Colombia’s New President Fuels Market Optimism but Faces Barriers to Policy Agenda

Risk Outlook: August 6, 2026

Aug 06, 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 deep dive by Elton Smole examines the impact of Columbia's new President.

Colombia’s New President Fuels Market Optimism but Faces Barriers to Policy Agenda

By Elton Smole

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On August 7, Colombia’s President-elect Abelardo de la Espriella will be inaugurated with a mandate to tackle crime and reverse the policies of his leftist predecessor. His long-shot campaign, in which he challenged Colombia’s political establishment as an outsider, benefited from a wave of popular support fueled by fears of rising violence from armed groups. He now seeks to reverse the course set by outgoing President Gustavo Petro, Colombia’s first-ever left-wing president, through business-friendly tax adjustments and a “Great Deregulation Revolution.” De la Espriella’s priorities will include fiscal reform, national and regional security, geopolitical alignment with the Trump administration, expanding Colombia’s hydrocarbon sector and seeking commercial exchange with Venezuela.

De la Espriella’s electoral victory makes Colombia the latest country to join the broader right-wing shift across Latin America. De la Espriella received US President Donald Trump’s endorsement and takes inspiration from other regional right-wing leaders including El Salvador’s Nayib Bukele and Argentina’s Javier Milei. While markets have reacted positively to his win, major legislative barriers remain for his policy agenda. Risks for investors revolve around Colombia’s delicate fiscal status, energy insecurity, rising rebel violence and transnational criminal activity.

In today’s full analysis:

What is on De la Espriella’s Agenda?
Roadblocks for the New Administration
Risks on the Road Ahead

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Global

North Korean deployment of a missile unit to western Russia adds more fighting capabilities as the Kremlin faces a domestic shortfall in military recruiting for the war in Ukraine. According to Ukrainian military intelligence, the unit has 90 North Korean personnel and is expected to be based in Russia’s Voronezh region. North Koreans had previously been deployed to Russia’s Kursk region, numbering around 14,000-15,000, with around 9,500 remaining in non-combat support positions. Ukraine estimates that North Korea had delivered 4 million artillery shells from mid-2023, excluding mortar rounds, and 148 KN-23 and KN-24 ballistic missiles by the start of 2025.

Russian military recruitment was down by 20% in the first quarter of 2026 compared to 2025. The Kremlin is reportedly moving from positive incentives of $80,000 bonuses to more coercive pressure tactics to compel volunteerism. Nearly 500,000 Russian soldiers have died in the war, and reports of ill treatment at the front have permeated society. The Kremlin is reportedly considering a mass mobilization to shore up manpower needs. However, the move would be unpopular and risk unleashing overt opposition to the growing costs of the war. With volunteer numbers dwindling, Putin may be forced to increase mobilization at home if sizable numbers of foreign forces cannot be recruited.

Read More: Reuters [paywall], CNN, Atlantic Council

Europe

The European Commission will disburse a further €1.4 billion to Ukraine from the interest of immobilized euro-denominated Russian bonds, mostly to pay off borrowed assistance. In Summer 2024, the G7 agreed to loan Ukraine a collective $50 billion and pay off these funds through the interest of Russian immobilized assets, which continue to sit and accrue interest but cannot be transferred out of depositories like Euroclear due to sanctions on the Russian Central Bank. The G7 solution does not touch the principal owed to Russia, which amounts to about $300 billion in mostly (matured) bonds, but only the interest, which corresponds to about €8 billion since sanctions were imposed. About 95% of the €1.4 billion tranche will pay off part of the EU’s contribution coordinated in the G7 scheme, but another 5% (€70 million) can be used for Ukraine’s direct military spending. The transfer occurs after Russia’s early Wednesday strikes against civilian areas, which killed 17 people and wounded 51.

Read More: Politico, Euronews, Reuters [paywall]

Middle East

Iran and Oman appear poised to ink a deal that would give Iran significant control over the Strait of Hormuz. The prospective deal would grant Iran control over inbound traffic into the Strait and Oman control over the outbound route, and permit Iran to collect “voluntary” fees for the operation of the waterway (a concession analysts read as tolls). The deal is reportedly on the brink of signing, with details such as coordinates of traffic routes already worked out. Gulf countries have reportedly signed off, and the US has received a copy.

The deal is deeply imperfect from the US point of view but may be the only off-ramp from the current round of conflict. The deal – which concedes an Iranian right to control of Strait of Hormuz traffic – is a far cry from the US’ initial objectives or even the text of the June MOU, which characterized the Strait as international waters and granted Iranian control for only 60 days. In order to implement the deal, the US would need to end the naval blockade on Iran.

Opening the Strait could be a first step to broader negotiations or simply a pause in fighting. The US’ military options are dwindling, and Iran has set the pace of escalation in recent weeks, making a decisive military victory less likely than protracted mid-level conflict. But both sides need a settlement they can present as a win, a middle ground they have consistently struggled to identify.

Read More: Wall Street Journal [paywall], Reuters [paywall], Axios, Al Hurra

Asia-Pacific

Pakistan has introduced new restrictions on international media from reporting in most of the country amid protests in Pakistan-administered Kashmir. Under the new rules, foreign journalists, including Pakistani nationals working for foreign outlets, must obtain government permission before traveling beyond Pakistan’s three largest cities. Authorities may also revoke journalists’ accreditation for acts deemed contrary to Pakistan’s “ideology, sovereignty, security, or public order.” Since restrictions were imposed, access to Al Jazeera’s website has been blocked, two Pakistani journalists have been detained, and journalists working for foreign media organizations have been ordered to leave Pakistan-administered Kashmir.

The measures deepen longstanding concerns over Pakistan’s suppression of press freedom. Several international organizations have condemned the restrictions, with some describing them as more severe than those imposed during General Zia ul-Haq’s military rule. Combined with the indefinite internet and mobile communications blackout in Pakistan-administered Kashmir, the measures significantly limit any form of independent reporting from the region, giving Islamabad greater control over the narrative surrounding the unrest and risking further crackdowns on protesters in the territory.

Read More: New York Times [paywall], The Guardian, Committee to Protect Journalists, Al Jazeera

Americas

The US has recently expanded CIA operations in Cuba, reportedly sending intelligence assets to the island. The CIA has also established a secret task force and tasked case officers with recruiting intelligence assets on the island. The task force’s mandate is to create fissures within Cuba’s political establishment and to create favorable conditions for practical leaders to gain influence compared to hardliners. The US seeks to replicate the style of leadership under Delcy Rodriguez in Venezuela, who has largely accommodated US interests, despite maintaining Venezuela’s top-down political structure. However, political power in Cuba is highly consolidated around the Castro family and the military conglomerate GAESA, while the highly centralized Communist Party of Cuba has proven resilient to internal fractures.

The Trump administration recently revised the National Intelligence Priorities Framework (NIPF), designating Cuba as a Priority 1 country. This puts Cuba in the same tier as China, Russia, and Iran. The US ramped up intelligence-gathering flights near the island earlier this year, and the State Department released a report on Cuba in July, describing Cuban communism as a threat to US domestic security. The CIA previously closed its Havana stations during Trump’s first term amid reports of the mystery “Havana Syndrome.” CIA Director John Ratcliffe visited the island in May, warning the regime to make reforms. The increased intelligence activity points to potential US military action to initiate regime change. According to recent statements from sources with knowledge of the Trump administration, the administration prefers a diplomatic route but may take action in Cuba before the end of the ongoing war in Iran.

Read More: Politico, New York Times [paywall]

Africa

Libya’s UN mission announced that the country’s rival political factions have agreed on a new mechanism to appoint the head of the High National Elections Commission, marking a modest step toward reviving the long-stalled electoral process. National elections have repeatedly been postponed amid power struggles between the internationally recognized government in Tripoli and eastern authorities aligned with Khalifa Haftar. The agreement follows renewed diplomatic efforts by the US and Türkiye to broker a power-sharing arrangement between Libya’s eastern and western factions. Washington announced plans to reopen its embassy in Tripoli, signaling a renewed commitment to deepening ties, while Türkiye’s intelligence chief recently held meetings with senior Libyan officials to advance negotiations over a unified governing framework.

Despite these developments, Libya remains far from achieving lasting political stability. The US-backed power-sharing framework has already drawn criticism from political and military factions over its reported inclusion of the Haftar family in Libya’s future political structure. Washington reportedly supports appointing Saddam Haftar as head of a newly created presidential council, fueling concerns that the framework could entrench existing power structures rather than facilitate a genuine political transition. While the agreement on the elections commission represents incremental progress, national elections remain highly unlikely without sustained commitment from rival factions to implement a comprehensive political settlement.

Geoeconomics

China’s July surveys show that its economy continues to falter. The official manufacturing PMI fell from 50.3 to 49.2, its lowest reading in five months and below the 50 threshold separating expansion from contraction. Production slipped to 49.9, while new orders dropped from 51.2 to 48.5 and export orders fell to 49.6. The official non-manufacturing PMI declined from 50.2 to 49.0, its weakest level since December 2022; services registered 49.3 and construction 47.0. Private surveys were less severe but showed the same direction. The RatingDog manufacturing PMI eased from 51.7 to 50.9, while its services index plunged from 54.1 to 50.4, the slowest expansion since September 2024. Its composite index consequently fell from 53.6 to 50.8. Although the official and private surveys cover different groups of companies, both indicate that economic momentum weakened sharply in July.

The underlying problem remains insufficient domestic demand. High-tech and equipment manufacturing continued expanding, supported by AI investment and exports, while consumer-goods producers, construction and real estate contracted. Official service-sector new orders fell to 45.2, construction orders dropped to 40.1, and service employment remained weak at 46.2. Private data similarly showed domestic services demand slowing even as export business continued growing. This imbalance helps explain why second-quarter GDP growth decelerated from 5.0 to 4.3 percent, below Beijing’s 4.5–5 percent annual target. The high savings culture in China, amplified by the nation’s lack of a robust social safety net and limited places to invest savings, continues to drag down personal consumption.

Read More: Reuters [paywall], New York Times [paywall], MERICS

Disruptive Technology

The White House’s voluntary AI review framework, which remains confidential, will only apply to closed frontier models. This means that open-weight models whose parameters can be downloaded and tinkered with, such as China’s leading models, will be exempt from review for now. Under the voluntary review framework defined in a June executive order, the White House and “trusted partners” in industry will have up to 30 days to review new “state-of-the-art” capabilities before public release to improve the cyber safety of the models, in a sort of government-facilitated version of Project Glasswing.

The benchmarks that the government uses to determine a “covered frontier model” also remain private, so some near-peer developers may hesitate on whether they should participate in the voluntary review framework. Leading developers like Anthropic want to participate in the framework to avoid disruptive government reactions to protect AI safety, such as export controls on foreign national use of Mythos 5 and Fable 5 in June after a suspected jailbreak was discovered.

Read More: Axios, The White House, The New York Times [paywall]

Energy

A startup in Japan is looking to partner with Tokyo to drive its nuclear fusion project forward. Starlight Engine hopes to harness growing government interest in fusion energy to receive public funding for its prototype fusion power plant, citing energy security concerns as one of the primary justifications for pursuing fusion energy. Pursuing nuclear fusion requires intensive capital investment, and over the last several years Japan has lagged behind other leading states like the US and China in terms of funds dedicated to fusion energy. However, the Japanese government recently designated fusion as a strategic field for promoting investment.

Germany is also taking steps to develop its fusion industry. Berlin recently announced the locations of three “hubs” for fusion research, which will receive public support, seek to draw in private investment and create regional ecosystems for fusion research. Berlin has set a goal of building the first fusion power plant in the world.

There is a larger global trend towards nuclear energy. The energy shocks generated by the US war with Iran and Russia’s invasion of Ukraine have underlined energy security’s importance. Now, many countries are looking towards nuclear energy as a potential path to diversify their energy supplies and reduce reliance on chokepoints. Simultaneously, providers of nuclear technology are increasingly interested in nuclear energy partnerships.

Read More: Financial Times [paywall], Golem.de [in German], Stepwise Risk Outlook

Defense

France is cooperating with car manufacturers to scale its drone production capacity. Since the beginning of this year, at least six partnerships between defense and automotive companies have been announced as Paris pushes to leverage existing industrial capacity for building military drones. France’s armed forces ministry has been actively involved in promoting these tie-ups, showing the emphasis Paris is placing on expanding French drone production capacity in light of the military lessons from Ukraine and from the US war with Iran. The agreements, which indicate potential for industrial capacity of tens of thousands of drones per year, also have potential for developing France’s defense exports business.

Building drone capacity is a larger trend across Europe. The EU has looked to develop its defense industrial capacity in recent years with initiatives like the European Defence Industry Programme as well as subsidies for manufacturing key components for drones. In July, the EU and Ukraine also signed a deal to fast-track production of unmanned systems, with the intention of combining Ukrainian technical expertise and experience with the EU’s overall industrial scale. The agreement envisions joint ventures between selected Ukrainian and European defense companies for speeding up development and manufacturing.

Read More: Breaking Defense, Reuters [paywall], Defense Post