Interview with Anni Coonan, Senior Analyst and Stepwise Editor

Risk Outlook: July 17, 2026

Jul 17, 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 Anni Coonan, Senior Analyst and Editor-in-Chief of the Stepwise Risk Outlook.

Interview with Anni Coonan, Senior Analyst and Stepwise Editor

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Anni Coonan is a senior analyst with Steptoe’s Global Strategic Engagement Team and Editor-in-Chief of the Stepwise Risk Outlook. A risk analyst and researcher with a focus on US foreign policy, geostrategic competition, and the Middle East and North Africa, Anni provides forward-looking analysis on domestic and geopolitical developments for international clients, providing assessments and key takeaways to guide strategic decisions and stakeholder engagement plans. Anni has written and edited newsletters on the intersection of geopolitics and business risk for over six years, earning JD Supra readership awards at two previous law firms. She also supports due diligence investigations and research in support of litigation. Anni is based in New York.

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Global

Wildfires fueled by extreme heat and dry conditions pose serious health risks from smoke and noxious gases. Wildfires in Canada and Minnesota are producing heavy smoke, which has engulfed the US Midwest and Northeast, exposing millions of people to hazardous levels of air pollution. Studies have linked wildfire smoke with higher rates of heart attacks and strokes, and increases in emergency room visits for asthma and vulnerable groups with weakened immune defenses.

Health officials are urging people in affected areas to reduce exposure. Experts advise wearing N95 masks and limiting outdoor activities in order to minimize inhaling dangerous particles. Experts also recommend indoor air purifiers that can trap particles smaller than 2.5 microns. Researchers are studying the long-term effects of smoke particles in water supplies, on crops or ingested by livestock and whether wildfire smoke amplifies the adverse effects of extremely hot weather.

2026 is shaping up to have a highly destructive wildfire season. In the US, by mid-summer, over 3.6 million acres have burned, approximately 157% to 195% higher than the previous 10-year average for the same time period. European Forest Fire Information System reports that the number of blazes in both Spain and France is at an all-time high for this time of year. Spain has suffered 330 fires so far in 2026, triple the average. Burnt area in France is about four times greater than the average.

Read More: Reuters [paywall], CBS News, US National Interagency Fire Center, Financial Times [paywall]

Europe

Ukrainian President Volodymir Zelenskyy’s government reshuffle has sparked large-scale resistance both in Ukraine and internationally. As part of the reshuffle, Zelenskyy fired defense minister Mykhailo Fedorov and moved to replace him with Yevhenii Khmara, who is currently the acting head of the Security Service of Ukraine (SBU). Fedorov’s removal triggered protests in the streets of Kyiv and resulted in significant political pushback, especially since the decision to oust Fedorov came unexpectedly.

The specific cause for firing Fedorov was his relationship with General Oleksander Syrskyi, the head of Ukraine’s armed forces. Fedorov and Syrskyi reportedly had a highly acrimonious relationship and struggled to cooperate. However, Fedorov’s reputation is significantly better than Syrskyi’s. Fedorov’s six months in office are credited with significant progress in Ukraine’s campaign against Russia and progress in anti-corruption efforts, whereas Syrskyi is seen by many (including Fedorov) as unwilling to adapt to a changing battlefield and too focused on centralized command.

The conflict from the reshuffle comes at a bad time for Zelenskyy. The decision is almost exactly a year after Zelenskyy attempted to subordinate Ukraine’s anti-corruption authorities to his office. Ukraine’s government has also suffered from corruption scandals over the last year, and Ukraine currently has strong momentum in its strike campaign against Russia. Moreover, other parts of the reshuffle have also not gone well. Yuliia Svyrydenko, who was prime minister up until the reshuffle, reportedly “flatly refused” an offer from Zelenskyy to become Ukraine’s ambassador to the US.

Read More: Financial Times [paywall], Politico EU, Ukrainska Pravda, Kyiv Post

Middle East

President Trump doubled down on a controversial suggestion to have Syria take on Hizballah in Lebanon rather than Israel. The president first floated the idea in early July, likely in response to the Lebanese Armed Forces’ capacity issues and a shared desire by Syria to weaken Iran-backed groups. On Tuesday, Trump told media he was thinking about giving President al-Sharaa a “green light” to enter Lebanon. But the plan is deeply controversial in both countries; Syria under the Assads held territory and exerted significant influence in Lebanon from 1976 to 2005, Hizballah materially supported the Assads during Syria’s civil war, and Syrians are exhausted from over a decade of war.

Instead, al-Sharaa is seeking to normalize Lebanese relations on an economic level and avoid external entanglements. On Friday, Lebanon and Syria announced a plan to revive prewar trade agreements and ultimately aim for a broader bilateral trade deal. The strategy dovetails with Damascus’ plan to expand economic development and regional interconnectedness, while focusing single-mindedly on solving Syria’s thorny domestic security issues rather than engaging in regional proxy wars.

Read More: The New Arab, Arab News, Reuters [paywall], Middle East Institute

Asia-Pacific

The executive order (EO) that authorized US sanctions on individuals and entities deemed responsible for undermining Hong Kong’s autonomy quietly lapsed on Tuesday. Issued on July 14, 2020, shortly after President Trump signed the Hong Kong Autonomy Act (HKAA), EO 13936 declared a national emergency over developments in Hong Kong, directed federal agencies to revoke Hong Kong’s differential treatment status, and provided the legal basis for a range of sanctions and trade restrictions. The EO and HKAA came shortly after the People’s Republic of China passed a sweeping national security law on Hong Kong that criminalizes secession, subversion, terrorist activities, and collusion with external forces that endanger national security. The EO became effectively defunct on Tuesday when its anniversary passed without the formal renewal notice required under the National Emergencies Act.

The sanctions program appears caught between a surviving statutory mandate and the disappearance of the emergency authority used to implement it, raising questions about the legal basis for maintaining designations. Sec. 4 of EO authorized the Treasury Department to use the blocking powers of the International Emergency Economic Powers Act (IEEPA) to designate individuals and entities pursuant to the HKAA and the Hong Kong Human Rights and Democracy Act of 2019. Yet while the EO has expired, HKAA remains in force and continues to require sanctions on persons found to have undermined Hong Kong’s autonomy. The 48 individuals designated under the program remain on OFAC’s Specially Designated Nationals (SDN) List. Export controls restricting defense equipment sales to Hong Kong remain in place as the Export Administration Regulations (EAR) were officially amended.

The timing is notable ahead of President Xi Jinping’s expected September visit to the US. Washington and Beijing have spent recent months attempting to stabilize the increasingly volatile relationship, including the October trade truce and the cordial tone during their May summit, fueling cautious optimism that the two seek to establish guardrails around strategic competition, though disputes over trade and tech restrictions persist. Washington’s quiet decision to soften its position on Hong Kong’s autonomy removes a longstanding diplomatic irritant and suggests an effort to prevent another contentious issue from undermining broader bilateral stabilization, though the administration has not publicly commented.

Americas

The US State Department on Wednesday designated Mexico’s Juárez Cartel and Los Viagras as Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SDGTs). A press statement from the State Department said the organizations had carried out attacks against Americans, Mexican security forces, and civilians, citing the 2019 killing of nine US citizens in Sonora by La Línea, a faction of the Juárez Cartel. The designation subjects both groups to financial sanctions, blocks any assets under US jurisdiction, and generally prohibits US persons from conducting transactions with them. The move brings the number of Mexican cartels designated as terrorist organizations by the Trump administration to eight, including the Sinaloa Cartel and Jalisco New Generation Cartel.

The latest designations reflect Washington’s broader strategy of applying counterterrorism tools to combat transnational criminal organizations and increase pressure on Mexico over security cooperation. The announcement follows recent US indictments against current and former officials in Sinaloa for alleged cartel ties and comes amid ongoing controversy over US security operations in Mexico. The addition of the Juárez Cartel strengthens the legal framework for US actions against criminal groups operating along the Texas border, while the designation of Los Viagras expands pressure on cartel networks in Michoacán, a key hub for synthetic drug production and extortion targeting export industries.

Read More: AP, State Department, PBS

Africa

The US has barred American citizens in the Democratic Republic of the Congo (DRC) from returning directly to the US until they complete quarantine protocols, as the country’s Ebola outbreak becomes increasingly difficult to contain. Two Americans have been confirmed infected, and the outbreak has resulted in at least 700 deaths. The international response continues to face delays in assistance, with the World Health Organization reporting it has received only about 40% of the $115 million it requested for emergency operations.

Beyond the humanitarian impact, the outbreak is beginning to affect broader US strategic interests in the DRC. The outbreak has reportedly slowed implementation of elements of the US-DRC Strategic Partnership Agreement by delaying discussions surrounding US-backed critical minerals projects. While mining operations continue, visits by US suppliers and investors intended to expand cooperation on critical mineral development have been postponed, raising the prospect of delays to investment timelines.

Read More: Reuters [paywall], Reuters [paywall], Business Insider Africa

Geoeconomics

India is experiencing a record outbound-investment surge. Indian companies announced more than $14 billion of overseas equity investments during the first four months of the fiscal year beginning April 1, roughly three-quarters of the $18.7 billion announced during the entire previous year. The headline figure is heavily influenced by Sun Pharma’s proposed $11.75 billion acquisition of US drugmaker Organon, which would give it products sold across approximately 140 countries, while Persistent Systems’ €1.3 billion bid for Germany’s Nagarro would reduce its dependence on the US outsourcing market. More broadly, Indian firms are buying foreign distribution networks, intellectual property and manufacturing capacity to protect themselves from US tariffs, regional conflicts and supply disruptions. Moreover, overseas direct-investment commitments, which include equity, loans and guarantees, increased 11 percent to $48.39 billion in fiscal 2025–26.

The expansion strengthens Indian companies abroad but compounds India’s immediate external-financing problem. Outbound FDI reached $35.8 billion on a trailing 12-month basis in January, up 47 percent from a year earlier, while repatriation by foreign investors remained above $52 billion and India’s net FDI inflow fell close to zero. Overseas acquisitions therefore add to demand for dollars when foreign investors have withdrawn more than $23 billion from Indian markets, the rupee has fallen more than 6 percent this year and the country’s foreign-exchange reserves have declined sharply. Corporate investment is not the principal cause of that pressure: India imports about 90 percent of its oil and gas, and its energy bill exceeded $60 billion in the June quarter alone. Nevertheless, weaker net FDI leaves the current account increasingly dependent on volatile portfolio flows and diaspora deposits.

Read More: Financial Times [paywall], Reuters [paywall], Financial Times [paywall], Observer Research Foundation

Disruptive Technology

TSMC announced that it will spend an additional $100 billion on expanding its manufacturing capacity in the US. This brings its total inbound investment to $265 billion and ten planned fabrication plants in Arizona. The increased investment is a signal of two trends. First, given that these fabs will focus on the most advanced semiconductors under two nanometers, the pledged investment is a sign of confidence in AI deployment. Current trends affirm this confidence, with TSMC’s Q2 net income increasing 77% year-over-year. Moreover, TSMC is expanding operations in Taiwan and Japan, too. Second, TSMC aims to diversify its supply lines from Taiwan to insulate operations from increased strategic competition in the South China Sea. China’s defense modernization drive explicitly aims for the option to establish military dominance over the Taiwan Strait by 2027. With increased capability, China’s risk tolerance to climb the geoeconomic escalation ladder—or even commit to kinetic operations—will increase.

TSMC’s investment decision comes despite a volatile US chips policy framework. The Biden administration incentivized the first investment cycles in Arizona through subsidies in the Chips Act. Meanwhile, the Trump administration has adopted a two-pronged approach, threatening tariffs against companies that do not on-shore manufacturing, plus converting chip subsidies to taking equity stakes. The US’ shifting policy on chip manufacturing incentives may blunt their effectiveness. This suggests that market trends—the AI boom and the benefit of supply chain redundancy—may be the driving force behind new investments that could outlast several administrations.

Read More: Yahoo!news, The Hill, The New York Times [paywall]

Energy

The European Union is facing pressure from some members to dilute the bloc’s Emissions Trading System (ETS). Ten countries, led by Italy and Poland, are pushing the EU to review the bloc’s carbon price on fuel as part of an overall revision of the EU’s carbon market due to be proposed on July 17. The countries also argued for other changes, such as giving more free CO2 permits without broad conditions. Currently, Brussels only plans to give free permits to companies that intend to invest in European decarbonization. Brussels already delayed the new carbon tax by a year over concerns about the impact on consumers.

The group is potentially pitting itself against other countries that support the new carbon price on fuel, such as Germany and Sweden. Supporters argue that the ETS system is a vital element of Europe’s drive for decarbonization and adoption of green technologies. The Commission’s initial proposal for the review significantly loosens restrictions and lengthens the timeline for decarbonization; there will be opportunities for national governments and EU lawmakers to work out and potentially approve carbon market changes as well.

The ETS will be a major factor in EU politics for months to come. The ETS affects much of Europe’s heavy industry and has long-term implications for the bloc’s economy and investment environment as the bloc looks to update the ETS for the next decade. National governments, European policymakers, and industry groups are set to thrash out issues like whether to add in new sectors and whether to slow down the speed at which the EU expects industries to decarbonize.

Read More: Reuters [paywall], Politico EU, Politico EU, Deutsche Welle, Bruegel

Transnational Crime and Corruption

European authorities are debating a military response to Atlantic cocaine smuggling operations. The initiative, primarily backed by France and the Portugal-based multinational Maritime Analysis and Operations Center (MAOC), proposes intercepting drug smugglers using naval frigates and military helicopters. The proposal is currently facing resistance from Germany and the Netherlands, which are reluctant to militarize what they view as a law enforcement issue.

Atlantic cocaine smuggling is a growing issue for southwestern Europe. Cocaine trafficked from Colombia, where more land than ever is under coca cultivation, is brought up the coast of West Africa in container ships and dropped off to “flotillas” of custom speed boats waiting offshore near Spanish and Portuguese island territories, including Madeira and the Canary Islands. Italian authorities told media that the smuggling operations are overseen by Albanian organized crime, while the individual smugglers are North African, many of whom allegedly receive support from the Libyan regime of Khalifa Haftar.

Police authorities also propose responses beyond military confrontations. Funding and training programs for Senegalese and Cabo Verdean coast guards could help interdict drugs before they can reach Europe. Europe could also ban the ownership and manufacture of the speed boats used in trafficking operations, mimicking laws passed by Spain and Portugal in 2018 and 2026, respectively.

Read More: Washington Post [paywall], Le Monde [paywall], IRPI Media (Italian), MOAC-N