By Katya Schwenk & Luke Goldstein, The Lever, 6/11/25

Florida is poised to eliminate long-standing guardrails limiting local investment in increasingly risky Israel bonds that help finance the country’s war efforts.

Florida Gov. Ron DeSantis (R) is set to quietly ban any financial-risk standards when local governments use public money to invest in bonds funding Israel’s government – just months after a major credit rating agency warned the bonds were at risk of default and a potential “junk” rating. 

By creating the special carveout and allowing unrestricted investments into a foreign country on the brink of regional war, Florida politicians now threaten to funnel an even greater share of local governments’ savings to the Netanyahu regime’s war efforts. 

The legislation also introduces a new financial model enabling local governments around the country to invest virtually limitless sums in the Israeli war effort, despite the mounting financial risk of doing so.

The Florida bill was brought to the legislature by one of the state’s wealthiest counties and home base of President Donald Trump’s Mar-a-Lago resort: Palm Beach, which is facing a lawsuit from its own residents for sinking 15 percent of its savings portfolio in debt-issued Israeli bonds, making the county the world’s largest investor in Israel bonds. The only foreign bonds that localities in Florida can invest in by law are from Israel.

Outside of direct military assistance to Israel from the federal government, bond purchases have become a key node for U.S. states and localities to provide billions of taxpayer dollars to Israel, particularly during the Israel-Hamas war following the Oct. 7 attacks.

The main broker for Israel bonds, which operates on behalf of the Israeli government, lobbied for the first-of-its-kind legislation, according to records reviewed by The Lever. 

The introduction of the bill came just months after the preeminent Wall Street credit rating agency Moody’s downgraded Israel’s bonds from an “A” to a “Baa” rating amid its mounting geopolitical turmoil, indicating a significantly higher risk that Israel fails to pay back its investors. 

The assessment also noted that the impact of the war on the country’s long-term financial prospects created “much higher [risk] than is typical” even at the lower investment rating. That means another potential downgrade could be on the horizon, which would put the country’s debt security into the lower “junk” bond tier, making it an even riskier asset to hold. 

Two other major U.S. credit rating agencies slightly downgraded Israel last year.

Because of the downgrades, Palm Beach and other counties invested in Israel, including Miami-Dade, would be in violation of their local investment policies for any future Israel bond purchases, which mandate an “A” rating for Israel bond purchases. Those restrictions would be wiped away by the new bill, which passed unanimously through the Florida legislature in April and now awaits signing by DeSantis before the end of the legislative session this month. 

“The bill is specifically designed to create an exemption [for Israel] just like the U.S. government has in lots of other areas where Israel would otherwise run afoul of U.S. law,” said Michael Omer-Man, the director of research at Democracy For The Arab World, an advocacy group that’s tracked the activity of Israel bonds. 

Another example Omer-Man cited is a federal law that prohibits U.S. aid to security forces committing human rights abuses, which human rights organizations have documented at the hands of the Israeli military.

The Florida legislation could also have widespread financial implications, according to municipal finance experts. 

“This is definitely a first,” said University of Chicago professor Justin Marlowe, who runs the school’s Center for Municipal Finance. “I’ve not seen any attempt to do some sort of a legislative carveout of the sort that we’re talking about here.” 

He said the policy is “paving the way for a big shift in behavior on the part of states and localities.”

Palm Beach County did not reply to The Lever’s request for comment on the bill.

A Possible “Foreign Agent”

Since the start of the Israel-Hamas war, Israel has received a record-setting influx of $5 billion in financing from public and private U.S. investors to help address its mounting piles of debt. State and local governments make up $1.7 billion of that overall investment. 

Bonds are fixed-income securities bought by investors to loan the government money and are paid back over a long period of time, anywhere from two to 15 years, at a set interest rate.

Proceeds from these bonds return to Israel as a surplus budgetary fund for government projects, including to offset the costs of its military campaigns.

Some 90 states and localities already had millions of dollars of investments in Israel bonds on the books well before the Israel-Hamas war, but such efforts increased dramatically in the past year and a half. 

All of this U.S. investment is facilitated by the main underwriter and promoter of these government-backed instruments: the Development Corporation for Israel, also known as Israel Bonds. The operation has sales offices across the country, offering bonds to retail investors as well as public pensions, treasury funds, and institutional investors on Wall Street.

“Oct. 7 changed everything,” said Dani Naveh, the current president of the Development Corporation for Israel and former member of both the Israeli Knesset and a cabinet minister, earlier this month, announcing record U.S. sales of Israeli debt. “What followed has been nothing short of extraordinary. This $5 billion isn’t just capital, it is a global vote of confidence in the Israeli economy.”

Israel Bonds, whose head is selected by Israel’s finance minister, dates back to the early years of the country and played a crucial role in corralling U.S. financing for the Six-Day War in 1967 and later the Yom Kippur War in 1973.

The broker doesn’t just facilitate bond sales. Israel Bonds has transformed into an all-encompassing financial and political operation that lobbies for legislation to boost bond sales and hosts lavish private junkets to wine and dine politicians, according to an investigation by the International Consortium of Investigative Journalists last year. 

These influence-peddling activities have raised legal questions about whether or not Israel Bonds is operating in the U.S. as an unregistered foreign agent. According to a letter sent to the Justice Department last year from Democracy for the Arab World Now calling for an investigation, Israel Bonds acts “at the direction and control of the Israeli government, acts as a publicity agent for Israel; promotes the public and political interests of Israel.”

Israel Bonds did not return a request for comment from The Lever.

Israel Bonds has successfully convinced numerous state governments, including Louisiana, Indiana, New Jersey, and New Mexico, to undo long-standing rules banning them from purchasing foreign government bonds. Israel Bonds has also gotten county governments to ease remaining local investment restrictions on foreign-issued debt. 

It’s not just Florida that’s poured out its coffers to show support for the U.S. ally. Under Republican Gov. Sarah Huckabee Sanders, Arkansas’ public pension plan authorized a $50 million investment in Israel bonds this spring. Ohio, meanwhile, has invested more than $50 million since October 2023, bringing the state treasury’s holdings up to $260 million. New York State has committed a total $267 million from its state employees’ pension fund into Israel bonds.

Yet these investments pale in comparison to those of Palm Beach County, which under its Democratic local comptroller Joseph Abruzzo has become the world’s largest investor in Israel bonds. When Abruzzo took office in 2021, Israel bonds were capped at 5 percent of the county’s portfolio. In his first year, Abruzzo doubled the cap to 10 percent. Last year, the county voted again to raise the cap to 15 percent.

Abruzzo has since increased the county’s Israel bonds holdings to $700 million, up from just $40 million in 2022. According to county finance documents, Israel bonds now make up 16 percent of Palm Beach’s holdings.

Like other public investors in Israel bonds, Abruzzo has explicitly described his investment calculus as politically motivated, in direct support of Israel’s military operations. 

“There could be no greater advocacy that we could do in our office right now than support the state of Israel,” Abruzzo, a former reality TV star with a net worth of $16 million, said in the days after Oct. 7, announcing an initial $25 million round of bond purchases. More recently, he has denied that the motivations are anything other than strictly financial. Florida state law bars any investments of public savings for ideological reasons. 

In turn, as state and local treasuries ramp up their investments in Israel bonds, they have faced mounting public opposition. Protesters across the country have demanded public divestment from Israel bonds, citing their role in funding the carnage in Gaza.

Last May, several anonymous residents of Palm Beach County brought a lawsuit against Abruzzo over the mammoth investment in Israel bonds, arguing that the county’s $700 million purchase was “unprecedented,” “a great concentration of risk,” and violated its fiduciary duty to taxpayers, given the clear signs the bonds would be downgraded as Israel’s economy struggled. Florida statute, the plaintiffs noted, directs that local governments cannot invest to benefit “any social, political, or ideological interests.”

The plaintiffs in the case are Palestinian Americans, all of whom have lost friends and family members in Gaza, where tens of thousands of civilians have been killed since Oct. 7. 

“I feel such horror at my local taxes being used to fund such violence and destruction towards Palestinians in the West Bank and Gaza,” one plaintiff said in a declaration last year.

The suit highlighted Palm Beach County’s ongoing financial troubles, including a $730 million funding gap for capital projects — all worsened by security costs for Mar-a-Lago, which the county must foot. “If the State of Israel were to default on these bonds, then Palm Beach County would have to find a way to pay its bills without money that it had counted on being available,” one expert is quoted as saying in the lawsuit.

In a November 2024 legal filing, attorneys for Palm Beach called the lawsuit against the county “entirely devoid of legal support.”

The lawsuit was voluntarily dropped in January due to a procedural issue, but a lawyer working on the case, Lydia Ghuman, confirmed to The Lever that the team intends to refile the suit in the fall. 

In the meantime, the ongoing legal battle — alongside national attention to Palm Beach County’s investments — may be an impetus behind the county’s efforts to get a carve-out for Israel bonds passed at the state level.

Ghuman emphasized, though, that the legislation wouldn’t put an end to her team’s case. “It doesn’t change the fact that… we have a bunch of other statutes regulating investments that we’re suing [Abruzzo] under,” she said. “If anything, it shows how he is not listening to the voice of his constituents and is manipulating different processes to allow him to make unchecked investments.”

A “Striking” Shift

After Moody’s downgraded Israel bonds, Palm Beach County faced a conundrum: Palm Beach’s local investment policy, like those in other counties, prohibits investment in bonds rated lower than an A credit rating. Not only did the policy threaten future county investments in Israel, it also exposed county officials to legal scrutiny over their current investment portfolio. 

In February, Florida lawmakers unveiled a bill that aimed to solve Palm Beach County’s problems. The legislation would amend state law to bar any local government from setting a minimum credit rating exclusively for Israel bonds. The legislature’s own bill analysis specifically cites the Moody’s downgrade and Palm Beach County’s investment policy as part of the rationale for why the legislation is necessary.

Abruzzo, the Palm Beach County treasurer, brought the bill to the legislature, and he testified in support of the legislation at a March public hearing. 

“I cannot thank the committee enough for taking up this bill to ensure we keep supporting what I consider our greatest ally Israel and investing in Israel bonds,” he told lawmakers.

Behind the scenes, the Development Corporation for Israel used its lobbying muscle to push for the bill’s passage. The group hired the well-connected Florida lobbying shop Capital City Consulting, which includes numerous former DeSantis aides and staffers. 

Meanwhile, Palm Beach County advocated for the legislation through the lobbying titan Ballard Partners, whose Florida alumni include Trump’s chief of staff Susie Wiles and Attorney General Pam Bondi. 

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Both chambers of the Florida legislature subsequently passed the bill unanimously. A DeSantis spokesperson confirmed to The Lever that the bill “has not reached his desk.” There are a number of bills still awaiting a signature from the governor in the remaining weeks of the Florida legislative session.

Should DeSantis sign the bill, it could set a precedent for other states and localities to take on more financial risk to finance Israel’s war effort. Abruzzo, Ghuman noted, holds a position with an Israel Bonds’ leadership group, composed of treasurers across the country. “He’s already in a position of power where he can spread his ideas to other states,” she said.

Daniel Garrett, a professor of finance at the University of Pennsylvania, told The Lever that while he didn’t think that the guidance would have much impact on local investment decisions, he wasn’t aware of any comparable legislation. 

“I can’t think of any other kind of encouragement to invest in risky securities,” he said, although he added that most states set various “restrictions on how investment policies can be written.”

Marlowe at the University of Chicago emphasized that the bill was part of a “striking” government investment shift allowing a “serious concentration of risk in these portfolios in a way that we had never seen before.” 

He added, “It’s one thing for a county to buy up these bonds in the first place, it’s another to explicitly de-diversify the portfolio, which flies in the face of the philosophy of how to invest public money.”

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By Brian McDonald, Substack, 6/1/25

Brian McDonald is Irish and a long time Russia-based journalist. Writing about politics, sports and culture.

In the current Western discourse about Eastern European transformation, one hears Poland invoked like a hymn. It is, undeniably, a triumph. From the grey fatigue of post-communist inertia, Poland has emerged into something striking: a country that is modern, stable, and punching above its demographic weight. In nominal GDP terms alone, it has multiplied its national output fivefold since 2000, lifted living standards, integrated into the EU, rebuilt its infrastructure and created global firms. It is a remarkable success story.

But there is a strange silence—one that is becoming harder to ignore. Because if Poland’s economic rise is described as “nothing short of a miracle (Michael A. Arouet on X),” then what language is left to describe Russia’s trajectory over the same period? From a nominal GDP of $259 billion in 2000 to over $2.2 trillion in 2024, Russia’s nominal economic expansion dwarfs Poland’s in both absolute and relative terms. And in purchasing power parity (PPP), the gap is even starker: Russia has risen from $1.1 trillion in 2000 to over $5.2 trillion today, while Poland’s economy grew from around $420 billion to $1.6 trillion.

And even those numbers may understate the case. World Economics, using alternative methodologies that adjust for the informal economy and outdated GDP base year calculations, estimates Russia’s true PPP GDP in 2024 at over $7.5 trillion — roughly 26% higher than the World Bank’s official figure. Their model factors in a shadow economy that accounts for at least 26% of all economic activity, and potentially much more. Other studies, such as the Shadow Economy Index by Sauka and Putnins, estimated the informal sector at nearly 45% of GDP as recently as 2018.

This suggests that much of Russia’s economic life — from envelope wages to unregistered businesses — operates off the books. It’s messy, opaque, and far from ideal. But it also means the country’s real productive activity is significantly higher than what’s recorded. In nominal terms, Russia may look like a mid-size economy. In practice, it behaves more like a large one hiding behind a bureaucratic veil.

None of this is to diminish Poland’s achievement. Quite the opposite. Its progress is the product of hard work, strategic policy choices, and—crucially—European integration. Massive inflows of EU funds, combined with a committed and mobile population, created conditions for a genuine leap forward. But when commentators cite Poland as living proof of the virtues of EU membership, free markets, and entrepreneurial spirit, they often imply—or outright assert—that it is Poland’s embrace of Brussels that made the difference.

And here is where the silence creeps in. Because Russia, by any reasonable measure, has posted greater economic growth than Poland over the past two decades—despite facing every headwind Poland was spared. No EU funds. No single market access. No structural aid. And, since 2014, the most sustained regime of Western sanctions applied to any major economy in modern times.

Yes, Russia has immense natural resources. So do many nations. The trick is not having oil and gas—it is utilizing them while building a functioning economy beneath. Few expected Russia to make it work. Many predicted collapse (just Google the subject). But in a country often dismissed as a gas station with nukes, there has been something far more complicated, and inconvenient for some, happening: genuine, sustained growth.

This is not a paean to Russia, nor a denial of its flaws. Corruption, capital flight, inequality—all real and enduring. But what grates is the refusal to even acknowledge its economic performance in the same breath as Poland’s. It’s as if certain analysts fear that recognising this would somehow weaken their preferred narrative: that Brussels brings prosperity, and turning from it brings ruin.

But the numbers are not guided by political preferences. They are arithmetic. Poland’s growth deserves praise. But Russia’s deserves recognition too—especially when it has come through geopolitical frostbite, financial exclusion, and institutional hostility. That doesn’t make Russia a model. It makes it an inconvenient outlier.

There is no need for rivalry here. Poland’s rise is not Russia’s loss. Nor should Russia’s survival under duress be read as proof of sainthood. But the lopsidedness in how their stories are told—and what is omitted—reveals more about the storytellers than the countries themselves.

Eastern Europe is not a morality tale for outsiders to exploit. It is a region of hundreds of millions of real people, of histories and choices. And while Poland’s road to prosperity may have gone through Brussels, it doesn’t follow that every path must.

To acknowledge this is not to diminish Poland. It is to finally speak about the region with the honesty it deserves.

YouTube link here.

YouTube link to Rachel Blevins’ interview with military analyst Mark Sleboda on Iran-Israel.

By Oliver Boyd-Barrett, Substack, 6/19/25

Oliver Boyd-Barrett is a scholar and critic of media and communication, propaganda, and international news media and film.

There have been a number of important developments over the past 24 hours. Let me summarize these, first of all, and, in the time I have today (under time pressure as always), flesh them out as best I can. In “fleshing them out” I shall likely not proceed in the same order as my summary points are presented below. I will note that amongst the most prominent of physcial actions that have occurred in the past few hours is an Israeli attack on the inactive Iranian nuclear reactor at Arak, justified on the grounds that this will stop Iran from re-activating it; and an Iranian call for the evacuation of Israel’s Dimona nuclear facility in the Negev desert, in advance of a forthcoming Iranian assault. Iran claims to have fired 100 drones into Israel during the last day.

Perhaps most importantly, in the light of my most recent previous post, there are signs of a stronger, more proactive move of support for Iran from China, especially, and from Russia. Secondly, there are some growing doubts as to the accuracy of Israeli and US claims that Israel controls the skies over Tehran. Thirdly, the situation with respect to Iranian missile launchers is perhaps not so dire as might have seemed to be the case yesterday while, fourthly, there are persistent indications that Israel will soon run out of missiles.

Fifthly, while the US and Israel have repeatedly talked about their interest in assassinating the Supreme Leader (a foolish quest, totally illegal of course and typically gangsterish, as this in itself most assuredly would NOT bring about regime change in Iran), President Trump, who has said that he has signed off on relevant attack plans, is now saying he will hold off from “direct” US participation for up to two more weeks because, apparently, he has more hope for that negotiations (which are due to continue in Geneva on Friday beteween the E3 and Iran) can be successful, while there is plenty of evidence in the US that public opinion does not support this measure (greater US involvement in the war) and that Trump’s MAGA basis is split, with prominent foundational members of the MAGA movement such as Tucker Carlson and Steven Bannon coming out in strong opposition to another US-instigated “forever war.”

On the topic of assassinations I hold it highly likely that the President Peseshkian’s predecessor, Raisi, was assassinated – probably by Mossad, perhaps by the CIA or MI6.

What would be the nature of more direct US involvement in the war? There are many senior-level voices that express doubt as to the likely success of MOABS for the purpose of taking out deeply buried Iranian nuclear facilities. One of these is that of MIT/Stanford professor emeritus Ted Postol (a cousin of mine through marriage, I am pleased to say) who is highly skeptical that MOABs can achieve the necessary depth. An additional measure, involving the dropping of one MOAB after another at exactly the same target would be particularly challenging to achieve.

In short, the MOAB route could end up further embarrassing the US (which has in effect just lost a war to Yemen, having a little while back lost a war to Afghanistan, in a long line of losses going back to Vietnam and Korea – none of these being counted as amongst the most technologically sophisticated civilizations).

Besides, how is MOAB going to help given that the real purpose of this war has nothing whatsover to do with nuclear enrichment but with regime change. Would a successful MOAB attack bring about regime change of itself? No, it wouldn’t.

Would an attempt on the life of the Supreme Leader bring about a regime change? No, because the political system of Iran is far too complex. We can think of it as being a vibrant democracy in a system that is capped by the privileged influence of the mullahs [ayatollahs], perhaps comparable to – but actually more benign in my view – the US system of democracy that seems in many respects to be totally overridden by an out-of-control military-industrial complex, a lobby complex and plutocrats, a far more sinister crowd than humble Shi’a clerics.

So, last night I was bemoaning the evidence of a strong, unambiguously supportive stance by Russia and China that would convey to the world their resolve that they would not allow this war crime to pass and that they would extend to Iran, their partner in the BRICS, every help it needs in order to survive and prosper, and I was also casting doubt on the efficacy of the BRICS, which is unable or unwilling to express a view on events that are tearing the world apart and whose leaders seem fearfully over-cautious about being bold.

So I am glad to say that I have to take some of this back. First of all, I should note that there was a telephone call yesterday between President Putin and Chairman Xi Jinping. This lasted about an hour and the leaders spent most of their time talking about Iran. They have issued a statement to the effect that both countries are united behind the view that the way to resolve the conflict between Iran and Israel is through diplomatic means.

Now, I am concerned that the wording of the statement seems to me to fall into the trap of legitimizing the lie that this is just about Israel versus Iran, which of course it is not – it is about the US war against the rest of the world for the maintenance of US hegemony through the use, in this instance, of Israel-as-proxy, (which does not mean that the proxy, the “tail,” is not also wagging the dog). And it seems to give legitimacy to the lie that the real issue is about nuclear enrichment and to the lie that Iran remotely constitutes a nuclear “threat” to the region when it is the humungus, inhuman bully, Israel, that is the threat and when the real issue, as I have just said, is about US global supremacy through regional Israeli supremacy.

But we should also note that the Russian-Chinese statement does not preclude hard support for Iran.

At this point I should throw in the obvious observation that Iran is important in this context not because it may become a nuclear weapons power – on that we shall just have to wait and see, but no evidence of it so far – but because Iran sits on one of the world’s most important, perhaps THE most important global concentration of oil and gas wealth. By controlling Iran, installing a Western-friendly puppet regime, the US (which does not itself need much oil from Iran) may think it can control China, which is a major user of Iranian energy. And China, as Trump and the neocons have been parrotting for decades, is the real adversary that the US has to stop and overcome.

Now, the Moscow-Beijing statement is proactive in the sense that both countries agree to mobilize their respective departments of state to resolve the problem. A call between Putin and Erdogan of Turkey the day before came to a similar conclusion.

There are reports today from Dima of the Military Summary Channel, citing CIG/Telegram/Counter Int, that China has two electronic surveillance ships (855 and 815A) in the Gulf, their purpose being to gather intelligence of Israeli drone and missile launches and to give this to Iran.

AFP reports that China has had conversations with Oman, seeking to pressure Oman into closing its air-space to the US and Western nations, as well as China talking with Pakistan so that Pakistan can help close off its south western maritime border to Israeli, US and Western planes and ships, in this way forcing as much western traffic as possible into the Gulf, where it will be highly vulnerable either to direct hits or to Iranian measures designed to close the Strait of Hormuz (the US has already evacuated its navy and personnel from Qatar and Bahrein).

Professor Marandi, speaking to Glenn Diesen from the PressTV studios in Tehran this morning believes that such hits, coupled with Iranian missile strikes on US bases in the region, as well as strikes on neighboring oil and gas fields, could be a crippling blow to international trade, even pushing much of the world back into a pre-oil era.

China has also been talking to General al-Sisi of Egypt, trying to apply pressure on Egypt to control the passage of certain (Western war)ships through the Suez canal – a measure that would contravene a treaty of 1888 except in circumstances in which the security of the canal itself was at stake.

In the meantime there is growing consensus among analysts that Israel is lacking missiles and may soon run out. The Iranian waves of drone and missile attacks are depleting Israeli interceptors. Iran has far many more missiles than Israel, to all accounts. Israel claims to have destroyed one half of Iranian missile launchers which, in the light of some assessments, would represent quite good news about its remaining capability. But it is entirely possible that there has been a great deal of exaggeration about Israel’s successes in hitting or in other ways disabling Iranian launchers, anyway.

There are continuing reports of the arrival of Chinese cargo ships to Iran that are delivering weapons, including air defense systems.

As for Russian tardiness in responding to the crisis, Putin himself explains that in making progress towards the recent and now agreed strategic partnership between the two countries (Iran and Russia) he found the Iranians were difficult to negotiate with, that it was Iran that said it did not want a mutual defense clause, and that Iran was resistant to a program of joint Russian-Iranian weapons production on Iranian soil, and, finally, that Russia has not received a request from Iran for help with more weapons. I can see that Iran has many historical reasons for suspicion of Russia (essentially, Russia vied with Britain for control of Iran for over one hundred years), but I am not entirely satisfied with this account by Putin.

(I shall return later to extend and to update)

***

“According to Seymour Hersch, the war will start in the next few days. Ever aware of the potential impact on the stock and bond market, the start of could wait until the markets close for the weekend. According to Hersh’s sources, it will consist of a bombing campaign, mostly directed at the Revolutionary Guards, followed by B-2’s dropping bunker busters on Furdow to destroy Iran’s nuclear centrifuges.” – This summary provided by Sylvia Demarest.

By Anatol Lieven, Responsible Statecraft, 6/19/25

The European Union’s latest moves (as part of its 17th package of sanctions against Russia declared in May) to target much more intensively Russia’s so-called “shadow fleet” of oil tankers and other vessels illustrate the danger that, as long as the Ukraine war continues, so will the risk of an incident that will draw NATO and the EU into a direct military clash with Russia.

The EU sanctions involve bans on access to the ports, national waters and maritime economic zones of EU states. Ships that enter these waters risk seizure and confiscation. It does not appear that Washington was consulted about this decision, despite the obvious risks to the U.S.

As part of this strategy, on May 15, an Estonian patrol boat attempted to stop and inspect a tanker in the Gulf of Finland. Russia sent up a fighter jet that flew over the Estonian vessel (allegedly briefly trespassing into Estonian waters), and the Estonians backed off — this time. In January, the German navy seized a Panamanian-flagged tanker, the Eventin, in the Baltic after its engines failed and it drifted into German territorial waters.

Sweden has now announced that starting on July 1 its navy will stop, inspect and potentially seize all suspect vessels transiting its exclusive economic zone, and is deploying the Swedish air force to back up this threat. Since the combined maritime economic zones of Sweden and the three Baltic states cover the whole of the central Baltic Sea, this amounts to a virtual threat to cut off all Russian trade exiting Russia via the Baltic — which would indeed be a very serious economic blow to Moscow.

It would also threaten to cut off Russia’s exclave of Kaliningrad, which is surrounded by Poland, from access to Russia by sea.

This is the kind of action that has traditionally led to war. The Swedish assumption seems to be that the Russian navy and air force in the Baltic are now so weak — and so surrounded by NATO territory — that there is nothing Moscow can do about this. However, it is very unlikely that the Swedes would take this step unless they also believe that in the event of a clash, Washington will come to Sweden’s defense — even though the EU and Swedish decisions were made without U.S. approval and are not strictly covered by NATO’s Article 5 commitment.

And despite all the hysterical language about Russia being “at war” with NATO countries, these moves by the EU and Sweden are also based on an assumption that Russia will not in fact lose its temper and react with military force. European policymakers might however want to think about a number of things: for example, what would the U.S. do if ships carrying U.S. cargo were intercepted by foreign warships? We know perfectly well that the U.S. would blow the warships concerned out of the water and declare that it had done so in defense of the sacred rule of free navigation — in which the EU also professes to believe.

EU leaders, and admirals, should also spend some time on Russian social media, and read the incessant attacks on the Putin administration by hardliners arguing precisely that Moscow has been far too soft and restrained in its response to Western provocations, and that this restraint has encouraged the West to escalate more and more. Such hardliners (especially within the security forces) are by far the greatest internal political threat that Putin faces.

It is important to note in this regard that moves to damage Russia’s “shadow fleet” have not been restricted to sanctions. In recent months there have been a string of attacks on such vessels in the Mediterranean with limpet mines and other explosive devices — developments that have been virtually ignored by Western media.

In December 2024, the Russian cargo ship Ursa Major sank off Libya after an explosion in which two crewmembers were killed. The Reuters headline reporting these attacks was rather characteristic: “Three tankers damaged by blasts in Mediterranean in the last month, causes unknown, sources say.” Unknown, really? Who do we think were the likely perpetrators? Laotian special forces? Martians? And what are European governments doing to investigate these causes?

If the Russians do sink a Swedish or Estonian warship, the Trump administration will face a terribly difficult decision on how to respond to a crisis that is not of its own choosing: intervene and risk a direct war with Russia, or stand aside and ensure a deep crisis with Europe. The U.S. administration would therefore be both wise and entirely within its rights to state publicly that it does not endorse and will not help to enforce this decision.

Washington also needs — finally — to pay attention to what the rest of the world thinks about all this. The overwhelming majority of senators who are proposing to impose 500% tariffs on any country that buys Russian energy have apparently not realized that one of the two biggest countries in this category is India — now universally regarded in Washington as a vital U.S. partner in Asia. And now America’s European allies are relying on U.S. support to seize ships providing that energy to India.

The U.S. administration would also be wise to warn European countries that if this strategy leads to maritime clashes with Russia, they will have to deal with the consequences themselves. Especially given the new risk of war with Iran, the last thing Washington needs now is a new flare-up of tension with Moscow necessitating major U.S. military deployments to Europe. And the last thing the world economy needs are moves likely to lead to a still greater surge in world energy prices.

European governments and establishments seem to have lost any ability to analyze the possible wider consequences of their actions. So — not for the first time — America will have to do their thinking for them.