Blain’s Morning Porridge, July 8^th, 2026: Is this the End of Nato?

 “Trump is America’s answer to Soviet leader Mikhail Gorbachev, weakening a superpower he meant to strengthen.”

NATO has been the core of the Western Alliance and Transatlantic Economy. The men in the ill-fitting Florsheim dress shoes have broken it. What will follow is uncertain, but will clearly impact global markets and geopolitics to an enormous degree. The deepening Atlantic rift puts the need for European defence, sovereignty and resilience right at the top of the priority list.

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Will this week’s Ankara NATO summit be remembered as the moment NATO ruptured?

The summit is heading for the rocks. The strongest and most successful military alliance and economic alignment in global history is cracked. If/when it splinters into broken shards, it will be the definitional end to the era of growth and prosperity that defined the American era.

The end of the transatlantic economy will have massive consequences for global trade, markets, and geopolitical alliances. Every investor should be factoring in the probabilities it may happen with their portfolio structures in terms of bonds and tech. It will trigger a rethink/reset of literally every single aspect of modern societies in terms of who controls what, supply chains, and strategic sovereignty as “the pond” becomes a “sundering sea”.

• Will it push the urgency of European rearmament and resiliency, (and critically the issue of how to pay for it), to the very top of the European priority list. The risk – as always in Europe where unity is a phrase rather than a reality – is will the competing tribes agree on how to defend themselves?
• Will it push Europe into closer relationships with China to ensure peace, and to secure the critical resources China dominates from solar power to rare-earths, and its access to the growing prosperity of South-East Asia? or,
• Will Europe shift from its once-easy partnership with pre-Trump America to become mere supplicants at the Court of Emperor Xi?

Trump arrived in Turkey an angry man – knowing the November Mid-terms may leave him the lamest of lame ducks, the Iran War was an embarrassing sh*tshow for Team America, while his narcissistic personality will have been stung by the criticism of his misjudged intervention into World Cup refereeing. He needs a win. He needs it now. He is thus more determined than ever that America’s allies kow-tow – so he can show the US electorate how he dominates the international stage.

For that, he is prepared to sacrifice Europe and ultimately the US economy. Trump seems to forget its European money spent with US firms that’s driven much of the USA’s exceptionalism.

Yesterday, the first day of the NATO summit, he shocked Europe by openly favouring NATO sceptic Turkish Premier Erdogan, renewing his demands that Greenland is ceded to the USA (a red line), threatening the complete withdrawal of US Troops from Europe, lambasting European leaders for their failure to support his ill-considered and un-planned War on Iran, while dismissing them as weak, “horrible” leaders for not meeting his spending demands fast enough.

Europe’s leaders were smiling for the cameras but were seething. The continent is split between those who wish to preserve the alliance at all costs and continue to seek to placate Trump (Nato General Secretary Mark Rutte), those that are concerned about the threat from Trump-aligned right-wing Populist parties (like Germany), those that are spinning into end-of-career irrelevance (Starmer of the UK), and those who want Europe plus Canada to go their own way (Carney of Canada and Macron of France.) Some nations, particularly in the North and Baltic, know what is coming and preparing for it.

Canada has a brilliant idea to set up a defence bank. Britain has backed away because the Treasury piggy bank is shut. France will only join if every penny spent goes through Paris. Germany is thinking about converting mothballed VW factories…

There have been a series of excellent articles in the Wall Street Journal the last few days outlining (through briefings from those who took part) exactly how Trump has fractured NATO. They are worth a read here and here. There is one quote which sums it up from the highly respected Fiona Hill:

• “Fiona Hill, Trump’s top Russia adviser in his first term and now a co-author of the British report, was skeptical about Washington’s staying power. Trump, argued Hill, was America’s answer to Soviet leader Mikhail Gorbachev, weakening a superpower he meant to strengthen.”

Many European leaders now believe Trump, even more so than Putin, is a real Threat to Europe.

Why has the most successful alliance in global economic history fractured over a mere 18 months of Donald J Trump? My American Trump supporting chums offer no explanation, except to accuse anyone asking the difficult questions of suffering “Trump Derangement Syndrome”.

As I’ve written many times before, Trump is not the disease. He is a symptom. A symptom of a successful global hegemonic power that has past its top.

The reality is the free-market Western Democracies have been in economic conflict with China and its allies for years. They were not prepared to acknowledge it. The Chinese knew they were winning the GDP battle as the cheapest-to-manufacture, becoming the supplier of everything, but were struggling to match the inventiveness, innovation and deep capital markets that enabled tech exceptionalism, and are the drivers of the success of entrepreneurial, capitalist economies.

Don’t be shocked. Economics is war by other means. This is what happens in periods of hegemonic change – the new power seeks to replace the old by whatever means that are available. Hence there has been a multi-faceted attack underway upon the West and its core values for decades. Part of China’s solution was to steal IP. The other was to use proxy states to destabilise the West.

China is clearly a threat to Europe. But so is the USA. The unique strength of America is the depth of its capital markets. American firms have access to a single unified capital machine able to sustainably fund the extraordinary growth of the American economy – and get away with mispricing it! It is dominated by the world’s largest funds, most successful investors, and most powerful banks.

In contrast, especially post-Brexit, Europe’s capital markets are divided, sub-scale and inefficient. There are over 30 European stock exchanges, which collectively deliver a fraction of the placement and funding power of the US. To get value and raise funding, European firms are increasingly beholden to American capital.

As a result, the US playbook has been to use the easy cash generated from American markets to buy early-stage European firms to acquire their IP and talent. We are seeing it happening in defence, where the new NeoPrime Anduril has landed its “M&A expeditionary force” (yep, that’s the inhouse joke) to use its massive stock market valuation as leverage to buy up every single smart, clever, effective, war-winning European concept it can find. It will then happily sell back the weapons Europe invented back to Europe. Doh!

Europe is caught in the middle of the hegemonic struggle to be top dog between China and the US.

And, it’s no longer a cold war.

It is now a Grey War – the kind where daily threats and outrages dominate the news… threats from Russia and other “bad actors” in the Axis of Evil to undermine nations through threats that exhaust us. They feature:

• Below the substantive threshold of an all-out war.
• Ambiguity
• Deniability
• Coercion
• Attributability

Grey Wars are part of full-on Cognitive Warfare. I wrote earlier this week about how Russia has engaged in Cognitive Warfare to spin its narrative, aiming to undermine national resilience, trust and politics using any means possible, exploiting cyber-crime, misinformation, fake news, troll-bot farms, deep fakes and political manipulation and electoral interference.

It’s succeeded beyond the Kremlin’s wildest dreams. Trump leans towards Russia and Right-Wing populist parties that are Russian supportive. He is willing to break European alliances rather than promote them. He crushes confidence in democracy by denying the veracity of electoral systems. It’s worked superbly well. (You might even think Trump was a Russian Asset?) Europe no longer believes the US Cavalry is set to ride to their rescue.

Modern Wars are fought across a new and very wide geographic and economic Battlespace. Warplanners seek to exploit every vulnerability:

• Supply Chains to restrict resources will limit operational capacity,
• Kinetic Warfare on the front lines and against civilians,
• Cyber Disruption to the economy
• Cognitive Warfare to destabilise and undermine the resilience of democratic society, and
• Strategic Sovereignty – who controls your systems, infrastructure and capabilities.

I recently heard China has increased the price of certain rare-earths by over a 1000%. Each NATO 155mm artillery shell needs that material for the warhead – the price of the shell just rose accordingly, adding millions to already stretched military budgets. In terms of Strategic Sovereignty, how can NATO defend Greenland when US tech firms are bound by law to share all global data with US authorities – as someone told me: “close your AWS accounts.”

Where do we go from here? That’s the 64mm Renminbi question Europe has to answer…

Out of time and back to the day job…

Bill Blain

Author of the Morning Porridge
CEO Windshift Capital
Advisor – Spitfire Strategic Capital

Meanwhile, don’t forget about my new book:

The Battle For Hamble is a proper grown-up examination of how economies fail: a tale of Greedy Corporates, Bad Planning and Economic Illiteracy. It uses a wholly unnecessary Gravel Quarry in the middle of a prosperous village to illustrate the multiple failings and abdications of responsibility that have created Broken Britain. It’s about bureaucracy, money, exploitation and shareholders vs stakeholders. It’s about social injustice – asking why it’s ok to put 6000 jobs at risk so corporate bosses can reap bigger bonuses! Whether is the Hamble Quarry, HS2 or the abysmal state of UK armed forces due to bad procurement, read the book to understand how its broken process and bureaucratic indifference that is sinking Britain.