreign Subsidies Regulation (FSR). In May, China issued a similar order against an EU investigation into Chinese security firm Nuctech. The EU began investigating Nuctech in 2024, conducting surprise inspections at its offices before launching an in-depth FSR investigation in December 2025. Unlike the Nuctech probe, which was initiated independently by the EU, the JD.com investigation falls under the FSR’s M&A track, which carries strict statutory deadlines and requires a decision by October 2, 2026.

Previous FSR investigations have produced outcomes ranging from strict behavioral commitments to companies withdrawing bids altogether to avoid disclosing sensitive financial information to EU authorities. JD.com now faces a similar dilemma: complying with the EU could expose it to administrative or civil penalties in China, while refusing to cooperate could leave the EU to make its determination based on available information, potentially increasing the risk that the deal is blocked. The broader concern is that EU-China trade tensions are increasingly spilling into the legal and regulatory sphere, creating conflicting compliance obligations for companies caught between the two jurisdictions.

Americas

Ecuadorian President Daniel Noboa visited China this week to meet with Chinese President Xi Jinping. The agenda included talks on trade and investment, amid Chinese suspensions on Ecuadorian shrimp processors over the use of sodium metabisulphite and detections of white spot syndrome virus. Shrimp is Ecuador’s largest non-oil export. Another point of negotiation is a contract related to a Chinese-built hydroplant in Ecuador. Other topics included mining, green development, and artificial intelligence. Noboa is also scheduled to visit Singapore and Vietnam before August 28.

Ecuador is balancing its economic ties to China with a growing political alignment with the US. USSOUTHCOM General Francis Donovan also visited Ecuador this week to meet with Ecuador’s defense ministers and senior leaders to discuss joint efforts to combat narco-terrorism. The US has recently been involved in boat strikes off the coast of Ecuador in the Pacific Ocean, and Ecuador is one of a handful of Latin American countries to authorize joint land strikes with the US to target narco-terrorist groups. The first of these in Ecuador took place in March.

Africa

A tanker off the coast of Yemen was hijacked and is being diverted to Somalia. The Seamull, a tanker sanctioned by the US for reportedly being part of Iran’s shadow fleet, was traveling 136 nautical miles east of Mukalla when it was boarded by six armed men. The vessel remains en route to Somalia according to the most recent update from UKMTO.

The hijacking follows a significant increase in Somali piracy around the Bab el-Mandeb and Gulf of Aden. On Monday, a Cameroon-flagged cargo vessel carrying weapons was hijacked off the coast of Puntland. In total, six cargo ships and over 100 crew members are currently being held by Somali pirates. The resurgence in piracy exacerbates the security risks to Red Sea shipping, which has already been disrupted by attacks from the Houthis in Yemen.

Read More: Reuters [paywall], Al Jazeera, UK Maritime Trade Operations, The New York Times [paywall]

Geoeconomics

US public debt has crossed $40 trillion while the deficit remains near crisis-era levels. Treasury reported gross debt of $40.047 trillion on August 18, comprising $32.266 trillion held by investors and $7.782 trillion recorded within federal accounts. Debt held by the public, the amount financed through markets, now equals roughly 101% of GDP. Gross debt rose from $39 trillion in less than five months. Through July, the fiscal 2026 deficit reached $1.799 trillion, already exceeding the entire 2025 deficit, although benefit-payment timing and tariff refunds inflated the latest figures. Even after those distortions, the year-to-date gap was 5% larger than a year earlier. Tax cuts have constrained revenue while Social Security, Medicare, defense and interest costs continue to rise; net interest is now running above $1 trillion annually.

The debt burden is feeding directly into the price of capital throughout the US economy. The 30-year Treasury yield reached 5.333% this week, its highest since 2007, as investors confronted persistent inflation, heavy government issuance and competing demand for capital from AI infrastructure. Treasury expects to borrow $739 billion in privately held marketable debt this quarter and another $628 billion next quarter. Its decision to double long-term bond buybacks to at least $4 billion per operation briefly lowered yields, but the purchases are designed to improve liquidity and are financed through new issuance, meaning they do not reduce the debt. If investors continue demanding a larger premium, refinancing will push interest costs higher and require additional borrowing. CBO projects publicly held debt reaching 120% of GDP by 2036 and 175% by 2056, while annual interest costs rise to $2.1 trillion. Higher Treasury yields will simultaneously raise mortgage and corporate financing costs, weaken investment and leave Washington with less capacity to respond to recessions or fund defense and industrial policy.

Read More: Financial Times [paywall], The Wall Street Journal [paywall], Reuters [paywall], US Treasury, CBO, Bipartisan Policy Center

Disruptive Technology

The US released a National Security Science and Technology Strategy earlier this week. Notably, the document highlights three priority areas for the US to achieve “battlefield dominance” in: undersea, space, and AI and autonomy. The document also underscores the need to remain resilient to (i.e., maintain leadership in) potentially transformative technologies—like AI, biotech and quantum—while developing “optimal” redundancy across the national security architecture to deny attacks on the homeland and critical infrastructure. The strategy also emphasizes the need to bridge the research and national security community, including through relaxed procurements through Other Transaction Authorities (OTAs). Lastly, the strategy calls for a strengthened CFIUS investment screening process for critical technology projects. A better resourced CFIUS would aim to prevent information leakage to potential adversaries while accelerating investments from allies and partners.

Read More: The White House [pdf], Breaking Defense

Energy

The US military has been covertly helping oil move through the Strait of Hormuz. The US has set up a shipping corridor to facilitate the movement of millions of barrels of oil through the Strait of Hormuz every day. The operation, which has been underway for several weeks, sees around 15-20 tankers move along a southern section of the strait each night. The operation has been enabled by the military’s degrading of Iranian radar and maritime surveillance systems. However, despite US efforts, only about half of prewar oil volumes are going through the strait currently.

Despite the operation, oil prices remain elevated. Over the last weeks, oil prices have been inching upwards and yesterday reached the highest level in almost a month. The jump on Thursday followed a warning by US president Donald Trump of potential retaliation against countries supporting Iran. Brent crude ended the day at almost $94 a barrel.

Global energy markets are still under stress from other areas. Oil exports out of Russia’s western ports in the first half of August dipped about 15% below the initial loading plan. This is due to disruptions at Russia’s Black Sea port of Novorossiysk, which is also the primary entry point for Kazakhstan’s oil exports to reach global markets. Oil coming out of Novorossiysk dropped to around 0.4 million bpd compared to 0.8-1 million bpd in June and ‌July.

Read More: Axios, Reuters [paywall], Reuters [paywall]

Transnational Crime & Corruption

New US sanctions target Ecuadorian fishing enterprises allegedly involved in cocaine smuggling. The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated 15 individuals and entities and 10 vessels for either transporting drugs in the eastern Pacific or supporting other narcotrafficking boats. The trafficking enterprise was allegedly connected to the Mexican Sinaloa and Jalisco New Generation cartels and the Ecuadorian group Los Choneros and Los Lobos.

The designations coincide with US and Latin American maritime interdictions against eastern Pacific vessels. In August 2025, the US Coast Guard launched Operation Pacific Viper targeting alleged drug traffickers in the eastern Pacific. The OFAC press release claimed that the operation led to the seizure of over 112 tons of cocaine as of June 2026. The operation was coordinated with elements within the Department of Homeland Security, the Drug Enforcement Administration, the Florida National Guard, SOUTHCOM and the Office of Naval Intelligence. It also coincides with reports of CIA-assisted attacks on fishing vessels in the region.

Defense

The army is going to disband an experimental drone unit after less than a year. The battalion, which was established in Europe in January by the former Chief of Staff of the US Army, was intended to learn from Ukraine’s battlefield experience with drones. The unit will report its findings to help steer future experimentation and then “refocus on its core warfighting tasks as an airborne infantry battalion.”

The unit’s dissolution is part of a larger debate about the future of drones for the military. Acting Chief of Staff of the US Army Christopher LaNeve has moved to implement a “back-to-basics” for the Army since taking over his position. The decision has been criticized by some as potentially slowing down the military’s progress in adapting to the new realities of conflict, evidenced by the wars in Ukraine and the Middle East.

The Pentagon is still very focused on the role of drones in future conflicts. Yesterday, administration leaders met with drone companies for the first White House ‘Drone Dominance’ meeting. In June, Secretary of Defense Pete Hegseth established a new office to consolidate nearly all the Pentagon’s drone and autonomous systems programs. The new office reports directly to Hegseth’s deputy.

Read More: Wall Street Journal [paywall], Defense News, Breaking Defense