🟢 California AI bill passed, Trump tries to send National Guard to Portland, US economy warning signs | Global Risks Weekly Roundup #40/2025

Hamas agreed to some parts of a 20-point US peace plan. Ukraine continues to target Russia’s oil refineries.

Executive summary

Top items

• Geopolitics: Hamas agreed to some parts of a 20-point US peace plan. Ukraine continues to target Russia’s oil refineries.

• US politics: The Trump administration was blocked three times from sending National Guard troops to Portland.

• Artificial Intelligence: AI progress continues with the releases of Claude 4.5 and Sora 2. California makes addressing AI catastrophic risk a legal requirement. US Senators Hawley and Blumenthal introduce a bill to establish an AI evaluation program.

• Economy: The US economy continues to display indicators of distress.

• Biorisks: ∅

• Climate and nature: ∅

Forecaster estimates:

• Will there be an Israel-Hamas ceasefire that lasts more than 1 week by the end of 2025? 57% (45% to 67%)

• Will Israel strike Iran by EOY? 28% (20% to 35%)

• Will Hawley & Blumenthal’s AI bill make it into law by January 3, 2027? 5.0% (2.0% to 10%)

• Will there be a stock market crash by the end of 2026, operationalized as a >10% reduction in the S&P 500 over the course of a week? 19% (14% to 30%)

• Will US unemployment reach 10% or more at any point by the end of 2026? 5.1% (4.0% to 7.0%)

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​​Geopolitics

Europe

Munich Airport, in Germany, was forced to close twice after suspected drone sightings. It’s the latest airport in Europe that has been forced to suspend flights because of unidentified objects having been reported. German Chancellor Friedrich Merz previously said that it is “reasonable to assume the drones are coming from Russia”. NATO is boosting its Baltic surveillance in response to drone threats.

The chief of the UK’s Space Command accused Russia of targeting and attempting to jam Britain’s military satellites on a regular basis.

The Economist notes that Russian hybrid warfare in Europe has ramped up in recent years with increasing numbers of attacks on critical infrastructure in multiple Western countries.

Source: IISS, via the The Economist

Anti-ship missile systems were brought by ship to Sweden’s Gotland Island in the Baltic Sea, as part of Operation Gotland Sentry, military exercises whose goal is to test Sweden’s and NATO’s defence of Gotland. The island occupies a strategic location in the Baltic Sea.

Ukraine is continuing to target oil refineries in Russia, increasing the gas shortage. Russia reportedly lost a theoretical maximum of 38% of refining capacity, but the plants that have been attacked might bounce back or partially continue operating. The US plans to provide targeting information for Russian critical infrastructure. The US might send Tomahawk and Barracuda cruise missiles to Ukraine for long-range precision strikes in Russia, though reporting says that this possibility looks unlikely.

And: A Russian submarine reported a major malfunction in the Mediterranean (although the submarine wasn’t nuclear). Putin ordered the highest fall conscription target in 9 years, for 135,000 men. Tens of thousands of demonstrators rocked the Georgian capital of Tbilisi and attempted to storm the presidential palace, in protest against the pro-Russian regime.

United States

The Trump administration was blocked three times from sending National Guard troops into Portland. US District Court judge Karin Immergut, a Trump appointee, blocked the administration from deploying Oregon National Guard troops to Portland against the will of Oregon Governor Kotek.

The Trump administration then attempted to send California National Guard troops to Portland, against the will of California Governor Newsom, and was blocked from doing so, but not before the troops arrived by plane at night. Finally, the administration tried to send Texas National Guard troops to Portland, with the blessing of Texas Governor Abbott, but has now been blocked from sending troops from any state or the District of Columbia to Oregon. Judge Immergut stated that President Trump was “in direct contravention of her order.”

One forecaster highlighted the contravention of the judge’s ruling, and continuing attempts to call areas war zones to impose a military state in Democratic states; he views protests in Portland as small and easily controlled, and the administration as actively trying to incite and inflame the situation.

A Supreme Court decision will allow Trump to revoke temporary status for up to 600k immigrants from Venezuela.

ICE agents reportedly dragged naked children out of home in Chicago per Newskeek, amid mass arrests of suspected illegal migrants.

And: Hegseth and Trump’s meeting with general and flag officers of the military happened. The US alleges that China was behind a plot to take down cell service in NYC that was reported last week, and the plans were bigger than was previously thought. One in seven people aged 18-24 in the US is neither in school, employed, nor in training. The US government shut down, a somewhat common occurrence when the two parties can’t agree on the budget.

The Rest of the Americas

US Marines are set to conduct joint exercises together with Panamanian security forces, following other US military exercises in Panama over the past several months. Here, the US is attempting to diminish China’s influence in Panama. China had significant control of the ports near each end of the Panama Canal until the US pushed a new management plan this summer. Note that Venezuela is situated approximately 925 km east of Panama.

Trump has also increased the US military presence in the Caribbean, dispatching eight warships, a nuclear submarine, and ten fighter jets to Puerto Rico, supposedly to combat drug trafficking but possibly targeting Venezuelan President Nicolas Maduro. This naval build-up marks the most substantial in the region since the US invasion of Panama in 1989, which left hundreds of civilians dead.

The US struck another alleged drug boat near Venezuela, again in international waters. Some members of the Trump administration, including Secretary of State Marco Rubio, are pushing for regime change in Venezuela.

The US military’s impact on the Venezuelan regime’s income from the drug trade has reportedly been substantial. “The cash flow from trafficking is under direct threat, and that puts the cohesion of the military elite at risk. In three months they won’t have funds to pay the generals,” says the Miami Herald.

US policy in Venezuela might seek to accomplish a variety of goals: 1. Help to oust Maduro either through pressure or direct action. 2. Combat drugs, even if only performatively, to appear bold in countering the drug and gang epidemics in the US. 3. Apply pressure throughout the Americas to make it harder for China and Russia to play in the US’ backyard (Neo-Monroe Doctrine).

And: In the event of an outright confrontation with the US, the Venezuelan air force would be able to offer little resistance. The UN approved a larger force to combat gang violence in Haiti.

Middle East and South Asia

Hamas accepted many elements of the Trump administration’s plan to end the war in Gaza, including a handover of governance to a technocratic administration, though it suggested that certain aspects should still be up for negotiation. In response, Donald Trump demanded that Israel suspend its operations in Gaza. Tony Blair is in discussions to run a transitional Gaza authority.

Forecasters estimated a 57% (45% to 67%) probability of an Israel-Hamas ceasefire lasting more than one week by the end of the year. On the one hand, successive cycles of hope and disappointment mean that each new round of talks doesn’t raise our probability that much. On the other hand, there are some signs of progress, Trump appears to have been genuinely outraged by Israel’s attack on the Hamas negotiating team in Qatar, and this appears to be the best chance for peace for both sides thus far.

Israeli military officials are reportedly exploring the possibility of further strikes on Iran. Forecasters estimate that there is a somewhat wishy-washy 28% (20% to 35%) probability of an Israeli strike on Iran by the end of the year. Some Israeli military officials discussed the possibility, and Iran seems wary of another round. Recent reports that the US moved refueling tankers into the region suggested that the US could be preparing to assist Israel if needed, but these movements turned out to have been equipment rotations. And even if Israel or the US were to conduct new strikes, they could be limited strikes targeting military facilities, rather than Iran’s leadership.

And: Israel intercepted a humanitarian flotilla, leading to large scale strikes in Europe. Greta Thunberg was detained and reportedly mistreated. The UN imposed “snapback” sanctions on Iran. Trump signed an executive order pledging that the US will defend Qatar if the country is attacked. In Afghanistan, the Taliban cut off access to the internet for two days.

Africa

Dozens have died from hunger and disease in North Darfur.

Peace in the Democratic Republic of the Congo (DRC) “is still mostly a promise”, according to Bintou Keita, the Head of the UN Organization Stabilization Mission in the DRC, as conflict continues to plague eastern DRC.

Congo’s Former President was sentenced to death in absentia.

Asia-Pacific

Taiwan is resisting US pressure to facilitate a shift of 50% of its semiconductor chip production capacity to American soil. This dispute could make the Trump administration less willing to defend Taiwan in the event of a Chinese invasion or blockade—or more willing, because Taiwan’s semiconductor industry would be less expendable. One forecaster calls this a “variance play”.

Economy

The US economy is displaying a number of indicators of distress.

In housing, the number of homes on the market greatly exceeds the number of buyers, and there are signs that homeowners are under financial pressure: for instance, the number of Google searches for “help with mortgage” has passed its 2008 peak (as we reported previously), and US Google searches for “bankruptcy lawyer” recently reached an all-time high. The commercial real estate market is also struggling with vacancies.

Nonetheless, the housing market is also in a very different place than in 2008; the market isn’t plagued by adjustable-rate mortgages (more than 90% of US mortgages are fixed-rate loans), and homeowners own a large and growing share of the equity in their homes.

In freight, container freight costs are falling, and the freight industry has been in a recession for the past three years. Import volumes are expected to fall 3.4% for the year as a whole – but the last four months of 2025 are expected to see a decline of 15.7% compared to the same months last year, and volumes are forecasted to be down 19% YoY in January. As inventories of imported goods are gradually drawn down, some amount of pent-up inflation is expected to hit the economy as inventories are replenished with tariffed goods.

As the world begins to decouple from dollar-denominated assets, the dollar has fallen nearly 10% YTD, and the price of gold is at a record high; assets have become relatively more expensive in dollars. JP Morgan is calling the investment strategy favoring gold and Bitcoin the “debasement trade”.

The University of Michigan’s Consumer Sentiment Index is near historic lows. The labor market has been weakening. Meanwhile, the S&P 500 chases all-time highs, powered by AI investments, even as bond markets are signaling risks.

Forecasters estimate a 19% (14% to 30%) probability that the SP 500 will drop more than 10% in any one week by the end of 2026. They point out that the baserate is six times since 1980 (this list, plus COVID and the 2025 crash). They also point to the Case-Shiller index, a measure of housing valuations, being at all-time highs, suggesting that it has peaked, although a fall might not be precipitous. At least one of our forecasters also sees a small but significant potential for some large-scale shocks to the economy over the coming 1-3 years, potentially from new, large changes in US government policies or a Chinese invasion of Taiwan.

Artificial Intelligence

Anthropic launched Claude Sonnet 4.5, its newest AI model. They say it’s the best coding model in the world, and the strongest for building complex agents. It also scores the lowest among current state-of-the-art AIs in misaligned behavior tests. Like Anthropic’s previous Opus 4.1 model, Sonnet 4.5 is an ASL-3 model.

Anthropic says that it has observed Sonnet 4.5 maintaining focus for more than 30 hours on complex, multi-step tasks. This is importantly very different from a model’s “time horizon”, which, if we had one for Sonnet 4.5, would be a much more useful metric of Sonnet 4.5’s capabilities and a test of whether the current exponential trend is holding. We haven’t found measurements for Sonnet 4.5’s time horizon.

Apollo Research tested Sonnet 4.5 and found that it displays “Significantly higher verbalized evaluation awareness (58% vs. 22% for Opus-4.1)”. Researchers said they don’t know whether the better alignment scores come from better alignment or from higher eval awareness. Apollo’s CEO said this is concerning.

OpenAI launched Sora 2, which generates highly realistic AI videos and deepfakes with audio — together with a shorts platform (cf. our interview with Ivan Vendrov on the dangers of recommender systems). Sam Altman commented on features that GPT-6 might have. Samsung and SK Hynix joined OpenAI’s Stargate project; the South Korean companies will supply AI chips to run OpenAI models, and explore opportunities for building data centres in South Korea.

Governor Gavin Newsom signed California’s SB 53 AI transparency bill, which also requires developers of the most powerful AIs to develop and employ frameworks for assessing and mitigating catastrophic AI risks.

In the US, Senators Hawley and Blumenthal introduced a bill to establish an AI evaluation program, among other measures. The bill seeks to address AI risks of loss of control, national security, public safety, economic competitiveness, civil liberties, and labor markets. It also contemplates managing or preventing the development of artificial superintelligence, and would establish assessments for AI existential threats to humanity.

Forecasters estimate 5% (2% to 10%) that the bill will make it into law by the end of 2026. They point out that a given bill has a 3-8% chance of becoming law. AI is a salient issue, and a “warning shot” might mean it passes, but on the other hand the law will face intense lobbying pressure.

And: Coreweave signed a $14B deal with Meta.Thinking Machines launched a product that automates fine-tuning LLMs. A new benchmark for tracking the economic potential of AI, the AI Productivity Index, was published. Among its authors are Cass Sunstein and Eric Topol. AI is getting good at detecting bugs and vulnerabilities in curl.

Biological risks

Nucleic acid screening services used by providers of synthetic nucleic acids to prevent bioweapons development had software vulnerabilities, which have since been patched.

In the US, more kids with the flu are getting severely ill or dying as vaccination rates fall, according to the CDC. Two CDC reports highlight the 2024-25 flu season’s deadly impact on US kids; the season was the most severe since the H1N1 pandemic in 2009-10, although the percentages of children affected remained small.

H5N1 is spreading to poultry farms in the US as the fall waterfowl migration is underway.

Climate and Nature

September, 2025 was 1.47°C above pre-industrial levels and was the third warmest on record, behind 2023 and 2024.